LEROY BROWN et al., Plaintiffs and Appellants, v. MID-CENTURY INSURANCE COMPANY, Defendant and Respondent.
No. B238357
Second Dist., Div. Seven
Apr. 2, 2013
215 Cal.App.4th 841
Donna Bader; Donahue & Horrow and Michael B. Horrow for Plaintiffs and Appellants.
Stone & Hiles, David L. Schaffer; Greines, Martin, Stein & Richland, Robert A. Olson and Gary J. Wax for Defendant and Respondent.
OPINION
SEGAL, J.*—
INTRODUCTION
Leroy and Terrie Brown appeal the trial court‘s judgment in favor of Mid-Century Insurance Company on the Browns’ claims for breach of contract and breach of the implied covenant of good faith and fair dealing. The trial court concluded that the Browns’ claim for water damage caused by a broken pipe in their house was not covered under their Mid-Century policy and that Mid-Century was entitled to summary judgment. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Water
On or about February 18, 2009 the Browns began observing condensation on the windows of their three-story, split-level home and on the drywall around the windows. There was moisture from the windowsills running down the walls and mildew on some of the windows and walls. When they cleaned the condensation off the windows, it returned the next day. About a week later, the Browns began noticing mold forming around the inside of their windows and on the walls in the living room and kitchen, “developing everywhere simultaneously.” Every room that had a window had mold or mildew.
On March 18, 2009 the Browns hired a plumber, Michael Lewis, to find and fix the leak. Leroy Brown took Lewis to the laundry room, where there was moisture on the walls. Lewis testified in his deposition that when Mr. Brown took him to a hallway and the laundry area, he could see condensation and moisture on the walls. Lewis told Mr. Brown that “from experience, it seemed like he had a hot water leak. And because his home was on slab, it probably was underneath the cement.” Lewis did a couple of tests and determined that it was hot water. Lewis testified that he told Mr. Brown that “the leak was on the hot water side. And in that situation, I told him that when you have a slab house, that sometimes you can‘t—you can‘t find the leak because water [has] a way of traveling. The leak could have been anywhere in the bottom floor of the house, and because it already had made a path, the water was just trickling, you know, wherever it was coming out at. And I told him, pretty much because we had the most damage in the laundry room, that nine times out of ten, it was going to be in the laundry room.”1
Lewis also went into the crawl space under the house where he encountered mud and discovered a pool of water that appeared “pretty deep.” While Lewis was in the crawl space, Mr. Brown turned on the water “very low” so Lewis could determine where the water was coming from. Lewis observed that water was coming into the crawl space from the back side of a vertical pressurized copper hot water line attached to the hot water manifold.
Lewis then went into the laundry room and began drilling with a jackhammer and searching for the hot and cold water manifolds, with the water system still off. When he located the hot water manifold, he “got the pipe exposed and [saw] the leak.” With the water turned on “very low,” Mr. Brown went back into the house and observed “water coming from an
The Browns notified Mid-Century of the problem.
B. The Policy
Mid-Century had issued the Browns a “Farmers Next Generation Homeowners Policy” providing them with first party property damage coverage for structural damage in the amount of $404,000, with a $1,000 deductible. The policy insured some, but not all, of the Browns’ property and stated “[c]overage is dependent upon both the (1) cause of the loss or damage and (2) type of loss or damage.” The policy listed certain types of loss or damage that were not covered under the policy, “however caused,” including “loss or damage consisting of, composed of or which is water damage.” The policy included an “extension of coverage” that provided “limited” water damage coverage “for direct physical loss or damage to covered property from direct contact with water, but only if the water results from . . . [¶] (4) a sudden and accidental discharge, eruption, overflow or release of water . . . [¶] (i) from within any portion of: (a) a plumbing system.” The policy described what was not included in the limited water damage coverage: “A sudden and accidental discharge, eruption, overflow or release of water does not include a constant or repeating gradual, intermittent or slow release of water, or the infiltration or presence of water over a period of time. We do not cover any water, or the presence of water, over a period of time from any constant or repeating gradual, intermittent or slow discharge, seepage, leakage, trickle, collecting infiltration, or overflow of water from any source . . . whether known or unknown to any insured.”
For mold, the policy stated: “We do not insure loss or damage consisting of, composed of, or which is fungi. Further, we do not insure any remediation.” The policy also contained the following exclusion: “We do not insure loss or damage directly or indirectly caused by, arising out of or resulting from fungi or the discharge, dispersal, migration, release or escape of any fungi. Further, we do not insure any remediation. . . .” The policy defined fungi as “any part or form of fungus, fungi [or] mold . . . .”
