Petition — West v. Harris

in the

Supreme Court of the Anite States

DEC 90 1978

MICHAEL RODAK, JR., CLERK

OCTOBER TERM, 1978

NO.

“3=1001

CARL D. WEST, Petitioner

Versus

PATRICIA ROBERTS HARRIS, SECRETARY OF

THE UNITED STATES DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT,

Respondent.

and

ANDREW J. DAIGLE, Petitioner

Versus

PATRICIA ROBERTS HARRIS, SECRETARY OF

THE UNITED STATES DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

FIFTH CIRCUIT

LEOPOLD B. BABIN

WIMBISH & BABIN

240 Barrow Street

P.O. Box 406

Houma, Louisiana 70361

(504) 868-1073

Attorney for Petitioners

SRS aaa a NT LE ID BEI EDIE LI PL SLED,

A B Letter Service, Inc., 327 Chertres St., New Orleans, La. (504) 581-5555

TABLE OF CONTENTS

PAGE

List of Authorities ..... balea naan «an ie i-vii

Citations to Opinion Below............... 2

PROGR cee dab ses nee theaen ens 2

RE -. . . . Sn caueseenosieec 2-3

Constitutional, Statutory and Regulatory

PE nw knes bneabeat ess 3

spemenmnenst GF Che Comes... 5. ee ccc 3

i CS okcmechnwtdwcebsewe 3-6

Sm 2 RS eee rey 6-9

Reasons for Granting the Writ............. 9

A. Issue: Seventh Amendment Violation. . 9-16

B. Issue: Flood Policy Interpretation .... 16-23

CE isn asd cade cake nh nea bees 23

Pere rr er 24

SE ca cea CEA RR hee eae eh aes A-1-26

fod fete geek CLR cea A-27-32b

%

°

Se RE Ne he

ii

TABLE OF CONTENTS (Continued)

lO S es a Sutnieen cds kee en

MICS VO aoa cup Weta ts cea eaes

PAGE

A-33-35

A-36-68

A-69-105

A-106-119

A-120-135

A-136-140

A-141-143

LIST OF AUTHORITIES

TABLE OF CASES

PAGE

Aetna Insurance Company vs. Boon,

95 U.S. 117 24 L Ed 395 (1877) ....... 21

Anderson vs. Indiana Lumbermens Mutual Ins.

Co., 127 So2d 304 (La. App., 1961)...... 17

Ashenbrenner vs. L. S. Fidelity & Guaranty

Co., 292 U.S. 80, 54S. Ct. 590,

FB Ui Te BAR CIPO ch 8 ei ee dee news 22

Boeing Company vs. Shipman,

411 F 2d 365 (Sth Cir., 1969)........... 13, 15

Calcasieu Marine Nat. Bank vs. Am.

Emp. Ins., 533 F 2d 290 (Sth Cir.,

POY -Suareo ek cTacebne ae sees hous oe 22

Cincotta vs. National Flood Insurers

Assoc., (No. 75-C-1833, D.C., NY,

FOREE S43 Ric ened uae hhgnee sane 21, A-136-40

Cities Service Oil Company vs. Launey,

403 F 2d 537 (Sth Cir., 1966). .......... 16

Continental Ore Co. vs. Union Carbide

and Carbon Corp., 370 U. S. 691, 82

S. Ct. 1404, 8 L Ed 2d 777 (1962)....... 13

iv

LIST OF AUTHORITIES (Continued)

Drewett vs. Aetna Casualty & Surety Co.,

539 F 2d 496 (Sth Cir., 1976)...........

Dubugue Fire and Marine Insurance

Company vs. Caylor, 249 F 2d 162

eo De et eee eee

Feeney and Meyers vs. Empire State Ins.

Co., 228 F 2d 770 (10th Cir., 1955)......

Garcia vs. Murphy Pac. Marine Salvaging

Co., 476 F 2d 303 (Sth Cir., 1973).......

Gullett vs. St. Paul Fire & Marine Ins.

Co., 446 F 2d 1100 (7th Cir., 1971)......

Gunning vs. Cooley, 281 U.S. 90,50

S. Ct. 231, 24 L Ed 720 (1930)..........

Hartford Steam Boil Inst. I. Co. vs.

Schwartzman Pack. Co., 423 F 2d

ee Re Peer eres

Jackson vs. National Flood Insurers

Assoc., 398 F. Supp. 1383 (S.D. Tex.,

BOE S ccnnanesaéenieneeseeeeeeue

Lanasa Fruit Steamship & Importing

Co. vs. Universal Ins. Co., 302 U.S.

556, 58 S.Ct. 371, 82 L Ed 422 (1938)....

PAGE

21

21

22

13

17

13

22

21

21

Vv

LIST OF AUTHORITIES (Continued)

Lavender vs. Kurn, 327 U.S. 645, 66 S. Ct.

740, 90 L Ed 916 (1946) ..............

Looney vs. Great American Ins. Co.,

FEE es BEE CETTE 6 cts ev acresvccecs

Mason vs. National Flood Insurance Assoc.,

Norwich Union Fire Ins. Soc. vs. Board

of Commissioners, 141 F 2d 600 (Sth

Phoenix Ins. Co. vs. Slaughter, 12 Wall

404, 20 L Ed 444 (1871) ..............

