Horvath v. State Farm General Ins. Co. CA4/3 ( 2014 )

Filed 6/30/14 Horvath v. State Farm General Ins. Co. CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
PETER HORVATH et al.,
Plaintiffs and Appellants, G048457
v. (Super. Ct. No. 30-2012-00544587)
STATE FARM GENERAL INSURANCE OPINION
COMPANY,
Defendant and Respondent.
Appeal from a judgment of the Superior Court of Orange County, Derek W.
Hunt, Judge. Affirmed.
Shields Law Offices, Jeffrey W. Shields, and Rick A. Varner for Plaintiffs
and Appellants.
LHB Pacific Law Partners, Michael J. McGuire, and Matthew F. Batezel
for Defendant and Respondent.
* * *
Plaintiffs Peter and Susan Horvath’s home suffered water damage after a
heavy rain storm overwhelmed the storm drains in their neighborhood, causing water to
come coursing down to nearby hills and surround their home with approximately three
feet of water. Plaintiffs tendered a claim on their homeowners insurance policy.
Defendant State Farm General Insurance Company (State Farm) denied the claim based
on exclusions in the policy for damage caused by “flood” or “surface water.” The trial
court granted summary judgment to State Farm, finding the damages were caused by
either or both.
On appeal plaintiffs contend a “flood” cannot be caused simply by excess
rainfall, but only by an existing body of water exceeding its bounds and inundating the
surrounding area with water. That would be news to Noah. (Genesis 7:17.) We hold the
plain meaning of “flood” includes deluges caused by excess rainfall, which is what
happened here. Because plaintiffs’ claim was properly denied based on the “flood”
exclusion, we do not reach the “surface water” exclusion.
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FACTS
In December of 2010 plaintiffs owned and lived in a house located at the
end of a cul-de-sac at the bottom of Bell Canyon Drive in Dove Canyon, California.
“Bell Canyon Drive slopes downhill for approximately one mile from its highest
elevation down to the Property.” “Plaintiffs’ home is set back from Bell Canyon Drive
and sits at a slightly higher elevation than the street.” “Bell Canyon Drive is an asphalt
paved street, bordered on each side by cement curbs which guide drainage waters down
the street. In addition to the curbs, Bell Canyon Drive’s manmade drainage system
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Unattributed quotations in this statement of facts are taken from the parties’
respective separate statements of undisputed material facts submitted in connection with
defendant’s motion for summary judgment.
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includes numerous storm drains located at intermittent points on either side of the street,
including . . . one located directly across the street from the Property.”
Bell Canyon Drive is bordered on one side by hillsides that slope
downward towards the street. There are concrete drainage ditches built along and down
those upper hillsides, which ultimately empty into the Bell Canyon Drive storm drains.
One of those drainage ditches empties into the storm drain directly in front of plaintiffs’
property.
Plaintiffs purchased a homeowners insurance policy for the property from
State Farm. The policy provides that State Farm will provide plaintiffs with coverage for
all risks of accidental property damage occurring to the property, except as expressly
excluded. The exclusion at issue states, “We do not insure under any coverage for any
loss which is caused by” “Water Damage, meaning:” “flood, surface water, waves, tidal
water, tsunami,” and other similar events. The term “flood” is not further defined in the
policy.
On December 22, 2010, the house was seriously damaged when rain waters
channeled into and down the drainage systems on Bell Canyon Drive overwhelmed the
storm drains near the property. That morning, plaintiffs’ neighbor alerted them that
waters from Bell Canyon Drive were coming up their driveway toward their home. From
their home, plaintiffs “observed large amounts of waters coming down Bell Canyon
Drive, as well as waters flowing down the drainage ditches and off the hillsides onto Bell
Canyon Drive.” Plaintiff Peter Horvath described its appearance as a “river of water
coming down the street . . . .” They also observed the end of the cul-de-sac in front of
their home being filled with water and rising quickly up their driveway. The water rose
to a point where it nearly covered the mailbox in front of their home, “which stood
approximately five feet over curb level.”
