Henry SMIGIELSKI, et al., Plaintiffs and Appellants, v. AETNA CASUALTY AND SURETY COMPANY, et al., Defendants and Respondents.
This appeal presents a coverage issue under a homeowner's insurance policy. The policy excluded losses caused by water damage, defined to include “water which backs up through sewers or drains.” The trial court found the exclusion unambiguous, and granted summary judgment to the defendant insurance company. The homeowners appeal.
On November 6, 1985, plaintiffs' residence was damaged when sewage flowed from toilets and a shower stall. Subsequent investigation disclosed that the flow was caused by a blockage in the city sewer. The blockage resulted from an unknown person dumping concrete blocks down a manhole.
COVERAGE PROVISIONS OF THE POLICY
Plaintiffs' insurance policy, issued by defendant Aetna, provides coverage for losses to the residence (Coverage A) and coverage for losses of personal property in the residence (Coverage C). Under Coverage A, Aetna insures the dwelling against the risk of direct physical loss to property, except excluded perils. Under Coverage C, Aetna insures personal property against certain named perils, including accidental discharge or overflow of water from within a plumbing or drainage system 1 and vandalism.2
The issue here is whether coverage for the damage was excluded by the water damage exclusion. This exclusion states: “We do not cover loss resulting directly or indirectly from: ․
3. Water damage, meaning;
a. Flood, surface water, waves, wave wash, tidal water, overflow of a body of water, or spray from any of these, whether or not a result of precipitation; or driven by wind;
b. Water which backs up through sewers or drains; or
c. Water below the surface of the ground, including water:
(1) which exerts pressure on, or seeps or leaks through a building, driveway, roadway, walkway, pavement, foundation, spa, hot tub, swimming pool or other structure;
(2) which causes earth movement.” (Emphasis added.)
The trial court found that the term “water which backs up through sewers or drains” is unambiguous and that it describes the type of loss alleged in the complaint. Accordingly, the trial court granted summary judgment for the defendant insurance company.
“In analyzing the extent of the exclusion, our boundaries are the rules to be applied in the interpretation of insurance policies. Any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer. If semantically permissible, the contract will be given such construction as will fairly achieve its manifest object of securing indemnity to the insured for the losses to which the insurance relates. Any reasonable doubt as to uncertain language will be resolved against the insurer whether that doubt relates to the peril insured against or other relevant matters. [Citation.] The policy should be read as a layman would read it and not as it might be analyzed by an attorney or an insurance expert. [Citation.] An exclusionary clause must be conspicuous, plain and clear [citation] and must be construed strictly against the insurer and liberally in favor of the insured [citations].” (Crane v. State Farm Fire & Cas. Co. (1971) 5 Cal.3d 112, 115–116, 95 Cal.Rptr. 513, 485 P.2d 1129.)
The parties agree that the issue of the applicability of the water damage exclusion to the circumstances here, an overflow caused by blockage of a city sewer pipe, has not previously been decided in California.3 In support of their respective positions, the parties cite several cases from other jurisdictions that have considered the issue.
In Hallsted v. Blue Mountain Convalescent Ctr. (1979) 23 Wash.App. 349, 595 P.2d 574, the sewer under the street in front of plaintiff's home became clogged and sewage backed up through the sewer pipes. The policy language was essentially the same as the language of the policy here. The court found the exclusion unambiguous. Considering a possible ambiguity under Coverage C, the court found that coverage under that section was limited to water which leaks from within the insured's plumbing system. The exclusion was applicable when the cause of the discharge was outside of the insured's plumbing system. Under this reasoning, the exclusion would prevent coverage here.
The Hallsted court rejected a contrary conclusion in a Georgia case, Aetna Fire Underwriters Ins. Co. v. Crawley (1974) 132 Ga.App. 181, 207 S.E.2d 666. In that case, heavy rainfall entered an opening in the sewer line outside plaintiff's property and entered the insured's home through his plumbing system. The court held that the water did not back up from the plaintiff's sewer or drains but rather entered the system from outside the premises. The court held that the insurer was not entitled to summary judgment. Under this reasoning, the exclusion would not prevent coverage here.