Souza vs. Corvick, 941 F 2d 1013

OE Cha pba hava bss 00 6s

Summers vs. Harris, 573 F 2d 869

ee

Tennant vs. Peoria & P.U. Ry. Co.,

321 U.S. 29, 64S. Ct. 409, 88 L Ed

aia a n'y 0nd 0 ae ad's 9's, 0 84's

West vs. Harris, 573 F 2d 873, 876;

SL rrr ere re ee re

PAGE

13

23

22

21

22

22

21-2

13

2-6, 8-12, 14,

16, 21, A-1-26

vi

LIST OF AUTHORITIES (Continued)

PAGE

Wilkerson vs. McCarthy, 336 U.S. 53, 69

S. Ct. 413, 93 L Ed 397 (1949).......... 13

STATUTES

U. S. Constitution, Amendment Seven

(U.S.C.A., Const. Amend. 7)............ 3,10

a0 UBL: Geotion 1254 (1)... 1. es ccveeves 2

42 U.S.C.A. Section 4001 (f)............. 3,19

A-27-30

42 U.S.C.A. Section 4012 (a) ............. 3, 18, A-31-2

42 U.S.C.A. Section 4012a..........ee00. 18, A-32-32b

REGULATIONS

24 Code of Federal Regulations, .

ASIN Sak hie eewhe cees seek ea 3, 17, 18, A-33

24 Code of Federal Regulations,

Section 1911.4....... Cue ee ae ees 3,17, 18,

A-33-5

TEXTS, DICTIONARY & LEGISLATIVE HISTORY

5 Appleman, Insurance Law & Practice,

ee) 21

vii

TEXT, DICTIONARY & LEGISLATIVE HISTORY

Continued

PAGE

12 Appleman, Insurance Law & Practice,

Boctiods 7 Fee (hel Oe iss ieee ckavarss 23

Black's Law Dictionary (4th Ed. 1968,

Os GH s <taaeek-ceow sce ane eeeeaan 17

Restatement of Contracts, Section 236

CROC 6 oi 4h 4p eRe aes 23

1968 U. S. Code Congressional &

Administrative News, pp. 2966-7,

SN eek ea bs bak bea bea cadens 18, A-141-3

1973 U. S. Code Congressional &

Administrative News, pp. 3228-9 ........ 18-20

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1978

No.

CARL D. WEST, Petitioner

Versus

PATRICIA ROBERTS HARRIS, SECRETARY OF THE

UNITED STATES DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT,

Respondent.

and

ANDREW J. DAIGLE, Petitioner

Versus

PATRICIA ROBERTS HARRIS, SECRETARY OF THE

UNITED STATES DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

FIFTH CIRCUIT

Petitioners, Carl D. West and Andrew J. Daigle, pray that a

writ of certiorari issue to review the judgment of the United

States Court of Appeals for the Fifth Circuit entered in the

above entitled case on May 26, 1978, and the rehearing

denial entered on July 28, 1978.

2

CITATIONS TO OPINIONS BELOW

The opinion of the Circuit Court of Appeals for the Fifth

Circuit, printed in Appendix 4, (pp. A-1 - 26) herein, is re-

ported as West vs. Harris at 573 F 2d 873. There was no re-

ported opinion of the district court below. The jury verdicts,

pertinent rulings and opinions of the United States District

Court for the Western District of Louisiana, and notices of

appeal are reproduced in Appendix D,(pp.A-55-8, 64-8), Ap-

pendix E, (pp.A-100-1, 103-5) and Appendix G, (pp. A-120

-132), herein from the Appendix prepared by the trial court

for the United States Court of Appeals for the Fifth Circuit.

JURISDICTION

The judgment of the United States Court of Appeals for

the Fifth Circuit was entered on May 26, 1978. (West, supra,

p. 873, Appendix A, p. A-1) A petition for rehearing was de-

nied on July 28, 1978. (Appendix G, pp.A-133-4) Petition-

ers West & Daigle, filed an application for extension of time

in which to file for a Writ of Certiorari in the Supreme Court

of the United States. Mr. Justice Powell, on October 11,

1978, signed the order extending the time for filing the

petition for writ of certiorari to, and including, December 20,

1978. (Appendix G, p. A- 135). The jurisdiction of this

Court is invoked under 28 U.S.C. Section 1254(1).

QUESTIONS PRESENTED

(1) Whether the United States Court of Appeals for the

Fifth Circuit has usurped the function of the jury as finders

of fact in these cases?

(2) Whether the United States Court of Appeals for the

3

Fifth Circuit decision in these cases is totally contrary to the

congressional intent and national purpose of the National

Flood Insurance Act, as well as contrary to the personal in-

tent and purpose of the contracting policy holders?

CONSTITUTIONAL, STATUTORY AND REGULATORY

PROVISIONS INVOLVED

The constitutional provision involved in these consolidated

cases is the Seventh Amendment to the United States Consti-

tution. (p. 10) The statutory provisions involved are Sections

1302 and 1305 of the National Flood Insurance Act of 1968,

(42 U.S.C.A. § § 4001(f), 4012(a), Appendix B, pp. A-27-32)

and the applicable Federal Regulations are 24 CFR §1909.1,

(“Flood or Flooding’’ and ‘‘Mudslide’’) and 24 CFR§ 1911.4,

(Appendix C, pp. A-33-5)

STATEMENT OF THE CASES

A. The Daigle Case

In 1966, the Daigles purchased a new home in Morgan

City, which is located in south central Louisiana near the At-

chafalaya river./Appendix D,.pp. A-36, 44-5), Subsequently,

they purchased a National Flood Insurance policy on their

home with policy limits of $17,500 and a policy term of

March 31, 1973, to March 31, 1974. (West, supra, p. 876;

Appendix A, p. A-8; Appendix D, p.A- 39, Appendix F,

p. A116). On April 17 and 18, 1973, a 12 to 14 inch rain fell

in the Morgan City area creating flooding conditions in the

entire area and on the Daigles’ property. (Appendix D, pp.

