Court of Appeal affirms summary judgment in favor of GMSR’s carrier client in first-party coverage dispute

Cardio Diagnostic Imaging, Inc. v. Farmers Group, Inc. et al. (2012) 212 Cal.App.4th 69 (California Court of Appeal, Second Appellate District, Division Two) [published]. When a sewer backed up in the building where plaintiff had its office, water overflowed a toilet in an upper-floor office and then seeped down and caused damage in plaintiff’s lower-level suite. The carrier, GMSR’s client, denied coverage under the standard provision in plaintiff’s policy that excluded water damage caused directly or indirectly by water that “backs up or overflows from a sewer, drain or sump.” Plaintiff sued for breach of contract and bad faith. The trial court granted the carrier’s summary judgment motion, finding that the provision unambiguously excluded the damages from coverage.

The Court of Appeal affirmed. It agreed that the exclusion is unambiguous, and held the word “overflows”—preceded by the word “or”—means something different than “backs up.” In doing so, it flatly rejected plaintiff’s interpretation of the phrase “backs up or overflows” as redundant, and found that the language was not reasonably susceptible to the interpretation plaintiff asserted “because that interpretation can be reached only by ignoring part of the language.”