A couple's long-standing battle with their insurance company over a denied claim for water damage to their home has reached a critical juncture. Priscilla and Elias Mendoza filed a complaint against Pacific Specialty Insurance Company in the Court of Appeal of the State of California, First Appellate District, Division Four, on August 29, 2024.
The Mendozas' case revolves around an incident in October 2014 when their home suffered significant structural damage due to water overflow from a broken pipe. The couple claimed that Pacific Specialty Insurance Company failed to conduct a thorough investigation and inadequately compensated them for the damages. They argued that the insurer's actions constituted a breach of the implied covenant of good faith and fair dealing inherent in their policy. Despite receiving $1800 from Pacific, this amount did not cover the structural damage they alleged was caused by soil saturation due to the broken pipe.
At trial, Pacific disputed these claims, arguing that any water accumulation was due to an ongoing leak caused by deterioration and not a sudden break. They further contended that various factors such as faulty construction and historic subsidence were responsible for the structural damage rather than water from the pipe. The jury was instructed on several exclusions under the insurance policy, including continuous leakage, wear and tear, corrosion, earth movement, and defective construction or maintenance.
Despite these arguments, the Mendozas insisted that a sudden rupture in the pipe led to soil saturation and subsequent structural damage. Their expert testified that even one cycle of soil saturation could cause settlement leading to significant damage. However, no evidence was presented showing an abrupt event causing the hole in the pipe; instead, it appeared to have developed over time due to corrosion.
Ultimately, in a split verdict (10-2), the jury found that the Mendozas did not suffer a loss covered under their insurance policy with Pacific Specialty Insurance Company. The court ruled that there was no prejudicial error in refusing to give a jury instruction on efficient proximate cause—the principle stating that if multiple risks cause damage but one is predominant and covered by insurance, then coverage should apply.
The plaintiffs sought judgment favoring their interpretation of coverage under their policy and compensation for all incurred damages resulting from what they deemed as sudden water discharge from their plumbing system. However, based on evidence presented at trial and expert testimonies indicating long-term leakage rather than sudden rupture, the court affirmed Pacific's position.
The case was presided over by Judge Goldman with concurrence from Judges Brown and Douglas
The case ID is A168307.