C. The Investigation
On March 20, 2009 Mid-Century claim representative Seann Clifford inspected the Browns’ home and took photographs of the laundry room and the adjacent crawl space. Clifford “observed pervasive, visible mold and
Mid-Century then assigned the Browns’ claim to another claims representative, Rosie Acevedo, who inspected the home the next day, March 21, 2009. Acevedo observed mold on the walls in the laundry room, the office, the second floor living room, the kitchen, and the third floor bathrooms, and on clothing in a room next to one of the bathrooms. The Browns told Acevedo, in recorded statements, that they began noticing evidence of a water leak, condensation on the windows, and mold, approximately one month earlier. The Browns also told Acevedo that the condensation stopped forming on the windows when they turned off the hot water on March 17, 2009.
On March 23, 2009 Mid-Century retained American Leak Detection to inspect the house and determine whether there were any more leaks in the plumbing system. American Leak determined that the interior plumbing system was “sound” and that there were no other leaks.
On March 27, 2009 Mid-Century denied the Browns’ claim. Acevedo wrote the Browns and stated that Mid-Century‘s “investigation revealed that the pipe in the wall of the laundry room that runs into your crawl space has been leaking water into your crawl space over a period of time causing condensation and mold growth through out [sic] your home. Unfortunately, this loss is uninsured or excluded from coverage under your policy.” Acevedo determined that “the cause of loss was wear and tear which caused a hole in the pipe, allowing water to leak into the crawl space over a period of time.” Acevedo then quoted at length various provisions in the policy, including the extension of limited water coverage for “sudden and accidental discharge, eruption, overflow or release of water” from a plumbing system or household appliance.
D. The Action
The Browns filed this action on March 16, 2010, alleging causes of action for breach of written contract, breach of the implied covenant of good faith and fair dealing, negligence, fraud, unfair competition, and declaratory relief.
E. The Motion for Summary Judgment
On August 5, 2011 Mid-Century filed a motion for summary judgment or in the alternative for summary adjudication on the Browns’ claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and for punitive damages. Mid-Century argued that it did not breach the policy or act in bad faith because the water damage in the Browns’ home was caused by a long-term, gradual, incremental discharge or release of water, and not by a sudden and accidental discharge or release of water. Mid-Century also argued that its interpretation of the policy was reasonable and that it did not engage in any conduct that could justify a claim for punitive damages.
In support of its motion Mid-Century submitted the declarations of Clifford and Acevedo, as well as an expert declaration by Claude LeBlanc. LeBlanc is a licensed plumbing contractor with 33 years of experience investigating, diagnosing, repairing, and replacing “more than 500 broken pressurized hot water lines in residential plumbing systems,” with expertise in “leak detection, duration, and causation and plumbing repair and design.” LeBlanc stated that on June 14, 2011 he inspected the 24-inch section of pipe that had been removed from the Browns’ house and found “a jagged hole which measured approximately 1/8 inch in diameter . . . surrounded by corrosion.” LeBlanc also reviewed 89 color photographs taken by Clifford depicting “the failed section of pipe before the section was cut out and preserved,” which showed that “the failed section was encased in the concrete slab floor of the home‘s laundry room which was adjacent to a crawl space that had a dirt floor under the home‘s second floor.”
LeBlanc noted from the photographs that “the portion of the pipe embedded in concrete was not wrapped with a plastic protective sleeve,” in violation of the California Plumbing Code,
LeBlanc opined that the “hot water which first escaped from the pipe was in the form of drips into the concrete which surrounded the pipe. As the size of the hole slowly increased, this dripping gradually turned into leakage. Eventually, the escaping water migrated to the adjacent dirt floor of the nearby crawlspace and slowly pooled there. This unabated continuous dripping and leaking lasted at least five months until the leak was discovered and the water turned off on March 17, 2009.” LeBlanc also reviewed water bill and service records for the home, compared them to the previous year, and concluded that the Browns’ monthly water consumption increased during the period water was escaping from the pipe and then decreased to normal levels after the repair.
