Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

BACKGROUND 

This case arises from a dispute between an insurer and its insured.  Defendant State Farm General Insurance Company issued a homeowners insurance policy to Plaintiff Marcy Paul (“Policy”) for her property located at 33002 Pacific Coast Hwy, Malibu. CA 90265 (“Pacific Coast Property”).  (Undisputed Material Fact “UMF” No. 1.)  

The Policy provides that losses are not insured for “(9) seepage or leakage of water, steam, or sewage that occurs or develops over a period of time: (a) and is: (i) continuous; (ii) repeating; (iii) gradual; (iv) intermittent; (v) slow; or (vi) trickling; and (b) from a: (i) heating, air conditioning, or automatic fire protective sprinkler system; (ii) household appliance; or (iii) plumbing system, including from, within or around any shower stall, shower bath, tub installation, or other plumbing fixture, including their walls, ceilings, or floors.”  (UMF No. 2.) On September 14, 2022, Plaintiff submitted a claim for a water loss that she discovered on September 9, 2022, after the ceiling under her second level powder room toilet collapsed due to a water leak, which State Farm assigned as claim number 75-39F5-42M (“Claim”).  (UMF No. 3.)  During State Farm’s first call with Plaintiff, State Farm claims Plaintiff told State Farm that the toilet seal in the second level powder room caused water to leak throughout her house as the flush mount was not correctly sealed by the prior owner. (UMF No. 4.)  In addition, during that call, Plaintiff also allegedly told State Farm that she had previously seen water lines in her daughter’s room’s ceiling, which was located below the second level powder room, but didn’t think anything of it.  (UMF No. 5.)   

Plaintiff disputes she made these statements to State Farm.  (Paul Decl. ¶10.)  Plaintiff attests she never saw water in the powder room prior to the loss.  When using the toilet before the loss, it always appeared normal and operable.  Prior to the loss, there was never any indication that water was leaking out of the toilet.  If water had been leaking out of the toilet, Plaintiff would have seen it.  (Id. ¶ 12.) 

Plaintiff’s plumber found a soft blockage, and State Farm claims the plumber determined that water was leaking through the flange of the second level powder room toilet from the toilet drain pipe.  (UMF No. 6.)  State Farm claims the only time the leak occurred was when the toilet flushed and every time the toilet was flushed, more water went into the walls and ceiling.  (UMF No. 7.) There were no branches in the pipes, and the soft blockage was located before the main water line. (UMF No. 8.)  

State Farm claims Plaintiff and her plumber stated that water did not come up from any drains or sinks in the house, or from any tubs or showers, or from any toilet bowls.  (UMF No. 9.) Nor were any broken or burst pipes found. (UMF No. 10.)  According to State Farm, Plaintiff stated that the water leak caused the ceilings in the two bedrooms under the leaking toilet flange to collapse and that there was two to three inches of standing water on the bottom floor of her house.  (UMF No. 11.)     

On November 9, 2022, State Farm denied the Claim.  (UMF No. 12)   This action ensued.  The operative complaint alleges claims for breach of contract and breach of the covenant of good faith and fair dealing. 

This hearing is on State Farm’s motion for summary judgment.  State Farm argues that Plaintiff will not be able to establish a breach of contract or bad faith because Plaintiff’s loss was not covered by the Policy since it was due to a continuous leekage.    

LEGAL STANDARD     

In evaluating a motion for summary judgment, the Court engages in a three-step process. First, the Court identifies the issues framed by the pleadings. The pleadings define the scope of the issues on a motion for summary judgment. (FPI Dev. Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381-382.)  Because a motion for summary judgment is limited to the issues raised by the pleadings (Lewis v. Chevron (2004) 119 Cal.App.4th 690, 694), all evidence submitted in support of or in opposition to the motion must be addressed to the claims and defenses raised in the pleadings.  

The court cannot consider an impleaded issue in ruling on a motion for summary judgment. (Roth v. Rhodes (1994) 25 Cal.App.4th 530, 541.) The papers filed in response to a defendant's motion for summary judgment may not create issues outside the pleadings and are not a substitute for an amendment to the pleadings. (Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 Cal. App.4th 1334,1342.) 

Second, the Court must determine whether the moving party has met its burden. A defendant moving for summary judgment bears the burden of persuasion that one or more elements of the plaintiffs cause of action cannot be established, or that there is a complete defense to the cause of action. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (quoting Code Civ. Proc, § 437c, subd. (p)(2)).) 

Third, once the moving party has met its initial burden, the burden shifts to the opposing party to show that a material factual issue exists as to the cause(s) of action alleged or the affirmative defense(s) claimed. (Code Civ. Proc.,§ 437c, subd. (p); see generally Bush v. Parents without Partners (1993) 17 Cal.App.4th 322, 326-327.) 

In ruling on the motion, the Court must consider the evidence and inferences reasonably drawn therefrom in the light most favorable to the opposing party. (Aguilar, 25 Cal.4th at 843.) Summary judgment is properly granted only if the moving party's evidence establishes that there is no issue of material fact to be tried. (Lipson v. Super. Ct. (1982) 31 Cal.3d 362, 374.) 

