The California Court of Appeal for the Fourth Appellate District recently passed upon the question of what constitutes a “flood” in the context of exclusions contained in a homeowner policy. A residence owned by plaintiffs Peter and Susan Horvath sustained water damage in December 2010 after a heavy rainstorm. The plaintiffs submitted a claim under their homeowners’ policy issued by State Farm.
The home was located at the end of a cul-de-sac, where the road slopes downhill for a significant distance before reaching the property. The road, bordered by cement curbs, was equipped with a drainage system that included intermittent storm drains and a drain directly across from the plaintiffs’ residence. Concrete drainage ditches on hillsides adjoining the road upstream from the plaintiffs’ property also emptied into the storm drains along the road. On December 22, 2010, a heavy rainstorm caused the storm drains along the road to be overwhelmed and water cascaded down the road in what was described as a “river” toward the plaintiffs’ property. Ultimately, water reached a depth of approximately three feet outside the plaintiffs’ home and approximately 18 inches inside on the first floor.
Upon submission of the claim and investigation of the incident, State Farm concluded that the loss resulted from “flood” or “surface water,” and denied the claim based upon the corresponding applicable exclusions in the policy. Specifically, the State Farm policy exclusion states “We do not insure under any coverage for any loss which is caused by . . . ‘Water Damage’, meaning . . . flood, surface water, waves, tidal water, tsunami . . . .” The term “flood” is not specifically defined in the policy.
The plaintiffs filed suit for breach of contract, declaratory relief, and bad faith. The trial court granted summary judgment in favor of State Farm on the basis of both flood and surface water damage. The Plaintiffs’ primary contention on appeal was that excess rainfall alone cannot cause a “flood.” The court summarily rejected this argument by citing the biblical story of Noah.
Delving more deeply into the issues, the court analyzed the use of the term “flood” in the policy in response to the plaintiffs’ argument that the term is ambiguous. The plaintiffs cited the definition of flood utilized by the Federal Emergency Management Agency (FEMA) as “an excess of water on land that is normally dry,” although the court found that argument self-defeating. Recognizing its task as applying the ordinary and plain meaning of the term “flood,” the court cited common parlance of what constitutes a flood, including the fact that one of the plaintiffs referred to the incident herself at deposition as a “flood.” The court further noted that the local municipality condemned the plaintiffs’ home after the incident, citing the reason as “flood.” Ultimately, the court opined that the plaintiffs’ loss resulted from what is commonly understood to be “a typical ‘flash flood.’” Indeed, the Merriam-Webster Dictionary definition of “flash flood” (cited by the court) refers to a localized flood of heavy volume and short duration resulting from heavy rainfall, a definition which seems to apply perfectly to the loss in this case.
Based upon its finding that (a) the term “flood” as used in the State Farm policy was not ambiguous, and (b) the underlying loss resulted from a “flood” as that term is commonly understood, the court affirmed the grant of summary judgment to State Farm. Due to its conclusion on the “flood” issue, the court declined to address the application of the “surface water” exclusion.
This decision is significant certainly in California, and perhaps on a broader scale, with regard to policyholder arguments of ambiguity in flood exclusions as well as what exactly constitutes a “flood”. The court’s reasoning is sure to provide guidance on the application of these exclusions, even in situations that may not reach the flood stages faced by Noah and his Ark.