In an unpublished opinion, the California Court of Appeal determined there was no coverage for damage caused by a leaking pipe, including mold. Brown v. Mid-Century Ins. Co., 2013 Cal App. Unpub. LEXIS 2389 (Cal. Ct. App. April 2, 2013).
In February 2009, the insureds noticed condensation on the windows of their home. A week later, they began noticing mold forming around the inside of their windows and on the walls of the living room and kitchen. A relative crawled under the house where he observed moisture.
In March 2009, the insureds hired a plumber to find and fix the leak. The plumber eventually found a pipe in the hot water manifold that was leaking at a slow pace.
Water damage was not covered under the homeowners policy unless it resulted from a sudden and accidental discharge. A constant or repeating gradual, intermittent or slow release of water was specifically not covered. Mold was also excluded from the policy.
The insurer investigated and determined there was no coverage. The loss was caused by wear and tear which caused a hole in the pipe, allowing water to leak over a period of time.
The insureds sued, alleging that their home was damaged when a pipe burst, causing substantial loss. The insurer moved for summary judgment. A declaration from the insurer's expert stated that the leak from the pipe was a slow, gradual and incremental process. The expert also noticed that the monthly water bills before the leak was located and fixed were higher than after the problem was resolved. The insureds' expert countered that the pipe suddenly breached. Ultimately, a spray or stream of hot water shot through the holes in the pipe.
The lower court granted summary judgment to the insurer. The insureds' expert's opinion that the pipe's breach only took a fraction of a second did not mean that release of water was sudden. Further, the insureds did not dispute that the pipe leaked over a period of one to two months.
The appellate court affirmed. The insureds' expert's testimony did not create a triable issue of fact. Even if the pipe burst quickly and resulted in a mist or spray that was constant or intermittent, it occurred over a period of a month or two. The policy did not cover such a constant or repeating intermittent or slow release of water. Merely because the pipe's breach tool only a fraction of a second did not mean the release of water was "sudden."
The insureds also argued the mold damage was covered because it resulted from direct contact with the abrupt and sudden discharge of water. Under the efficient proximate cause doctrine, the sudden discharge of water produced the condensation and, eventually, the mold.
The court disagreed that this was an instance for application of the efficient proximate cause doctrine. Under the doctrine, a loss was not covered if the covered risk was only a remote cause of the loss, or the excluded risk was the efficient proximate, or predominate cause. The doctrine applied only when two or more conceptually distinct perils combined to cause the loss.
Here, there were not both a covered risk and an excluded risk. There were only two excluded risks: discharge of water that was not sudden, and mold. Further, two conceptually distinct risks or events did not cause the insureds' loss. The case involved only one cause, a leaking pipe.
