Spurlock v. State Farm Fire and Casualty Company
2:23-cv-00467
W.D. Wash.Dec 6, 2024Background
- Plaintiff Craig Spurlock held a homeowner's insurance policy with State Farm, which included a Back-up of Sewer or Drain (BUSD) endorsement.
- In March 2022, Spurlock filed a claim for water damage in the crawl space of his home after sump pump failure during heavy rain.
- State Farm initially indicated coverage might apply, but after further investigation, denied the claim, arguing the sump pump was outside the dwelling and thus not covered.
- Spurlock filed suit for breach of contract, bad faith, and violations of Washington’s Consumer Protection Act (CPA) and Insurance Fair Conduct Act (IFCA).
- Both Spurlock and State Farm moved for summary judgment; the court granted Spurlock’s motion in part (on breach of contract) and denied both parties’ motions as to the remaining claims, leaving issues of bad faith and statutory violations for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Coverage under BUSD (sump pump location) | Sump pump inside dwelling, covered | Sump pump outside, not covered | For plaintiff; breach of contract by State Farm |
| Bad faith in claims handling and denial | State Farm investigated unreasonably | Denial based on reasonable interpretation | Material fact dispute; for jury to decide |
| CPA and IFCA violations by State Farm | Denial was unfair/unreasonable | Denial was not unfair/unreasonable | Material fact dispute; for jury to decide |
| Affirmative defenses (mitigation, misrepresentation) | No support for State Farm's defenses | Material fact disputes remain | Split; some defenses dismissed, others to jury |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1985) (summary judgment standard)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (standard for no genuine issue of fact)
- Graff v. Allstate Ins. Co., 54 P.3d 1266 (Wash. Ct. App. 2002) (two-step insurance coverage process)
- Tank v. State Farm Fire & Cas. Co., 715 P.2d 1133 (Wash. 1986) (insurer's duty of good faith)
- Smith v. Safeco Ins. Co., 78 P.3d 1274 (Wash. 2003) (bad faith requires unreasonableness)
- Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531 (Wash. 1986) (elements of CPA claim)
- Kish v. Ins. Co. of N. Am., 883 P.2d 308 (Wash. 1994) (efficient proximate cause doctrine)