Fidelity Co-operative Bank v. Nova Casualty Company

United States Court of Appeals
For the First Circuit

Nos. 12-1572,
12-2150

FIDELITY CO-OPERATIVE BANK, individually and as
assignee of MATTHEW KNOWLES and SONDRA KNOWLES,

Plaintiff, Appellant,

v.

NOVA CASUALTY COMPANY,

Defendant, Appellee.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Timothy S. Hillman, U.S. District Judge]

Before

Torruella, Thompson and Kayatta,
Circuit Judges.

Lawrence M. Slotnick, with whom Richard W. Jensen and Morrison
Mahoney LLP, were on brief for appellant.
Scott T. Ober, with whom Hassett & Donnelly, P.C., was on
brief for appellee.

August 7, 2013
 TORRUELLA, Circuit Judge. Plaintiff-Appellant Fidelity

Co-operative Bank ("Fidelity"), individually and as assignee of

Matthew and Sondra Knowles ("the Knowles"), appeals the granting of

summary judgment to Defendant-Appellee Nova Casualty Company

("Nova"), after the district court determined that an all-risk

insurance policy neither covered water damage caused to an

apartment building during a tropical storm nor any resulting

business interruption losses. Fidelity challenges the district

court's interpretation of the policy under its "rain limitation"

provision, arguing that the policy's coverage extended to both

damage "caused by" or "resulting from" rain as well as damage

resulting from the entry of "surface water." Since we agree that

the water damage was covered under the all-risk policy at issue, we

reverse the district court's summary judgment order and remand for

further proceedings in accordance with this opinion.

I. Background

A. Factual Background

The Knowles owned a five-story mixed-use rental property

at 46-50 High Street in Clinton, Massachusetts, which was

approximately 100 years old. The building had a masonry exterior

and a flat, rubber-covered roof which had been installed by the

previous owner one to two years before the Knowles purchased the

building. The drainage system on the roof consisted of a single

drain located at the center of the roof with an internal diameter

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of 2.5 inches covered by a strainer made from lead flashing. The

roof also contained two glass skylights directly above the

building's stairwell.

The High Street property was mortgaged with Fidelity.

The property was insured by Nova through an all-risk policy (the

"Policy") covering direct physical loss or damage to the building

subject to any specific exclusion stating otherwise. While the

original policy contained an exclusion for water damage, including

damage resulting from "[w]ater or water-borne material, that backs

up or overflows from a sewer, drain or sump," an amendatory

endorsement to the Policy explicitly deleted that exclusion. An

additional endorsement modifying the Policy added flood coverage

for loss attributable to "[f]lood, meaning a general and temporary

condition of partial or complete inundation of normally dry land

areas due to: . . . [t]he unusual or rapid accumulation or runoff

of surface waters from any source."

On September 6, 2008, a tropical storm brought heavy

rains to Clinton which resulted in the accumulation of a

significant amount of water on the roof of the covered property.

The high volume of water overwhelmed the rooftop drain, causing the

water to pool on the roof and eventually leak through the

building's two skylights. The water caused substantial damage to

the interior of the building, and as a result of that damage, the

Town of Clinton ordered the building to be closed, causing the

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forced evacuation of all tenants. The town would not permit

reentry into the building until a structural engineer provided an

inspection report indicating that the structure was sound. The

building was fully rented, and the closure resulted in an

additional loss of rental income to the Knowles. Because the

Knowles could not afford to make repairs to the building, it

remained vacant.

The Knowles filed a claim for reimbursement for the

interior water damage with Nova. Nova investigated the damage

resulting from the storm by dispatching two engineers to the

property on September 9 and 18, 2008. One engineer concluded that

the "building flooded because rainwater backed up on the roof and

ponded to a depth that was above two, aged and porous, metal and

glass, roof skylights, which leaked significantly when submerged

under water." The engineer noted the roof was not the path for

water entry and concluded that the drain "failed to drain the

rapidly accumulated volume of water on the roof," opining that the

single drain and strainer were "inadequate." The other engineer

concluded that "the obstruction of the roof drain caused the

ponding of water to such a height that it flowed over the skylight

curbs and entered the building."

