Varela v. State Farm Gen. Ins. Co., 1:19-cv-00617-DAD-EPG

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
Docket Number1:19-cv-00617-DAD-EPG
Decision Date16 August 2021



No. 1:19-cv-00617-DAD-EPG

United States District Court, E.D. California

August 16, 2021


Before the court is the motion for summary judgment filed by defendant State Farm General Insurance Company (“defendant” or “State Farm”) on February 19, 2021. (Doc. No. 34.) Pursuant to General Order No. 617 addressing the public health emergency posed by the COVID-19 pandemic, defendant's motion was taken under submission on the papers. (Doc. No. 35.) For the reasons explained below, the court will deny defendant's motion for summary judgment.


This action arises from a dispute between the parties over whether plaintiff's “all risk” insurance policy coverage extends to water damage caused by a broken plumbing pipe located underneath plaintiff's home. The factual background that follows is derived from the amended joint statement of undisputed material facts filed by defendant (Doc. No. 37 (“JUF”)), plaintiff's response to defendant's joint statement of undisputed material facts (Doc. No. 38-2), plaintiff's statement of disputed facts (Doc. No. 38-3 (“PSDF”)), and defendant's reply to plaintiff's statement of disputed facts (Doc. No. 39-3). The facts are undisputed unless otherwise noted.

Defendant State Farm issued Homeowners Policy 87-EF-S188-7 to plaintiff Ashlee Varela for the policy period commencing September 24, 2018 through September 24, 2019 (“the Policy”). (JUF at ¶ 3.) The Policy insured the premises at 4664 N. Kavanagh Avenue in Fresno, California. (Id.) The Policy states in pertinent part:

We insure for accidental direct physical loss to the property described in Coverage A, except as provided in SECTION I - LOSSES NOT INSURED
4. We do not insure under any coverage for any loss which is caused by one or more of the items below, 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
c. Water Damage, meaning
(1) flood, surface water, waves, tidal water, tsunami seiche, overflow of a body of water, or spray from any of these, all whether driven by wind or not
(2) water or sewage from outside the residence premises plumbing system that enters through sewers or drains, or water which enters into and overflows from within a sump pump, sump pump well or any other system designed to remove subsurface water which is drained from the foundation area; or
(3) water below the surface of the ground, including water which exerts pressure on, or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure.

(JUF at ¶ 4; Doc. No. 34-7 at 17-21) (emphasis added).

In November of 2018, a water supply line in plaintiff's home broke, causing water damage. (Doc. No. 38-2 at 2.) The parties dispute whether the water supply line was under the slab foundation of plaintiff's home or in a trench backfilled with sand (“fill”). (Id.) Defendant began a coverage investigation and issued a reservation of rights on December 6, 2018 “because the loss may have been ‘caused by water below the surface of the ground, '” a loss that defendant contends is excluded from coverage under the Policy. (JUF at ¶ 1.) Defendant requested to access the broken pipe through the slab to see if any circumstances existed which would render the exclusion for loss caused by water below the surface of the ground inapplicable. (Doc. No. 39-3 at 7.) Specifically, defendant intended to look to see if the pipe was in the foundation or in fill (gravel, stone or sand 12 inches directly below the slab), because if so it would not be part of the natural surface of the ground. (Id. at 6, 7.) Defendant informed plaintiff that if the pipes were in soil, and not in fill or in the foundation, the loss would not be covered, and defendant would accordingly not pay to repair any damage to plaintiff's home that would result from the investigatory testing. (Doc. No. 39-3 at 7.)

Defendant did not conduct the inspection, asserting that plaintiff refused to allow it to access the pipe through the foundation of the home and “the claim was denied based on Plaintiff's non-cooperation and material breach of ‘Duties After Loss' conditions of the policy.” (Doc. Nos. 34-1 at 10; 34-11 at 17.) Plaintiff asserts, and defendant does not contest, that in connection with the request for testing, defendant required plaintiff to sign work authorization forms consenting to “have State Farm's chosen vendors PW Stephens and Olsen Construction perform the testing.” (PSDF at ¶ 22.) Defendant provided the forms to plaintiff the day before the date it scheduled for the testing. (Id. at ¶ 23.) In response to defendant's request for testing and its requirement that plaintiff sign the work authorization forms, plaintiff Varela requested additional time to consult with an attorney. (Id. at ¶ 23.) The next day, defendant denied plaintiff's claim in its entirety based upon the aforementioned claimed non-cooperation of plaintiff. (Id. at ¶ 26.)


Plaintiff filed this action against defendant on May 7, 2019, asserting a single cause of action for breach of the covenant of good faith and fair dealing based on defendant's refusal to afford policy benefits for repairs and loss of use. (Doc. No. 1 at 7.)

On February 19, 2021, defendant filed the pending motion for summary judgment. (Doc. No. 34.) Defendant's motion is not premised on the purported non-cooperation of plaintiff. Rather, defendant argues that it is undisputed that the broken water line was below the surface of the ground and that the “water below the surface of the ground” exclusion in the Policy therefore applies. (Doc. No. 34-1 at 10.) Plaintiff filed her opposition to the pending motion for summary judgment on March 23, 2021. (Doc. No. 38.) Defendant filed its reply thereto on March 30, 2021. (Doc. No. 39.)


Summary judgment is appropriate when the moving party “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).

In summary judgment practice, the moving party “initially bears the burden of proving the absence of a genuine issue of material fact.” In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The moving party may accomplish this by “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials, ” or by showing that such materials “do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1)(A), (B). When the non-moving party bears the burden of proof at trial, as plaintiff does here, “the moving party need only prove that there is an absence of evidence to support the non-moving party's case.” Oracle Corp., 627 F.3d at 387 (citing Celotex, 477 U.S. at 325); see also Fed. R. Civ. P. 56(c)(1)(B). Indeed, summary judgment should be entered, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. See Celotex, 477 U.S. at 322. “[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” Id. at 322-23. In such a circumstance, summary judgment should be granted, “so long as whatever is before the district court demonstrates that the standard for the entry of summary judgment . . . is satisfied.” Id. at 323.

If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In attempting to establish the existence of a factual dispute, the opposing party may not rely upon the allegations or denials of its pleadings but is required to tender evidence of specific facts in the form of affidavits or admissible discovery material in support of its contention that the dispute exists. See Fed. R. Civ. P. 56(c)(1); Matsushita, 475 U.S. at 586 n.11; Orr v. Bank of Am., NT & SA, 285 F.3d 764, 773 (9th Cir. 2002) (“A trial court can only consider admissible evidence in ruling on a motion for summary judgment.”). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). The opposing party also must demonstrate the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the non-moving party. See Anderson, 477 U.S. at 250; Wool v. Tandem Computs. Inc., 818 F.2d 1433, 1436 (9th Cir. 1987).

In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.” T.W. Elec. Serv., 809 F.2d at 631. Thus, the “purpose of summary judgment is to...

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