Smith-Martin v. State Farm General Insurance Co. CA2/3 ( 2024 )

Filed 10/29/24 Smith-Martin v. State Farm General Insurance Co. CA2/3
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
SANDRA D. SMITH-MARTIN, B333554
et al.,
Los Angeles County
Plaintiffs and Appellants, Super. Ct. No. 21STCV11434
v.
STATE FARM GENERAL
INSURANCE COMPANY,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of
Los Angeles County. Douglas W. Stern, Judge. Affirmed.
Shaver Legal, Cody J. Shaver; McCathern, Evan Selik and
Christine Zaouk for Plaintiffs and Appellants.
Pacific Law Partners, Jenny J. Chu and Weiland S. Chiang
for Defendant and Respondent.
_________________________
Plaintiffs Sandra D. Smith-Martin and Sterling K. Martin
(Plaintiffs) filed a claim with their homeowners’ insurance
company—State Farm General Insurance Company (State Farm)
—after a leaky pipe caused damage to their condominium.
State Farm denied the claim, citing policy exclusions for losses
caused by wear, tear, or deterioration, as well as continuous
or repeated seepage or leakage of water. Plaintiffs sued
State Farm, asserting causes of action for breach of contract
and breach of the implied covenant of good faith and fair dealing.
State Farm moved for summary judgment, which the trial court
granted.
On appeal, Plaintiffs argue they submitted sufficient
evidence to raise triable issues of fact concerning whether
State Farm erroneously denied their claim and conducted a
thorough investigation. Plaintiffs also argue the trial court
made evidentiary errors and denied them the opportunity to
address certain issues at the hearing. We reject Plaintiffs’
arguments and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
1. The loss
On March 17, 2020, Plaintiffs discovered water leaking
from a pipe in their kitchen ceiling. The leak caused a bubble
of water to form on the ceiling, measuring approximately one foot
across. Water was running down the wall and had accumulated
on the kitchen counters and floor.
Martin cut a hole in the ceiling drywall and placed a
basin under the leak to collect the water. The basin was about
six inches across and three inches deep. Martin used tubing to
connect the basin to a five-gallon bucket on the kitchen counter.
2
Water would drain from the basin into the bucket by way of
the tubing.
Plaintiffs filed a claim with State Farm under their
homeowners’ insurance policy. The policy insures Plaintiffs
for accidental direct physical loss to their property, subject to
explicit exceptions for losses not insured. The policy excludes
from coverage losses resulting from “wear, tear, . . . deterioration,
. . . latent defect or mechanical breakdown,” as well as losses
caused by “corrosion, electrolysis or rust.” The policy also
excludes any loss caused by “water damage,” “regardless of
whether the event occurs suddenly or gradually, involves isolated
or widespread damage, arises from natural or external forces,
or occurs as a result of any combination of these.” The policy
defines water damage to include the “continuous or repeated
seepage or leakage of water or steam from a . . . plumbing
system.” We refer to this as the CRSL exclusion.
State Farm retained Reagan Katz to inspect the loss and
handle the claim on its behalf. Katz inspected Plaintiffs’ property
on March 23, 2020, which he documented in the claim file.
According to Katz’s report, he was unable to see the actual leak
because a ceiling joist blocked his view. However, he noticed
a single drip of water from the joist every second or second
and a half. Martin reportedly told Katz the main water was
turned on during the inspection and the current flow rate was
the same as when he first noticed the leak.
Katz told Plaintiffs he could not confirm or deny coverage
until he received confirmation from a plumber regarding the
source of the leak. Katz wrote in the claim file that the loss
was the result of continuous or repeated seepage or leakage.
3
He noted he would prepare a denial of claim “for review once
plumber report received to confirm [cause of loss].”
Plaintiffs hired a plumber to repair the leak and sent Katz
an invoice for the work. The invoice states the plumber repaired
a “[f]resh water leak at kitchen ceiling.” It does not provide
information about the cause of the leak.