A- 36-50) Structural cracking of their home was first heard

on April 18, 1973, and the observable cracks continued to

4

worsen with time. (Appendix D, pp. A-40,51) Because of the

emergency flooding situation, the municipal authorities

pumped out the drainage canals in and around the Morgan

City area. After the deluge a dry period followed through

August, 1973. (West, supra, p. 877; Appendix A, p. A-9; Ap-

pendix D, pp. A-45, 48). The Daigles had never heard or ob-

served any cracking or other structural damage to their home

for the seven years prior to the flood. (Appendix D, pp. A-

36-7, 40, 52-3). Dr. Capozzoli, defendant's soil expert, opin-

ed that the flood had little, if no effect, on the resulting

structural damage. He also concluded that the pumping out

of the drainage canals or the subsequent dry period was not

the cause of the damage. He contended that the nature of the

soil support caused uneven settlement under the home’s con-

crete slab over the years which ultimately resulted in the

cracking damage. (Appendix D, pp. A-57-62). However, he

did admit that if no cracks were found prior to the flood and

cracks appeared after the flood, he would agree that the

flood was the cause of the structural damage. (Appendix D,

p. A-63). Mr. Shumaker, a construction contractor who in-

spected the house in July, 1973, and who ultimately repair-

ed the Daigles’ home, confirmed that the cracking of the

masonry and brick had occurred only a few months earlier.

(Appendix D, p. A-51). Mr. Guillory, an architectural en-

gineer, observed that the Daigles’ home was of typical con-

struction for the soil conditions in the Morgan City area and

the slab used was sufficient to support those light, brick ve-

neer type homes. Because there was no appreciable settle-

ment of the Daigles’ home as evidenced by lack of cracking,

he concluded that the flood directly caused the structural

damage. (Appendix D, pp. A-51-5).

The jury concluded that the structural damage to the

5

Daigles’ home was a “direct loss by flood” and awarded

$12,084.56 in damages. (The award was later reduced by the

policy deductible of $200.00) ( Appendix D, pp. A- 67-8).

‘“Flood’’ was defined in the policy as a ‘‘general or temporary

condition of partial or complete inundation of normally

dry land areas from (1) the overflow of inland or tidal waters,

(2) the unusual and rapid accumulation or runoff of surface

waters from any source, or (3) mudslides which are caused or

precipitated by accumulation of water on or under the

ground.” (West, supra p. 876, Appendix A, p. A-7); Appen-

dix F, p. A108). The trial judge denied defendant’s motion

for a directed verdict at the close of plaintiff’s evidence

(Appendix D, pp. A- 55-8) and after all evidence was pre-

sented. (Appendix D, pp. A-64-7) Included as grounds for

defendant's motions were that the evidence failed to show a

direct loss by flood and the evidence established certain ex-

cluded perils under the policy, namely:

“Perils Excluded - This Company shall not be li-

able for loss: (a) by . . . (3) water, moisture, or

mudslide damage of any kind resulting primarily

from conditions, causes or occurrences which are

solely related to the described premises or are

within the control of the insured (including but

not limited to design, structural or mechanical de-

fects, failures, stoppages or breakages of water or

sewer lines, drains, pumps, fixtures or equipment,

seepage or backup of water, or hydrostatic press-

ure) or any condition which causes flooding which

is substantially confined to the described premises

or properties immediately adjacent thereto;

6

(d) by fire, windstorm, explosion, erosion, earth-

quake, landslide or any other earth movement ex-

cept such mudslides as are covered under the peril

of flood, or by theft;’”’

(West, supra, p. 876, Appendix A, p. A-7-8, Ap-

pendix F, p. A- 108).

After the verdict, the defendant again urged the afore-

mentioned grounds in motions for judgment notwithstanding

the verdict and for a new trial. Defendant’s motions were

denied. (Appendix G, pp. A- 120-31). On appeal, the United

States Court of Appeals for the Fifth Circuit reversed the

judgment in favor of the Daigles and directed a verdict for

the defendant by concluding that while there was sufficient

evidence for the jury to find there was a direct loss by flood,

the facts showed the immediate cause of the Daigles’ loss was

an earth movement which was not a mudslide. The Court

said the policy did not cover earth movement in the form of

soil settlement regardless of the role the flood played in caus-

ing that earth movement. (West, supra, pp. 876-78, Appen-

dix A, pp. 8-12).

B. The West Case

The Wests purchased a four year old home located on an

incline in the Bayou Vista subdivision near Morgan City in

1969 on a VA approved loan.( Appendix E, pp. A-70, 78-80)

They purchased flood insurance in the amount of $17,500

with a policy term of April 16, 1973, to April 16, 1974.

(West, supra, p. 876, Appendix A, p. A- 8 ; Appendix F, p.

7

A- 117). At the time the Wests acquired their home they

carefully inspected the home and found no structural defects,

and they had not seen any evidence of cracking or structural

darnage for the four years prior to the 1973 flood, despite

numerous wet and dry periods, minor flooding, and even a

hurricane. (Appendix E, pp. A 72-5, 79-87).