The Browns opposed the motion and submitted an expert declaration by Harvey Kreitenberg, a licensed journeyman plumber whose “primary occupation is a forensic consultant plumber.” Kreitenberg also examined and photographed the pipe section and found two holes, one approximately 3/32 inch by 1/8 inch and one approximately 1/32 inch. Kreitenberg agreed that the pipe “failed due to a yet to be identified form of corrosion.” Kreitenberg concluded that what had occurred “can be best described as a sudden breach of the pipe. This type of corrosion failure mechanism usually produces a sudden breach in the wall of the pipe, creating a non water tight condition. As the corrosion process continues, the size of the breach increases, ultimately producing a mist, stream and spray of water through the breach. It would have taken a mere fraction of [a] second (a ‘nano’ second’ [sic]) between the
F. The Ruling
The trial court granted Mid-Century‘s motion for summary judgment, finding that none of the evidence submitted by the Browns “creates a dispute of fact as to the cause of the leak as set forth by Mid-Century‘s expert.” The court found that Kreitenberg‘s opinion that “the pipe‘s breach only took a fraction of a second does not mean that release of water was ‘sudden.’ ” The court also noted that the Browns “do not dispute that the pipe leaked over a period of one to two months, and that the leak was caused by corrosion which wore away at the pipe,” and that the evidence presented by Kreitenberg “shows that the release of water was a ‘gradual . . . release of water . . . over a period of time,’ and not ‘a sudden . . . discharge, eruption, overflow or release of water. ’ ”
The trial court entered judgment in favor of Mid-Century on November 3, 2011. Mid-Century gave notice of the entry of judgment on November 8, 2011, and the Browns filed a timely notice of appeal on January 6, 2012.
DISCUSSION
A. Standard of Review
Rulings on motions for summary judgment are reviewed de novo. (Buss v. Superior Court (1997) 16 Cal.4th 35, 60 [65 Cal.Rptr.2d 366, 939 P.2d 766]; see Cole v. Town of Los Gatos (2012) 205 Cal.App.4th 749, 757 [140 Cal.Rptr.3d 722] [“[b]ecause summary judgment can raise only questions of law, we review the trial court‘s ruling without deference“].) “The standard of review is the same regardless of whether the trial court grants or denies a summary judgment motion.” (Benson v. Superior Court (2010) 185 Cal.App.4th 1179, 1184–1185 [111 Cal.Rptr.3d 27].)
” ’ “While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply.” ’ ” (Haynes v. Farmers Ins. Exchange (2004) 32 Cal.4th 1198, 1204 [13 Cal.Rptr.3d 68, 89 P.3d 381] (Haynes); see Arce v. Kaiser Foundation Health
B. Breach of Contract
The Browns concede that they had the burden (1) “of proving their water damage is covered under their policy with Mid-Century,” and (2) “to present facts showing a ‘sudden release’ of water, causing damage to their home.”4 (See Aydin Corp. v. First State Ins. Co. (1998) 18 Cal.4th 1183, 1191–1192 [77 Cal.Rptr.2d 537, 959 P.2d 1213].) The Browns do not argue that Mid-Century failed to meet its initial burden on summary judgment to show that the damage was not caused by a sudden discharge of water. They do not dispute that the evidence Mid-Century presented regarding the gradual deterioration of the pipe, the small size of the hole, and the existence of the effects of the water for at least a month or two, satisfied Mid-Century‘s initial burden on summary judgment. The Browns contend that in response to Mid-Century‘s showing they “presented admissible evidence supporting the finding of a triable issue on this fact.” We disagree.