State Farm denied the claim in a letter dated April 16,
2020. According to the letter, “[w]ater has been leaking from the
cold water supply line in the ceiling above the kitchen, causing
damage to the ceiling, walls and cabinets below.” State Farm
determined the predominant cause of the failure “is most likely
wear, tear, deterioration, latent defect, mechanical breakdown
and/or workmanship,” which resulted in a “continuous or
repeated leakage or seepage of water.” State Farm concluded
the policy excludes coverage for all the damage to Plaintiffs’
property.
2. Plaintiffs’ complaint
About a year after State Farm denied the claim, Plaintiffs
filed a complaint against it, asserting causes of action for breach
of contract and breach of the implied covenant of good faith
and fair dealing. Plaintiffs alleged State Farm breached their
homeowners’ policy by failing to provide coverage for damage
caused by a sudden and accidental water loss. According to
Plaintiffs, State Farm fabricated facts to support the denial of
the claim, failed to investigate the claim thoroughly, and ignored
information supporting coverage. They alleged State Farm
breached the implied covenant of good faith and fair dealing
by—among other things—failing to respond timely to their
correspondences, misrepresenting policy provisions, failing
4
to conduct an adequate investigation, failing to pay the claim,
and failing to comply with regulations.
3. State Farm’s motion for summary judgment
State Farm moved for summary judgment, asserting
Plaintiffs could not prove it breached the homeowners’ policy.
According to State Farm, the loss was the result of a pinhole
leak in a cold-water supply line, which was caused by wear,
tear, deterioration, or a latent defect. State Farm argued any
resulting losses to Plaintiffs’ property were caused by continuous
or repeated leakage or seepage from the damaged pipe.
State Farm asserted Plaintiffs could not prevail on their claims
because their policy excludes coverage for both types of losses.
State Farm supported its motion with a declaration from
George Clayton Mitchell, who is a general contractor and the
president of a construction and architecture consulting firm.
Mitchell inspected the property and reviewed the claim file,
including photographs of the damage and a video Plaintiffs
took while the pipe was leaking.
Mitchell determined the damage to Plaintiffs’ property
was caused by a pinhole leak in a cold water supply line located
in a kitchen soffit, which is an enclosed box-shaped area between
the top of the kitchen cabinets and the ceiling. He explained
the pipe was in a protected location, and there is no evidence of
an external force or impact that could have caused trauma to it.
He concluded the leak must have been caused by long-term
corrosion resulting from either a latent defect or wear, tear,
and deterioration of the pipe.
Mitchell also provided an opinion on the cause of the
water damage. According to Mitchell, the leak slowly dripped
onto the soffit until it became saturated and a bubble appeared
5
on the ceiling. The damage was the result of continuous leakage
of water over time, rather than a sudden discharge of a large
amount of water all at once. Mitchell based his opinion on the
lack of signs of major spraying as well as Plaintiffs’ video of
the leak, which apparently showed water dripping from a wooden
joist at a relatively slow rate. Mitchell also pointed to evidence
that Plaintiffs were able to contain the leak using a “catch basin
system” that drained the water into a five-gallon bucket. He
noted that Plaintiffs said they emptied the bucket relatively
infrequently, which indicated the leak was very small. According
to Mitchell, had there been a sudden burst in the supply line
causing water to spray, Plaintiffs’ catch system would not
have worked and the area would have flooded.
4. Plaintiffs’ opposition
Plaintiffs opposed the motion for summary judgment,
arguing their policy included an ensuing loss provision that
provided coverage for water damage caused by wear and tear.
Plaintiffs also asserted there were triable issues of fact as to
whether the loss resulted from continuous or repeated leakage
or seepage from the supply line. Plaintiffs also argued there were
disputed issues of fact concerning whether State Farm denied
the claim before it completed an investigation, determined the
cause of the loss, or retained an expert to investigate the cause.