On October 6, 2008, Nova denied the Knowles' claim. In

its denial, it cited to the "rain limitation" provision, or

"Limitation D.1.c." of the Knowles' policy, as well as the "faulty

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workmanship exclusion," or "Exclusion C.3.c." The "rain

limitation" is a listed exclusion from policy coverage if the loss

suffered is to "[t]he interior of the building . . . caused by or

resulting from rain, . . . whether driven by wind or not, unless

[t]he building . . . first sustains damage by a Covered Cause of

Loss to its roof or walls through which the rain . . . enters."

The "faulty workmanship exclusion" excludes damage resulting from

"[f]aulty, inadequate or defective . . . [d]esign, specifications,

workmanship, repair, construction, renovation, remodeling, grading,

compaction; materials used in repair, construction, renovation or

remodeling; or maintenance of part or all of any property on or off

your 'covered locations.'" In denying coverage, Nova claimed that

the rainwater entered the interior of the building because of the

backed-up roof drain and not through damage to the roof or walls.

It also maintained, pertaining to the "faulty workmanship

exclusion," that the roof drain strainer and the single 2.5-inch

diameter roof drain were inadequate to handle the water deposited

from the rain storm.

On December 4, 2008, after the Knowles' claim was denied,

the building was vandalized and much of its copper piping was cut

out, causing further damage to the property. The Knowles filed a

separate claim for reimbursement for this damage, but Nova denied

that claim under the "vacancy exclusion," or "Loss Conditions 6.b,"

of the policy, which states in pertinent part:

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 If the building where the loss or damage
occurs has been vacant for more than 60
consecutive days before that loss or damage
occurs[,] [w]e will not pay for any loss or
damage caused by any of the following even if
they are Covered Causes of Loss:

(a) Vandalism;

. . .

(e) "Theft"

Nova claimed that, since the building had been vacant for over

sixty days, policy coverage did not extend to the losses or damage

suffered by the vandalism and theft.

Due to these financial losses, the Knowles defaulted on

their mortgage and Fidelity took title to the property through a

deed in lieu of foreclosure around the beginning of 2010.

B. Procedural History

On February 8, 2010, Fidelity, individually and as

assignee of the Knowles, filed a complaint in the Massachusetts

Superior Court against Nova. The complaint sought a declaration

that the physical losses suffered by the property were covered by

the Policy (Count 1), and that the loss of business income to the

Knowles was likewise covered (Count 2). Fidelity also sought

monetary damage from Nova for breach of contract (Count 3),

negligence (Count 4), and violations of Massachusetts' consumer

protection statute, Mass. Gen. L., ch. 93A ("Chapter 93A") (Count

5). Nova removed the case to the Massachusetts federal district

court on diversity grounds. Following discovery, Nova moved for

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summary judgment on all counts of the complaint, and Fidelity

cross-moved for summary judgment only as to the first two counts

involving Nova's denial of coverage under the Policy.

The district court granted summary judgment to Nova on

all five counts, denying Fidelity's cross-motion. It construed the

issues before it as whether the rain limitation and/or the faulty

workmanship exclusion applied to the loss suffered to the property.

The court concluded that the "rain limitation" exclusion excluded

coverage because, as the court stated, "the water pooled on the

roof, thus becoming surface water which entered the building

through the eroded metal and glass skylights. That the water

pooled due to a faulty or inadequate drain does not trump the

surface water exclusion which bars coverage." Fid. Coop. Bank v.

Nova Cas. Co., 2012 U.S. Dist. LEXIS 51313, *13 (D. Mass. Apr. 11,

2012) (emphasis added). Regarding the applicability of the faulty

workmanship exclusion, however, the court strictly construed the

exclusion against the insurer and held that the language did not

exclude coverage here. Specifically, it found that the undisputed

fact that the single roof drain was inadequate to remove the

rainwater did not, on its own, trigger the faulty workmanship

exclusion. Finally, it held that the vacancy exclusion of the

policy excluded coverage for the Knowles' second claim for the

vandalism and theft that occurred in December 2008. The court

explicitly rejected Fidelity's argument that an insurer was

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prevented from invoking the vacancy exclusion if its wrongful

denial of the claim is the reason for the vacancy. Instead, since

it had found that the denial of coverage was not wrongful under the

"rain limitation" provision of the Policy, Fidelity could not

attribute the reason for the vacancy to Nova.1

Fidelity moved for reconsideration, arguing, inter alia,

that any water damage resulting from "surface waters" was covered

under the amendatory endorsement to the Policy. The district

court issued an electronic line order denying that motion without

providing a reason. Fidelity timely appealed both the district

court's summary judgment order and its denial of the motion for

reconsideration.

