Date: 12-31-2021

Case Style:

Ed Laur and Maria Laur v. Safeco Insurance Company

Case Number: 2:21-CV-246

Judge: Unknown

Court: United States District Court for the Northern District of Texas (Potter County)

Plaintiff's Attorney:

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Defendant's Attorney: Unavailable

Description:

Dallas, Texas insurance law lawyer represented the Plaintiff who sued on a bad faith breach of insurance contract theory.

Ed and Marla Laur sued Safeco Insurance Company of Indiana after
Safeco denied the Laurs’ claim for water damage to their basement resulting
from a frozen lawn irrigation pipe

The Laurs owned a home in Amarillo, Texas, at the center of this
dispute. On February 21, 2021, an irrigation supply line in the home’s
backyard froze and then ruptured, causing the Laurs’ basement to flood. The
water damaged both the home and the Laurs’ personal property. The Laurs
held a Safeco homeowners insurance policy (the Policy)1 at the time of the
loss, and they timely submitted a claim to Safeco.
In March 2021, in response to the Laurs’ claim, Safeco assigned Chris
Royce of American Leak Detection to investigate. Royce made the following
findings: “[T]he cause of the water damage to the dwelling [was] a rupture
on the [two-inch] PVC irrigation supply in the valve box in the
backyard”;“[t]he rupture appear[ed] to have been due to the irrigation line
freezing during the period of time in which the temperatures were below
freezing for several days”; and “[t]he water from this ruptured line
appear[ed] to have run at ground level, between the soil and the concrete
foundation of the back patio[.]” Both parties eventually designated Royce as
a non-retained expert.
On March 24, 2021, Safeco denied coverage. Safeco’s denial letter
cited the Policy’s exclusions, including those for losses caused by water
damage and “[f]reezing, thawing, pressure or weight of water, ice or snow
whether driven by wind or not, to a . . . sprinkler system.” The Policy’s
relevant exclusion language states:

BUILDING PROPERTY LOSSES WE DO NOT COVER
We do not cover loss caused directly or indirectly by any of the
following excluded perils. Such loss is excluded regardless of
the cause of the loss or any other cause or event contributing
concurrently or in any sequence to the loss. These exclusions
apply whether or not the loss event results in widespread
damage or affects a substantial area.
. . .
2. Freezing, thawing, pressure or weight of water, ice or
snow whether driven by wind or not, to a swimming pool, hot
tub or spa, including their filtration and circulation systems,
fence, landscape sprinkler system, pavement, patio,
foundation, retaining wall, bulkhead, pier, wharf or dock;
. . .
However, we do insure from any loss from items 1. through 5.
unless the resulting loss is itself excluded under Property
Losses We Do Not Cover in this Section.
. . .
9. Water Damage, meaning:
a. (1) Flood, surface water, waves, tidal water,
overflow of a body of water, or spray from any of these, whether
or not driven by wind, including hurricane or similar storm;
and
(2) release of water held by a dam, levee or dike or by
a water or flood control device;
b. water below the surface of the ground, including that
which exerts pressure on, or seeps or leaks through a building,
wall, bulkhead, sidewalk, driveway, foundation, swimming
pool, hot tub or spa, including their filtration and circulation
systems, or other structure;
c. water which escapes or overflows from sewers or drains
off the [r]esidence [p]remises;
Case: 23-10315No. 23-10315
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d. water which backs up, overflows or discharges, for any
reason, from within a sump pump, sump pump well, or any
other system designed to remove water which is drained from
the foundation area;
Water includes any water borne materials.
This exclusion applies whether caused by or resulting from
human or animal forces or any act of nature.
Direct loss by fire, explosion or theft resulting from water
damage is covered.
Because the damaged home was under contract for sale, the Laurs
paid out-of-pocket to repair the damage, and the sale subsequently closed.
The Laurs then filed suit against Safeco in December 2021, alleging claims
for breach of contract and violations of the Texas Insurance Code as a result
of Safeco’s denial of their claim. Safeco answered in February 2022,
interposing Policy Exclusions 2 and 9 and asserting additional affirmative
defenses. The parties filed cross-motions for summary judgment in
December 2022. Both parties sought summary judgment regarding: the
applicability of the “resulting loss” exception to Exclusion 2; whether the
water that damaged the Laurs’ basement was “below the surface of the
ground” or “surface water,” such that it triggered Exclusion 9; and liability
for breach of contract and Insurance Code violations. The Laurs additionally
moved for summary judgment on Safeco’s affirmative defenses.2 Safeco also
sought summary judgment on the Laurs’ bad faith claims.

Outcome: The district court entered summary
judgment in favor of Safeco and denied the Laurs’ cross-motion for summary
judgment.

Affirmed on appeal by the Fifth Circuit.

Plaintiff's Experts:

Defendant's Experts:

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