Unlucky 13th Hole

Redesign after Windstorm Fells Famed Tree Ruled Out of Bounds

If a tree falls on a golf course, will an insurance company hear the claim?

Not if the claim is that the demise of the tree changes the character of the entire hole and requires coverage for extensive re-landscaping.

That was the ruling in a recent golf course property insurance policy case decided in the U.S. District Court for Massachusetts by Judge Kenneth P. Neiman. The ruling in Crestview Country Club Inc. and Woodlawn Realty Corp. v. St. Paul Guardian Insurance Company provides a clear definition of the term “direct physical loss.” The decision resulted in a summary judgment in favor of the insurer, St. Paul.

On Aug. 10, 2001, a severe windstorm destroyed a large ash tree—nicknamed the “Poltergeist Tree”—which had been located on the left side of the thirteenth hole of the Crestview golf course in Agawam, Mass. The tree had stood 75 feet tall, sporting branches that overhung the fairway, and was approximately 210 yards from the tee box in the anticipated landing zone of a typical tee shot.

After the storm, plaintiffs submitted an $18,178 claim for damage to trees, including the Poltergeist Tree, caused by the windstorm. Although St. Paul paid that claim in full, the golf course later sought reimbursement for a redesign of the thirteenth hole as a result of the loss of the Poltergeist Tree.

According to the affidavit of W. Marshall Victor of the Roger Rulewich Group, a golf course design firm retained by plaintiffs, the loss of the tree has changed the thirteenth hole “character, challenge, rating, slope and psychology.” Victor presented two options for returning the hole to its pre-storm rating and slope: planting several trees in the fairway area to create a similar obstacle or building a bunker complex in the same area to create a comparable obstacle.

The original amount of the redesign claim was $137,512, although plaintiffs later explained that the redesign could probably be done for less. St. Paul rejected the redesign claim, whatever the amount, claiming it was not a covered loss and the golf course brought suit to challenge that claim denial.

The St. Paul property insurance policy provided general coverage, up to $300,000, for “direct physical loss or damage to golf course grounds.” The policy also had a separate “tree, plant or shrub” sublimit that capped at $500, payment for damages to and removal of any tree, plant or shrub, not including debris removal.

The coverage sublimit in the policy provided that the insurer would pay up to the $500 limit for damage to and removal of any tree, plant or shrub. The sublimit did not include debris removal.

Plaintiffs argued that the $500 sublimit did not apply because the loss of the tree was accompanied by additional losses to the surrounding area.

But the court agreed with the insurer and found that the $500 tree, plant and shrub sublimit applied only to the actual loss of the tree itself, not to any claimed redesign and modification of the thirteenth hole. As such, the sublimit was clear and unambiguous and ought to be enforced as St. Paul argued. The court also agreed with the insurer’s argument that the “wind or hail” provision in the policy prevented plaintiffs from recovering the costs of redesigning and modifying the thirteenth hole so as to restore its slope, rating and character. That provision says the insurer will cover direct physical loss or damage to golf course grounds that’s caused by wind or hail. The defendant argued that the phrase—”direct physical loss or damage”—did not pertain to the ephemeral changes for which plaintiffs sought recovery.

But the golf course owners argued that the change in the slope, rating and character of the thirteenth hole was indeed a “direct physical loss or damage to the golf course grounds.” They pointed out that the policy defines “golf course grounds” as including “greens, tees, and fairways; practice putting greens, practice driving areas; fairways, rough, sand traps, bunkers, and other outdoor grounds at the premises described, specifically designed and maintained for the game of golf; and trees, plants, shrubs.”

Since the Poltergeist Tree was an obstacle at the thirteenth hole, the owners maintained that its removal caused a substantial alteration of that hole. Plaintiffs also contended that the definition of “golf course grounds” strongly suggested that the parties meant to have the course viewed in its entirety.

The court said “physical” should be given its plain meaning—and ruled that an intangible loss in value of a golf course because of a change in its slope rating and difficulty did not fit within this meaning. Moreover, the “character” of the course was not part of the policy’s definition of “golf course grounds.”

Several Massachusetts courts, as well as others elsewhere, have interpreted the phrase “direct physical loss” in a similarly narrow way. The decision cites several cases where intangible damages, such as diminution in value, were found to not constitute property damage. The theme of these decisions is that once physical damage is fixed and paid for by the insurer, any diminution in value, income or use is not “physical damage” under language similar to the clause at issue in this case. In short, the court ruled that there was no ambiguity in the phrase “direct physical loss or damage” in this case. The phrase was not susceptible to more than one meaning by “reasonably intelligent persons.” The only “physical” damage to the thirteenth hole was the harm to the Poltergeist Tree itself, a claim that had been paid.

The golf course had sought coverage for work necessary to return the hole not to its former physical appearance, but to the same subjective level of difficulty. The policy was not designed for such coverage, this court ruled.