| New Decision Interpreting Homeowners Policy | ||
| November 16, 2000 | ||
| By Jennifer L. Murphy | ||
| In the recent case of Bergeron v. State Farm Fire and Casualty Company (Nov. 15, 2000), the New Hampshire Supreme Court affirmed the trial court's denial of the Bergerons' petition for declaratory judgment to establish coverage under a homeowners' insurance policy for
damages sustained as a result of the failure and collapse of a dam on their property in Alton, New Hampshire, in 1996. The language of the State Farm policy required the court to find that the dam was a "building" and that the building "collapsed" either from an "explosion" or "hidden decay." Either alternative would have entitled the Bergerons to recover
under the policy.
The Bergerons contended that the trial court erred in concluding that a reasonable reading of the term "building" did not include the dam. Alternatively, they contended that it was at least ambiguous as to whether the term "building" included the dam, and that, therefore, based upon the legal principle that any ambiguity will be construed in favor of coverage, the plaintiffs should prevail. The Supreme Court disagreed, upholding the trial court's conclusion that a reasonable reading of the term "building" did not encompass the dam. The Bergerons urged the adoption of two dictionary definitions which defined the term "building" as a "permanent fixed structure" and as a "structure; edifice" (citations omitted). The trial court had used a third dictionary to obtain a more narrow definition of the term "building." The Supreme Court quoted the following definition: [A] constructed edifice designed to stand more or less permanently, covering a space of land, usu[ally] covered by a roof and more or less completely enclosed by walls, and serving as a dwelling, store house, factory, shelter for animals, or other useful structure - distinguished from structures not designed for occupancy (as fences or monuments) and from structures not intended for use in one place (as boats or trailers) even though subject to occupancy . . .." Webster's Third New International Dictionary 292 (unabridged ed. 1961). While the Supreme Court indicated that the range of definitions caused the court to question the usefulness of dictionaries in interpreting terms, (citing Hudson v. Farm Family Mutual Ins. Co., 142 N.H. 144, 146, 697 A.2d 501, 503 (1997)), it agreed with the trial court that the broad interpretation of the term "building" urged by the plaintiffs was not reasonable given the context in the policy which indicated that the term means something more than simply "anything that is built." The court therefore concluded that because the dam was not a "building," as the term was used in the policy, the plaintiffs were not entitled to coverage for the dam's collapse, even if the collapse was due to an "explosion" or "hidden decay." The court's decision in this case is instructive for two reasons. First, it demonstrates that differing dictionary definitions do not automatically amount to an ambiguity. Second, it indicates that consistency in the context of terms which are used throughout various sections of a policy will lend support to an insurer's suggested interpretation of the policy language. |
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