II. Discussion

A. The "Rain Limitation" and "Surface Water" Coverage

On appeal, Fidelity asks this court to make sharp

distinctions between "rain," water damage "caused by rain," and

water damage caused by "surface water." It first requests that we

narrowly construe the "caused by rain" provision in the Policy's

"rain limitation" exclusion, as required under Massachusetts law,

to only exclude coverage for damage whose "efficient proximate

cause" was rainfall. Fidelity argues that, since the "efficient

1
The court granted summary judgment to Nova on the remaining
breach of contract, negligence and Chapter 93A claims, finding them
dependent on the question of whether or not there was coverage
under the Policy for the loss suffered.

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proximate cause" in this case was not the direct entry of rainfall

into the building's interior but was rather the "blocked or

inadequate roof drain," as Nova's own investigation found, the

damage was not "caused by rain" and did not fall within the "rain

limitation" exclusion of the policy.

Further, Fidelity requests that we draw a sharp line

between "rain" and "surface water" as mutually exclusive terms.

While the district court found that the "rain limitation" excluded

coverage because the water that pooled on the roof became "surface

water" that was "caused by rain," Fidelity insists that the court's

reasoning conflated two legally distinct terms. Instead, Fidelity

invites us to find that, if the water on the roof was in fact

"surface water" as characterized by the district court, it was no

longer "rain," and the rain limitation could not bar coverage. It

cites two recent decisions of the Massachusetts Supreme Judicial

Court -- Boazova v. Safety Ins. Co., 462 Mass. 346 (2012) and

Surabian Realty Co. v. NGM Ins. Co., 462 Mass. 715 (2012) -- both

issued after the district court's opinion, to support its

contention that, while "surface water" is "derived from falling

rain," it is starkly distinguished from rain for the purposes of

"rain limitation" exclusions under all-risk insurance policies.

Fidelity goes on to conclude that, if the rain were to be

characterized as "surface water" as it should under Massachusetts

law, it would not be excluded from coverage because the amendatory

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endorsement to the Policy covers damage resulting from surface

water.

Nova, for its part, argues that the district court

properly determined, under the plain language of the Policy, that

the rain limitation excluded coverage of the water damage. Since

the rain entered the interior of the building without prior damage

to the roof or walls, it was "caused by or resulted from rain."

According to Nova, automatically categorizing "rain" as "surface

water" merely because it "touches some surface, ground or not,"

constitutes a "tortured reading" of an otherwise clear exception,

according to Nova, and is contrary to the rule that insurance

policies be given their plain and ordinary meaning. Nova relies on

Wider v. Heritage Maintenance, Inc., 827 N.Y.S.2d 837 (N.Y.Sup.

2007), wherein the court determined that water damage was "caused

by rain" and did not constitute "surface water" since it had

resulted from water that had accumulated in tarps hanging from a

scaffold. Nova rejects Fidelity's reliance on Boazova and Surabian

Realty, arguing that those cases did not in fact deal with rain

limitation exclusions, but rather "anticoncurrent causes"; they did

not set out any new law in the area of "surface water" dispositive

for this case.

This court reviews the entry of summary judgment de novo.

Rockwood v. SKF USA, Inc., 687 F.3d 1, 9 (1st Cir. 2012). Summary

judgment is appropriate when there is no genuine dispute of

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material fact and the moving party is entitled to judgment as a

matter of law. See Fed. R. Civ. P. 56(a). That this matter was

resolved on cross motions does not change this standard of review,

Wightman v. Springfield Terminal Ry., 100 F.3d 228, 230 (1st Cir.

1996), but where a cross-motion was made, we must decide "whether

either of the parties deserves judgment as a matter of law on facts

that are not disputed," Barnes v. Fleet Nat'l Bank, N.A., 370 F.3d

164, 170 (1st Cir. 2004) (citation and internal quotation marks

omitted).

Under Massachusetts law, the interpretation of an

insurance policy is a question of law for the court. Bos. Gas Co.

v. Century Indem. Co., 454 Mass. 337, 910 N.E.2d 290, 304 (Mass.

2009). The court construes the terms of the policy "de novo under

the general rules of contract interpretation." Valley Forge Ins.

