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Denial of Summary Judgment Motion on Undefined Policy Term did not Preclude Litigating the Term at Trial

July 10, 2017

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In <a href="http://www.pacourts.us/assets/opinions/Superior/out/j-a29023-16o%20-%2010308333617162842.pdf#search=%22windows%22"><em>Windows v. Erie Ins. Exch</em></a>., homeowners claimed coverage under their policy after raw sewage entered their home.  The insurance company denied coverage based on a water damage exclusion that stated there was no coverage for damage caused by “water or sewage which backs up through the sewers and drains”.  After the denial, the homeowners commenced the instant action.
Ultimately, the insurance company filed for summary judgment seeking a declaration of no coverage based on the exclusion.  The trial court denied the insurer’s motion on the basis that “backs up” was not defined.  The insurer then filed a motion in limine seeking a ruling that the law of the case did not apply, and it should not be precluded from presenting evidence of its coverage defenses, i.e. the water damage exclusion barred coverage under the policy.  The trial court also denied this motion stating the previous summary judgment order had already concluded that the water damage exclusion could not preclude coverage for the homeowners’ instant claim.  As such, the denial of summary judgment established the law of the case.
On appeal, the Superior Court reasoned that while the policy term “backs up” was ambiguous, and the trial court had correctly denied the insurer’s motion for summary judgment, the trial court had erred nonetheless by reading into the denial of summary judgment the legal conclusion that the insurer was precluded from further litigating the water damage exclusion.  As such, the case was remanded.
Accordingly, this case stands for the proposition that a denial of a summary judgment does not mean an insurer will be precluded from continuing to litigate its position that coverage does not apply, regardless of whether its reasons for disclaimer were included in a previously denied motion for summary judgment.
Thanks to Colleen Hayes for her contribution to this post.
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