Tred R. Eyerly | Insurance Law Hawaii
The Federal District Court, District of Hawaii, found the earth movement exclusion barred coverage for the contractor when a landslide damaged the property. North River Ins. Co. v. H.K. Constr. Corp., 2020 U.S. Dist. LEXIS 90110 (D. Haw. May 22, 2020).
Bruce and Yulin Bingle sued HK for damage caused to the Bingle property. HK was hired as the contractor for the construction of a new residence and improvements on their property in Kaneohe. HK excavated near the boundary of the neighbors’ and the Bingle’s property in order to cut the existing slope to build a retaining wall. Due to the excavation work, the slope on the Bingle property failed and soil eroded away. At the time, the Bingles were selling their property. Due to the landslide, the buyer decided not to buy the property.
The Department of Planning and Permitting issued a Notice of Violation for failure to obtain a grading permit. HK notified its carrier, North River. North River agreed to defend under a reservation of rights, but then filed suit against HK for a declaratory judgment.
The policy excluded coverage for property damage caused by “subsidence and earth movement.” Further, “such loss or damage is excluded regardless of any other cause or event, including any product, work or operation provided or performed by or on behalf of the insured, that contributes concurrently or in any sequence to the loss or damage.”
HK conceded that its work was the sole cause of the loss, but argued the exclusion only applied to earth movements caused entirely by natural phenomena, not those caused by human action. The court disagreed. The exclusion was unambiguous. It did not cover property damage resulting from movement, “settling, slipping, or falling away” of and caused by natural phenomena, HK’s operations, or any combination thereof.
Although there was no Hawaii law construing the earth movement exclusion, authority from other jurisdictions interpreting a similar or identical exclusion held that the provision unambiguously excluded earth movement-related damages caused by natural phenomena and the insured’s activities. Therefore, North River had no duty to defend.