Plaintiffs supported their opposition with excerpts from
their own depositions and the deposition of their mitigation
expert. In those excerpts, Plaintiffs testified that the water
was spraying—rather than dripping—from the leak in the pipe.
Plaintiffs said they had to turn off the main water nearly all the
time—including during the inspection—because the five-gallon
bucket would rapidly fill up and need to be emptied. Plaintiffs’
6
mitigation expert testified that he inspected the property and
observed a significant amount of water damage from the leak.
In addition to the deposition testimony, Plaintiffs
submitted a declaration from Sandra Moriarty, who is an expert
on the handling of first-party insurance claims. Moriarty opined
that State Farm’s investigation fell below industry standards
and practices, which resulted in an improper coverage denial.
She criticized State Farm for failing to obtain detailed
information from the plumber who made the repairs or from
Plaintiffs’ emergency water restoration company. She also
criticized State Farm for refusing to conduct another inspection
with Plaintiffs’ public adjuster.1 According to Moriarty,
State Farm based its denial decision on misrepresentations
in the claim file, including that the water had been turned on
during the inspection.
Plaintiffs also submitted a declaration from a plumber,
Jake Parker. According to Parker, leaks in copper piping
can be caused by corrosion, failure of a pressure regulator,
an increase in pressure from the city supply, fittings installed
too close together, or poor chemical composition of the water.
Parker asserted an inspection of Plaintiffs’ pipe would be
required to determine conclusively if corrosion caused the leak.
Parker concluded that the leak occurred suddenly from an
unknown cause.
1 A public adjuster “is a person who, for compensation, acts
on behalf of or aids in any manner, an insured in negotiating for
or effecting the settlement of a claim or claims for loss or damage
under any policy of insurance . . . .” (Ins. Code, § 15007.)
7
According to Parker, the other damage to Plaintiffs’
property was caused by water spraying from the pipe for a
short period of time. Parker pointed to the lack of rot, mold,
and deterioration of drywall and plywood, which indicates the
leak did not occur over an extended period. Parker stated it was
probable that 11 to 39 gallons of water would have been released
from the leak per hour.
5. The ruling, judgment, and appeal
At the hearing on the motion, Plaintiffs conceded there
was not “so much of a dispute” about whether the damage to the
pipe resulted from wear and tear. Instead, the main dispute was
whether the policy covered the ensuing water damage. Plaintiffs
argued their evidence showed the water damage was covered
because it occurred suddenly. State Farm responded that the
undisputed evidence showed the water was dripping at a slow
rate and any resulting damage was excluded under the policy’s
CRSL exclusion.
After taking the matter under submission, the court
granted State Farm’s motion for summary judgment. The
court concluded State Farm had met its initial burden to show
the policy excludes coverage for Plaintiffs’ losses. The court
determined there were no disputed issues of fact concerning
whether the leak resulted from wear, tear, or deterioration.
The court explained that Parker’s declaration “simply speculates
on potential external forces that may have cause[d] the pinhole
in the pipe.” The court next determined there were no triable
issues concerning whether the water damage was the result of
continuous or repeated leakage or seepage. The court reasoned
that, although the facts of the case did not show leakage of
an extended duration, the policy excludes losses caused by
8
continuous or repeated leakage or seepage “ ‘regardless of
whether the loss occurs suddenly or gradually.’ ”
The court declined to consider Plaintiffs’ evidence that
State Farm improperly handled the claim. The court explained
that such evidence was relevant only to whether State Farm
acted in bad faith. However, to prove bad faith, Plaintiffs had
to show State Farm improperly denied their claim. Because
Plaintiffs did not present evidence that State Farm improperly
denied their claim, their evidence of bad faith was irrelevant.
The court entered judgment for State Farm, and Plaintiffs
timely appealed.
DISCUSSION
Plaintiffs argue the trial court made procedural and
substantive errors in connection with State Farm’s motion for
summary judgment. They assert the court erred in finding
no disputed issues of material fact concerning the adequacy of
State Farm’s investigation and whether the policy covered the
damage to their property. They also argue the court erroneously
sustained objections to Parker’s declaration and denied them
the opportunity to address certain issues at the hearing.
