Seven inches of rain fell in the Little Maumelle River basin
the night of 30 April 2011. By morning on May 1st, the river
had come out of its banks. It covered some of the parking
lots at the River Valley Marina, as well as the ramps
connecting several floating docks to the shore. There was
heavy wind, too. Five of the docks were lost that morning.
They were covered by an insurance policy that excluded losses
"caused directly or indirectly" by flood. The
Marina argues that, as a matter of law, the dock loss
wasn't caused by flood. The insurers, Certain
Underwriters at Lloyds London, argue that, as a matter of
law, it was.
Policy. River Valley Marina is the doing-business name of
Hudson Enterprises, Inc., a corporation owned by Ray and
Debra Hudson. The Marina bought a commercial property
insurance policy from the Underwriters in January 2011. The
one-year policy covered eight of the Marina's docks,
labeled A, B, C, E, F, G, I, and O (there was no H dock). The
policy had exclusions. This section said:
* * *
4. Water -
(a) Flood, surface water, waves, tides, tidal waves,
overflow of any body of water, or their spray, all whether
driven by wind or not[.]
No. 34-3 at 9. The parties argue over how to apply
this flood exclusion.
What's a flood? The first question is whether
the Court can interpret and apply this policy as a matter
of law. It can. The Marina argues that the policy is
ambiguous, because it doesn't define "flood."
And, the Marina continues, because the language is
ambiguous, it must be construed against the Underwriters.
But an undefined term isn't automatically ambiguous.
Essex Insurance Co. v. Holder, 372 Ark. 535, 537,
261 S.W.3d 456, 458 (2008). Mr. Hudson, for example, said
the policy's flood language was clear; so did Mrs.
Hudson. No. 48-1 at 71 & 48-7 at 23-24.[*] Besides,
the Marina and the Underwriters urge the Court to adopt the
same definition of "flood": the one used by the
Arkansas Court of Appeals in Ebbing v. State Farm Fire
& CasualtyCo., where that Court found
the term unambiguous in a similar policy provision. 67
Ark.App. 381, 386, 1 S.W.3d 459, 462 (1999). This Court
therefore holds that this common term in this policy is
unambiguous. So the policy's construction and legal
effect are questions of law. Southall v. FarmBureau Mutual Insurance Co. of Arkansas, 276 Ark.
58, 60, 632 S.W.2d 420, 421 (1982).
then, does the policy mean by flood? Ebbing tells
"Flood waters" are those waters above the highest
line of the ordinary flow of a stream, and generally
speaking they have overflowed a river, stream, or natural
water course and have formed a continuous body with the
water flowing in the ordinary channel[.]
67 Ark.App. at 386, 1 S.W.3d at 462 (quotation omitted).
Did a Flood Cause the Dock Loss? The parties agree
that the Underwriters must prove that the flood exclusion
applies. No. 47 at 6. Here are the undisputed
facts, and, where disputed, the facts in the light most
favorable to the Marina. Anda v. Wickes Furniture
Co., 517 F.3d 526, 531 (8th Cir. 2008).
Valley Marina sits on the north bank of the Little Maumelle
River. The Marina is about two miles above the Little
Maumelle's confluence with the Arkansas River. No.
34-3 at 78 & 48-3 at 4. Most of the water falling
into the Little Maumelle basin drains into the River
upstream from the Marina. In 2011, between 9:00 p.m. on
April 30th and 3:00 a.m. on May 1st, more than seven inches
of rain fell in the basin. No. 34-3 at 78. This
was a 300-year rain event. As Mr. Hudson put it: "It
rained for three days. Hard. I mean it just one, one storm
after another storm." No. 48-3 at 3. When you
get that kind of rain, he said, "you're fixin'
to have problems." No. 48-3 at 4.
Hudson made it to the Marina around 1:00 a.m. on May 1st.
When he got there, he "found water already higher than
I had ever seen it around, as far as the amounts of the
rain that had fell." No. 48-3 at 2. He started getting
people off their boats and getting campers moved to higher
ground. His stepson, Phillip Tidwell, helped. No. 48-6 at
36-3 7. Soon the river had doubled in speed. By 3:00 a.m.,
"it had come up a couple of feet and was beginning to
really roll[.]" No. 52 at 2. At 4:00 a.m., according
to Mrs. Hudson, the river was a little over its banks. No.
48-7 at 90. By daylight, there was six inches of water in
the parking lot in front of E dock. No. 48-1 at 134 &
48-7 at 91. Water was starting to cover the gangplanks
between the docks and the shore. No. 48-5 at 29. Water
wasn't the only problem; there was wind too. The wind
on May 1st was probably the strongest Mr. Hudson had ever
experienced. No. 48-1 at 173. It nearly pushed his wife
into the river. No. 48-7 at 77. And it left tree limbs
strewn across the ground. No. 48-5 at 47.
took some photographs of E dock after daylight; these will
be important later. Then, sometime later that morning,
Tidwell heard creaking and popping and turned and saw docks
starting to leave the bank. No. 48-6 at 44, 46-47, 70.
(Neither of the Hudsons saw any docks leaving.) Five docks
were lost: E, F, G, I, and O. No. 48-7at 34. The others
were mostly undamaged.
days after the loss, the Underwriters sent an adjuster,
Mark Gray, to take photographs and talk to the Hudsons.
