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A federal district court in New Jersey has ruled that an insurance company had no obligation to cover damage to a salon resulting from a thunderstorm that dropped up to 7 inches of rain in two hours.

The severe thunderstorm took places on July 30, 2016, and was thought to constitute a 200-to-500 year storm. As a result, water pooled at the bottom of a stairwell next to a beauty salon’s glass door entrance, which was below street level. The water leaked through the door and subsequently damaging the building.

On the day after the storm, Tere Villamil telephoned her insurance carrier, Sentinel Insurance Company, Limited, to file a claim.

The claims

Villamil explained when and how the damage occurred, and that she started cleaning up the mess before filing her insurance claim. She had also called her landlord. Her business carried commercial property insurance.

Sentinel denied the salon’s insurance claim, reasoning “the cause of loss was a flood,” which was not covered under the policy or the modification agreement to the policy.

Villamil sued Sentinel, which moved for summary judgment. The insurer argued that heavy rain flooded areas in Princeton, including where the salon was located. It contended that the flood water flowed over the curb and accumulated at the bottom of the stairwell that led to the lower level, prior to entering the building through the glass door, notwithstanding the salon’s efforts to block it with partially filled garbage bags from inside the building.

The opposing arguments

On the other hand, the salon contended that the water that entered through the lower level of the building and did not constitute flood water. Rather, the salon maintained that as a consequence of the storm, water accumulated on the building’s roof and, in turn, entered the building’s drain system. The high volume of water that entered the building’s drain system created an “over-pressurization” and, as a consequence, that water was “ejected” through the salon’s numerous sinks and through the salon’s toilets and drains.

According to the salon, that water also, as opposed to the flood water from the street, accumulated at the bottom of the salon’s stairwell, entered the building, and caused the damage.

The district court granted Sentinel’s motion.

The verdict

In its decision, the district court explained that, for there to be coverage, the salon had to show that it had sustained damage “solely” from water that backed up from a sewer or drain. Stated differently, the district court continued, the salon had to demonstrate that flood water had not, in any way, contributed to the damages that the building had sustained.

The district court then ruled that the expert opinions relied on by the salon did not “refute that the water that accumulated at the bottom of the stairwell, at a minimum, included surface water which subsequently entered the premises through the salon’s glass door.”

The district court pointed out that an expert for the salon provided an opinion as to the cause of the water damage in a three-sentence email that stated:

“Based on my inspection of the site on [A]ugust 10, 2016, and the pictures you showed me it appears that the water damage in your building was not created by flooding from the street. From what you described the floor drain in your exterior [stairwell] appears to have failed causing water to backup into your building. Should you have any questions do not hesitate to call.”

Breaking down the verdict

In sum, the district court said, this expert opined that water accumulated at the bottom of the stairwell, because the intensity of the rain caused the drain to clog and cease functioning. Moreover, his explanation supported the fact that rain water also pooled at the stairwell’s base, as opposed to only the water that drained from the roof, contrary to the salon’s position that the water that accumulated solely came from the roof through the backed up drain.

The district court then found that this expert opined that the water that accumulated at the bottom of the stairwell consisted, at a minimum, of water that welled out of the lower level drain in addition to rain water that fell directly into that area.

The district court added that a public insurance adjuster similarly explained that the cause of loss resulted from a blockage in the drain system:

“[T]he water that damages your client’s occupied space came from the reverse flow under pressure due to a blockage in the drain system. The building has a combined plumbing system that receives storm water and sewage water and then is pumped into the city’s sewer system. The pumps were actively trying to pump the water out to the sewer until an over pressurization occurred and set the water in a reverse direction.”

According to the adjuster, the damages were sustained, at least in part, by an over pressurization of the drain system.

The final verdict

The district court then ruled that, drawing every favorable inference from the expert reports, entry of summary judgment in favor of Sentinel was appropriate. The district court reasoned that, to the extent that the water from the roof of the building could be categorized as non-flood water and some of that water eventually pooled at the bottom of the stairwell, the salon’s experts either were silent on the issue or admitted that the water that accumulated in that area included flood water.

The district court pointed out that, as defined under the policy, flood included “the accumulation of surface water,” which case law has defined as, “waters on the surface of the ground, usually created by rain or snow, which are of a casual or vagrant character, following no definite course and having no substantial or permanent existence.”

According to the district court, even if it presumed that non-flood water backed up from the lower level drain, the water that ultimately entered the building “also included an accumulation of flood water.” As such, it concluded, the expert reports did not support the fact that the damages that the salon sustained were solely the result of an accumulation of non-flood water.

The case is Villamil v. Sentinel Ins. Co., No.: 17-1566 (FLW) (D.N.J. Dec. 21, 2018)

Related: Know your product liability claims

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