1. Standard of review and relevant law
Summary judgment is proper if the papers submitted
show there is no triable issue as to any material fact and the
moving party is entitled to prevail on a cause of action as a
matter of law. (Code. Civ. Proc., § 437c, subd. (c); Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) A
defendant moving for summary judgment has the initial burden
to show the plaintiff cannot establish one or more elements of
the challenged cause of action or there is a complete defense
to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).)
9
A defendant meets its burden by presenting affirmative evidence
that negates an essential element of the plaintiff’s claim, or by
submitting evidence that demonstrates “the plaintiff does not
possess, and cannot reasonably obtain, needed evidence” to prove
an essential element of the plaintiff’s claim. (Aguilar, at p. 855.)
If the defendant makes a sufficient showing, the burden
then shifts to the plaintiff to demonstrate a triable issue of
material fact exists. (Code Civ. Proc., § 437c, subd. (p)(2).)
A triable issue of fact exists if the evidence would allow a
reasonable trier of fact to find the underlying fact in favor of
the party opposing the motion. (Aguilar, supra, 25 Cal.4th
at p. 850.)
On appeal from a summary judgment, we review the record
de novo and independently determine whether triable issues
of material fact exist. (Saelzler v. Advanced Group 400 (2001)
25 Cal.4th 763, 767; Guz v. Bechtel National, Inc. (2000) 24
Cal.4th 317, 334.) We “view the evidence in a light favorable”
to the nonmoving party, “resolving any evidentiary doubts or
ambiguities” in that party’s favor. (Saelzler, at p. 768.) We
consider all evidence the parties submitted in connection with
the motion, except that which the court properly excluded.
(Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.)
2. State Farm met its initial burden
As we understand it, Plaintiffs’ complaint alleged State
Farm breached their homeowners’ policy by denying coverage for
two categories of losses to their property: (1) damage to the pipe;
and (2) damage caused by water leaking from the pipe. State
Farm presented sufficient evidence that Plaintiffs’ policy excludes
coverage for both types of losses.
10
With respect to the damage to the pipe, State Farm’s expert
―George Mitchell—opined in a declaration that the leak was
caused by long term corrosion resulting from a latent defect,
wear, tear, or deterioration. Mitchell formed his opinion after
viewing a video and photographs of the leak, reading Plaintiffs’
deposition testimony describing the leak, and personally
inspecting the area where the loss occurred. He explained
there is “no evidence that any external force or impact caused
trauma to the pressurized cold-water supply line,” nor is it
possible anything impacted the pipe “due to its protected location
in the ceiling above the refrigerator.” This was sufficient to show
the damage to the pipe was the result of wear, tear, deterioration,
or corrosion, each of the which the policy expressly excludes
from coverage.
State Farm also presented ample evidence that Plaintiffs’
policy excludes coverage for the water damage resulting from
the leak. Mitchell opined that the damage was the result of
water dripping from the pipe slowly and continuously over an
extended period of time. He based his opinion on photographs
of the area and a video of the leak, which apparently showed
water dripping from the ceiling joist at a relatively slow rate
of speed. Mitchell noted the lack of signs of water splashing
in the surrounding area, which indicated there was no major
spraying of water. He also reasoned that Plaintiffs’ self-
constructed catch system would not have worked if water had
been spraying from the pipe. This was sufficient to show any
water damage to Plaintiffs’ property was the result of continuous
or repeated seepage or leakage, which the policy expressly
excludes from coverage.
11
The evidence summarized above is sufficient to show the
policy excludes coverage for all the damage to Plaintiffs’ property.