- There was not “a sudden and accidental discharge, eruption, overflow or release of water”
The Browns’ primary argument on appeal is that Kreitenberg created a triable issue of fact by stating in his declaration in opposition to Mid-Century‘s motion for summary judgment that “the pipe burst suddenly—in a ‘nano-second,’ [sic] spraying water in the crawlspace.” This
Nor does it qualify as “sudden” under California law. ” ‘Sudden’ has a temporal element and does not mean a gradual or continuous discharge.” (Standun, Inc. v. Fireman‘s Fund Ins. Co. (1998) 62 Cal.App.4th 882, 889 [73 Cal.Rptr.2d 116]; see Travelers Casualty & Surety Co. v. Superior Court (1998) 63 Cal.App.4th 1440, 1455 [75 Cal.Rptr.2d 54] [“the interpretation of ‘sudden’ must include a temporal component; otherwise, the word is rendered mere surplusage“]; Shell Oil Co. v. Winterthur Swiss Ins. Co. (1993) 12 Cal.App.4th 715, 754 [15 Cal.Rptr.2d 815] [“[w]e cannot reasonably call ‘sudden’ a process that occurs slowly and incrementally over a relatively long time, no matter how unexpected or unintended the process“].) In the context of the phrase “sudden and accidental,” the word sudden “must, if it is to be
The nature of the gradual water discharge from the Browns’ pipe (even if initiated by a nanosecond breach in the wall of the pipe) and of the incremental effects of the water on the Browns’ house precludes any finding that the discharge was sudden. (See Freedman v. State Farm Ins. Co. (2009) 173 Cal.App.4th 957, 964 [93 Cal.Rptr.3d 296] [“[g]iven the small size of the hole(s) through which the water leaked, and given the extensive amount of water damage . . . , the leak must have lasted a sufficiently long time, or stopped and started sufficiently many times, to count as ‘continuous’ or ‘repeated’ under any reasonable construction of those terms“]; Truck Ins. Exchange v. Pozzuoli (1993) 17 Cal.App.4th 856, 860 [21 Cal.Rptr.2d 650] [“[a]ny continuous event, whether it be of 30 years’ or 2 months’ duration, is simply not ‘sudden’ “].) A dishwater hose breaking in midcycle, a water heater giving out and flooding a room, or an overflowing toilet is a sudden discharge of water. (See, e.g., De Bruyn v. Superior Court (2008) 158 Cal.App.4th 1213 [70 Cal.Rptr.3d 652] (DeBruyn) [overflowing toilets sudden and accidental]; but see Cardio Diagnostic Imaging, Inc. v. Farmers Ins. Exchange (2012) 212 Cal.App.4th 69, 71 [150 Cal.Rptr.3d 798] [malfunctioning toilet that failed to shut off water intake and overflowed because of blockage in the sewer line was not covered because of exclusion for loss or damages caused by water ” that backs up or overflows from a sewer’ “].) A spray/stream/leak of water over several months is not.
Kreitenberg‘s opinion that the nanosecond “breach in the pipe” converted the pipe from a watertight condition to a nonwatertight condition in an instant did not create a factual issue regarding whether the release of the water was sudden. Those courts that have considered the theory espoused by Kreitenberg have rejected it. For example, in Saint Paul Surplus Lines Ins. Co. v. Geo Pipe Co. (Tex.Ct.App. 2000) 25 S.W.3d 900, the court stated: “According to [the insured], the fact that the leak was not discovered for a lengthy period of time does not negate the temporal suddenness with which the breach occurred. This argument has been described as the ‘metaphysical moment’ theory. Under the logic of this theory, every event or condition not existing from the dawn of time would be considered ‘sudden’ because at one moment it did not exist and the next moment it did.” (Id. at p. 905.) The court held that while “the time of discovery does not control whether the discharge was sudden,” a “discharge that continues over a lengthy period of time cannot be considered ‘sudden’ as a matter of law.” (Ibid.)
A gradual process, viewed through an electron microscope that can show physical changes occurring in nanoseconds, can appear sudden at certain points in time. Given a small enough time interval, even a slow gradual leak is sudden. There is always a time, t1, before the first water molecule breaches the surface of a corroding pipe, and a time, t2, after the first water molecule breaches the surface, such that the breach can appear sudden if t2-t1 is small enough. Such a calculus, however, does not make a gradual release of water sudden. As the trial court stated, “[i]t was not a sudden burst . . . unless you used ‘sudden’ to just explain at one point in time there was no water, then there was water.” In concluding that Kreitenberg‘s declaration did not create a triable issue of material fact, the trial court properly concluded that “the fact that the pipe‘s breach only took a fraction of a second does not mean that the release of water was ‘sudden.’ ”
- The efficient proximate cause doctrine does not apply to the Browns’ mold claim
The Browns recognize that the policy did not include coverage for mold. The policy listed mold as one of 13 uninsured types of loss or damage: “We do not insure loss or damage consisting of, composed of, or which is fungi.”
The efficient proximate cause doctrine, codified at
The efficient proximate cause doctrine does not apply to the Browns’ mold claim for two reasons. First, the efficient proximate cause doctrine applies when ” ‘a loss is caused by a combination of a covered and specifically excluded risks . . . .’ ” (De Bruyn, supra, 158 Cal.App.4th at p. 1216.) The only potentially “covered risk” the Browns point to is “the abrupt and sudden discharge of water.” As explained above, as a matter of law no sudden discharge of water occurred. Thus, this is not a situation where there is both a covered risk and an excluded risk. There are only two excluded risks: discharge of water that is not sudden, and mold.
Second, two conceptually distinct risks or events did not cause the Browns’ loss. In Finn v. Continental Ins. Co. (1990) 218 Cal.App.3d 69 [267 Cal.Rptr.
