Furrow et al v. Wright National Flood Insurance Company (f/k/a Fidelity National Indemnity Insurance Company ) et al

Filing 79

Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered. Plaintiffs' Motion for Summary Judgment (Docket No. 61 ) and Defendants' Motion for Summary Judgment (Docket No. 58 ) are DENIED. (Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
)
)
Plaintiffs,
)
)
v.
)
)
WRIGHT NATIONAL FLOOD INSURANCE
)
COMPANY and UNDERWRITERS AT
)
LLOYD’S LONDON,
)
)
Defendants.
)
___________________________________)
SAMUEL J. FURROW and ANN FURROW,

Civil Action
No. 14-10497-PBS

MEMORANDUM AND ORDER
November 17, 2016
Saris, C.J.
INTRODUCTION
Plaintiffs Samuel and Ann Furrow bring this suit seeking
excess flood insurance coverage for the loss of their vacation
home after a storm in March of 2013 in the Town of Nantucket,
Massachusetts. Plaintiffs allege the loss qualifies as a “flood”
under the “erosion” prong of their Standard Flood Insurance
Policy (“SFIP”). Defendant Underwriters at Lloyd’s London
(“Lloyd’s”), the excess insurer, asserts that the loss was not
covered because the cause of the loss was gradual erosion of a
sandy bluff overlooking the Atlantic Ocean, which was a
specifically excluded cause of loss under the policy.

1

Both parties moved for summary judgment. After hearing,
Plaintiffs’ Motion for Summary Judgment (Docket No. 61) and
Defendants’ Motion for Summary Judgment (Docket No. 58) are
DENIED.
FACTUAL BACKGROUND
The facts below are taken from the record, and are
undisputed except where stated.
I.

The Policy
Plaintiffs Samuel and Ann Furrow purchased their summer

home in Nantucket in July 2003. The home is located at 87 Baxter
Road atop a 75-foot bluff on the easternmost portion of the
island of Nantucket. When the home was purchased in 2003, the
home was over 50 feet away from the bluff.
Due to erosion rates at the bluff, Plaintiffs knew it might
become necessary to move their house away from the bluff at some
point in the future. By 2007, the bluff had moved to within 20
feet of the home, so Plaintiffs moved the house closer to the
road and away from the bluff. After the move, the home was about
60 feet away from the bluff.
Plaintiffs purchased insurance for their home. In addition
to standard home insurance, Plaintiffs also purchased primary
and excess flood insurance. For the policy period from February
12, 2013 to February 12, 2014, Plaintiffs had two flood

2

insurance policies – a primary policy issued by Wright National
Flood Insurance Company1 with limits of $250,000; and an excess
policy with additional limits of $1,450,000 sold by Lloyd’s. The
scope of the coverage under the excess flood policy is governed
by the SFIP, issued pursuant to the National Flood Insurance
Program Act (“NFIP”), 42 U.S.C. § 4001 et seq. The SFIP provides
for the following coverage: “We will pay you for direct physical
loss or damage by or from flood to your insured property.” The
SFIP defines “flood”:
A. . . . Flood, as used in this flood insurance policy,
means:
1. A general and temporary condition of partial or
complete inundation of two or more acres of normally
dry land area or of two or more properties (at least
one of which is your property) from:
a. Overflow of inland or tidal waters;
b. Unusual and rapid accumulation or runoff of surface
waters from any source;
c. Mudflow;
2. Collapse or subsidence of land along the shore of a
lake or similar body of water as a result of erosion
or undermining caused by waves or currents of water
exceeding anticipated cyclical levels that result in a
flood as defined in A.1.a. above.
Standard Flood Insurance Policy section II.A..

1

Wright was formerly known as Fidelity National Indemnity
Insurance Company.
3

Certain causes of damage are explicitly excluded from coverage:
B. We do not insure for loss to property caused directly by
earth movement even if the movement is caused by flood.
Some examples of earth movement that we do not cover are:
1.
2.
3.
4.
5.