State Farm, therefore, met its initial burden on summary
judgment. (See Medina v. GEICO Indemnity Co. (2017)
8 Cal.App.5th 251, 259–260 [an insurer may seek summary
judgment on the ground that the insured’s claim is excluded
under the policy]; Alex R. Thomas & Co. v. Mutual Service
Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 74 (Alex R. Thomas)
[an insurer need not disprove all possible causes of a loss to
meet its burden on summary judgment].) Accordingly, the
burden shifted to Plaintiffs to present evidence raising triable
issues of fact as to the coverage issue. (See Roberts v. Assurance
Co. of America (2008) 163 Cal.App.4th 1398, 1406 (Roberts) [“once
the insurer establishes the claim is excluded, the burden shifts
to the insured to show a triable issue of material fact exists”].)
3. Plaintiffs failed to raise triable issues of fact
Plaintiffs contend they presented sufficient evidence
to raise triable issues of fact as to whether: (1) the leak was
the result of wear, tear, or deterioration; (2) the resulting
water damage was caused by continuous or repeated seepage or
leakage; and (3) State Farm conducted an adequate investigation.
We consider each issue in turn.
a. Evidentiary objections
Before considering the substantive issues, we must address
Plaintiffs’ arguments concerning the court’s evidentiary rulings.
We review a trial court’s evidentiary rulings for an abuse of
discretion. (See Ryder v. Lightstorm Entertainment, Inc. (2016)
246 Cal.App.4th 1064, 1072.)
Plaintiffs argue the trial court abused its discretion
by sustaining State Farm’s objections to Parker’s declaration.
12
Plaintiffs fail, however, to identify the objections the court
sustained or explain why those specific objections were meritless.
Their conclusory assertion that the court abused its discretion
does not satisfy their burden to show error affirmatively.
(See Yield Dynamics, Inc. v. TEA Systems Corp. (2007)
154 Cal.App.4th 547, 556–557 [“an appellant must do more
than assert error and leave it to the appellate court to search
the record and the law books to test his claim”].)
Nevertheless, for the sake of argument—and out of
an abundance of caution—we will consider Parker’s entire
declaration to determine whether Plaintiffs raised triable issues
of fact.
b. Wear, tear, or deterioration
Plaintiffs assert Parker’s declaration created triable issues
of fact as to whether State Farm properly denied coverage under
the policy’s exclusion for wear, tear, or deterioration. According
to Plaintiffs, the trial court erred by failing to view Parker’s
declaration in the light most favorable to them. They note that
Parker is an experienced plumber who based his opinions on the
same information that Mitchel did. Plaintiffs insist that, had
the court given Parker’s opinions the same weight as Mitchell’s
opinions, it would have found triable issues of fact.
We reject Plaintiffs’ contention that Parker’s declaration
was sufficient to raise triable issues of fact. We acknowledge that
Parker is well qualified as an expert and based his opinions on
similar information as did Mitchell. However, unlike Mitchell,
Parker did not provide an opinion on the actual cause of the leak,
which was the key issue in the case. Nor did he directly refute
Mitchell’s opinion that corrosion caused the leak. Instead,
he merely identified additional general causes of leaks in
13
copper pipes. For example, although Parker asserted a pressure
regulator failure can cause a pipe to leak, he did not conclude
a pressure regulator failure actually—or even likely—caused the
leak in Plaintiffs’ pipe. Nor did he identify any evidence that
would support such a conclusion. Because an insurer is not
required to disprove all possible causes of a loss to be entitled
to summary judgment, the mere possibility of alternative causes
is not sufficient to survive summary judgment. (See Alex R.
Thomas, supra, 98 Cal.App.4th at p. 74 [an insurer need not
disprove all possible causes of a loss to be entitled to summary
judgment]; Roberts, supra, 163 Cal.App.4th at p. 1406 [same].)
Parker’s assertion that a lab analysis is required to prove
conclusively that corrosion caused the leak is insufficient for
a similar reason. Crucially, Parker did not opine that a lab
analysis would have shown a lack of corrosion. Nor did Plaintiffs
submit evidence to that effect. Instead, they simply asked the
court to speculate as to what a lab analysis might have revealed.