The deluge of April 17 and 18, 1973, flooded the entire

area including the area around the Wests’ house. The water

was waist deep in the street in front of the Wests’ house and

entered the Wests’ house to a depth of one to two inches and

remained standing there for a period of over 18 hours. (Ap-

pendix E, pp. A 69-71, 73, 77). Water damage to the floor

tiles, walls, baseboards, and insulation and outside air con-

ditioning unit was seen immediately. Structural damage was

observable within two or three weeks after the flood, when a

sliding glass door would not open, bricks began to separate

from baseboards, a ridge appeared under the floor tiles and

later an open crack developed where the ridge had been.

(Appendix E, pp. A 73-7, 80-1).

Mr. Patterson, a Morgan City construction contractor,

found the slab had cracked in several places and he opined

the only feasible method of repair was to demolish the struc-

ture and rebuild a similar house. (Appendix E, pp. A-88-9).

He testified that the house was adequately constructed for

that area and met the standards for FHA and VA approval.

(Appendix E, pp. A-90-1,94) He said he would rebuild the

house the same way as it had been built before (Appendix E,

p. A- 91), however he did state he might use a slightly larger

slab because if the slab failed again because of flood he might

be involved in the law suit. (Appendix E, pp. 98-9). Mr.

Patterson clearly said the sudden structural damage was due

8

to area flooding. (Appendix E, p. A-90).

Dr. Capozzoli again testified that the flood had a negli-

gible effect on the house, and that the structural damage was

in progress at the time of flood and was due to the soil con-

ditions and improper construction of the house. (Appendix

E.p. A- 101), He stated that the flood waters could have

accelerated the settling of the soil under the house, but he

could offer no explanation as why sudden cracking would

occur immediately after the flood except to conclude that

there was cracking in progress at the time of flood and the

cracking was not observed by the Wests or others. (Appendix

E, pp.. A-102-3).

After hearing all the evidence the jury awarded the Wests

the policy maximum of $17,500 for ‘‘direct loss by flood’’

(See Appendix E, pp. A 1045). Defendant's motions for a

directed verdict, at the completion of plaintiff's evidence,

(Appendix E, ep. A-100-1), and after all the evidence, were

denied (Appendix E, pp. A- 103-4), Also, defendant's

motions for judgment notwithstanding the verdict and for a

new trial were based on the same grounds as in the Daigles’

case. These motions were similarly denied by the trial

judge. (Appendix G, pp. A- 120-31).

On appeal, the United States Court of Appeals for the

Fifth Circuit reversed the jury award and remanded the case

for trial on the amount of damages (less the $200 policy

deductible) caused by flood waters which entered the house.

As in the Daigle Case, the Court concluded that the structural

damage to the Wests’ home was caused by earth movement

other than mudslide. (West, supra, p. 878-79, Appendix A,

pp. A- 12-15). Since the defendant insurer in the West Case

9

had some liability, the Court then decided the issues raised

on cross-appeal, namely the applicability of Louisiana’s statu-

tory law on attorney’s fees and the appropriateness of pre-

judgment interest. Attorney’s fees and penalties allowed

under Louisiana law were found inapplicable; prejudgment

interest was allowed. (West, supra, pp. 878-84, Appendix A,

pp. A- 15-26). Petitioners’, West & Daigle, do not seek re-

view of the Court’s findings on those cross-appeal issues.

REASONS FOR GRANTING THE WRIT

It is respectfully submitted that the United States Court of

Appeals for the Fifth Circuit has violated the tenets of the

Seventh Amendment to the United States Constitution by

precluding the fact finding function of the jury in the West &

Daigle cases. The Court of Appeals decision conflicts with

rulings of the Supreme Court of the United States and other

Circuit Courts of Appeals decisions.

Further, the Court of Appeals for the Fifth Circuit’s nar-

row interpretation of the earth movement flood policy exclu-

sion is unworkable, unconscionable and is directly contrary

to the intent of the contracting policyholders, and to intent

of the Congress which implemented a National Flood Insur-

ance Program to protect American homeowners from the

perils of flood.

Finally, that Court’s interpretation of an insurance policy

conflicts with decisions announced by the Supreme Court of

the United States and other Circuit Courts of Appeals rulings.

A. Issue: Seventh Amendment Violation

The Court of Appeals for the Fifth Circuit is not free to

10

reexamine the jury’s findings of fact in these cases; to do so

violates the Seventh Amendment to the United States Consti-

tution as stated:

‘In Suits at common law where the value in con-

troversy shall exceed twenty doilars, the right of

trial by jury shall be preserved, and no fact tried

by a jury shall be otherwise reexamined in any

Court of the United States, than according to the

rules of the common law.” (U.S.C.A., Const.