Toward the end of their talk, Gray asked Mr. Hudson what
was "the reason or the cause of the docks pulling
loose." No. 48-1 at 312. Hudson answered:
"The velocity of the water." Ibid. This
answer was part of a taped statement, but Gray didn't
record all his conversation with the Hudsons. They talked
for about 20 minutes before the recorder started running.
During that time, the Hudsons told Gray about the high
wind. They told him the wind was blowing at "an
unbelievable amount." No. 48-7 at 44. They also told
him about a dock tenant who nearly lost her little dog to
the wind. Ibid.
Underwriters informed the Marina in late May 2011 that they
questioned coverage, based mostly on the Hudsons'
statement to Gray about the fast-moving water. No. 34-3 at
35 . In late June, they denied the claim. No. 34-3
at 40. The Underwriters blamed the loss on "a flash
flood that occurred on the Little Maumelle River following
heavy rains." Ibid.
that summer, though, Mrs. Hudson was going through the
photographs on her camera and happened to find the ones
Tidwell had taken on May 1st. No. 48-7 at 37. (He'd
used her camera.) These photos are at No. 48-7 at
145-49 in the record. They show a power pole crashed
into E dock. The power-pole situation changed Mr.
Hudson's mind about what caused the loss. No. 48-1 at
128. It was actually caused, Mr. Hudson came to see, by the
power pole. "[I]t split the [E] dock in half, and from
there down, everything is gone." No. 48-1 at 184.
"[I]f the pole hadn't hit the dock, they'd
still be there." Ibid. This fallen pole was,
according to Mr. Hudson, a symptom of the great wind. Thus,
the sole cause of dock coming free was wind: "Just the
wind - the wind and the tree limbs and the velocity of the
wind." No. 48-1 at186. The Hudsons
now deny that water had anything to do with the loss. No.
48-1 at 185-86 & 48-7 at 76.
from the wind, however, this record shows a flood. To use
the parties' definition from Ebbing, on May
1st the waters of the Little Maumelle at the Marina were
"above the highest line of the ordinary flow[.]"
They had "overflowed a river, stream, or natural water
course and [had] formed a continuous body with the water
flowing in the ordinary channel[.]" 67 Ark.App. at
386, 1 S.W.3d at 462.
best way to understand all this is through the photographs.
Tidwell's May 1st photo of E dock says a lot. It's
appended to this Order. The parking lot is in the bottom
left-hand corner. No. 48-7 at 91. It's underwater.
Ibid. Mr. Hudson testified that the base of the
fallen power pole, which is underwater in this photo, is
usually not in the water. No. 48-1 at 129-30. The land-end
of the dock's gangplanks are underwater. Ibid.
Compare this photo with one that Gray took on May 5th. It
shows where E dock used to be, and it shows the gravel
parking lot-dry four days after the storm -above the river,
outside the banks. No. 48-1 at 152, 191. This photo is also
appended. Another set of photos shows a tree that was
nicked by the corner of a dock being carried down river.
No. 48-1 at 160, 199. That dock's track shows where the
water's edge was on May 1st. No. 48-1 at 160. In the
Gray photos, the water level is back to normal: about three
feet below where it was on May 1st, and about a
foot-and-a-half below the bank. No. 48-1 at 160-61. (This
last point, about the normal flow line, means there was a
flood under both the "outside the banks" and the
"highest line of ordinary flow" definitions from
Ebbing. 67 Ark.App. at 386, 1 S.W.3d at 462.)
Hudson later agreed that the river had flooded. No. 48-1 at
117, 200. Mrs. Hudson also said that, at least in a few
areas, the water exceeded the banks. No. 48-7 at 75.
Tidwell added that there was water in places that were
normally dry. No. 48-6 at 21. When he took the photographs,
he recalled, the river was overflowing its banks. No. 48-6
at 57. James Blansett was living on a boat at the Marina at
the time. He said the water was over the shoreline of the
river; it was up on land that's normally dry. No. 48-5
at 20, 26, 56-57.
response to all this, the Marina emphasizes something said
by the Underwriters' expert. He looked at Tidwell's
May 1st photographs and said the river was flowing
"bank-full." No. 34-3 at 79. And his report
assumed the stream was flowing "within its
banks." Ibid. This looks like a conflict with
the Underwriters' theory of the case. But it's not.
For one thing, the expert equivocated. He said there was
"clearly some flooding along the banks."
Ibid. More importantly, his assumption was for a
limited purpose: calculating the water's velocity.
Ibid. The point is that he didn't attribute
any current to the water outside the banks. Nor does the
Marina's distinction between low banks and high banks
make its case - even if the parking lots were low banks,
they still were under six inches of water. On May 1st,
then, there was a flood at the Marina.
remaining dispute is whether this flood directly or
indirectly caused the dock loss. Did the flood, in a
natural and continuous sequence, produce the loss, and
would the loss have happened without the flood? New
Hampshire Insurance Co. v. Frisby, 258 Ark. 39, 43,
522 S.W.2d 418, 420 (1975).
flood caused this loss. Underwriters' expert, Mark
Saunders, said that all that rain on April 30th and May 1st
flowed through the river with extraordinary force. There
was 75, 000 to 110, 000 pounds of force on the docks that
morning. No. 48-16 at 14. The docks were ...