6.

Earthquake;
Landslide;
Land subsidence;
Sinkholes;
Destabilization or movement of land that results
from accumulation of water in subsurface land
area; or
Gradual erosion.

We do, however, pay for losses from mudflow and land
subsidence as a result of erosion that are specifically
covered under our definition of flood (see II.A.1.c. and
II.A.2.).
Id. section V.C.
II.

The Storm

From March 6-9, 2013, a storm hit Nantucket with near gale
force winds, a storm surge, and high waves (“Storm”). As a
result of this Storm, a portion of the bluff upon which the
house sits collapsed into the ocean. Two days after the Storm
ended, the home was condemned by the Nantucket Building
Commissioner as unsafe for human use. In April 2013, the home
was demolished.
Within days of the Storm, Plaintiffs made a claim for the
loss to Wright and Lloyd’s. Plaintiffs reached a settlement with
Wright for the $250,000 policy limit. Lloyd’s determined that
the loss was not covered. Plaintiffs seek a declaration that the

4

excess policy is obligated to cover the full value of the
dwelling up to the policy limit.
DISCUSSION
I.

Summary Judgment Standard
Summary judgment is appropriate when there is “no genuine

dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). To succeed
on a motion for summary judgment, the moving party must
demonstrate that there is an “absence of evidence to support the
nonmoving party’s case.” Sands v. Ridefilm Corp., 212 F.3d 657,
661 (1st Cir. 2000) (citing Celotex Corp. v. Catrett, 477 U.S.
317, 325 (1986)). Once such a showing is made, “the burden
shifts to the nonmoving party, who must, with respect to each
issue on which [it] would bear the burden of proof at trial,”
come forward with facts that demonstrate a genuine issue. Borges
ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010)
(citing Celotex, 477 U.S. at 324). “Where, as here, there are
cross motions for summary judgment, we evaluate each motion
independently and determine ‘whether either of the parties
deserves judgment as a matter of law on facts that are not
disputed.’” Matusevich v. Middlesex Mut. Assur. Co., 782 F.3d
56, 59 (1st Cir. 2015) ((citing Barnes v. Fleet Nat’l Bank,
N.A., 370 F.3d 164, 170 (1st Cir. 2004) (quoting Wightman v.

5

Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir.
1996))).
II.

Law Governing Flood Insurance

In enacting the National Flood Insurance Act (“NFIA”),
Congress found, among other things, that “many factors have made
it uneconomic for the private insurance industry alone to make
flood insurance available to those in need of such protection on
reasonable terms and conditions.” 42 U.S.C. § 4001(b). “The NFIP
is a federally-subsidized program which provides flood insurance
at below actuarial rates.” Berger v. Pierce, 933 F.2d 393, 394395 (6th Cir. 1991). In 1973, Congress broadened the Act by
adding to the definition of “flood” as follows: “[T]he collapse
or subsidence of land along the shore of a lake or other body of
water as a result of erosion or undermining caused by waves or
currents of water exceeding anticipated cyclical levels . . . .”
42 U.S.C. § 4121(c); see also Berger, 933 F.2d at 399 (“The
concept of flood now includes a type of erosion: erosion caused
by high levels of water in a lake or other body of water . . . .
The touchstone for coverage is a finding of waves or currents of
water exceeding anticipated cyclical levels.”); 44 C.F.R. § 61,
App. A(1) (defining flood in the standard policy).
Federal common law governs the interpretation of the flood
insurance coverage under the NFIP. See Matusevich, 782 F.3d at
6