EVIDENTIARY OBJECTIONS 

The Court overrules Plaintiff’s objections to paragraphs 3 and 7 and sustains Plaintiff’s objections to paragraphs 8, 9, 10 of the Declaration of Donna Blazewich.  The Court overrules Plaintiff’s objections to paragraphs 3, 4 and 6 of the Declaration of Heather McKeon.  The Court overrules Plaintiff’s objections to Defendant’s Exhibit B and sustains Plaintiff’s objections to Defendant’s Exhibit C.  The Court sustains Defendant’s objections to paragraphs 2, 4, 11, 12 and 14 of the Declaration of Marcy Paul.  The Court overrules Defendant’s objections to paragraphs 4, 5, 6, and 7 and sustains Defendant’s objection to paragraph 8 of the Declaration of Alfonso Rocher. 

DISCUSSION 

Defendant argues that there is no triable dispute that Plaintiff’s loss is not covered by the policy and therefore, it cannot support either a breach of contract or bad faith claim.  The Court disagrees. 

The essential elements for a breach of contract action are: (1) the existence of a contract; (2) plaintiffs’ performance of the contract; (3) defendant’s material breach of the contract; and (4) damages resulting from the breach.  (Abdelhamid v Fire Ins. Exchange (2010) 182 Cal.App.4th 990, 999.)   

In order to establish a “breach” of an insurance contract in a first party claim, a policyholder must show an entitlement to a benefit that an insurer refused to pay. (Behnke v. State Farm General Insurance Co. (2011) 196 Cal.App.4th 1443, 1468 (holding an action for an insurance contract breach requires a showing that the insurer wrongfully withheld policy benefits due and owing.) “[A]bsent an actual withholding of benefits due, there is no breach of contract.”  (Dalrymple v. United Serv. Auto. Assn. (1995) 40 Cal.App.4th 497, 512, fn. 4.)  The insured has the burden of proof of establishing that the claim is within the basic scope of coverage, and the insurer has the burden of establishing that the claim is specifically excluded.  (MacKinnon v. Truck Ins. Exch. (2003) 31 Cal. 4th 635, 648.)   Here, the Policy explicitly excludes coverage for any damages caused by the seepage or leakage of water, steam, or sewage that occurs or develops over a period of time that is continuous, repeating, gradual, intermittent, slow, or trickling and from a plumbing source. (UMF No. 2.)   

There is a triable issue as to whether the water damage here was caused by a continuous seepage.  State Farm claims that water was leaking from Plaintiff’s second level powder room toilet flange from the toilet drain pipe into the walls and ceiling below, due to an improperly sealed flush mount. (UMF No. 4, 6.)  According to State Farm, the only time the leak occurred was when the toilet flushed and every time the toilet was flushed, more water went into the walls and ceiling, suggesting a seepage from a continuous source.  (UMF No. 7.)  

State Farm claims, during Plaintiff’s initial phone call with State Farm, she told State Farm that prior to September 9, 2022, she had seen water lines on the ceiling in her daughter’s room, which was the room underneath the second level powder room. (UMF No. 5.)  Plaintiff’s alleged statement to State Farm supports the fact that the leak was ongoing for some period of time and that water was leaking into the ceiling below the second level powder room every time the toilet was flushed. (UMF No. 7.)  

But Plaintiff denies ever making these statements to State Farm.  (Paul Decl. ¶ 10.)  And Plaintiff’s plumbing expert opines that the flange was securely mounted to the drain pipe and showed no signs of leakage.  (Rocher Decl. ¶3.)  The expert attests that the water loss was not due to a slow, continuous leak, as evidenced by the wood joints in the ceilings which did not show discoloration from sitting in water.  (Id. ¶6.)  On these facts, the Court concludes Plaintiff has presented a triable issue whether the water loss was as a result of a continuous seepage.   

As to Plaintiff’s bad faith claim, the law implies a covenant of good faith and fair dealing in every contract including insurance policies. (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720.)  The fundamental principle of the implied covenant of good faith and fair dealing is “that neither party will do anything which will injure the right of the other to receive the benefits of the agreement.” (Chateau Chamberay Homeowners Assoc. v. Associated Int’l Ins. Co. (2001) 90 Cal.App.4th 335, 345.)   

An essential element for an insurer breach of the implied covenant of good faith and fair dealing cause of action is that coverage is due under the policy.  (Waller v. Truck Ins. Exch., Inc. (1995) 11 Cal. 4th 1, 36; see also Love v. Fire Ins. Exch. (1990) 221 Cal. App. 3d 1136, 1153.) An insured must show that benefits were due under the policy and the insurer wrongfully withheld such benefits in order to recover for the breach of the implied covenant. (Progressive West Ins. Co. v. Superior Court (2005) 135 Cal. App. 4th 263, 278). An insured cannot maintain a claim for “breach of the implied covenant of good faith and fair dealing absent a covered loss.” (Benavides v. State Farm General Ins. Co. (2006) 136 Cal. App. 4th 1241, 1250).  

If the insurer did not breach the policy, it did not breach the implied covenant.  (Minich v. Allstate Ins. Co. (2011) 193 Cal.App.4th 477, 493 (holding that where an insurer was granted summary judgment as a matter of law on the insured’s breach of contract claim, the bad faith claim must also fail); Everett v. State Farm General Ins. Co. (2008) 162 Cal.App.4th 649, 663 (“Because there was no breach of contract, there was no breach of the implied covenant.”).  

As discussed above, there is a triable issue on Plaintiff’s breach of contract claim.  Accordingly, there is also a triable issue on whether State Farm breached the implied covenant.   

CONCLUSION 

Based on the foregoing, the Court DENIES Defendant State Farm General Insurance Company’s motion for summary judgment.   

 

IT IS SO ORDERED. 

 

DATED: February 11, 2025 ___________________________ 

Edward B. Moreton, Jr.  

Judge of the Superior Court