Massachusetts Supreme Judicial Court Finds “Surface Water” Ambiguous

In May Yonathan Arbel  (left) and David Hoffman (below, right) posted Generative Interpretation in the NYU Law Review. When we commented on a draft here, we noted a striking finding. Louisiana courts had ruled that references to“floods” in insurance contracts does not include floods caused by broken water mains. However, with the help of large language models, the Authors were able to show that ordinary language does connect floods with failed water mains. The use of generative AI would have changed the outcome of some cases.

A similar issue arose in an insurance dispute in Massachusetts, and the First Circuit, so flummoxed by the term “surface waters,” certified the following question to Massachusetts’s Supreme Judicial Court:

“Whether rainwater that lands and accumulates on either (i) a building’s second-floor outdoor rooftop courtyard or (ii) a building’s parapet roof and that subsequently inundates the interior of the building unambiguously constitutes ‘surface waters’ under Massachusetts law for the purposes of the insurance policies at issue in this case?”

The meaning of “surface waters” was of interest to the parties because the claimant, Medical Properties Trust, Inc. (Medical) had two insurance policies that limited recovery for damage caused by “flood” and defined “flood” as a “general and temporary condition of partial or complete inundation of normally dry land areas or structure(s) caused by[] [t]he unusual and rapid accumulation or runoff of surface waters.” 

In deciding Zurich American Insurance Company v. Medial Properties Trust, Inc., alas, Massachusetts’s Supreme Judicial Court did not rely on large language models.  It nonetheless concluded that the phrase “surface waters” was ambiguous in this context. It’s method for so determining seems to have been what Hoffman and Arbel called “the most artisanal and articulated form of textualism available in late-stage capitalism;” that is, resort to dictionaries, treatises, case law and canons of construction.

Here, the Court quickly dispensed with extensive quoting of dictionaries in a footnote, indicating that the conflicting definitions found in dictionaries supported the finding of ambiguity.  The court discusses the parties’ competing definitions of the scope of “surface waters,” both of which rely on case law. The bulk of the opinion is a summary of case law construing “surface waters.” Other courts’ conclusions are inconsistent, bolstering the Supreme Judicial Court’s conclusion that the term is ambiguous.

The Court answers the certified question as follows:

Rainwater that lands and accumulates on either a building’s second-floor outdoor rooftop courtyard or a building’s parapet roof does not unambiguously constitute “surface waters” under Massachusetts law for the purposes of the policies at issue in this case. We also report that any such ambiguity as to the intended meaning of the words must be resolved against the insurance company that employed them and in favor of the insured.

Late-stage capitalism at its finest.