59. As a means to promote uniformity of decision in cases
involving the NFIP, “[t]he law is clear that, as contracts,
SFIPs issued under the National Flood Insurance Program (“NFIP”)
are governed by federal law applying standard insurance law
principles.” McHugh v. United Serv. Auto Ass’n, 164 F.3d 451,
454 (9th Cir. 1999). “However, in enacting the NFIP, Congress
did not intend to abrogate standard insurance law principles.”
Atlas Pallet, Inc. v. Gallagher, 725 F.2d 131, 135 (1st Cir.
1984) (citing Drewett v. Aetna Cas. & Sur. Co., 539 F.2d 496
(5th Cir. 1976)). Courts are free to apply the “‘traditional
common-law technique of decision’ by drawing upon standard
insurance principles.” Id. (citing West v. Harris, 573 F.2d 873,
881 (5th Cir. 1978)).
“Insurance policies are generally interpreted in the same
way as other contracts,” the dominant purpose of which is to
“give effect to the intentions of the parties.” Eagle-Picher
Indus., Inc. v. Liberty Mut. Ins. Co., 682 F.2d 12, 17 (1st Cir.
1982). “Where the relevant language is unambiguous and the
application of the policy to the relevant facts is clear, . . .
[the] intent [of the parties] must be ascertained by the plain
and ordinary meaning of the contract language.” Id. If, however,
the policy remains ambiguous, “the policy is generally construed
in favor of the insured in order to promote the policy’s
objective of providing coverage.” Id. Regarding insurance
7

contracts in particular, there is a “well-settled principle of
construction that insurance contracts are construed liberally in
the insured’s interest and strictly against the insurer.” Atlas,
725 F.2d at 136.
The insured bears the burden of proving the loss is within
the description of the risks covered. See Highlands Ins. Co. v.
Aerovox, Inc., 676 N.E.2d 801, 804 (Mass. 1997) (internal
quotation marks excluded). It is then the burden on the insurer
to prove that an exclusion applies. Id.; Murray v. Cont’l Ins.
Co., 48 N.E.2d 145, 147 (Mass. 1943). If the insured seeks to
rely on an exception to the exclusion, then the burden shifts
back to the insured to prove that some exception to the
exclusion applies. Highlands, 676 N.E.2d at 804-805.
I.

Gradual Erosion
Defendants contend Plaintiffs’ claim is not covered because

it resulted from ongoing, gradual erosion which is excluded
under the SFIP. To support their contention that the loss on
Plaintiffs’ house was caused by gradual erosion, Defendants
presented evidence that the coastal erosion on the sandy bluff
at 87 Baxter Road was frequent. The average rate of erosion in
the vicinity of Plaintiffs’ property from 1990 to 2005 ranged
from 2.0 to 12.7 feet per year, Docket No. 60 at 13, and during
the thirteen months from November 2012 to December 2013, the
8

land eroded approximately thirteen feet. Id., Ex. 4 at 48. Even
though Defendants admit the bluff at 87 Baxter Road eroded as a
result of the Storm, Defendants contend this erosion was common
for the area and typical of gradual beach erosion. Moreover,
they assert the precise amount of bluff erosion that occurred
during the Storm is “undetermined”. Docket No. 60 ¶ 16.
Plaintiffs assert that the SFIP provides coverage for
“erosion.” Section II.A.2. of the SFIP defines flood as a
“[c]ollapse or subsidence of land along the shore of a lake2 or
similar body of water as a result of erosion or undermining
caused by waves or currents of water exceeding anticipated
cyclical levels that result in a flood as defined in A.1.a.” In
addition, although the policy excludes “gradual erosion,” the
SFIP states: “We do, however, pay for losses from mudflow and
land subsidence as a result of erosion that are specifically
covered under our definition of flood (see II.A.1.c. and
II.A.2.).”
To meet their threshold burden of demonstrating that the
erosion that caused their loss was covered, Plaintiffs submit
that the bluff generally eroded 3-5 feet per year. Docket No. 64
¶ 4. At the beginning of 2013, Plaintiffs state the top of the
bluff was 20-30 feet away from their home and at the general

2

Defendants concede that an ocean qualified as a “similar body
of water.”
9

rate of erosion, it would have taken 2-3 years for the gradual
erosion to threaten their home. Plaintiffs contend that a factfinder could reasonably find that during the four days of the
Storm, 20-30 feet of the bluff precipitously collapsed into the
ocean. Even with Defendants’ evidence that the bluff was
gradually eroding at a rate of up to 13 feet a year, Plaintiffs’
evidence that the erosion was a result of the Storm was at least
20 feet is sufficient to create a disputed issue of fact as to
whether the exclusion applies. Accordingly, when all facts are
viewed in favor of Plaintiffs, a fact-finder could reasonably
find that the loss after the Storm was not due to “gradual
erosion.”
II.