Hallsted was followed, and Crawley was rejected, in the case of Haines v. United Sec. Ins. Co. (1979) 43 Colo.App. 276, 602 P.2d 901. In that case, heavy rainfall entered a sewer line under construction and heavy pressure in the line caused sewage to be discharged into the basement of a residence. The court held that the exclusion controls because the flooding resulted from sources outside the plumbing system that caused water to back up through the system. The court found the policy unambiguous.
Similarly, in Jackson v. American Mutual Fire Insurance Company (M.D.N.C.1968) 299 F.Supp. 151, affirmed 410 F.2d 395 (4th Cir.1969), heavy rain filled the sewer system and caused an overflow that entered the insured's house through the plumbing system. The court found the exclusion unambiguous, and held that it referred to sewers or drains outside the insured's plumbing system, i.e., the city sewer system. The court found no conflict between the exclusion and the coverage clause.
Plaintiffs rely on Fairlawn Properties, Inc. v. Liberty Mutual Insurance Co. (Ohio App.1982), case number 10671, 1982 WL 5163, an unpublished opinion.4 In that case, the insured's building was flooded because of a backup in a sanitary sewer line. Appellee argued that the term “water which backs up through sewers or drains” was ambiguous, that it applied to water, not sewage, and that it could refer to storm sewers or drains. The trial court agreed. It distinguished between “water” and “sewage,” saying “It seems clear that the material which caused the damage in this case was not water, but whatever was in whatever liquid it was that came out of the sanitary sewer.” It found that the term “water” was used to mean “floodwater,” and accordingly blockage of a sewer from other causes was not excluded. The appellate court agreed that the exclusion was ambiguous and did not specifically apply to raw sewage backing up from sanitary sewers. The court distinguished Jackson and Haines on grounds that those cases involved rainwater. It declined to follow Hallsted because the cause of the backup was not stated there, and because the exclusion was contrasted to a coverage provision for accidental discharge of water from within the insured's plumbing system.
Plaintiffs also cite Thompson v. Genis Bldg. Corp. (1979) 182 Ind.App. 200, 394 N.E.2d 242. In that case, the failure of a sewer line cap allowed water and sewage to flow directly into the insured's basement. The court found that the water and sewage did not “back up” into the basement, and that the exclusion was therefore inapplicable. Here, however, the water and sewage did back up from a blockage in the line.
Another case cited by plaintiffs is Carolina Mills Dist. Co. v. World Fire & Marine Ins. Co. (W.D.Mo.1948) 75 F.Supp. 606, modified (8th Cir.1948) 169 F.2d 826. In that case, heavy rain caused a backup which broke a cap on a drain in the insured's basement. The court therefore had to distinguish between a backing up and overflow of the drain and an accidental discharge from the plumbing system on the premises. The court found the latter and held the exclusion inapplicable. The court held that the words “backing up of sewers or drains” signified “the filling of the sewers or drains until the water would overflow at the drainage point where it is received into the drain.” (Id., 75 F.Supp. at p. 608.) The court further held that “[a]ny damage that might be caused either directly or indirectly by such overflow, whether from floods, surface water, or water from the drains or sewers or from tides, would exempt the defendant from liability.” (Ibid.) The Court of Appeals for the Eighth Circuit affirmed, finding that the excepting clause did not apply when there was an accidental discharge of water from within the plumbing system. (World Fire & Marine Ins. Co. v. Carolina Mills Dist. Co. (8th Cir.1948) 169 F.2d 826, 830.) Since the present case is a case of overflow, Carolina Mills does not help plaintiffs.
Based on Fairlawn, plaintiffs contend that the trial court erred because the exclusion is ambiguous, and that the ambiguity should be construed against defendant insurance company. They argue that a lay person reading the policy would expect coverage for loss resulting from sewage entering the home through the plumbing system. They argue that “sewage” and “water” are not the same thing, and that the exclusion is therefore “reasonably susceptible of an interpretation as not applying to damage caused by sewage.” Under this argument, the entire exclusion is read to mean that water damage from floods, surface waters, and groundwater is excluded. Since storm sewers can become overloaded in a storm, and water can then back up through the drains to flood a home, water damage from this source is excluded. Accordingly, plaintiffs argue that damage from a sewage backup caused by a blockage in the line is not necessarily related to storm damage, and should not be excluded.
