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Hudson Enterprises Inc. v. Certain Underwriters At Lloyds London Insurance Companies

United States Court of Appeals, Eighth Circuit

April 28, 2017

Hudson Enterprises, Inc., doing business as River Valley Marina Plaintiff- Appellant
Certain Underwriters at Lloyd's London Insurance Companies, Subscribing to Policy #10NCG01559 and Agreement Numbers NPPI1011456 and NPPI09112456 Defendant-Appellee

          Submitted: April 5, 2017

         Appeal from United States District Court for the Eastern District of Arkansas - Little Rock

          Before GRUENDER, MURPHY, and KELLY, Circuit Judges.

          MURPHY, Circuit Judge.

         On the night of April 30, 2011 a storm generated strong winds and left seven inches of rain in the Little Maumelle River basin. The River Valley Marina lost five of its docks to the storm. The docks were covered by an insurance policy issued by Certain Underwriters at Llyod's London Insurance Companies (Underwriters) which excluded losses "caused directly or indirectly" by flood. Underwriters denied coverage based on the flood exclusion. The marina then filed this action against Underwriters, alleging that they breached the policy. The district court[1] granted Underwriters summary judgment after concluding that the docks were lost to flood. Hudson appeals, and we affirm.


         Ray and Debra Hudson own Hudson Enterprises, which operates the River Valley Marina. The marina owns eight docks on the north bank of the Little Maumelle River in Little Rock, Arkansas. The Little Maumelle River runs west to east until it converges with the Arkansas River. The marina is located approximately two miles above the Little Maumelle's confluence with the Arkansas River.

         On the night of April 30, 2011 approximately seven inches of rain fell in the Little Maumelle watershed. Several area residents testified that the river rose at least three feet above its normal levels and exceeded its banks in some places. Photos indicate that there was standing water in the parking lot near one of the marina's docks the next day. The rain also greatly increased the speed of the river's current. In addition to rain, the storm brought with it high winds that tore down tree branches near the marina.

         The marina lost five of its eight docks to the storm. The three docks that survived the storm were located upstream from the docks that were swept away. The marina was covered by an insurance policy issued by Underwriters. After the storm, the marina contacted Underwriters to obtain compensation for the loss. Its policy insured the marina against "direct physical loss of or damage to" its eight docks. The policy contained an exclusion, however, which stated:

We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage affecting a substantial area, or remains localized - even when restricted to the insured premises. . . . .
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; . . . .

         A few days after the storm, Underwriters sent an adjuster to take photographs of the marina and talk to the Hudsons. Mr. Hudson told the adjuster that the "[t]he velocity of that water" caused the damage to the docks. Underwriters denied coverage after finding that the loss was caused by "a flash flood that occurred on the Little Maumelle River following heavy rains." The Hudsons later came to believe, however, that a utility pole caused their loss when it fell onto the docks as a result of the storm's high winds.

         Hudson Enterprises (Hudson) filed this action against Underwriters in state court. Underwriters removed the case to federal court. During discovery, Hudson served an interrogatory on Underwriters that stated, "In the course of your investigation of the facts and circumstances forming the basis for the claim for benefits tendered by Plaintiff . . . did you obtain any expert opinion relating to your determination to deny payment of such claim?" Underwriters answered on November 16, 2015 by stating "discovery is ongoing and [Underwriters] have not yet made a determination as to whether an expert witness may testify at trial." The answer then indicated "[i]f Underwriters decide to have a testifying expert, Underwriters will identify said expert(s) in accordance with the Federal Rules of Civil Procedure."

         The district court entered a case scheduling order which required Underwriters to "identify all expert witnesses and produce their opinions by 27 January 2016." Underwriters disclosed their civil engineering expert to Hudson on January 27, 2016. The expert concluded that the flash flood was the sole cause of Hudson's loss and rejected Hudson's utility pole hypothesis. Hudson objected to Underwriters' expert and asked that his opinions be stricken because the expert had been disclosed too late and because Underwriters had not supplemented their interrogatory answer after retaining him. At the hearing on Hudson's motion to strike, counsel for Underwriters stated ...

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