However, speculation is not sufficient to create a triable
issue of fact. (See Joseph E. Di Loreto, Inc. v. O’Neill (1991)
1 Cal.App.4th 149, 161 [opposition to a motion for summary
judgment may not be based on “speculation, conjecture,
imagination, or guesswork”].)
Plaintiffs’ reliance on Garrett v. Howmedica Osteonics
Corp. (2013) 214 Cal.App.4th 173 is misplaced. In that case,
the trial court excluded an expert’s declaration submitted in
opposition to a motion for summary judgment. The trial court
ruled the declaration lacked adequate factual foundation and was
devoid of reasoned analysis to support the expert’s opinions. (Id.
at pp. 179–180, 185.) A different panel of this Division reversed,
rejecting the respondents’ argument that the declaration failed to
14
meet the requirements for expert testimony under Evidence Code
section 802 and Sargon Enterprises, Inc. v. University of Southern
California (2012) 55 Cal.4th 747. The court explained, “In light
of the rule of liberal construction, a reasoned explanation
required in an expert declaration filed in opposition to a
summary judgment motion need not be as detailed or extensive
as that required in expert testimony presented in support of a
summary judgment motion or at trial.” (Garrett, at pp. 188–189.)
Unlike the declaration at issue in Garrett, Parker’s
declaration is not deficient because it lacks factual foundation
or is devoid of reasoned analysis. Rather, it is deficient because
Parker failed to address the key issues in the case. Instead
of opining on what caused Plaintiffs’ pipe to leak—or directly
refuting Mitchell’s opinion on the cause—Parker simply
identified general causes of leaks in copper pipes. He offered
no reason, apart from pure speculation, to conclude any of
those causes actually resulted in the leak in Plaintiffs’ pipe.
Garrett has no application under these circumstances.
We also reject Plaintiffs’ argument that they raised triable
issues of fact by presenting evidence that State Farm covered two
subsequent water damage claims on their property. Plaintiffs
cite no evidence in the record to support their argument. Instead,
they rely entirely on statements in their opposition brief to
State Farm’s motion for summary judgment. It is elementary
that an attorney’s statements are not evidence. (See J.P. v.
Carlsbad Unified School Dist. (2014) 232 Cal.App.4th 323, 343.)
Nor are they sufficient to create triable issues of fact.
c. Continuous and repeated seepage or leakage
Plaintiffs argue they raised triable issues of fact concerning
whether State Farm properly denied coverage under the policy’s
15
CRSL exclusion.2 Plaintiffs contend their evidence shows the
damage to their property resulted from water spraying at a fast
rate, rather than at a slow drip. In support, they cite deposition
testimony that the water was spraying from the pipe, there was
extensive water damage in the area, and a five-gallon drainage
bucket filled up quickly when the main water was turned on.
Plaintiffs also point to the lack of evidence of long-term water
damage in the area, such as mold, rot, or soft drywall.
Even assuming Plaintiffs’ evidence is true, it does not show
the damage to their property falls outside the scope of the CRSL
exclusion. The CRSL exclusion applies to damage caused by a
“continuous or repeated seepage or leakage of water or steam
from a . . . plumbing system.” Generally, we interpret
contractual terms in their “ ‘ “ordinary and popular sense. ” ’ ”3
(Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18.)
2 For the first time in their reply brief, Plaintiffs argue the
trial court did not conclude State Farm properly denied coverage
under the CRSL exclusion. Plaintiffs forfeited this argument
by failing to raise it in their opening brief. (See Christoff v.
Union Pacific Railroad Co. (2005) 134 Cal.App.4th 118, 125
[“an appellant’s failure to discuss an issue in its opening brief
forfeits the issue on appeal”].) In fact, Plaintiffs argued the exact
opposite in their opening brief, asserting the trial court “based
its ruling on the CRSL exclusion.”