In our view, the term “water which backs up through sewers or drains” is unambiguous. Water is clearly the major component of sewage effluent 5 and the damage was caused by the backup of water containing sewage. The degree of purity is irrelevant because a lay person reading the policy would understand that water which backs up through a sewer would necessarily contain sewage. The trial court here so found, and we agree with that conclusion.
We also consider the source of the water to be irrelevant. Plaintiffs ask us to find that the exclusion applies only to water damage arising from floods, storm drain overflow, and related events. While the exclusion could be written narrowly to apply to storm waters, or rainwater runoff that backs up through clogged storm drains, it was not. The exclusion could also be written to refer to blockages in city sanitary sewer systems, and not storm water runoff through storm drains, but it was not. As written, it is not limited to any one cause, but rather expressly excludes damage resulting from the backup of water through sewers or drains without specifying the cause of the backup.
We agree with the court in Hallsted that the only possible ambiguity in this language arises from a possible conflict with Coverage C, section 12, which includes coverage for overflow from within a plumbing or drainage system. (Hallsted v. Blue Mountain Convalescent Ctr., supra, 23 Wash.App. 349, 595 P.2d 574, 575.) In Hallsted, the court found that the coverage section applied to discharges from within the insured's plumbing system, while the discharge there originated outside the insured's plumbing system in the city sewer system.
The issue is resolved here because, in addition to the reasoning in Hallsted, the policy here expressly provides that section 12 does not cover loss on the residence premises caused by accidental discharge or overflow which occurs off the residence premises. There is no conflict here because the blockage occurred outside the insured's plumbing system.
ADMISSIBILITY OF EXTRINSIC EVIDENCE
Plaintiffs next contend that the trial court erred in refusing to consider the provisions of Aetna's own Technical Claims Manual. With respect to the water damage exclusion, that manual provides that “The intent of the water damage exclusion is to bar coverage for naturally occurring water such as flood, tidal waves and surface water. (Surface water is water which runs or stands on the surface of the ground.) [¶ ] Water damage resulting from an overflow because of a blockage in the pipe would not be considered a ‘back up’, and coverage would apply if the blockage was accidental.” 6
Plaintiffs also sought to introduce a bulletin issued by The National Underwriter Co. which explains the water exclusion clause. The bulletin states that the water damage exclusion is aimed at the flood situation 7 and discusses the blockage situation as follows: “With respect to damage from water that backs up through sewers or drains, distinctions have been made between cases involving a high water table and those confined to sewer blockage—where the sewer fails to accept the water from within the structure's plumbing system and that water spills over the structure. While it is apparent that the exclusion applies in the case of the high water table, it is not so clear that it applies to the second situation. In the case of sewer blockage where the sewer fails to accept the water from within the plumbing system, the water has never been in the sewer system.” 8
Having found the exclusion unambiguous, the trial court declined to resort to the Technical Claims Manual and the bulletin to aid in its interpretation of the exclusion. Plaintiffs contend that the trial court erred in its ruling. We agree.
Code of Civil Procedure section 1856 states the parol evidence rule. Subdivision (a) of that section states “Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement.” Subdivision (g) of that section states: “This section does not exclude other evidence of the circumstances under which the agreement was made or to which it relates, as defined in Section 1860, or to explain an extrinsic ambiguity or otherwise interpret the terms of the agreement, or to establish illegality or fraud.” (Emphasis added.)
As plaintiffs point out, the Law Revision Commission Comment to that section cites and quotes our Supreme Court's opinion in Pacific Gas & E. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 69 Cal.Rptr. 561, 442 P.2d 641: “The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible.” (Id., at p. 37, 69 Cal.Rptr. 561, 442 P.2d 641; see generally, 2 Witkin, Cal. Evidence (3d ed. 1986) § 984, pp. 930–931.)
