Geiman v. Northern Kentucky Water District et al

Filing 20

MEMORANDUM OPINION & ORDER: 1) Pltf's Motion for summary judgment is DENIED and Deft's motion for summary judgement is GRANTED. A separate judgment shall enter concurrently herewith. Signed by Judge William O. Bertelsman on 3/3/2014.(ECO)cc: COR

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION AT COVINGTON

CIVIL ACTION NO. 2:13-cv-177(WOB-CJS)
RICHARD GEIMAN
VS.

PLAINTIFF
MEMORANDUM OPINION & ORDER

NORTHERN KENTUCKY WATER
DISTRICT, ET AL.

DEFENDANTS

This is an insurance coverage dispute that was removed from
state court pursuant to this Court’s diversity jurisdiction.
The full procedural history of the case can be found in an
earlier Memorandum Opinion and Order of the Court.

See Doc. 18.

The case arose out of damages to plaintiff’s home, yard,
and personal property resulting from a leaking water district
supply line.

Although several defendants were named in

plaintiff’s complaints, the sole remaining defendant is ACA
Insurance Company d/b/a AAA Fire & Casualty Insurance Company
(“AAA”), plaintiff’s homeowner’s insurance carrier.
This matter is now before the Court on cross motions for
summary judgment by plaintiff and AAA regarding coverage under
the policy in question for the damages to plaintiff’s home and
property.

(Docs. 5-3, 5-4, 5-5).1

The Court previously heard

oral argument from the parties in conjunction with another

1

 These motions were filed in state court prior to removal.

motion, see Doc. 18, and it concludes that further oral argument
is unnecessary.
The Court therefore issues the following Memorandum Opinion
and Order.
Factual Background
The material facts herein are not in dispute and may be
briefly summarized.
Plaintiff Richard Geiman (“Geiman”) owns a home in
Alexandria, Kentucky.

In 2008, Geiman noticed that water had

begun to pool in the yard to the side of his house.

When the

yard remained saturated even during dry spells, Geiman suspected
a leaking water line and called the Northern Kentucky Water
District (“NKWD”).

NKWD personnel inspected the area but

reported that they found no leak.
Despite efforts by Geiman to reduce the water accumulation
in his yard, the problem grew worse.

In 2010, a second pool of

water appeared to the side of the house, and sinkholes developed
in the front yard.
In August, 2011, water began to flow into Geiman’s
basement, draining into a floor drain and causing mold to grow.
In March 2012, Geiman filed an insurance claim with AAA.

2

(Doc. 5-3 at 52)2 (Property Loss Notice).

Following an

investigation, including a property inspection, AAA denied the
claim by letter dated April 24, 2012.

(Doc. 5-5 at 69-81).

After Geiman again contacted NKWD, a second inspection
revealed a small hole in Geiman’s water meter.

When the hole

was repaired, the water leakage ceased.
Geiman filed suit in October 2012 in Campbell Circuit
Court, after which the case was removed to this Court.
Analysis
“In general, the proper interpretation of insurance
contracts is a matter of law to be decided by a court.”

Pryor

v. Colony Ins., 414 S.W.3d 424, 427 (Ky. Ct. App. 2013)
(citation omitted).
“To ascertain the construction of an insurance contract,
one begins with the text of the policy itself.

So that, ‘the

words employed in insurance policies, if clear and unambiguous,
should be given their plain and ordinary meaning.’”
(citation omitted).

Id. at 430

If no ambiguity exists, “a reasonable

interpretation of an insurance contract is to be consistent with
the plain meaning of the language in the contract.”

Id.

2

Page references are to the document as it appears on the
Court’s electronic docket.
3

In denying coverage under the policy in question, AAA
relied on the following exclusion, which is incorporated into
the policy by way of endorsement:
2.

We do not insure, however, for loss:
c.
(5)

Caused by: . . .
Constant or repeated seepage or leakage of water
. . . over a period of weeks, months or years
unless such seepage or leakage of water . . . is
unknown to all “insureds” and is hidden within
the walls or ceilings or beneath the floors or
above the ceilings of a structure.

(Doc. 5-4 at 73; Doc. 5-5 at 15) (Policy and Endorsement); (Doc.
5-5 at 70, 73) (Coverage Denial Letter).
The Court concludes that no ambiguity exists in this
exclusion, and that it applies to the facts underlying Geiman’s
property loss.

It is undisputed that water had been seeping

into Geiman’s yard since at least 2008; that it did so for a
period of several years, worsening in 2010 and actually entering
his basement in 2011; and that Geiman, while unsure of the
cause, was aware of this seepage such that it was not “unknown”
or “hidden” to him.
Geiman argues in a conclusory fashion that this exclusion
is ambiguous based on common meanings of the terms “seepage” and
“leakage.”

The Court finds this argument to be unpersuasive

given the undisputed facts just discussed.

4

Where the language of an exclusion is clear, “a nonexistent
ambiguity should not be used to resolve a policy against a
company nor should courts rewrite an insurance contract to
enlarge the risk to the insurer.”

Pryor, 414 S.W.3d at 430-31

(citation omitted).
Because this exclusion is dispositive, the Court need not
discuss the other exclusions on which AAA relies.
However, the Court notes that, in addition to the above
exclusion, the policy in question places on the homeowner a duty
to give “prompt notice” to the insurer of a loss to covered
property, and that a failure of prompt notice which is
prejudicial to the insurer will bar coverage.

See Doc. 5-4 at

83.
This provision further precludes Geiman’s claims because it
is undisputed that he waited seven months -- from August 2011
until March 2012 –- to contact AAA after he first observed water
entering his basement, and his own testimony establishes that
the damage to his home and other property increased
substantially during that time.
For these reasons, the Court concludes that AAA is entitled
to summary judgment on Geiman’s claims against it.3

3

The Court thus respectfully disagrees with the Order denying
summary judgment entered by the Campbell Circuit Court prior to
removal. See Doc. 5-1 at 94-97. First, a different and more
5

Therefore, having reviewed this matter, and the Court being
otherwise sufficiently advised,
IT IS ORDERED that plaintiff’s motion for summary judgment
be, and is hereby, DENIED, and defendant’s motion for summary
judgment be, and is hereby, GRANTED.

A separate judgment shall

enter concurrently herewith.
This 3rd day of March, 2014.

lenient standard for summary judgment applies under Kentucky
law. See Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807
S.W.2d 476 (Ky. 1991). Second, this Court disagrees that the
issue is whether there is a genuine issue of material fact “as
to whether any of the damage to Plaintiff’s property caused by
water could have been avoided.” Doc. 5-1 at 97. The issue,
rather, is whether the undisputed facts trigger the exclusion
discussed above. The state court recognized that Geiman was
aware for some months of the water seeping into his basement.
Id. This Court thus concludes that the exclusion applies as a
matter of law.
6