Ever since Mattis v. State Farm Fire & Cas. Co., 118 Ill.App.3d 612, 73 Ill.Dec. 907, 454 N.E.2d 1156 (1983), Illinois courts have held that an earth movement exclusion contained in a first-party policy applies only to earth movement due to natural causes. At the beginning of this month, however, a federal court in Missouri construing Illinois Law found otherwise with respect to mine subsidence. In Hutchinson v. Pacific Indem. Co., 2015 WL 5139183, 2015 U.S. Dist. LEXIS 112239 (E.D.Mo., Sep. 1, 2015), the court held that an earth movement exclusion was unambiguous and clearly barred coverage for such a loss.
The policyholders owned a home in Alton, Illinois that was totally destroyed by “a mine subsidence event” on May 28, 2011. The contract of insurance – a Chubb Masterpiece Policy with “Deluxe House Coverage” – afforded $3,236,000 in dwelling coverage, but it excluded “any loss caused by earth movement, including volcanic eruptions, landslides, mud flows, and the sinking, rising, or shifting of land[.]” Illinois’ Mine Subsidence Act required that the insurer afford $750,000 in coverage for loss by that peril, however.
The carrier paid $750,000 to the insureds, but they contended that their loss was covered under both the statutorily-required mine subsidence coverage and the basic grant of “all risk” Deluxe House Coverage. The policyholders therefore sought to recover the overall limit of liability in the amount of over $3M, and they brought suit after the insurer balked.
On September 1st, Missouri District Judge Ronnie White sided with the carrier and granted its motion for summary judgment. In the words of his opinion:
the Court finds that the unambiguous language in the Policy provides that Plaintiffs’ claim for mine subsidence fits within the earth movement exclusion. The Court finds that the earth movement exclusion is not ambiguous. There is nothing in the description of the earth movement exclusion as “any loss caused by earth movement, including volcanic eruptions, landslides, mud flows, and the sinking, rising, or shifting of land” that is ambiguous. The Court, as any reasonable reader would, interprets earth movement under its plain and ordinary dictionary meanings to include mine subsidence.
Last year, an Illinois federal court had come to a similar conclusion when construing an earth movement exclusion that prefaced its list of examples with the phrase “including but not limited to.” Judge White saw no difference between that formulation and the single word “including” but was used here, stating that “[t]he Court. . . notes that the word ‘including’ means that the list is merely exemplary and not exhaustive.”
The linchpin of Mattis was the doctrine of ejusdem generis. For the layman, that is a rule of contract and statutory construction that states that when a general term (“earth movement”) is followed by an enumeration of examples (“volcanic eruptions, landslides, mud flows. . . “) “the general word shall be construed as applicable only to persons or things of the same general nature and kind as those enumerated.” The Missouri court held that the doctrine was inapplicable because the exclusion at issue was unambiguous. In addition, Judge White observed that
even if the Court were to apply the doctrine, the definition of earth movement is not limited to “natural” occurrences as claimed by Plaintiff. Several of the items listed in the definition of earth movement can be caused by nature or man-made causes. . . The Court finds that landslides and the sinking, rising, or shifting of land can have man-made causes similar to that of mine subsidence events.
Significantly, the court did not take the path of least resistance, which would have been to merely observe that the statutorily-required grant of mine subsidence coverage demonstrated that the Illinois legislature recognized that earth movement exclusions barred recovery for that peril under standard policy language.