Amend. 7)

In the Daigle case, the Court of Appeals for the Fifth Cir-

cuit agreed that the evidence presented supported the jury’s

verdict that the flood caused the structural damage, but that

Court presumes that the evidence showed how the flood

caused the damage:

“This testimony was sufficient to support the

jury’s finding that the crack damage was a direct

loss by flood. However, the plaintiff’s proof also

established how the flood caused this damage, and

that proof brings into effect the policy’s earth

movement exclusion,” (West, supra, p. 876, Ap-

pendix A, p. A- 9),

The Court of Appeals for the Fifth Circuit came to a con-

clusion which is contrary to the factual evidence presented

and the inferences to be drawn therefrom. The Court said:

‘. , .The house sank because the earth below it

shifted and settled as a result of the loss of mois-

ture in the soil. Regardless of whether this settle-

ment had been in progress over a long period of

11

time or whether it occurred immediately after the

flood and draining of the canals, it was still the re-

sult of earth movement. . . The policy does not

cover loss caused by earth movement in the form

of soil settlement. It unambiguously provides the

only earth movement covered is a mudslide caused

or precipitated by accumulation of water on or

under the ground. There is no evidence of a mud-

slide in this record, nor is there evidence that the

general surface of the ground area was unlevel

...” (West, supra, p. 877, Appendix A, p. A-11).

Mrs. Daigle testified the rain stopped on the morning of

April 18, 1973, (Appendix D, p. A-47 ) and she heard crackl-

ing sounds and noticed cracks almost immediately after the

rain throughout the day of April 18th, (Appendix D, p.

A- 40 ) before the water had receded in the late afternoon of

the 18th. (Appendix D, pp. A 48). The canals had been

previously pumped out several times after heavy rains with

no damage (Appendix D, pp. A-48-9) and defendant’s expert,

Dr. Capozzoli, testified that the pumping out of the canals

would have no effect on the house (Appendix D, pp. A-61-2).

It was reasonable for the jury to conclude that loss of mois-

ture in the soil was not the initial cause of the damage, but

that the heaving and cracking of the house was initially

caused by the pressure and force of the flood waters acting

on the foundation.

Mr. Guillory, an architectural engineer, who testified on

behalf of the Daigles, concluded that the flood waters which

floated the house aggravated the heaving and settling of the

home. (Appendix D, pp. A545). Because no appreciable

settlement of the house had occurred for seven years pre-

12

viously, as evidenced by the lack of cracking, he concluded

that the flood certainly had a direct effect on the structural

damage to the house. (Appendix D, pp. A-52-4). Dr. Capo-

zzoli was of the opinion that the house had appreciably

settled before the flood and that cracking had occurred but

was unnoticed. (Appendix D, pp. A-57, 59-62) He stated the

flood had little effect on the resulting damage. However, he

did observe that if there were no cracks before the flood and

cracks after the flood, the flood was the cause. (Appendix

D, pp. A-61-3)

The Court of Appeals for the Fifth Circuit did not believe,

as the jury did, that the flood waters not only proximately

caused the shifting of the earth below the house which re-

sulted in structural damage, but also that the force and press-

ure of the flood waters caused the house to heave and crack

initially. Once the loss was in progress, the receding flood

waters and loss of moisture through evaporation and pump-

ing would cause the structural damage to become more ap-

parent.

Finally, as noted above, the Court of Appeals for the

Fifth Circuit precludes the jury from finding that a mudslide

had occurred. The Court’s finding that there was ‘‘no evi-

dence of a mudslide . . . nor is there evidence that the gener-

al surface of the ground area was unlevel...” (West, supra, p.

877, Appendix A. p. A- 11 ) is totally erroneous. Dr. Capo-

zzoli testified that a canal was located eight feet below the

Daigles’ house, (Appendix D, p. A-57), and Mrs. Daigle clear-

ly testified her house was located at the top of an incline a-

bove the street (Appendix D, p. A-46);and that mud and de-

bris were washed into the street in front of her house and her

next door neighbor’s house on the day after the flood. (Ap-

13 e

pendix D, pp. A. 49-50).

The Court of Appeals was bound to view the evidence in a

light most favorable to the Daigles when they decided that a

directed verdict or a judgment notwithstanding the verdict

should have been granted as a matter of law. It is obvious

that the Fifth Circuit did not give the Daigles the benefit of

all inferences which the evidence suppcrted, even though

contrary inferences might be reasonably drawn. The jury

weighs the credibility of witness and determines proximate

cause. Gunning vs. Cooley, 281 U.S. 90,50 S. Ct. 231, 24L

Ed 720 (1930); Tennant vs. Peoria & P. U. Ry. Co., 321 U.S.

29, 64 S. Ct. 409, 88 L Ed 520 (1944); Lavender vs. Kurn,

327 U.S. 645, 66 S. Ct. 740, 90 L Ed 916 (1946); Wilkerson

vs. McCarthy, 336 U.S. 53, 69 S. Ct. 413, 93 L Ed 397

(1949); Continental Ore Co. vs. Union Carbide and Carbon

Corp., 370 U. S, 691, 82 S. Ct. 1404, 8 L Ed 2d 777 (1962);

Boeing Company vs. Shipman, 411 F 2d 365 (5th Cir.,

1969); Garcia vs. Murphy Pac. Marine Salvaging Co., 476 F

2d 303 (5th Cir., 1973).

Plaintiffs’ witness were clear that the Daigles’ home did

not crack independently of the flood waters. The jury could

have rejected all or part of the expert opinions offered and

could have concluded that because the Daigles’ home had

weathered many storms and wet and dry periods for seven

years prior to the flood with no sinking, cracking, or other

observable structural damage and that because cracking

noises and observable structural damage occurred to the

home immediately after the flood, the flood was the immedi-

ate cause of the loss.