Co. v. Field, 670 F.3d 93, 97 (1st Cir. 2012) (quoting Brazas

Sporting Arms, Inc. v. Am. Empire Surplus Lines Ins. Co., 220 F.3d

1, 4 (1st Cir. 2000)) (internal quotation marks omitted). First,

we look to "the actual language of the policies, given its plain

and ordinary meaning." Id. The burden of demonstrating that an

exclusion exists that precludes coverage is on the insurer, and

"any ambiguities in the exclusion provision are strictly construed

against [said] insurer." Id. Where "the relevant policy

provisions are plainly expressed, those provisions must be enforced

according to their terms and interpreted in a manner consistent

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with what an objectively reasonable insured would expect to be

covered." Vicor Corp. v. Vigilant Ins. Co., 674 F.3d 1, 11 (1st

Cir. 2012) (citing City Fuel Corp. v. Nat'l Fire Ins. Co. of

Hartford, 446 Mass. 638, 846 N.E.2d 775, 778-79 (Mass. 2006)).

The facts of this case are unusual relative to the cases

cited by the parties in that the Policy at issue had broad, all-

risk coverage as well as flood coverage under an amendatory

endorsement. The Policy thus clearly covers water damage caused by

"surface water," but it excludes from coverage water damage "caused

by or resulting from rain." While Nova argues that the damage to

the building's interior was "caused by rain" that entered the

building through skylights on the roof, and was not covered unless

"the building . . . first sustain[ed] damage by a Covered Cause of

Loss to its roof . . . through which the rain . . . enter[ed]," we

cannot agree.

Massachusetts courts have long used the "efficient

proximate cause" test "to resolve coverage controversies in chain

causation cases." Jussim v. Mass. Bay Ins. Co., 415 Mass. 24, 27

(1993). The test requires courts to determine the efficient

proximate cause of a given loss, and "[i]f that cause is an insured

risk, there will be coverage even though the final form of the

property damage, produced by a series of related events, appears to

take the loss outside the terms of the policy." Id. The

touchstone decision defining "efficient proximate cause" under

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Massachusetts law is Lynn Gas & Elec. Co. v. Meridien Fire Ins.

Co., 158 Mass. 570, 575 (1893), which clarifies that the "active

efficient cause that sets in motion a train of events which brings

about a result without the intervention of any force started and

working actively from a new and independent source is the direct

and proximate cause."

We are required to perform an efficient cause analysis

under these facts due the terms of the policy at issue. While the

terms of the original policy would appear to preclude such an

analysis, those terms were explicitly amended and must now be

strictly construed against the insurer. Specifically, section "C.

Exclusions" of the original policy states:

1. We will not pay for loss or damage
directly or indirectly by any of the
following. Such loss or damage is excluded
regardless of any other cause or event that
contributes concurrently or in any sequence to
the loss or damage.

f. Water

(1) Flood, surface water, waves, tides, tidal
waves, overflow of any body of water, or their
spray, all whether driven by wind or not;
(2) Mudslide or mudflow;
(3) Water or water-borne material, that backs
up or overflows from a sewer, drain or sump.

However, along with a separate "Flood Coverage" amendatory

endorsement modifying the policy as discussed infra, the policy

also contains an endorsement entitled "Amendatory Endorsement -

Habitational Program," drafted by Nova, which states in Paragraph

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12 that "Paragraph f. Water items (2) and (3) of C. Exclusions are

