Rizzo v. State Farm Insurance

Citation: Not available

Court: Idaho Supreme Court; May 22, 2013; Idaho; State Supreme Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The Supreme Court of Idaho affirmed the district court's summary judgment in favor of State Farm Insurance Company, dismissing all claims made by Roger Daniel Rizzo regarding water damage to his basement. Rizzo's claims stemmed from incidents on May 22 and December 29, 2010, while he was insured under a State Farm homeowners policy that excluded coverage for water damage caused by surface water or water from below ground. Rizzo reported his claims to State Farm, but was informed by agent Rod Brooks that the policy exclusion applied and coverage would be denied. Despite assurance from State Farm representative Donna Hoyne that no coverage decision had been made, Rizzo later received a formal denial stating that the damage was due to water entering through the basement foundation, which fell under the policy exclusion. Rizzo filed a complaint against State Farm on November 24, 2010, alleging breach of contract, bad faith, and negligence, among other claims. A second claim was reported on December 29, 2010, which State Farm assigned to a different investigator. Ultimately, the court upheld the lower court's rulings, including the denial of Rizzo's motion to amend his complaint and the approval of State Farm’s protective order against broad discovery requests.

On February 14, 2011, Rizzo sought to amend his complaint to add claims for punitive damages, failure to warn, personal injury, home value diminution, and damages related to flooding on December 29, 2011. The district court allowed the addition of the December flooding claim and the failure to warn claim, but denied the requests for punitive damages, personal injury, and home value diminution. Rizzo submitted an affidavit from Donald Flynn, president of Shadow Mountain Construction, which attributed damage to Rizzo's home to heavy rainfall causing flooding through a structural breach. State Farm filed a Motion for Summary Judgment on August 25, 2011, leading to a hearing and the district court's final judgment on February 15, 2012, granting State Farm's motion and dismissing Rizzo's claims.

In reviewing the summary judgment, the court applies the same standard as the district court, confirming that summary judgment is appropriate when there are no genuine issues of material fact. It emphasizes that the non-moving party must sufficiently establish essential case elements. All facts are construed in favor of the non-moving party, and insurance policy interpretations must follow the clear and unambiguous language as a matter of law. The discretion to permit amended pleadings and protective orders lies with the district court.

Regarding Rizzo's appeal, the district court correctly denied his request to limit the record on appeal. Rizzo argued that State Farm did not timely request certain documents, but the court found the submitted record to be appropriate and sufficient.

Rizzo appeals for sanctions against State Farm for using documents he argues are inadmissible under Idaho law. The appellate court reviews the district court's decisions on record settlement using an abuse of discretion standard as outlined in I.A.R. 29(a). Under Idaho Appellate Rule 28, parties are responsible for designating the contents of the clerk's record on appeal. If an appellant requests less than the standard record, the respondent must file a request to include additional standard documents within 14 days, as per I.A.R. 19(a).

In a previous case, Lamar Corp. v. City of Twin Falls, the court upheld the inclusion of documents in the clerk's record, emphasizing the Supreme Court's discretion to determine the relevance of the included items. The district court, in Rizzo's case, found the clerk's record sufficient despite Rizzo's objections, affirming this decision on appeal.

Rizzo also contests the district court's summary judgment on his five claims against State Farm, arguing that the court failed to adhere to summary judgment principles. He claims the court did not consider the facts favorably for him and improperly weighed evidence. Rizzo asserts that his experts provided sufficient causation evidence to create genuine factual disputes and challenges the district court's conclusion regarding the cause of water damage without expert testimony from State Farm. The appellate court affirms the district court's decisions on both the clerk's record and the summary judgment.

The district court emphasized the material facts necessary for determining coverage regarding water damage to Rizzo's home, specifically focusing on the cause related to significant rainfall and wind damage. Rizzo’s expert, a construction company president, indicated that heavy rainfall caused water to accumulate in a window well, exerting pressure that led to structural damage and subsequent flooding. State Farm did not contest this cause of damage but claimed the resulting damages were excluded under the insurance policy. The court noted that State Farm lacked expert testimony to counter Rizzo’s claims and concluded there were no genuine issues of material fact regarding the cause of the damage. 

Rizzo argued that the court failed to acknowledge his expert, Stephen Strzelec, a former State Farm claims representative who suggested coverage should apply. However, the court found Strzelec's testimony immaterial since it addressed a legal interpretation rather than factual disputes. Furthermore, Strzelec's commentary on industry standards was deemed irrelevant after the breach of contract claim was dismissed. The court maintained that it adequately considered the record and did not improperly weigh the evidence in reaching its summary judgment.