The water eventually breached plaintiffs’ home, entering through various
crevices, causing substantial damage to the house and its contents. Plaintiffs fled
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upstairs. Later that morning, “firefighters performed a mandatory evacuation of plaintiffs
from the house.”
Afterwards, the water line on the exterior stucco of the house was
approximately three feet above ground level. The interior water damage was about 18
inches through the first floor of the house. “The City of Rancho Santa Margarita yellow-
tagged Plaintiffs’ house as unsafe to live in. The tag indicated that the cause of the
damage was ‘flood.’”
As a result of the damage, plaintiffs contacted State Farm that same day and
notified it of their claim. State Farm sent two different inspectors to the home over the
course of two weeks. “On February 16, 2011, State Farm sent plaintiffs a letter denying
the Claim, stating that the damage to the house was not covered by the Policy due to
several exclusions, including exclusions for flood and surface water.”
Plaintiffs sued, asserting causes of action for bad faith breach of insurance
policy, breach of contract, and declaratory relief. State Farm filed a motion for summary
judgment, or, in the alternative, summary adjudication. The court granted State Farm’s
motion in full, stating plaintiffs’ claims were defeated by the exclusion in the policy for
flood and surface water damage. The court entered judgment, and plaintiffs timely
appealed the judgment.
DISCUSSION
Legal Principles
“The standard of review on a motion for summary judgment or summary
adjudication is familiar. A defendant meets his or her burden in a summary adjudication
motion ‘by negating an essential element of the plaintiff’s case, or by establishing a
complete defense, or by demonstrating the absence of evidence to support the plaintiff’s
case.’ [Citations.] ‘We review questions of law as well as orders granting summary
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adjudication under the de novo standard of review.’” (Angelica Textile Services, Inc. v.
Park (2013) 220 Cal. App. 4th 495, 504.)
“When determining whether a particular policy provides a potential for
coverage . . . , we are guided by the principle that interpretation of an insurance policy is
a question of law. [Citation.] The rules governing policy interpretation require us to look
first to the language of the contract in order to ascertain its plain meaning or the meaning
a layperson would ordinarily attach to it.” (Waller v. Truck Ins. Exchange, Inc. (1995) 11
Cal. 4th 1, 18 (Waller).)
“Interpretation of an insurance policy . . . follows the general rules of
contract interpretation.” (MacKinnon v. Truck Ins. Exchange (2003) 31 Cal. 4th 635, 647
(MacKinnon).) “The fundamental rules of contract interpretation are based on the
premise that the interpretation of a contract must give effect to the ‘mutual intention’ of
the parties.” (Waller, supra, 11 Cal.4th at p. 18.) “‘Such intent is to be inferred, if
possible, solely from the written provisions of the contract. [Citation.] The “clear and
explicit” meaning of these provisions, interpreted in their “ordinary and popular sense,”
unless “used by the parties in a technical sense or a special meaning is given to them by
usage” [citation], controls judicial interpretation. [Citation.]’ [Citations.] A policy
provision will be considered ambiguous when it is capable of two or more constructions,
both of which are reasonable. [Citations.] But language in a contract must be interpreted
as a whole, and in the circumstances of the case, and cannot be found to be ambiguous in
the abstract. [Citation.] Courts will not strain to create an ambiguity where none exists.”
(Id. at pp. 18-19.)
Where an insurance policy is ambiguous, it will be construed in favor of
coverage if it can reasonably be so interpreted. (State Farm Mut. Auto. Ins. Co. v.
Jacober (1973) 10 Cal. 3d 193, 201-203.) “Moreover, insurance coverage is
‘“‘interpreted broadly so as to afford the greatest possible protection to the insured,
[whereas] . . . exclusionary clauses are interpreted narrowly against the insurer.’”’
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[Citation.] ‘[A]n insurer cannot escape its basic duty to insure by means of an
exclusionary clause that is unclear. As we have declared time and again “any exception
to the performance of the basic underlying obligation must be so stated as clearly to
apprise the insured of its effect.” [Citation.] Thus, “the burden rests upon the insurer to
phrase exceptions and exclusions in clear and unmistakable language.” [Citation.] The
exclusionary clause “must be conspicuous, plain and clear.”’” (MacKinnon, supra, 31
Cal.4th at p. 648.)