- The policy is conspicuous, plain, and clear
The Browns argue that the extension of limited water coverage for damage to property from direct contact with water if the water results from a sudden and accidental discharge of water from a plumbing system is not conspicuous, plain and clear because it should be on page 21 of the policy under “Uninsured Loss or Damage and Excluded Causes of Loss of Damage,” rather than on page 14 of the policy under “Extensions of Coverage.” This argument is unconvincing.7
“Our jurisprudence respecting conspicuousness, consistently with the inherent logic of that concept, refers to how a coverage-limiting provision actually has been positioned and printed within the policy at issue.” (Haynes, supra, 32 Cal.4th at p. 1209.) ” ‘A coverage limitation is conspicuous when it is positioned and printed in a manner that will attract the reader‘s attention. ’ ” (Ortega v. Topa Ins. Co. (2012) 206 Cal.App.4th 463, 476 [141 Cal.Rptr.3d 771].) The provision of the Browns’ policy extending coverage for damage
The limited coverage for water damage from sudden and accidental discharge is also plain and clear. ” ‘To be plain and clear, the substance of the exclusion must be precise and understandable,’ ” and stated ” ‘in words that are part of the working vocabulary of the average layperson.’ ” (Malcom v. Farmers New World Life Ins. Co., supra, 4 Cal.App.4th at p. 301; see TIG Ins. Co. of Michigan v. Homestore, Inc., supra, 137 Cal.App.4th at pp. 759–760.) The Browns do not identify any language that they claim is not understandable. Although the Browns dispute Mid-Century‘s interpretation of the terms of coverage provided by the policy, the Browns do not argue that the words in the extension of limited water coverage or the exclusion for water damage (e.g., plumbing, discharge, eruption, overflow, release, constant, repeating, gradual, intermittent, infiltration) are difficult to understand. (Cf. Haynes, supra, 32 Cal.4th at p. 1205 [permissive user limitation in the financial responsibility law not understandable to the average policy holder]; Cal-Farm Ins. Co. v. TAC Exterminators, Inc. (1985) 172 Cal.App.3d 564, 578 [218 Cal.Rptr. 407] [exclusion for ” ‘liability assumed by the insured under any contract or agreement except an incidental contract’ ” not plain and clear]; Ponder v. Blue Cross of Southern California (1983) 145 Cal.App.3d 709, 724 [193 Cal.Rptr. 632] [exclusion for “temporomandibular joint syndrome” (italics omitted) not ” ‘comprehensible to lay persons’ “].)
Finally, as noted above, the policy gives an explanation of what is not included in the limited coverage for water damage: “A sudden and accidental
The fact that the policy does not define “a period of time” does not necessarily create ambiguity. (See Bay Cities Paving & Grading, Inc. v. Lawyers’ Mutual Ins. Co. (1993) 5 Cal.4th 854, 866 [21 Cal.Rptr.2d 691, 855 P.2d 1263]; Carson v. Mercury Ins. Co. (2012) 210 Cal.App.4th 409, 426–427 [148 Cal.Rptr.3d 518].) Moreover, although there may be, at the quantum level, some ambiguity in the concept of “a period of time,” an average layperson understands generally what “a period of time” is, and understands that for water escaping from a pipe, “one to two months” qualifies. The term “a period of time” has a well-established meaning in the context of running water, and the policy‘s use of the term is plain and clear.
C. Breach of the Implied Covenant of Good Faith and Fair Dealing
The Browns allege that Mid-Century breached the implied covenant of good faith and fair dealing by failing to investigate their claim properly, engaging in unlawful and deceptive claims practices, and refusing to indemnify the Browns under the policy. Because the policy did not cover the Browns’ claims, however, the Browns do not have a claim for breach of the implied covenant of good faith and fair dealing. (See Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390, 408 [97 Cal.Rptr.2d 151, 2 P.3d 1] [“without coverage there can be no liability for bad faith on the part of the insurer“]; Cardio Diagnostic Imaging, Inc. v. Farmers Ins. Exchange, supra, 212 Cal.App.4th at p. 76 [“because no policy benefits were due under the policy, [the insured‘s] claim for breach of the implied covenant of good faith and fair dealing cannot be maintained“].)
The judgment is affirmed. Mid-Century is to recover its costs on appeal.
Perluss, P. J., and Jackson, J., concurred.
On April 24, 2013, the opinion was modified to read as printed above.