Regarding Rizzo's breach of contract claim, which asserted that State Farm failed to provide coverage as per his homeowner's policy, the court ruled that the policy was not ambiguous and did not cover Rizzo's claims. Rizzo argued for coverage under two policy provisions: Coverage A (Dwelling) and Coverage B (Personal Property), but the court held that the applicable exclusions under Coverage A and the lack of applicable terms under Coverage B negated his claims for coverage.

Coverage exclusions apply to losses resulting from specific excluded events, regardless of their causes or the nature of their occurrence. Water damage is explicitly defined to include various forms of water, such as flood, surface water, and groundwater. The district court determined that Rizzo’s claims were unambiguously excluded under this provision, finding that the water entering Rizzo's basement constituted either surface water or groundwater. Rizzo contended that his expert's analysis indicated that wind-driven rain caused structural damage leading to flooding, arguing that this should not fall under the policy's exclusions. However, the expert ultimately attributed the damage to water accumulating in a window well due to heavy rainfall, which created pressure that contributed to the damage. Rizzo’s assertion that rainwater remains distinct from surface water upon contact with the ground lacks legal support. The treatise Couch on Insurance clarifies that while policies may cover precipitation damage, they generally exclude surface water damage, which is defined as water spread across the land's surface. Idaho case law further clarifies that rain becomes surface water once it stops falling. Thus, the conclusion is that the damage to Rizzo’s property resulted from surface water accumulation, making it ineligible for coverage under his State Farm policy.

Rizzo contends that Coverage B of his insurance policy, which insures personal property against damage from specified perils including windstorm or hail, is ambiguous regarding the application of those perils to his claims. He argues that since Coverage A for the dwelling lacks a similar list of perils, the sixteen perils in Coverage B should also apply to Coverage A. However, the court finds these provisions distinct and clearly applicable to different property types, concluding that Coverage B does not cover Rizzo’s claims.

Rizzo's assertion that the concurrent causation exclusion renders coverage illusory is not addressed because he failed to raise this issue in earlier proceedings, adhering to the rule that new arguments cannot be introduced on appeal. Similarly, his claim that denial letters from State Farm were ambiguous and violated various Idaho statutes is also not considered due to his failure to raise it previously.

Lastly, Rizzo's argument that State Farm breached the insurance contract by not adhering to the Idaho Unfair Claims Settlement Practices Act is rejected. The court notes that this Act does not provide a private right of action for insured individuals against insurers for statutory violations. Furthermore, the cited case regarding insurance policy interpretation does not support Rizzo's claim of breach, as it pertains to post-claim litigation rather than insurer conduct during the investigation and settlement process.

Rizzo’s bad faith claim was dismissed by the district court on grounds that there was no breach of contract, eliminating the basis for a bad faith action. To succeed in a bad faith claim, Rizzo needed to demonstrate that State Farm intentionally and unreasonably denied or delayed payment, that his claim was not fairly debatable, that the denial or delay was not due to a good faith mistake, and that any resulting harm was not fully compensable by contract damages. Since the court upheld the dismissal of Rizzo’s breach of contract claims, it also affirmed the dismissal of the bad faith claim.

The court also correctly dismissed Rizzo’s claim for violation of the implied covenant of good faith and fair dealing, finding no genuine issue of material fact regarding the elements of the claim. An implied duty of good faith exists in insurance policies, but Rizzo could not show that State Farm breached the contract or impaired any contractual benefit, as his policy did not cover the claims for damages he asserted.

Rizzo’s negligence per se claim was similarly dismissed because he did not present a material issue of fact regarding whether State Farm breached the relevant statute, I.C. 41-113(2). The court noted that there is no separate cause of action for negligence per se in this context, and Rizzo did not demonstrate that State Farm engaged in deceptive conduct or acted in bad faith. Consequently, the court upheld the dismissal of this claim as well.

Rizzo's failure to warn claim against State Farm was correctly dismissed by the district court. Rizzo claimed that State Farm did not inform him of health hazards related to rainwater flooding and potential mold growth in his home. However, the court found that State Farm had no duty to warn him about health risks, as their responsibilities were limited to the terms of the insurance contract, which did not include warnings about health hazards from property damage. 

Rizzo's motion to amend his complaint to add claims for punitive damages, diminished home value, and personal injury was also denied. He failed to demonstrate how the court abused its discretion regarding punitive damages and did not provide evidence of mold or personal injury resulting from the flooding. 

The court deemed State Farm's motion for a protective order moot following the dismissal of all claims. Regarding attorney fees, State Farm argued it was entitled to fees due to the frivolous nature of Rizzo's appeal, but the court found that Rizzo presented a legitimate legal question about the interpretation of "surface water" in his contract, thus denying the request for fees. The district court's grant of summary judgment is affirmed, with costs awarded to State Farm.