Subsequently, in Diamond v. Insurance Co. of N.A. (1968) 267 Cal.App.2d 415, 72 Cal.Rptr. 862, the Pacific Gas & Electric decision was applied in an insurance context. The court reversed the granting of a demurrer, saying that “That decision [Pacific Gas & Electric ] is controlling here. We cannot anticipate what evidence the plaintiff may offer at a trial to establish the meaning which he has alleged. The mere fact that the insurance policy has a clear meaning to the judge who ruled on the demurrer and a clear meaning to the members of this court will not preclude the plaintiff from offering evidence, if he has any, to support his allegation that the policy means what he claims.” (Id., at p. 419, 72 Cal.Rptr. 862.)
Here, in contrast, we know what evidence was offered by plaintiffs to prove the meaning of the policy, and we have reviewed the extrinsic evidence in interpreting the meaning of the policy provisions.
“The interpretation of a written instrument, even though it involves what might properly be called questions of fact [citation], is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. [Citations.] Extrinsic evidence is ‘admissible to interpret the instrument, but not to give it a meaning to which it is not reasonably susceptible’ [citations], and it is the instrument itself that must be given effect. [Citations.] It is therefore solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence.” (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865, 44 Cal.Rptr. 767, 402 P.2d 839.) Accordingly, “an appellate court must determine that the trial court's interpretation is erroneous before it may properly reverse a judgment.” (Id., at p. 866, 44 Cal.Rptr. 767, 402 P.2d 839.) Our independent review of the improperly excluded extrinsic evidence does not convince us that the trial court erred in its determination that the exclusion is not ambiguous, and bars coverage. Even though the trial court erred in not considering the proffered extrinsic evidence, its decision was correct, and any error was not prejudicial.
WAS THE EXCLUSION CLEAR, PLAIN AND CONSPICUOUS?
Plaintiffs next contend that the provision excluding coverage was not clear, plain and conspicuous. (Crane v. State Farm Fire & Cas. Co., supra, 5 Cal.3d 112, 115–116, 95 Cal.Rptr. 513, 485 P.2d 1129.) They point out that the burden is on the insurer to phrase the exclusion in clear and unmistakable language. (State Farm Mut. Auto. Ins. Co. v. Jacober (1973) 10 Cal.3d 193, 202, 110 Cal.Rptr. 1, 514 P.2d 953.) They cite Travelers Ins. Co. v. Lesher (1986) 187 Cal.App.3d 169, 184, 231 Cal.Rptr. 791: “To be conspicuous, an exclusion must be positioned in a place and printed in a form which will attract the reader's attention. [Citation.] To be plain and clear, the substance of the exclusion must be precise and understandable. ‘To be effective in this context, the exclusion must be couched in words which are part of the working vocabulary of average lay persons.’ [Citation.]”
We find that the exclusion here meets these tests. The coverage provisions clearly refer to the exclusion section. The exclusion section is clearly identified and the exclusions are listed in plain language. The exclusion here is listed under water damage, defined to include “water which backs up through sewers or drains.” A lay person reading the policy would therefore conclude that the policy does not provide coverage for water which backs up through sewers and drains.
Plaintiffs contend, however, that the exclusionary clause is reasonably susceptible to the meaning that it was intended to cover water backing up from storm drains and sewers resulting from a flooding situation, and not a sewage backup from a blocked main. Since the clause is susceptible to this meaning, plaintiffs argue that the clause is not plain and clear.
As discussed in the preceding sections, we find that the clause is unambiguous and applies to exclude coverage for water backing up through sewers and drains from any cause. As written, the exclusion covers backups from any source outside the house plumbing system, and does not require a specific cause for the backup. As we have also discussed, we find the attempted distinction between water and sewage to be unpersuasive. We agree with the trial court that a lay person, reading the exclusion, would interpret the phrase “water which backs up through sewers or drains” to mean just that. Water which passes through sewers ordinarily contains sewage 9 and the exclusion for such water is both plain and clear.
