Waldsmith v. State Farm Fire & Casualty Co. (232 Cal. App. 3d 693, 1991)

Opinion

SONENSHINE, J.

—Robert Waldsmith, Sr., his son, and Coast Federal Savings and Loan Association, the holder of the first trust deed and mortgage on Waldsmith’s building, appeal an adverse judgment, denying coverage under Waldsmith’s all-risk policy with State Farm Fire & Casualty Company.

I

In December 1983, Waldsmith purchased rental dwelling insurance from State Farm for his San Clemente property. While the policy was in effect, the building was destroyed by a landslide. State Farm denied coverage.

Waldsmith filed suit for, inter alia, breach of contract and unfair insurance practices. At trial, the parties stipulated the court would try the coverage issue, pursuant to State Farm’s motion for judgment on the pleadings. The amended judgment provides: “In addition the parties stipulated that for the sole purpose of deciding the coverage issue raised by defendant’s motion, the Court would accept plaintiffs’ offer of proof that a city water main in one of the streets adjacent to plaintiffs’ property was negligently maintained, broke, saturated the soil causing a landslide which destroyed plaintiffs’ house. For purposes of the motion it was stipulated that the breakage of the water main was to be considered the predominant cause of plaintiffs’ loss.” The court found the policy language clearly excluded the loss and granted the motion for judgment on the pleadings.

II

The policy at issue covers “accidental direct physical loss to the property except as provided in Section I—Losses Not Insured.” The latter section provides in paragraph 2: “We do not insure for loss which would not have occurred in the absence of one or more of the following excluded events. ... [ft] b. Earth Movement whether combined with water or not, included but not limited to . . . landslide . . . .”

Paragraph 3 provides: “We do not insure for loss consisting of one or more of the items below. ... [ft] a. conduct, act, failure to act, or decision of any person, group, organization or government body whether intentional, wrongful, negligent, or without fault; [ft] b. defect, weakness, inadequacy, fault or unsoundness in: [ft] (1) planning, zoning development, surveying, siting; [ft] (2) design, specifications, workmanship, construction grading, compaction; [ft] (3) materials used in construction or repair or; [ft] (4) maintenance [ft] of any property including land structures or improvements of any kind whether on or off the residence premises, [f] However, we do insure for ensuing loss from items a and b unless the ensuing loss is itself a Loss Not Insured by this Section.”

“In a first party claim case, such as the one before us, whether a claim is covered or excluded under the terms of the policy turns not on whether the alleged cause of the loss was a concurrent cause of the damage, but whether it was the ‘efficient proximate cause’ of the loss.” (Brodkin v. State Farm Fire & Casualty Co. (1989) 217 Cal.App.3d 210, 216 [265 Cal.Rptr. 710].)

Waldsmith’s attorney announced at the hearing, “Our position is that the evidence will show by a preponderance that a city water main in one of the streets adjacent to where the slide occurred had been negligently maintained and had been leaking for quite some time. It finally broke, [f] The soil was saturated with water and the hillside gave way. Three homes, one of which was Mr. Waldsmith’s, went down the hill. ... We alleged the predominant cause of the loss was the negligent conduct of the city in maintaining its water main in the street, [f] In other words, we believe that we can overcome defendant’s contention that the predominant cause was the landslide.”

The parties then stipulated the court should consider, for purposes of its determination, that the efficient proximate cause of the loss was negligence by the city. There is no disagreement with the fact the ultimate cause of the loss was the landslide, clearly an excluded peril. And negligent maintenance of the water main appears to fall squarely under the exclusions contained in paragraph 3, i.e., negligent conduct of a government body, inadequacy in workmanship, materials used in repair, or “maintenance of any property . . . of any kind whether on or off the premises.”

In Murray v. State Farm Fire & Casualty Co. (1990) 219 Cal.App.3d 58 [268 Cal.Rptr. 33], the plaintiff claimed a covered loss from leakage of a water pipe where the leakage was caused by corrosion; but there was no liability because the damages resulted from deterioration. However, the court noted, “[0]ne might similarly argue that the predominating cause of the loss was the negligence of the individual or company who installed the copper pipe with insufficient protection against electrolysis. The Murrays’ policy, however, specifically excludes coverage for any ‘defect, weakness, inadequacy, fault or unsoundness in . . . design, specifications, workmanship, construction [or] materials used in construction ... of any property.’ ” (Id. at p. 64, fn. 2.) Thus, that theory, too, was of no avail to the plaintiff. Waldsmith’s policy contains the same language and commands the same result. As in Brodkin, “the exclusion is clear and unambiguous and expressly covers the damage claimed here.” (Brodkin v. State Farm Fire & Casualty Co., supra, 217 Cal.App.3d 210, 218.)

Neither the ultimate cause of the loss (landslide) nor the stipulated efficient proximate cause (negligent maintenance by the city) was a covered peril. There is no coverage under the policy pursuant to the facts presented to the trial court.

Ill

On appeal, for the first time, Waldsmith contends the proximate cause of the loss was the sudden and accidental discharge of water from a “plumbing system,” a covered peril. He relies on the following language in the policy for coverage: “We do not insure for loss to the property . . . either consisting of, or directly and immediately caused by, one of the following: ...[][] f. leakage or seepage of water or steam unless sudden and accidental from any. [f] (1) heating or airconditioning system; [