Eloise Holdings, LLC v. Mt. Hawley Insurance Company

Background

Eloise Holdings, LLC owns a two-story commercial office building in Tampa, Florida. Mt. Hawley Insurance Company and Renaissance Re Syndicate 1458 Lloyd’s insured the building under a commercial property policy governed by New York law. A storm struck Tampa on March 15, 2022. Eloise Holdings submitted an insurance claim for property damage, including damage to the building’s interior and costs for temporary roof tarping.

Mt. Hawley’s investigation found that the roof was old and deteriorated and that water had entered the building over a long period. The roof consisted of a modified bitumen membrane installed over an original gravel roof. Evidence from contractors and experts indicated that installing the membrane over the gravel roof was improper and that applying a coating to repair leaks, instead of replacing the roof, was an inadequate repair. Mt. Hawley denied the claim.

The Motion and Eloise Holdings’s Nonresponse

After discovery, Mt. Hawley moved for partial summary judgment concerning the interior water damage and post-storm roof tarping. Eloise Holdings did not file an opposition. Because Eloise Holdings was represented by counsel and had been warned about the consequences of failing to respond to the motion and the opposing party’s statement of facts, the court treated Eloise Holdings as having abandoned any opposition to the motion. The court also deemed the assertions in Mt. Hawley’s statement of undisputed facts admitted, while still reviewing the supporting record and the legal basis for the motion.

Insurance-Policy Exclusion

The policy contained an anti-concurrent-causation provision. In substance, it excluded interior building damage caused or contributed to, directly or indirectly, by listed causes—including deterioration and faulty, inadequate, or defective workmanship, repairs, construction, materials, or maintenance—regardless of whether another cause also contributed to the loss.

The court held that the provision was unambiguous. Under New York law, the insurer had to show that the exclusion clearly applied, after which the insured would bear the burden of showing that an exception applied. The court concluded that the undisputed evidence established that the roof’s faulty installation and inadequate repairs contributed to or worsened the interior water damage. The court found this conclusion supported by both Mt. Hawley’s expert and Eloise Holdings’s expert, who agreed that placing a covering over the compromised gravel roof made it more susceptible to storm damage.

The court stated that any dispute over whether wind also contributed to the damage was immaterial because the policy excluded the loss when faulty workmanship was also a contributing factor. It therefore ruled that the anti-concurrent-causation exclusion barred coverage for the claimed interior water damage.

Roof-Tarping Costs

The policy also excluded losses that were a consequence of excluded damage. The court found that Eloise Holdings incurred the post-storm tarping costs to prevent further interior damage. Because those costs resulted from the excluded interior water damage, the court held that the policy also excluded the tarping costs.

Disposition

Judge Gregory H. Woods granted Mt. Hawley’s motion for partial summary judgment with respect to the claimed interior water damage and the post-storm tarping of the roof. The opinion does not state that the order resolved every issue or claim in the case.