The insured's attempt to secure additional coverage beyond a $10,000 payment for water damage after a rain storm damaged the interior of its building failed. Bible World Christian Ctr. v. Colony Insurance Co, 2016 U.S. Dist. LEXIS 175766 (M.D La. Dec. 20, 2016).
The interior of Bible World's building was damaged by water that leaked in from the roof after a heavy rain storm. Bible World's officials met with Robert Chandler, an employee of Omni Insurance Group, the day after the rain event. Chandler had assisted Bible World in procuring its commercial property policy with Colony Insurance Company. Chandler told Bible World to fix the property and that its costs would be covered under the policy. Bible World spent $79,876.81 in repairs.
Colony issued a $10,000 payment to Bible World for sewer and water backup coverage contained in the Gold-Pak Endorsement of the policy. The vendor who performed the repairs sued Bible World. Colony was sued under a third party demand filed by Bible World.
Bible World and Colony hired experts who agreed on two major issues. First, there were no physical holes or other damage to the roof from the rain event. Second, they agreed that the damage to the interior of the property was caused by water that overflowed at the gutter and entered the interior of the building through openings in the ceiling that were part of the original design of the building.
Colony's expert further opined that the gutter overflowed because of clogged downspouts caused by improper maintenance. He found that the gutter overflowed because fourteen of the twenty-one downspouts were blocked. Bible World's experts agreed that there may have been leaves plugging the drains but that these plugs would not have been significant enough to cause the overflow. Instead, a number of factors combined may have resulted in the backup of water including extensive rain, street flooding, sewage backup and other related problems.
Colony moved for summary judgment. The court first found that Chandler was not an agent who could bind Colony. There was no reasonable inference that an agency relationship existed between Chandler and Colony. Chandler was a broker employed by Omni Insurance. His role was to act as a liaison between insurance companies, like Colony, and potential insureds. Chandler worked with approximately fifty different companies. Further, Colony had no control over Chandler.
Secondly, Colony satisfied its obligations under the policy. The policy excluded coverage for damages to an interior of a building caused by rain unless the rain entered through an opening created by damage to the building. Another section of the policy excluded coverage for damages from water that overflowed from a sewer or drain. Third, the Gold-Pak Endorsement brought back coverage for damages from water that overflowed from a drain for damages totaling up to $10,000.
Colony argued that in order for rain damage to be covered, the rainwater must have entered through an exterior opening created by damage to the property. Here, water did not enter through exterior damage to the building. Second, the policy did not cover for damages caused by a defective or poorly maintained roof drainage system. Bible World disagreed with Colony's interpretation, but offered little analysis.
The court found that there were two main causes of the damages: the rain and the failure of the downspouts to drain properly. Assuming that the rain was the cause of the loss, the court fund that Colony did not owe Bible Work anything. Alternatively, assuming that the cause of the damages was the failure to drain, the court found that, at most, Colony owed Bible Work $10,000, which had already been paid.
Therefore, the court granted Colony's motion for summary judgment.