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Horvitz & Levy is a solutions-based firm focused on appellate success. We are distinguished by our commitment to responsive service and on-going innovation in the areas of civil appellate litigation, amicus curiae support, and trial strategy consultation.

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In this case, Horvitz & Levy LLP represented Factory Mutual Insurance Company on appeal in the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit held that even though a flood exclusion did not specify that it applied to wind-driven water, it excluded storm surge flood damage caused by Hurricane Katrina to Northrop Grumman Corporation’s Mississippi and Louisiana shipyards.

Northrop claims that flood damage to its shipyards from Hurricane Katrina exceeds $1 billion. Factory Mutual issued Northrop a $15 million primary policy (part of $500 million in primary coverage written by multiple carriers, of which $400 million covered flood) and a $19.8 billion excess policy that excluded flood. After Factory Mutual denied coverage for the flood damage to the shipyards under the excess policy, Northrop sued Factory Mutual for declaratory relief, breach of contract, and bad faith.

The Ninth Circuit held that the language of the flood exclusion in the excess policy, read in its ordinary and popular sense, encompassed the flood damage to Northrop’s shipyards. The court noted that both lay and legal dictionaries characterize flood as an overflowing or inundation of water over usually dry land. Rejecting the district court’s contrary holding, the Ninth Circuit stated that dictionary definitions are an appropriate consideration in evaluating the ordinary meaning of terms in an insurance contract. The Ninth Circuit held that the district court erred in construing the primary and excess policies as one contract and in finding an ambiguity based on the differing definitions of flood. Finally, the Ninth Circuit held that whether coverage is barred depends on an efficient proximate cause analysis, an issue which the court did not reach.