“Flood” Is Not Ambiguous and Applies to Plaintiffs’ Claim
Plaintiffs contend the word “flood” is ambiguous, and since at least one
definition of flood would fall outside the exclusion of the policy, that definition must
prevail. Plaintiffs cite the Federal Emergency Management Agency’s (FEMA) National
Flood Insurance Program Summary of Coverage, which defines flood, first, “[i]n simple
terms,” as “an excess of water on land that is normally dry.” That definition would
clearly apply to plaintiffs’ claim. But the document goes on to quote the National Flood
Insurance Program’s more detailed definition as, “‘A general and temporary condition of
partial or complete inundation of two or more acres of normally dry land area or of two
or more properties (at least one of which is your property) from: [¶] Overflow of inland
or tidal waters; [¶] Unusual and rapid accumulation of runoff of surface waters from any
source; [¶] Mudflow*; or [¶] Collapse or subsidence of land along the shore of a lake
or similar body of water as a result of erosion or undermining caused by waves or
currents of water exceeding anticipated cyclical levels that result in a flood as defined
above.’”
Of those causes, the only one potentially applicable here is “runoff of
surface waters.” Plaintiffs spend the bulk of their brief explaining, persuasively, that
once water starts flowing along a channel, such as Bell Canyon Drive, it is no longer
considered “surface water.” The problem is, the “flood” is not the surface water itself,
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but the runoff of surface water. It seems likely to us that the FEMA summary would
regard a deluge of rain water as the runoff of surface water.
We need not decide that issue, however, because our task is not to construe
the FEMA document, but instead to decide whether the ordinary and plain meaning of the
word “flood” would encompass the water that damaged plaintiffs’ home. We believe it
does. What happened to plaintiffs is a typical “flash flood.” In common parlance, a
“flash flood” is “a local flood of great volume and short duration generally resulting from
heavy rainfall in the immediate vicinity.” (Merriam-Webster’s Collegiate Dict. (10th ed.
2001) p. 442; see Scott v. Continental Ins. Co. (1996) 44 Cal. App. 4th 24, 29 [“In seeking
to ascertain the ordinary sense of words, courts in insurance cases regularly turn to
general dictionaries”].) A flash flood is a type of “flood,” as demonstrated by the fact
that it is defined in terms of a flood.
Our conclusion is bolstered by the fact that plaintiff Susan Horvath referred
to the waters as a “flood” in her deposition. (See Montrose Chemical Corp. v. Admiral
Ins. Co. (1995) 10 Cal. 4th 645, 666-667 [“If the meaning a layperson would ascribe to
the language of a contract of insurance is clear and unambiguous, a court will apply that
meaning”].) Also, when the City of Rancho Santa Margarita yellow-tagged plaintiffs’
home, it noted the cause of damage was “flood.” In other words, people using the term
“flood” in its ordinary sense applied the term to the waters that damaged plaintiffs’ home.
Plaintiffs’ homeowners insurance policy excluded flood damage, and thus State Farm
properly denied their claim. Since there were no material disputed facts as to the “flood”
exclusion, the trial court properly granted summary judgment. And since plaintiffs’
claim was properly denied under the “flood” exclusion, we need not address the “surface
water” exclusion.
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Plaintiffs Cannot Maintain a Claim of Bad Faith
Plaintiffs final argument is that State Farm denied their claim in bad faith.
However, “‘a bad faith claim cannot be maintained unless policy benefits are due . . . .’”
(Waller, supra, 11 Cal.4th at p. 36.) Since no policy benefits were due, plaintiffs’ bad
faith claim fails.
DISPOSITION
The judgment is affirmed. State Farm shall recover its costs incurred on
appeal.
IKOLA, J.
WE CONCUR:
RYLAARSDAM, ACTING P. J.
THOMPSON, J.
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