In the West case, it is certain that the Court of Appeals

14

violated the jury’s fact finding function by admitting that the

flood water caused the damage and then precluding the jury

from determining that the flood waters were the proximate

cause of the loss:

‘“. , In sum, the slab cracked because changes in

the water table due to flooding and drainage of

flood waters caused relative earth movements

under the slab which created the positive and nega-

tive pressure which cracked it .. .” (West, p. 878,

Appendix A, p. A-14 )

The testimony of the Wests’ clearly established that des-

pite wet and dry periods, minor flooding, and even hurri-

canes for almost eight years prior to the flood, no structural

damage had occurred to the house (Appendix E, pp. A72-5,

79-87). The Court of Appeals for the Fifth Circuit implied

Mr. Patterson testified relative earth movements caused the

damage, but that Court admits they did not clearly appre-

ciate Mr. Patterson’s testimony as to how the foundation

failed. (West, supra, p. 878, Appendix A, p. A-13-4). No-

where has Mr. Patterson said that changes in the water table

caused relative earth movements which cracked the slab, nor

does he agree with Dr. Capozzoli that lack of soil support

caused the foundation to settle unevenly and crack. (Appen-

dix E, pp. A-88-99). He only attributed the structural dam-

age to flooding. (Appendix E, p. 90). Dr. Capozzoli dismiss-

ed the flood by concluding it had a negligible effect on the

house, but again he could offer no explanation as to why sud-

den cracking would occur shortly after the flood, except to

say the cracks were just not observed. (Appendix E, pp. A-

101-3). Finally, any earth movement which may have occurr-

ed with the flood could be classified as a mudslide since the

15

Wests’ house was located on an incline up the side of a hill

and mud and sediment were found inside the house. (Appen-

dix E, pp. A-70-73, 79-80) It is therefore very clear that

there was sufficient evidence for the jury to infer that the

flood waters were the immediate cause of the cracking dam-

age to the house. And, even if earth movement was a contri-

buting cause to the loss, the earth movement itself was im-

mediately and concurrently caused by the flood waters. The

structural damage would not have occurred except for the

immediate and direct presence of the flood waters.

After hearing the evidence in both the West and Daigle

Cases, the trial judge denied defendant insurer’s motions for

directed verdict and a judgment notwithstanding the verdict,

Stating:

‘“‘We conclude that there was sufficient evidence

under Boeing Co. v. Shipman, supra, to go to the

jury on both the issues of direct loss because of

flood and damage substantial as a proximate result

of flood.” (Appendix G, pp. A-123, 128).

In denying defendant insurer’s motion for a new trial in

both cases, the trial court considered the Seventh Amend-

ment precepts:

“This constitutional provision obviously cannot be

applied so as to foreclose any scrutiny of a jury’s

fact findings; it expressed, however, in clear terms

the principle that facts once found by a jury in the

context of a civil trial are not to be re-weighed and

a new trial granted lightly. The standard adopted

by the Fifth Circuit is that the district court should

16

not grant a new trial motion unless the jury verdict

is ‘at least against the great weight of the evidence.’

Cities Service Oil Company v. Launey, 403 F.2d

537 at 540 (Sth Cir., 1968). A rule which would

permit a court to grant a new trial when the evi-

dence, the Fifth Circuit said, ‘would destroy the

role of the jury as the principal trier of the facts

and would enable the trial judge to disregard the

jury’s verdict at will.’ Applying the test enunciated

in Cities Service, we must decline to grant a new

trial.””( Appendix S, pp. A- 124, 128-9).

B. Issue: Flood Policy Interpretation

The Court of Appeals for the Fifth Circuit erred in its

holding that any earth movement other than mudslide also

excluded structural damage proximately caused by flood

waters. That Court limits the causation of earth movement

only to mudslide as well as defining earth movement as mean-

ing soil settlement:

“In unambiguous terms,” the Court said, ‘‘the

policy provides that the defendant ‘shall not be

liable for loss... by ... erosion, earthquake, land-

slide, or any other earth movement except such

mudslides as are covered under the peril of flood

. The policy does not cover loss caused by

earth movement in the form of soil settlement. It

unambiguously provides that the only earth move-

ment covered is a mudslide caused or precipitated

by accumulation of water on or under the

ground.”’ (West ,p. 877, Appendix A, p. A- 17 ).

rE ae =

17

This strained construction of a flood insurance policy was

not the intent of Congress, the Secretary of Housing & Ur-

ban Development or the insured. The intent of the “earth

movement” policy exclusion was to exclude earthquake,

landslide, and other like earth movement, all of which are

similar in origin or causation, i.e., tectonic or volcanic. Earth

movement which occurs independently in nature from flood

is excluded, not earth movements and mudslides caused or

precipitated by flood waters. Earth movement as a policy

exclusion is limited in its meaning to the same general kind

and class of perils which immediately preceed it, under the

common law doctrine of ejusdem generis. Black’s Law Dic-

tionary, (4th Ed, 1968, p. 608); Gullett vs. St. Paul Fire &

Marine Ins. Co., 446 F 2d 1100 (7th Cir., 1971); Anderson

vs. Indiana Lumbermens Mutual Ins. Co.,-127 So2d 304 (La.

App. 1961).

Nowhere in the policy, statute code of federal regulations

and legislative history is there stated that structural damage

proximately caused by general flooding condition is exclu-

ded. In the Code of Federal Regulations ‘Limitations on

Coverage,’ 24 C.F.R. 1911.4(C), there is a statement that the

policy does not cover damage from landslide or from earth-

quake or similar earth movement which are volcanic or

tectonic in origin. (Appendix C, p. A-34) The requla-

tions further state that the policy does not cover ‘“‘losses

caused by land slippage rather than mudslide” and then

directs the reader to 24 C.F.R. 1909.1, (Appendix C,pp.

