193 So. 3d 471
La. Ct. App.2016Background
- In March 2013 Powers discovered mildew, reported a suspected leak to their State Farm agent, and hired contractor Kurt Muller who identified a leaking copper elbow behind the refrigerator and prepared a repair estimate.
- State Farm assigned an adjuster (Jose Ortiz) who inspected after the contractor had already gutted the kitchen and replaced the leaking fitting; Ortiz concluded the leak had occurred over a period of time.
- State Farm denied the claim under the policy exclusion for “continuous or repeated seepage or leakage of water … which occurs over a period of time,” and also denied coverage for discarded cabinets because they were not preserved for inspection.
- Powers sued seeking policy benefits and penalties; the bench trial resulted in judgment for State Farm, and the Powers appealed raising three main arguments.
- The trial court relied on physical evidence (the copper elbow, corrosion/residue, mold, waterlines, grout corrosion), witness testimony (claims rep, adjuster, contractor), and the policy language in concluding the loss was excluded as a long-term leak.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the policy exclusion is ambiguous | Powers: phrase “continuous or repeated seepage or leakage … which occurs over a period of time” is undefined and therefore ambiguous; should be construed for coverage | State Farm: ordinary meaning of words is clear; failure to define terms does not make clause ambiguous | Court: clause unambiguous when given its plain, ordinary meaning; no ambiguity in this case |
| Burden of proof for proving exclusion | Powers: court applied wrong standard and shifted burden to them to prove exclusion did not apply | State Farm: insurer bears burden to prove exclusion, and trial court recognized this | Court: record shows trial court understood burden; no indication burden was misapplied |
| Factual finding that leak was long-term (credibility) | Powers: evidence insufficient; State Farm relied on inconsistent testimony and offered no proof of duration | State Farm: presented physical evidence and testimony supporting a long-term leak | Court: trial court’s factual finding has reasonable basis; not manifestly erroneous; deference to credibility determinations |
| Preservation of discarded property (cabinets) | Powers: contested denial of cabinet damage | State Farm: cabinets discarded without opportunity to inspect, breaching insured duties | Court: denial for discarded cabinets upheld (policy duties not met) |
Key Cases Cited
- Cadwallader v. Allstate Ins. Co., 848 So.2d 577 (La. 2003) (policy interpretation governed by contract rules; enforce unambiguous terms)
- Carbon v. Allstate Ins. Co., 719 So.2d 437 (La. 1998) (ascertaining parties’ common intent via policy language)
- Rosell v. ESCO, 549 So.2d 840 (La. 1989) (manifest error standard for appellate review of factual findings)
- Stobart v. State through Dept. of Transp. and Dev., 617 So.2d 880 (La. 1993) (two-part test to overturn factfinder under manifest error review)
- Blackburn v. National Union Fire Ins. Co., 784 So.2d 637 (La. 2001) (insurer bears burden to prove applicability of exclusionary clause)
- Primm v. State Farm Fire & Cas. Co., 426 So.2d 356 (La. App. 2d Cir.) (1983) (example where coupling terms created ambiguity in leak exclusion)
- Farciert v. U.S. Agencies Cas. Ins. Co., 131 So.3d 1020 (La. App. 5 Cir. 2013) (insurance contract interpretation principles; cited for policy construction guidance)