Plaintiffs also complain about the location of the exclusion, citing Ponder v. Blue Cross of Southern California (1983) 145 Cal.App.3d 709, 193 Cal.Rptr. 632. In that case, the court held that an exclusion in a health insurance contract for a syndrome that concerned the joint linking the jawbone and the skull was neither conspicuous nor plain and clear because it was stated in medical terminology and was placed under an exclusionary heading (“dental care”) that was not clearly applicable. (Id., at pp. 722–723, 193 Cal.Rptr. 632.) Regarding the conspicuous requirement, the court said, “we do suggest it is difficult to characterize as ‘conspicuous' an exclusion which is located under a subheading whose ordinary meaning does not encompass the condition purportedly excluded.” (Id., at p. 723, 193 Cal.Rptr. 632.)
Ponder does not help plaintiffs here because the exclusion in the homeowner's policy is clearly labeled “water damage” and the three subparagraphs are further definitions of that term. Unlike the medical term used in Ponder, the words of the exclusion here are properly placed under the heading, “water damage” where the reader would expect to find them. While plaintiffs' contentions might be more persuasive if the exclusion did not refer to water flowing through sewers, the language used informs the reader that damage from water backing up through sewers is excluded. That event is, unfortunately, exactly what happened here.
The judgment is affirmed.
1. This section also provides that this peril does not include loss on the residence premises caused by an accidental discharge or overflow which occurs off the residence premises.
2. Plaintiffs argue in their reply brief that this coverage applies. This issue was apparently not considered by the trial court, and is not considered further here, because the water damage exclusion, discussed below, provides that all loss from water damage is excluded “no matter if loss or damage was caused by, or aggravated by any other peril in any sequence.”
3. Cf. Waldsmith v. State Farm Fire & Casualty Co. (1991) 232 Cal.App.3d 693, 283 Cal.Rptr. 607 (leakage of water from broken city water main caused an excluded loss from earth movement; leakage was not from a “plumbing system”).
4. Following California Rules of Court, rule 977, Aetna argues that Fairlawn should not be cited for any purpose in a California court. We disagree. Under Ohio rules, an unpublished opinion is considered persuasive authority, but not controlling authority, in the district in which the opinion was rendered. (Ohio Sup.Ct. Rules, rule Rep R 2(G).) While we do not consider the case to be either controlling or persuasive, we have considered its reasoning in reaching our decision here.
5. “The primary meaning of the word ‘sewage’ is that which passes through a sewer, and a secondary meaning is derived from the usual character of the contents of a sewer, and as used in that sense the word signifies the refuse and foul matter, solid or liquid, which is so carried off; excreted, as well as waste, refuse or foul matter, carried off in sewers and drains, whether open or closed, by water flowing therein.” (80 C.J.S., Sewage, pp. 129–130, fn. omitted, emphasis added.) “Sewage effluent is water that is left over after having been put to use․ [W]hile effluent is neither groundwater nor surface water, it is certainly water.” (Arizona Public Service Co. v. Long (1989) 160 Ariz. 429, 437–438, 773 P.2d 988, 996–997.) The dictionary definition of “sewage” is “the contents of a sewer or household drain: refuse liquids or waste matter carried off by sewers.” (Webster's New Internat. Dict. (3d ed. 1964) p. 2081.)
6. This statement contradicts rather than explains the policy language because the term “back up,” when referring to water checked by an obstruction, means “to rise and flow backward or overflow adjacent areas (clogged pipes caused drain water to back up into the house)․” (Webster's New Internat. Dict. (3d ed. 1964) p. 160; Thompson v. Genis Bldg. Corp., supra, 182 Ind.App. 200, 394 N.E.2d 242, 244–245.)
7. The bulletin states: “Because of the catastrophic nature of a flood, cloudburst or tidal wave, which will affect not one or two but possibly hundreds or thousands of units in a general area, and the fact that only persons in flood-prone areas will purchase coverage against the exposure, such risks are uninsurable through normal channels. It is precisely this catastrophic exposure—that represented by natural and inevitable events rather than accidental or artificial causes—at which the water exclusion, theoretically, is aimed.”
8. Again, this extrinsic evidence contradicts the language of the exclusion more than it explains it. For the exclusion to apply, by definition, the water must have been in the sewer system and must have backed up through that system into and through the insured's plumbing system. That is, of course, exactly what happened here.
HOLLENHORST, Associate Justice.
DABNEY, Acting P.J., and McKINSTER, J., concur.