3 At oral argument before this court, Plaintiffs seemed
to argue that the interpretation of the CRSL exclusion is a
question of fact for the jury to decide. We disagree. Contract
interpretation is solely a judicial function where, as here, it
is based on the words of the instrument alone. (City of Hope
National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375,
395.)
16
The Merriam-Webster dictionary defines “continuous” as
“marked by uninterrupted extension in . . . time.” (Merriam-
Webster Dict. Online (2024) <https://www.merriam-webster.com/
dictionary/continuous> [as of Oct. 29, 2024], archived at
<https://perma.cc/N6UD-SVWA>.) The Cambridge dictionary
defines it as “without a pause or interruption.” (Cambridge Dict.
Online (2024) <https://dictionary.cambridge.org/dictionary/
english/continuous> [as of Oct. 29, 2024], archived at <https://
perma.cc/RF5Q-2NL5>.) Using these definitions, a leak is
continuous for purposes of the CRSL exception if it will continue
indefinitely absent outside intervention. In contrast, a leak
is not continuous if it ends on its own without intervention.
Examples of the latter might be “[a] dishwater hose breaking
in midcycle, a water heater giving out and flooding a room, or
an overflowing toilet.” (Brown v. Mid-Century Ins. Co. (2013)
215 Cal.App.4th 841, 853 (Brown).)
Here, the undisputed evidence shows the leak occurred
in a cold-water supply line. Given its location, there is
no reasonable dispute that the leak would have continued
indefinitely absent outside intervention. Indeed, Plaintiffs
asserted the water stopped leaking only when they turned off the
main water supply. When they turned the main water back on,
the leak would resume. On this record, even assuming the leak
was spraying rapidly for a short period of time, no reasonable
trier of fact could conclude the leak was anything other than
a “continuous . . . leakage of water . . . from a plumbing system.”
(See Brown, supra, 215 Cal.App.4th at p. 852 [“whether the water
leaked or sprayed or streamed out of the hole(s) in the pipe, the
water leaked, sprayed, or streamed out constantly and gradually
17
over time”].) Accordingly, State Farm properly denied coverage
for the resulting damage under the CRSL exclusion.
Plaintiffs contend the CRSL exclusion requires that
the damage occurred over an extended period of time. Their
contention is based on a misreading of the policy. Plaintiffs rely
on language in the main policy stating a continuous or repeated
seepage or leakage must “occur[ ] over a period of time” to be
excluded from coverage. However, Plaintiffs’ policy includes
a condominium endorsement, which expressly deletes that
provision. In its place, the endorsement inserts a revised
CRSL exclusion that denies coverage for any loss resulting from
“continuous or repeated seepage or leakage of water or steam
from a . . . plumbing system.” The revised exclusion does not
expressly require the loss occur over a period of time, let alone
an extended period of time. Moreover, as the trial court noted,
the revised exclusion expressly denies coverage for water damage
“whether the event occurs suddenly or gradually.”
Rather than suggest an alternative interpretation of the
endorsement’s CSLR exclusion, Plaintiffs simply urge us not to
enforce it. According to Plaintiffs, enforcement of the exclusion
would lead to absurd results because it would mean the policy
both provides coverage for water damage and excludes it. In a
related argument, they contend the exclusion is absurd because
“something cannot be both gradual and sudden at the same
time.”
We are not persuaded by either argument. It is not
apparent—and Plaintiffs do not meaningfully explain—how
the endorsement both covers, and excludes coverage for, water
damage. Nor does the endorsement require anything to occur
both gradually and suddenly. Rather, it excludes coverage for
18
water damage “whether the event occurs suddenly or gradually.”
(Italics added.) There is nothing absurd about this provision.
Brown, supra, 215 Cal.App.4th 841, is inapposite.
The policy at issue in that case covered losses resulting from
a “ ‘sudden and accidental discharge’ ” of water, but excluded
losses caused by a “ ‘constant or repeating gradual, intermittent
or slow release of water.’ ” (Id. at pp. 846, 856–857.) The
insureds argued the policy covered water damage caused by a
leaking pipe because, although the damage occurred gradually
over an extended period of time, the pipe itself burst suddenly.