Anticipated Cyclical Levels

The parties do not dispute that there was a “collapse or
subsidence of land,” but Defendants do dispute that the collapse
was caused by “waves or currents of water exceeding anticipated
cyclical levels.” Plaintiffs’ expert, Stephen Harned, a
meteorologist, defines “anticipated cyclical levels” using
statistical wave data collected by the National Oceanic and
Atmospheric Administration from 1982-2008 at Buoy #44008
(“Nantucket Buoy”) for the month of March when the event
occurred. This data shows the historical average level of waves
near the Nantucket Buoy (located 50 miles southeast of

10

Nantucket) during the month of March to be 11.2 feet or less.3
Docket No. 67, Ex. 14, Harned Report, at 9, 15-16, 25. Based on
this data, Plaintiffs contend the “anticipated cyclical levels”
of waves during March is 11.2 feet or less.
Harned then calculated the wave heights during the Storm to
determine if they exceeded “anticipated cyclical levels.” First,
Harned collected data from Buoy #44017 (“Montauk Point Buoy,”
southeast of Long Island, NY) to determine the wave heights at
the Montauk Point Buoy during the Storm. Harned used data from
the Montauk Point Buoy instead of the Nantucket Buoy because the
Nantucket Buoy became unmoored a few weeks before the Storm,
rendering the data unreliable. He then calculated the height of
the waves at the bluff using the data from the Montauk Point
Buoy. Because the calculated height of the waves at the bluff
during the Storm ranged between 12 and 29 feet, Harned concluded
that the level of the waves at the bluff during the Storm were
double – and almost triple - the historical level of waves at
the Nantucket Buoy in March, and thus, the waves during the
Storm exceeded “anticipated cyclical levels.”
Defendants attack Plaintiffs’ expert report in two ways.
First, they define “anticipated cyclical levels” “as waves or
currents at levels that could be expected, even if higher than

3

The average wave height is 2.2 meters with a standard deviation
of 1.2 meters.
11

average, in light of seasonal variations in sea and weather
conditions.” Docket No. 71 at 3. Defendants rely on a
comparative storm analysis performed by one of their experts,
Dr. Lloyd Schulman, a meteorologist, to define “anticipated
cyclical levels.” Analyzing data from January 2003 to January
2016, Schulman identified fourteen other storms of similar force
as the Storm, leading him to conclude that storms of this force
occur on average once per year. Specifically, Schulman found
that “[a]lthough each coastal storm is unique, the other 14
storms . . . were comparable in both wind speed and wave heights
with peak speeds near 20 m/s and maximum significant wave
heights in the open ocean near 6 meters.” Docket No. 60, Ex. 17,
Schulman Report, at 11. Thus, since the maximum wave heights
during the Storm were within the range of expected wave heights
during these yearly Nor’easters, the waves during the Storm were
anticipated and thereby did not exceed “anticipated cyclical
levels.”
Plaintiffs argue that Defendants’ definition of
“anticipated cyclical levels” is not supported by the plain
language of the policy because it would calculate only the
anticipated water levels during storms, rather than the longterm historical anticipated water levels in March. The primary
case Plaintiffs rely on is unpublished, but it is helpful
because it suggests that the proper methodology is looking at
12