deleted." Therefore, the policy can no longer be read to exclude

coverage for damage, directly or indirectly, by water that backs up

or overflows from a drain "regardless of any other cause or event

that contributes concurrently or in any sequence to the loss or

damage."2 Under such circumstance, Massachusetts law as a default

2
We disagree with Judge Kayatta's reasoning that "there is no
coverage under the original policy form, because the original
policy language plainly excludes coverage from any loss caused by
surface water, even in sequence with other, covered losses." There
is nothing in the language of the Flood Coverage amendatory
endorsement that has preclusive effect over any other claim for
damage brought under any other term of the policy, including a
claim brought on the basis of water damage resulting from drain
overflow. The concurrence/dissent suggests that, because Exclusion
C.1.f(1) remains in the original policy, even if amended by the
Flood Coverage amendatory endorsement, any damage resulting from
sequential events, including sequential events involving drain
overflow, are not covered. Rather, strictly construing the policy
against the insurer, Brazas Sporting Arms, Inc. v. Am. Empire
Surplus Lines Ins. Co., 220 F.3d 1, 4 (1st Cir. 2000), we read the
deletion of Paragraph C.1.f(3) as removing any prohibition against
coverage for a legitimate claim caused by drain overflow, whether
directly or indirectly caused. What the Amendatory Endorsement -
Habitational Program effectuated was the striking of the entire
phrase pertaining to the drain overflow exclusion, including the
portions of the provision excluding coverage for damage caused from
drain overflow, should there be intervening, indirect, or
sequential causes. This is so because what amendatory endorsement
deleted was not only the terms "Water or water-borne material, that
backs up or overflows from a sewer, drain or sump," but rather the
entire sentence: "We will not pay for loss or damage directly or
indirectly by [water or water-borne material, that backs up or
overflows from a sewer, drain or sump]. Such loss or damage is
excluded regardless of any other cause or event that contributes
concurrently or in any sequence to the loss or damage." Since that
entire exclusion was deleted, we most forcefully conclude that
damage caused by drain overflow, even if indirectly caused or
caused in a sequences with other causes, would be entitled to
coverage as a result of the amendatory endorsement without a
deductible (since only the Flood Coverage amendatory endorsement

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kicks in to require an efficient cause analysis in interpreting the

scope of coverage under the policy. Jussim, 415 Mass. at 27.

In this case, Nova's own experts determined that the

blocked or inadequate roof drain caused the "water to accumulate on

the flat roof trapped at the perimeter by parapet walls." Nova's

engineers found that the water damage occurred because rainwater

had "backed up on the roof and ponded" and the roof had thus

"flooded." Thus, we find that, when the blocked or inadequate

drain was overwhelmed by the severe rainstorm, it set in motion a

"train of events" lacking the intervention of any forces or the

activation of a new source to cause the interior water damage. The

failure of the drain must properly be deemed the "efficient

proximate cause" of the damage, not the rain. The blocked or

inadequate roof drain was a covered loss under the Policy in that

the Policy covered the "risk of direct physical loss," and was not

excluded by any other exclusion. Accordingly, it was error for the

district court to conclude that the interior damage was "caused by

rain" and was excluded from coverage under the rain limitation

provision.

Nova does not directly contest the finding of the

district court that the faulty workmanship exclusion was not

triggered, and we do not disturb that finding to create an

requires a deductible; the Amendatory Endorsement- Habitational
Program does not).

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exception to coverage in this instance. As the district court

found, the faulty workmanship exclusion was "intended to prevent

the expansion of coverage under the policy to insuring the quality

of a contractual undertaking by the insured or someone authorized

by him." Husband v. Lafayette Ins. Co., 635 So.2d 309, 311 (La.

Ct. App. 1994). The court was required to strictly construe

exclusionary clauses against the insurer, Vappi & Co. v. Aetna

Casualty & Surety Co., 204 N.E.2d 273, 276 (Mass. 1965), and its

conclusion was fortified by the undisputed evidence on record that

the roof was repaired prior to the Knowles' ownership, that the

Knowles did not repair, renovate or replace the roof or its drain,

and Nova's Property Technical Claim Manager and designated witness,

John Slootweg, admitted that the roof strainer or drain cover did

not constitute "faulty, inadequate or defective maintenance."

We next turn to the district court's determination that

the water damage resulted from "surface water."3 Nova does not

3
We address the application of the rain limitation provision and
the surface water exclusion separately as Fidelity makes two
separate arguments for coverage on appeal because the policy at
issue treats coverage under each respective provision differently.
Under the policy, there is no deductible for damage if the rain
limitation does not apply. However, for damage resulting from
"surface water," there is a $25,000 deductible. For this reason,
Fidelity, according to its brief, "sought to avoid the application
of this increased deduc[t]ible by taking the position that all it
needed to argue was that the water on the roof ceased to be 'rain,'
but had not necessarily become 'surface water.'" As discussed
supra, Fidelity, argued in the alternative on appeal that the
policy covered damage resulting from surface water, the district
court having passed on the issue.

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contest this finding, but contends that the issue of whether the

water damage was covered under the amendatory endorsement of the

policy was waived because "Fidelity made no arguments which

characterized the rain as 'surface water' and did not argue

application of the Flood Coverage endorsement to the Nova Policy."