A-34-5). There, under the definition of ‘‘mudslide’”’ is found

the limited contrasting statement that ‘“‘a mudslide (i.e.)

mudflow may occur as a distinct phenomenon while a land-

slide is in progress...” 24C.F.R. 1909.1, (Appendix C,

p. A-33). The only references to earth movement in the code

18

of federal regulations, The National Flood Insurance Act or

legisiative history of the Act is the limited classification of

landslides and earthquakes which are volcanic in origin.

Nowhere in the flood policy, code of federal regulations

and the Act is there any mention of an exclusion for soil

settlement! And there is certainly no reference to flood re-

lated soil settlement as an exclusion! The Code of Federal

Regulations reveals only that the policy does not cover

erosion which is not flood related, 24 C.F.R. § 1909.1,

(Appendix C, p. A-33), 24 C.F.R. §1911.4 (C), (Appendix

C, pp. A-34-5) Damage from the pressure or weight of ice and

water is covered when the loss occurs as a part of flood, 24

C.F.R. §1911.4(C), (Appendix C, p. A- 34). Damage by

hydrostatic pressure or seepage resulting from a general

flooding condition was intended to be covered (See Perils

Excluded, A-3, under the policy of flood insurance, Appen-

dix F,p. A-108; and see 24 C.F.R. §1911.4(C), Appendix

C,p. A-34)

Congress declared that flood insurance coverage for resi-

dential properties was a priority, 42 USCA § 4012(a) (Ap-

pendix B, p. A- 31). Protection from flood waters was the

first purpose of the Act. (See 1968 U.S. Code Cong. & Adm.

News, pp. 2966-7, 3026; Appendix I, pp. A-141-8). Flood

insurance is now required on homes in flood prone areas

when the home is built or improved with money borrowed

from federally insured lending institutions 42 U.S.C.A.

4012a, Appendix B, pp. A-32a &b) Mudslide coverage was

added by amendment in 1969 as an additional purpose. The

additional protection provided by mudslide coverage was

certainly not intended to limit the losses caused by flood

waters! (See 1973 U.S. Code Cong. & Adm. News, pp.

19

3228-9, infra.). It is evident that mudslides are “‘. . . related

in cause and similar in effect to that which results directly

from storms, deluges, overflowing waters, and other forms

of flooding . . . the problems involved in providing protec-

tion against this damage and loss . . . are similar to those...

caused by other forms of flooding . . .”” 42 USCA § 4001(f)

(Appendix B, pp. A-29-30) Congress intended earth movement

caused by flood to be covered as is seen in the legislative his-

tory of the National Flood Insurance Act below:

“DEFINITION OF ‘FLOOD’ ”

Section 107 of the bill, which is identical with Sec-

tion 108 of the House bill as reported, would

amend the mudslide definition of Section 1370(b)

of the National Flood Insurance Act of 1968 by

making clear that losses or damage resulting from

mudflows will be paid, regardless of whether there

may already have been a landslide in progress that

might affect the insured property.

The committee is aware of the difficulties the

Federal Insurance Administration has encountered

in differentiating mudslides, which the Act covers,

from landslides, which are not covered. Because

of those difficulties, and on the basis of extensive

investigation and advice from technical experts

on the subject, FIA has chosen to interpret the

word mudslide to mean mudflow: namely, a con-

dition where there is actually river, or flow, or

“liquid mud" down a hillside, usually as a result

of a dual condition of loss of brush cover and sub-

sequent heavy rains. Such occurrences are unfore-

seeable, are less common than earth movement

20

from landslide or erosion, and generally have

characteristics markedly similar to those of a

flood. Clearly, the committee intended this con-

dition to be covered when it added the mudslide

amendment to the Act in 1969.

What had been unclear, however, is whether FIA

had consistently provided mudflow coverage in

situations where the mudslide was preceded or

accompanied by a slow or gradual movement of

the earth, sometimes caused or aggravated by the

improper use of fill in the construction of new

subdivisions which had already endangered the

insured property, and would ultimately result in

its destruction, whether or not a mudflow occurr-

ed. There have been indications that where a land-

slide was already in progress at the time the insured

obtained coverage, FIA may refuse to pay the

claim for a subsequent loss, even if a mudflow

actually occurred.

The amendment added by the committee is in-

tended to make clear that, just as FIA would be

required to pay sudden flood loss that occurred to

an insured property while a gradual landslide was

in progress, so too it is expected to pay for mud-

flow losses that occur unexpectedly while a land-

slide is in progress, so long as the mudflow and not

the landslide is the proximate cause, or sine qua

non, without which the damage claimed would

not have occurred...” 1973 U.S. Code Cong. &

Adm, News, pp. 3228-9 (emphasis supplied).

21

Congress certainly intended coverage for the primary peril

of flood waters as well as the added peril of mudslide, when

the flood “‘.. . was preceded or accompanied by a slow move-

ment of earth ...,” if the flood waters were the proximate

cause of the damage.

In insurance cases the ‘‘proximate cause”’ of the loss is the

efficient cause and not merely an incidental cause which may

be nearer to the resulting damage. Aetna Insurance Company

vs. Boon, 95 U.S. 117, 24 L.Ed 395 (1877); Lanasa Fruit

Steamship & Importing Co. vs. Universal Ins. Co., 302 U. S.