long-term water level data. See Berger v. Pierce, No. 91-3982,
1992 WL 393595 (6th Cir. Dec. 22, 1992) (unpublished)
(concluding that long-term water level data, instead of “a
statistical snapshot” of a particular year should be used in
determining “anticipated cyclical levels”).4 Based on the plain
and ordinary meaning of the contract terms, the Court concludes
that the term “anticipated cyclical levels” is not limited to
anticipated cyclical storm levels alone. Neither the statute nor
the contract so limit the term “anticipated cyclical levels.”
Even if there were an ambiguity as to the meaning, ambiguous
policy terms are construed in favor of the insured. As such,
Defendants’ definition fails.
Plaintiffs don’t win yet though, because Defendants’ second
challenge is to Plaintiffs’ expert’s calculations of
“anticipated cyclical levels” and the height of the waves during
the Storm. Defendants’ experts question the methodology used to
convert the wave heights at the buoy to the wave heights at the
bluff. For example, the Defendants’ experts contend that Harned
made a number of assumptions in his calculations: that the “wind
direction is constant at 20 degrees along that entire fetch” and

4

 Defendants argue this decision is no longer persuasive because
it pre-dates the National Flood Insurance Reform Act of 1994,
Pub. L. No. 103-325, 108 Stat. 2160, 2255, which repealed
Congressional finding (g) addressing “erosion and undermining of
shorelines by waves or currents.” However, the statutory term
“anticipated cyclical levels” remains in the statute.

13

also that the velocity of the wind stayed constant over the
entire length the waves travelled from the buoy to the bluff.
Docket No. 67, Ex. 16, Sykora Dep., at 52-53. Additionally,
Defendants challenge Mr. Harned’s reliance on a buoy that was
600 miles away. Id. at 51. The methodological challenges were
not well briefed and are better addressed in the context of a
Daubert hearing.
III. Definition of Flood
Defendants argue that there is no evidence the Storm
resulted in a “flood” as defined in section II.A.1.a. of the
insurance policy as required by section II.A.2., and therefore
Plaintiffs’ loss is not covered.
Plaintiffs contend that the waves exceeding anticipated
cyclical levels resulted in inundation from tidal waters. To
meet the requirement that two or more acres of normally dry land
area were inundated by an overflow of tidal waters, Plaintiffs’
submit evidence that the beach and bluff up and down Siasconset
Beach, including 87 Baxter Road, were inundated. The Court has
an insufficient basis for concluding that the beach area is
“normally dry,” or that the inundation involves “two or more
acres,” or two or more properties, at least one of which is
Plaintiffs’. Moreover, the facts are unclear and disputed as to
where the property line is located on the bluff and beach.
14

Additionally, Plaintiffs point to several other spots on
the island that were flooded as a result of coastal flooding
during the Storm – Hulbert Avenue; Washington, Broad, Easton,
and Easy Streets; and Sheep Pond Road. Docket No. 67, Ex. 14,
Harned Report at 14-16, 20. Although the entire record is hard
to read, all of these streets appear to be on different sides of
the island from where the Furrows’ house was located.
Plaintiffs’ expert states that “surge and wave flooding covered
several streets and adjacent properties in the town of Nantucket
which exceeded 2 acres in size.” Docket No. 67, Ex. 14, Harned
Report at 4. Defendants state that these other properties are
not appurtenant to Plaintiffs’ property. The plain language of
the policy does not require that the properties be adjacent, but
it does require that the collapse of land on the bluff result
from erosion caused by the waves exceeding anticipated cyclical
levels and that these waves result in the inundation defined by
the policy (i.e., the two acres or the two properties). The
record contains insufficient evidence for the Court to conclude
that the flooding in other parts of the island was caused by
such waves.
In sum, each party is calling the other’s bluff because the
record is inadequate for this Court to determine whether there
is a “flood” as defined in the policy.

15

ORDER
Plaintiffs’ Motion for Summary Judgment (Docket No. 61) and
Defendants’ Motion for Summary Judgment (Docket No. 58) are
DENIED.
/s/ PATTI B. SARIS
Patti B. Saris
Chief United States District Judge

16