No Coverage for slab damage caused by Leaky pipe
Ms. Ellis had some work done on her house in 2002 when it was discovered a pipe had broken and there was a water leak. It was fixed, but later, the concrete slab started to crack. Ellis submitted a claim to State Farm, which denied it. She then sued State Farm claiming that the slab was covered and that State Farm's denial was in bad faith.
Both parties moved for summary judgment and the trial court granted summary judgment to State Farm. The 10th Circuit affirmed in Ellis v. State Farm, finding that the “continuous or repeated seepage or leakage” clause excludes coverage for the damage to the concrete slab.
Ms. Ellis contends that the district court erred in applying the “continuous or repeated seepage or leakage” clause for three reasons: (1) the evidence on summary judgment was disputed as to whether the sand fill under the foundation was washed away by water or whether “the sand sifted into the drain pipe and was washed out by effluent that stayed within the pipe,”; (2) the policy language refers to “water or steam,” not to sewage, so the clause is either ambiguous or simply does not apply to this situation where the sand fill was carried away by sewage; and (3) under the doctrine of “reasonable expectations,” Ms. Ellis is entitled to coverage because an insured would reasonably expect the clause to apply to “a water supply line or a steam line, both of which are under pressure, rather than a drain line,”
The court ruled: 1) reasonable expectations was raised for the first time on appeal and not considered; 2) didn't matter if it was a water or a sewage pipe, it contained liquid and a leak in the pipe caused the damage; and it also did not matter if the liquid contained sewage, it was still excluded; and 3) the evidence presented showed that the pipe leak washed supporting sand away from the foundation causing the cracking. Summary judgment was affirmed.