We cannot agree with Nova. The issue is not waived on

appeal as it was an issue directly passed on sua sponte by the

court below. Specifically, the district court determined that,

because the water that damaged the interior of the property was

"surface water," it was not covered under the Policy. The general

rule regarding waiver is that "it is only in exceptional cases

. . . that [this Court] considers questions urged by a[n] . . .

appellant not pressed or passed upon in the courts below." Turner

v. Rogers, 131 S. Ct. 2507, 2525 (2011) (quoting McGoldrick v.

Compagnie Generale Transatlantique, 309 U.S. 430, 434 (1940)); see

also Singleton v. Wulff, 428 U.S. 106, 120 (1976) ("It is the

general rule, of course, that a federal appellate court does not

consider an issue not passed upon below."). Since the district

court addressed and passed on the issue directly, Fidelity is free

to address the issue so raised in this appeal. Further, Fidelity

did in fact raise the issue in the court below when it filed its

motion for reconsideration following the district court's granting

of summary judgment to Nova. In that motion, Fidelity alerted the

court to the issues surrounding the "surface water" exclusion, the

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Flood Coverage amendatory endorsement of the Policy, and the legal

distinction between "rain" and "surface water." Fidelity cannot

thus be construed as having voluntarily relinquished a known right

since it expressly raised and argued the issue in a motion whose

denial was timely noticed for appeal. See Pike v. Guarino, 492

F.3d 61, 72 (1st Cir. 2007) (citing United States v. Olano, 507

U.S. 725, 733 (1993)).

Having determined that Fidelity has not waived the

"surface water" issue, we proceed to assess whether the district

court erred in deeming the water damage the result of "surface

water" not covered under the Policy. "Surface water" under

Massachusetts law has been defined as "waters from rain, melting

snow, springs, or seepage, or floods that lie or flow on the

surface of the earth and naturally spread over the ground but do

not form a part of a natural watercourse or lake." Boazova, 462

Mass. at 354 (quoting DeSanctis v. Lynn Water & Sewer Comm'n, 423

Mass. 112, 115 n.6 (1996)). In Boazova, the Supreme Judicial Court

found that water that had accumulated on a patio that was "higher

than the grade of the house's foundation" which "simply flowed

along the patio and seeped into Boazova's house" fit within the

definition of "surface water": "The mere migration of water from

the patio into the wooden sill, floor joists, and wall studs did

not change its essential character as 'surface water.'" 462 Mass.

at 355. In Surabian Realty Co., the Court stated that "[r]ain that

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collects on a paved surface, such as a parking lot, retains its

character as surface water. Rainwater that collects on the ground

is considered surface water even when, but for an obstruction, the

water would have entered a drainage system." 462 Mass. at 718-19

(citations omitted). The Court went on to include in the

definition of "surface water" "flood waters that spread over the

surface of the ground without having entered a drain." Id. at 719.

Therefore, in those two recent cases, the Supreme Judicial Court

confirmed that damage resulting from water that flooded into

properties after accumulating on artificial surfaces does not lose

its character as "surface water" merely because it flowed along the

artificial surface and seeped into or continued to flow onto the

property. See Boazova, 462 Mass. at 355; Surabian Realty, 462

Mass. at 718-19. Given the similarities between the district

court's factual findings here and the circumstances detailed in

recent Supreme Judicial Court rulings regarding "surface water," we

see no reason to disturb the district court's finding that the

"ponded" water on the roof of the property here was "surface

water." See also Gengel C&S Builders, Inc. v. Land Planning, Inc.,

79 Mass. App. Ct. 1120, 2011 Mass. App. Unpub. LEXIS 690, *1

(May 23, 2011) (equating "ponding" water with "surface water").

Where we cannot agree with the district court, however,

is on the issue of whether the surface water damage was excluded

from coverage under the Policy. As recited supra, the amendatory

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endorsement to the Policy independently provides coverage for

flooding caused by "[t]he unusual or rapid accumulation or runoff

of surface waters from any source." The flood coverage provision

defines "flood" as a "general and temporary condition of partial or

complete inundation of normally dry land areas," and the inundation

of the roof was such a condition. The roof may be considered a

"dry land area" under standard technical definitions of "land":

The word "land" includes not only the soil,
but everything attached to it, whether
attached by the course of nature, as trees,
herbage, and water, or by human hands, as
buildings, fixtures, and fences.