The court rejected the argument, reasoning that “[t]he nature
of the gradual water discharge from the [insureds’] pipe (even
if initiated by a nanosecond breach in the wall of the pipe) and
of the incremental effects of the water on the [insureds’] house
precludes any finding that the discharge was sudden.” (Id. at
pp. 851–853.)
Plaintiffs argue Brown stands for the proposition that “the
length of time a pipe leaks determines coverage.” (Boldface type
omitted.) While that may be true of the policy at issue in Brown,
it is not true here. Instead, under the CRSL exclusion, coverage
depends on whether the damage resulted from a “continuous or
repeated seepage or leakage” of water. On that issue, Plaintiffs
failed to submit evidence raising a triable issue of fact.
d. State Farm’s investigation
Plaintiffs argue there are triable issues of fact concerning
whether State Farm breached its duty to investigate the
circumstances of the claim and determine the cause of the loss.
According to Plaintiffs, their evidence shows State Farm made
the decision to deny the claim during the initial inspection,
before completing its investigation. They also contend their
19
evidence shows State Farm failed to examine the pipe, have
it tested, or retain an expert to determine the cause of loss.
Instead, State Farm determined only that the cause of loss was
“most likely” not covered.
As the trial court noted—and Plaintiffs seem to concede—
the sufficiency of State Farm’s investigation is relevant only
to whether it breached the implied covenant of good faith and
fair dealing. “[T]here are at least two separate requirements
to establish breach of the implied covenant: (1) benefits due
under the policy must have been withheld; and (2) the reason for
withholding benefits must have been unreasonable or without
proper cause.” (Love v. Fire Ins. Exchange (1990) 221 Cal.App.3d
1136, 1151.) Therefore, “[w]here benefits are withheld for proper
cause, there is no breach of the implied covenant.” (Ibid.; see
Benavides v. State Farm General Ins. Co. (2006) 136 Cal.App.4th
1241, 1250 [“to establish an implied covenant tortious breach,
an insured must show first, that benefits were due under the
policy”]; California Shoppers, Inc. v. Royal Globe Ins. Co. (1985)
175 Cal.App.3d 1, 54 [“declining to perform a contractual duty
under the policy with proper cause is not a breach of the implied
covenant”].)
Here, Plaintiffs failed to submit evidence creating a
triable issue of fact as to whether State Farm withheld benefits
due under the policy. As discussed above, they produced no
evidence from which a reasonable trier of fact could conclude the
damage to the pipe was caused by something other than corrosion
from wear, tear, or deterioration. Nor did they produce evidence
from which a trier of fact could conclude the water damage was
caused by something other than continuous or repeated seepage
or leakage from a plumbing system. Absent such evidence,
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Plaintiffs cannot prove an essential element of their claim that
State Farm breached the covenant of good faith and fair dealing.
Therefore, even if Plaintiffs raised triable issues of fact as
to whether State Farm’s investigation was inadequate, it is
not enough to survive summary judgment.
4. The court did not deny Plaintiffs the opportunity
to argue at the hearing
Plaintiffs contend the trial court refused to grant them the
opportunity at the hearing to address State Farm’s evidentiary
objections and the CRSL exclusion. There is simply no merit to
either contention. At no point during the hearing did the court
refuse to allow Plaintiffs to address any issue. In fact, Plaintiffs
argued at length about the CRSL exclusion, telling the court
it was the “actual issue in dispute.” Although Plaintiffs did not
discuss State Farm’s evidentiary objections, that was by their
own choice. There is no merit to their contention that the court
denied them the opportunity to argue any issues.
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DISPOSITION
We affirm the judgment. State Farm is awarded its costs
on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
EGERTON, Acting P. J.
We concur:
ADAMS, J.
BERSHON, J.*

Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
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