Leroy Brown, et al. v. Mid-Century Insurance Company
California Court of Appeal, Second Appellate District (April 24, 2013)
In this case, the Court of Appeal considered the meaning of “sudden” in an insurance policy which contained an exclusion for “gradual,” “slow” or “intermittent” water discharge. In Brown, homeowners argued that the development of hot water line leak due to corrosion was “sudden” in that the initial water penetration of the pipe was at a specific instant as a spray or stream, despite the undisputed facts that the leak developed over time by corrosion and was ongoing and intermittent when it was discovered.
On February 18, 2009, homeowners Leroy and Terrie Brown began observing persistent condensation near the windows of their three-story house. Shortly afterwards, mold and mildew developed throughout the home. On March 17 or 18, 2009 a plumber was hired to identify the source of the water. With the water pressure turned on but at a reduced level, the plumber found water dripping from an open hole in a hot water pipe. The Browns tendered the claim to their homeowner’s insurer, Mid-Century Insurance Company.
The Mid-Century policy contained “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…or release of water…” The policy further stated: “A sudden and accidental discharge 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.” The policy also included an exclusion for mold which stated in part: “We do not insure loss or damage consisting of, composed of, or which is fungi.”
Mid-Century’s investigator found the failed section of hot water pipe which had been encased in concrete. The leaking pipe section was heavily corroded near a 90 degree angle bend and contained a 1/8 diameter hole. Mid-Century denied the claim, explaining 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.” It stated that the loss is uninsured or excluded from the policy.
The Browns sued Mid-Century for, among other causes of action, breach of contract, breach of the implied covenant of good faith and fair dealing, and punitive damages. Mid-Century prevailed on motion for summary judgment, and the Browns appealed.
The Court of Appeal affirmed Mid-Century’s judgment in its favor. The Court first examined the definition of “sudden” within the context of the Browns’ hot water pipe leak. In opposing Mid-Century’s motion for summary judgment, the Browns had submitted a declaration from a plumbing expert who stated that what occurred was a “sudden breach” of the pipe, in that it “would have taken a mere fraction of a second (a ‘nano’ second) between the water tight and non-water tight condition, which is the breach of the pipe.” The expert stated the pipe “failed suddenly, and ultimately a spray or stream (not drips) of hot water shot through the holes in the pipe…and would have continued to spray and stream (not drip)…until the water line was shut off.”
The Court of Appeal noted that it was undisputed that the water incursion, even if commenced within a “nanosecond,” was “constant or intermittent,” was caused by corrosion that wore away the pipe, and occurred over a period of either a month (the Browns’ contention) or two or five months (Mid-Century’s contention). Thus, the Court found that within the plain meaning of the policy terms, the water discharge did not qualify as “sudden.” In addition, under California law the Court found that “sudden” is defined as having 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. The Court noted that under the Browns’ interpretation, 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 (known as the “metaphysical moment” theory). Saint Paul Surplus Lines, Ins. Co. v. Geo Pipe Co. (Tex.Ct.App.2000) 25 S.W.3d 900 at 905.
The Court concluded the Browns’ expert did not create a triable issue of material fact, and agreed with the trial court that the fact that the pipe’s breach occurred within a fraction of a second does not mean the release of water was “sudden.”
The Court recognized that focusing upon the “nanosecond” moment of a pipe’s outer breach by water at the molecular level would render “sudden” to be mere surplusage. Instead, the Court supported the notion that the correct determining factors were the cause of the leak by gradual corrosion and the ongoing, intermittent nature of the water loss over several months.
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