63C Am. Jur. 2d Property, § 12 (2006); see also Delaney v. Lowery,

25 Cal. 2d 561, 571 (1944); Bruno v. City of Long Branch, 21 N.J.

68, 73 (1956). Therefore, the water damage resulting from entry of

the "surface water" into the interior of the building was

explicitly covered under the plain and unambiguous language of the

Policy. It was error on the part of the district court when it

neither considered the language of the amendatory endorsement in

its denial of Fidelity's motion for summary judgment on the basis

of its "surface water" finding nor assessed the significance of

that endorsement to Fidelity's claim when it was called to the

court's attention in Fidelity's motion for reconsideration.

Since the evidence established as a matter of law that

the damage to the interior of the Knowles' property was not "caused

by rain," and in any case would have been covered by the amendatory

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endorsement of the Policy as "surface water," the declaratory

judgment in favor of Nova regarding coverage for the losses

sustained to the property from water damage on September 6, 2008,

is reversed, as is the denial of Fidelity's cross-motion for

summary judgment on that claim. We remand for the district court's

reconsideration, in accordance with the strictures of this opinion,

the entry of partial summary judgment on counts 1, 2, and 3 of

Fidelity's complaint. Since the district court summarily reviewed

and reached findings regarding Fidelity's business income loss

claim and subsidiary state law claims based on erroneous legal

findings reversed here, those claims are also remanded for further

proceedings.

III. Conclusion

We reverse the grant of summary judgment to Nova for the

declaratory relief requested regarding coverage under the Policy of

the September 2008 water damage claim. The case is remanded to the

district court for further proceedings in accordance with this

opinion.

Reversed and Remanded.

-Concurring and Dissenting opinion follows-

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 Kayatta, Circuit Judge, (Concurring in part and

Dissenting in part). I agree with my colleagues that there was

coverage under the Nova policy for the damage caused by water on

September 6, 2008. I also agree that the dismissal of Fidelity's

other claims must be vacated. I respectfully disagree with my

colleagues on only one point that affects the outcome of this case:

I would hold that, because there would be no coverage here but for

an amendatory endorsement for so-called flood coverage, the $25,000

deductible for coverage provided under that endorsement must apply.

The majority correctly concludes that a so-called "chain"

or "train" of events caused the loss here: it rained, the rain

backed up at the drain, and the backed-up water eventually pooled

high enough to flow over the tops of the skylights. In reaching

that conclusion, the majority also correctly concludes that the

pooled water on the roof was surface water, not rain.

Under the original policy form, all three causes of the

loss were excluded: Subparagraph 1.e of paragraph D (labeled

"Limitations") excluded coverage for damage caused by rain;

subparagraph 1.f(3) of Paragraph C (labeled "Exclusions") excluded

coverage for water backed up from a drain; and subparagraph 1.f(1)

of that same Paragraph C excluded coverage for a flood of surface

water.

The exclusions for the drain and surface water in

Paragraph C (but not the limitation for rain in Paragraph D) were

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accompanied by a dual or "chain" cause provision stating as

follows: "We will not pay for loss or damage directly or

indirectly by [excluded causes]. Such loss or damage is excluded

regardless of any cause or event that contributes concurrently or

in any sequence to the loss or damage." Under Massachusetts law,

such language precludes application of the "efficient cause"

doctrine to salvage coverage from the force of the exclusion. See

Jussim v. Mass. Bay Ins. Co., 415 Mass. 24, 30-31 (1993).

As the majority notes, one amendatory endorsement deleted

paragraph C.1.f(3); therefore, the exclusion for water backed up

from a drain disappeared. That first amendatory endorsement,

however, did not delete the exclusion under paragraph C.1.f(1) for

damage caused by surface water. Therefore, even if one agrees, as

I do, that the backed-up drain was a cause of the loss, there is no

coverage under the original policy form, because the original

policy language plainly excludes coverage from any loss caused by

surface water, even in sequence with other, covered losses.

What rescues the owner is the separate amendatory

coverage for floods that the owner also purchased. It covers

damage caused by "the unusual or rapid accumulation or run-off of

surface water from any source." Unlike the amendment concerning

the drain, the flood endorsement deletes nothing from the standard

policy form. Rather, it simply renders inapplicable only such

parts of the water exclusion in the standard policy that conflict

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with the flood endorsement ("that part of the Water Exclusion does

not apply").

Accordingly, coverage would not exist here but for the

amendatory endorsement for flood coverage. And that coverage, as

Fidelity admits, comes with a $25,000 deductible "for coverage

provided under this endorsement."

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