“Surface And Ground Water Damage” Exclusion

Spring is coming soon and exclusions in homeowner policies for “surface and ground water damage” will be an issue an insurance lawyer must be able to discuss with client.

Here is a November 2019, opinion from the Southern District of Texas, Houston Division, that “kinda” addresses this issue.  The opinion is styled, Robert Salcetti v. AIG Property Casualty Company.

Salcetti suffered damage to his home after the U.S. Army Corps of Engineers decided to release water from reservoirs and Salcetti alleges that water entered his home causing significant damage.

Both sides agreed to file early motions for summary judgement rather than getting into a lengthy discovery process.

The standard for insurance policies is that the meaning of an insurance contract is to be determined under the standards applicable to contracts generally.  A court’s primary concern is to give effect to the intention of the parties as expressed by the policy language.

In this case, the “Surface and Ground Water Damage” exclusion provides that the Policy does not cover “any loss caused by flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by rain . . ..”  An endorsement to the Policy defines “flood” to mean, in relevant part:

  1.  A general and temporary condition of partial or complete inundation of normally dry land area from:  a.Overflow of inland or tidal waters; [or]  b.Unusual and rapid accumulation or runoff of surface waters from any source.

AIG argues that Hurricane Harvey produced heavy rainfall throughout the area, and that the “rain water that eventually found its way to Salcetti’s Property is that which was in the Reservoirs and/or Buffalo Bayou.”   AIG argues that some of the rain water fell outside the Reservoirs as “surface water.”  AIG argues that other rain water fell or drained into Mason Creek, South Mayde Creek, Langham Creek, Bear Creek, Horsepen Creek, and Upper Buffalo Bayou.  Although AIG asks the Court to take judicial notice that these creeks and the upper Buffalo Bayou feed into the Reservoirs, AIG cites nothing to support judicially noticing this fact.  AIG argues that the Reservoirs and Buffalo Bayou are“natural watercourses” and that the water from the Reservoirs, upon its release, flowed into Buffalo Bayou and “immediately became Buffalo Bayou water.”  In support of its position that the water from the Reservoirs was released into Buffalo Bayou, AIG cites to Salcetti’s unsworn allegation in the Original Petition that the Army Corps of Engineers released water from the Reservoirs “thereby inundating Buffalo Bayou downstream.”   Salcetti now alleges, however, that the water in the Reservoirs was “impounded water” that, when released, did not flow into Buffalo Bayou because the bayou “was full and already outside its banks at the time of the release . . ..”  Although Salcetti has not filed an amended complaint making the new allegation, the Court has not entered a docket control order for the case.  Therefore, the deadline for amendments to pleadings has not yet been established and Salcetti is entitled to assert this new theory of his claim.

There is no evidence in the record to support either side’s position.  For example, there is no evidence that the water in the Reservoirs came from the creeks identified by AIG, that the water in the Reservoirs was “impounded water” as Salcetti argues, or that the water in the Reservoirs (whatever its character) went into Buffalo Bayou when it was released by the Army Corps of Engineers.  Because there is no evidence on which to base a summary judgment analysis, the Court denies both motions as to the “Surface and Ground Water Damage” exclusion.