Puzzling evidence: Was kitchen leak covered?
In March 2013, William Power discovered mildew in his kitchen and reported to his State Farm agent, Kurt LeBlanc, that his house might have a water leak. According to Power, LeBlanc advised him that he would report the claim to State Farm and told him to call someone to look at the leak. Power thereafter contacted Kurt Muller, his contractor, and informed him about the possible water leak. Muller went to the Powers’ house and determined that the water damage in the kitchen had been caused by a leak in a copper elbow in the wall behind the refrigerator. Muller prepared an estimate in the amount of $21,201.18, dated March 21, 2013, for repair of the damage to the kitchen as a result of the water leak.
According to the State Farm file, the loss was first reported on March 27, 2013. The next day Krista Bess, a State Farm claims representative, spoke with Power and Muller about the claim and thereafter assigned the case to Jose Ortiz, a claims adjuster. Ortiz contacted Power and made arrangements to inspect the property on April 1, 2013. By the time the adjuster arrived at the house, Muller had already gutted the kitchen and discarded the bottom kitchen cabinets. In addition, the upper kitchen cabinets had been removed and installed in the garage, and the leaking elbow and pipes had been replaced. Based on his inspection of the area, his conversation with Power and Muller, and his review of the initial information in the case file, Ortiz concluded that the leak had been continuous for a period of time.
On April 5, 2013, State Farm sent the Powers a letter advising them that their claim for the damage resulting from the water leak was denied because of their policy’s exclusion of losses arising out of a long-term water leak. State Farm also denied coverage for damage to the cabinets because they were discarded without affording State Farm the opportunity to inspect them, in violation of the policy’s clause relating to the duties of the insured.
On November 7, 2013, the Powers filed a petition for damages against State Farm seeking to recover benefits under their policy for the water damage to their kitchen. They further alleged that they were entitled to penalties, attorney’s fees, and court costs based on State Farm’s arbitrary and capricious refusal to pay their claim. The matter proceeded to a judge trial. The court rendered judgment in favor of State Farm for the reasons assigned in open court. The Powers appealed.
On appeal, the Powers contended that the trial court erred in determining that the policy provision on which State Farm relied to exclude coverage was unambiguous.
In Coverage A of the Powers’ policy, Section 1—Losses Not Insured provided:
- We do not insure for any loss to the property described in Coverage A which consists of, or is directly and immediately caused by, one or more of the perils listed in items a. through n. below, regardless of whether the loss 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:
- continuous or repeated seepage or leakage of water or steam from a:
(1) heating, air conditioning or automatic fire protective sprinkler system;
(2) household appliance; or
(3) plumbing system, including from, within or around any shower stall, shower bath, tub installation, or other plumbing fixture, including their walls, ceilings or floors;
which occurs over a period of time. If loss to covered property is caused by water or steam not otherwise excluded, we will cover the cost of tearing out and replacing any part of the building necessary to repair the system or appliance. We do not cover loss to the system or appliance from which the water or steam escaped;
The Powers argued that the policy provision at issue was ambiguous, undefinable, and irreconcilable, and therefore it should be construed against State Farm and in favor of coverage. In particular, they contended that the language used to exclude coverage was ambiguous because it failed to define or set forth any standards or guidelines for a determination of what constituted a “continuous or repeated seepage or leakage of water … which occurs over a period of time.” They further asserted that State Farm had never been able to provide an approximate time frame that constituted “over a period of time” but rather made such determinations on a case-by-case basis.
Applying the ordinary, plain, and usual meaning of the terms at issue, the court found that the limitation on coverage used by State Farm created no ambiguity under the circumstances in this case with respect to the coverage or lack of coverage contemplated by the policy.
The Powers also asserted that the trial court applied the wrong burden of proof in ruling in favor of State Farm. The appellate court found nothing in the record to support this claim and found no merit to the Powers’ argument.
In their final assigned error, the Powers challenged the credibility determinations of the trial court and alleged that the court improperly determined that the leak was long term. They maintained that State Farm presented no evidence to prove the exclusion, but rather relied solely on the testimony of State Farm representatives that Power had mentioned to them that the leak had been ongoing for several months. The Powers further asserted that had the trial court applied the proper legal standard to the evidence, they would have prevailed. In support of this argument, they focused on the credibility of Ortiz and specifically pointed to inconsistencies and alleged misstatements in his testimony.
According to the testimony of LeBlanc and Ortiz, both Power and Muller had told them that the leak had been ongoing for a period of time. Power and Muller denied making such statements, but Ortiz also relied on physical evidence that supported his conclusion that the leak was long term.
The appellate court rejected the Powers’ contentions and affirmed the judgment of the trial court in favor of State Farm.
Power vs. State Farm Fire and Casualty Company-Court of Appeal of Louisiana, Fifth Circuit-No. 15–CA–796-May 26, 2016.