556, 58 S. Ct. 371, 82 L Ed 422 (1938); Norwich Union Fire

Ins. Soc. vs. Board of Commissioners, 141 F 2d 600 (5th Cir.,

1944); Dubugue Fire and Marine Insurance Company vs.

Caylor, 249 F 2d 162 (10th Cir., 1957). When the flood

water peril insured against is the proximate cause of the loss,

as was determined by the jury, there should be recovery,

notwithstanding the earth movement peril outside the policy

which remotely and incidentally contributed to the loss.

Jackson vs. National Flood Insurers Assoc., 398 F. Supp.

1383 (S.D., Tex, 1974); Cincotta vs. National Flood Insurers

Assoc., No. 75-C-1833 (DC, NY, 1977, Unreported; repro-

duced as Appendix H, pp. A-135-40); 5 Appleman, Insurance

Law Practice § 3083 (1970).

The Court of Appeals for the Fifth Circuit is obligated to

construe the earth-movement-except-mudslides exclusion as

the contracting parties would have expected it to be con-

strued. The Court of Appeals for Fifth Circuit has stated

that standard insurance law principals govern the construc-

tion and effect of flood insurance principles (West, supra, p.

881, Appendix A, p. A-20); Drewett vs. Aetna Casualty &

Surety Co., 539 F.2d 496 (Sth Cir., 1976); Summers vs.

22

Harris, 573 F 2d 869 (5th Cir., 1978). With regard to policy

exclusions, it is well established law that if such policy pro-

visions are not clearly expressed, they will be construed

strictly against the insurer and in favor of the insured. Ash-

enbrenner vs. U. S. Fidelity & Guaranty Co., 292 US. 80,

54 S. Ct. 590, 78 L Ed 1137 (193A); Hartford Steam Boil

Inst. I. Co. vs. Schwartzman Pack. Co., 423 F.2d 1170 (10th

Cir., 1970); Calcasieu Marine Nat. Bank vs. Am. Emp. Ins.

533 F 2d 290 (5th Cir., 1976); Mason vs. National Flood

Insurance Assoc., 361 F Supp 939 (D.C., Haw., 1973).

An exclusion must be specific to be meaningful. If the

drafters of the flood insurance policy intended the earth

movement exclusion to include all earch movement, includ-

ing earth movement caused by flood, they should have so

said; the courts can not rewrite the contract. Phoenix Ins.

Co. vs. Slaughter, 12 Wall 404, 20 L Ed 444 (1871); Feeney

and Meyers vs. Empire State Ins. Co., 228 F 2d 770 (10th

Cir., 1955). If earth movement is intended to mean flood-

related “‘earth settlement”’ or “earth sinking’ the insurance

policy is sufficiently ambiguous to be construed in favor of

the insured, Souza vs. Corvick, 941 F 2d 1013 (10th Cir.,

1970).

Finally, it is virtually impossible to conceive of a general

flooding condition where there is not earth movement.

Flood itself is defined in the policy as the partial or complete

inundation of normally dry land areas, (Appendix F, p.

A- 108). Since earth movement accompanies or results from

almost all flood waters, particularly when buildings are

structurally damaged, almost all structural damage in flat

land areas would be excluded as a loss caused by “earth

movement other than a mudslide’! Under the United

States Court of Appeals for the Fifth Circuit's decision

23

herein, the peril of mudslide would be covered, but the peril

of earth movement caused by flood waters would not be

covered. And, if the Federal Insurance Administration had

difficulty in distinguishing mudslide from landslide, it would

be impossible for the FIA to distinguish between a mudslide

preceded or accompanied by earth movement caused by

flood! Both perils, ‘‘mudslide’’ and ‘‘flood caused earth

movement”’ would have similar characteristics in cause i.e.,

overflow of water and mud, and similar characteristics in

effect, i.e., soil subsidence. The administrative and judicial

resolution of this vicious circle would be arbitrary at best!

Thus, the ruling of the Court of Appeals for the Fifth Circuit

is unenforceable and it has been well settled that meaning

and effect should be given to the whole contract; a con-

struction which neutralizes any provision of a contract

should never be adopted if the contract can be interpreted

to give effect to all provisions. Looney vs. Great American

Ins. Co., 71 F.R.D. 211 (1976); 12 Appleman, Insurance

Law & Practice § 7383 (1976); Restatement of Contracts

§ 236 (1932).

CONCLUSION

For these reasons, a Writ of Certiorari should issue to re-

view the judgment and opinion of the United States Court

of Appeals of the Fifth Circuit.

RESPECTFULLY SUBMITTED,

LEOPOLD B. BABIN

WIMBISH & BABIN

240 Barrow Street

P.O. Box 406

Houma, Louisiana 70361

(504) 868-1073

24

CERTIFICATE

I certify that three copies of the above and foregoing

Petition for a Writ of Certiorari to the United States Court

of Appeals for the Fifth Circuit have been mailed to Mr.

P. A. Bienvenu, 1414 American Bank Building, New Or-

leans, Louisiana, 70112, first class, postage prepaid, and three

copies of this Petition have been mailed to the Solicitor Gen-

eral, Department of Justice, Washington, D.C., 20530, air

mail, postage prepaid, all in accordance with Rule 33.

Houma, Louisiana, this 19th day of December, 1978.

LEOPOLD B. BABIN