Premier Ins. Co. v. Welch

Decision Date10 March 1983
Docket NumberNo. 50794,50794
Citation140 Cal.App.3d 720,189 Cal.Rptr. 657
CourtCalifornia Court of Appeals Court of Appeals
PartiesPREMIER INSURANCE COMPANY, Plaintiff and Respondent, v. William E. WELCH, et al., Defendants and Appellants. A011905. 1 Civil

Stephen McReavy, Linda E. Klamm, Hall, Henry, Oliver & McReavy, P.C., San Francisco, for defendants and appellants.

Raymond Coates, Low Ball & Lynch, Menlo Park, for plaintiff and respondent.

CALDECOTT, Presiding Justice.

Defendants William E. Welch and Ann B. Welch (appellants or Welchs) appeal from a judgment rendered in favor of plaintiff Premier Insurance Company (respondent) in an action brought for declaration of rights under an "all risk" home-owners insurance policy.

The case was decided upon a stipulation of facts which reads as follows. 1

"... [Appellants] were the owners of certain improved real property situated at 410 County View Drive in Mill Valley, Marin County, California. The improvement consisted of a single family residence constructed in 1972 on fill. A drainage system was installed prior to the laying of the foundation and the placement of the fill. The drainage system consisted of several layers of gravel containing a perforated drain pipe, which emptied into a hillside below. After this drainage system was installed, the lot was graded, the house was built, the sewer main was installed, and other miscellaneous construction took place. All of this activity was completed prior to the purchase of the home by the Welch's.

"The hillside upon which the Welch's home was built was stable until January 1978, when, during a heavy rainy season, the fill began to slide downhill. The fill caused the foundation piers to tilt, and as the piers tilted, the foundation cracked in half, causing it to tilt and break out of the ground. As this movement progressed, the house tilted and began to break off the foundation, eventually sliding completely off the foundation and overturning into the ravine below. As a result, the house had to be demolished.

"Investigation during and after the land movement revealed that the subdrain designed to release subsurface waters had been damaged near the lower end of the drain, and this impeded its drainage capacity, either wholly or partially. With the drainage system unable to accommodate the percolating rain water, the fill became saturated and caused the movement described above.

"The damage to the subdrain is such that it could not have been the result of natural causes. The most probable explanation is that the drain was damaged by the original sewer contractor when the sewer lines were laid 2 to 3 feet below the subdrain and at a 90 degree angle to the subdrain. This sewer line was subsequently located almost directly beneath the damaged area of the subdrain. Regardless of the identity of the perpetrator, it is established by expert testimony that the damage to the subdrain was due to the human element, and had been in a damaged state for some period of time, probably before the completion of construction on the Welch's home.

"It is further established by expert testimony that the slide would not have occurred if the drain had not been damaged. Additionally, it is established by expert testimony that if no drainage system at all had been installed or provided for by the developer, then the slide would also have occurred."

The homeowners insurance policy issued to appellants, which was in effect on or about January 15, 1978, the time of the incident, read in relevant part as follows:

"This policy insures under: COVERAGE A--DWELLING AND COVERAGE B--APPURTENANT STRUCTURES against all risks of physical loss to the property covered (and under COVERAGE D, ADDITIONAL LIVING EXPENSE resulting from such loss), EXCEPT AS OTHERWISE EXCLUDED OR LIMITED.

"Exclusions: THIS POLICY DOES NOT INSURE AGAINST LOSS: Under Coverages A, B and C (and under Coverage D--Additional Living Expense resulting from such loss):

"1. CAUSED BY, RESULTING FROM, CONTRIBUTED TO OR AGGRAVATED BY ANY OF THE FOLLOWING:

"(a) FLOOD, SURFACE WATER, WAVES, TIDAL WATER OR TIDAL WAVES, OVERFLOW OF STREAMS OR OTHER BODIES OF WATER, OR SPRAY FROM ANY OF THE FOREGOING, ALL WHETHER DRIVEN BY WIND OR NOT;

"(b) WATER WHICH BACKS UP THROUGH SEWERS OR DRAINS: OR

"(c) WATER BELOW THE SURFACE OR THE GROUND INCLUDING THAT WHICH EXERTS PRESSURE ON OR FLOWS, SEEPS OR LEAKS THROUGH SIDEWALKS, DRIVEWAYS, FOUNDATIONS, WALLS, BASEMENT OR OTHER FLOORS OR THROUGH DOORS, WINDOWS OR ANY OTHER OPENINGS IN SUCH SIDEWALKS, DRIVEWAYS, FOUNDATIONS, WALLS, OR FLOORS; UNLESS LOSS BY FIRE OR EXPLOSION ENSUES, AND THIS COMPANY SHALL THEN BE LIABLE ONLY FOR SUCH ENSUING LOSS, BUT THESE EXCLUSIONS DO NOT APPLY TO LOSS BY THEFT."

Based upon the above-stated stipulated facts and the cited portions of the insurance policy the trial court, sitting without a jury, concluded that the efficient cause of the landslide which occasioned the loss to the property was the heavy rainfall rather than the damaged subdrain. In accordance therewith, the trial court held that the loss was excluded under the insurance policy and entered judgment in favor of respondent.

Appellants argue that the ruling of the trial court is erroneous for two reasons. One, contrary to the trial court's conclusion, the efficient or moving cause of the loss here incurred was the negligently maintained drainage system, a covered risk, rather the excepted peril of rainfall and landslide and as a consequence the insurer was liable under the "all risk" insurance policy (Sabella v. Wisler (1963) 59 Cal.2d 21, 27 Cal.Rptr. 689, 377 P.2d 889; Sauer v. General Ins. Co. (1964) 225 Cal.App.2d 275, 37 Cal.Rptr. 303; Gillis v. Sun Ins. Office, Ltd. (1965) 238 Cal.App.2d 408, 47 Cal.Rptr. 868.) Two, even if the damaged subdrain was to be deemed only a concurrent proximate cause of the incident, respondent was still responsible under the prevailing case law. (State Farm Mut. Auto. Ins. Co. v. Partridge (1973) 10 Cal.3d 94, 109 Cal.Rptr. 811, 514 P.2d 123; Safeco Ins. Co. of America v. Guyton (9th Cir.1982) 692 F.2d 551.) For the reasons which ensue we agree with appellants and reverse the judgment.

Before discussing appellants' arguments on the merit, we note that where, as here, the facts on appeal are settled and not in dispute, the determination of proximate cause is not binding on the reviewing court. In such an instance, the proximate causation becomes a question of law which is subject to the appellate court's independent determination. (Sabella v. Wisler, supra, 59 Cal.2d at p. 32, 27 Cal.Rptr. 689, 377 P.2d 889; Burdette v. Rollefson Construction Co. (1959) 52 Cal.2d 720, 726, 344 P.2d 307; Sauer v. General Ins. Co., supra, 225 Cal.App.2d 275 at p. 279, 37 Cal.Rptr. 303.) As another preliminary matter, it also bears emphasis that an "all risk" insurance policy, the type of policy issued to appellants, provides coverage for negligently caused damages unless the policy contains a specific provision expressly excluding the loss or losses thusly incurred (Associated Engineers, Inc. v. American Nat. Fire Ins. Co. (N.D.Cal.1959) 175 F.Supp. 352, 353, 88 A.L.R.2d 1122, 1125.) With these preliminary remarks in mind we now proceed to analyze and discuss appellants' contentions on the merit.

Briefly restated, the first issue revolves around a determination whether the efficient cause of loss was the negligently damaged subdrain which was covered under the all risk policy, or whether the loss to the dwelling occurred due to the heavy rainfall causing a number of conditions (flood, surface water; water backing up through sewers or drains; water accumulating below the surface or ground which exerts pressure on or flows, seeps or leaks through the foundations, walls, basement, floors or through openings in the foundations, walls or floors; or water causing landslide, mudflow, earth sinking, rising or shifting) which were exempted under the explicit provisions of the policy.

We start our discussion with the settled principle that where, as here, the loss occurs through a concurrence of covered and uncovered risks, the insurer's liability under the policy depends on whether the efficient cause of the loss (that is the cause that sets others in motion) is a covered peril. If it is, the insurer will be held liable even though other exempted causes also contribute to the loss. As stated in Sabella v. Wisler, supra, 59 Cal.2d 21, 31-32, 27 Cal.Rptr. 689, 377 P.2d 889: " '[I]n determining whether a loss is within an exception in a policy, where there is a concurrence of different causes, the efficient cause--the one that sets others in motion--is the cause to which the loss is to be attributed, though the other causes may follow it, and operate more immediately in producing the disaster.' " (See also State Farm Mut. Auto. Ins. Co. v. Partridge, supra, 10 Cal.3d 94, 104, fn. 10, 109 Cal.Rptr. 811, 514 P.2d 123: 6 Couch, Insurance (1930) § 1466.)

In the instant case, the causal sequence leading up to the loss of the appellants' house began with the negligent installation of the sewer line in 1972. This damaged the subdrain underlying appellants' property by impeding its capacity to release subsurface waters. Although the damage created no problem for several years, during the winter of 1977/1978 the drainage system was apparently unable to accommodate the unusually large amount of percolating rainwater. As a result, the fill became saturated, causing the movement which damaged appellants' house. While it is true that the heavy rainfall was the first link in the causal sequence, the immediate or proximate cause of loss was the damage to the drain which set in motion the chain of events leading to the...

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