Ellison v. Allstate Indemnity Co.

Citations: 103 F. Supp. 3d 358; 2015 U.S. Dist. LEXIS 58193; 2015 WL 2090259Docket: No. 12-CV-6261L

Court: District Court, W.D. New York; May 4, 2015; Federal District Court

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Plaintiffs Stephen and Anita Ellison filed a lawsuit against Allstate Indemnity Company for coverage related to water damage under their homeowners insurance policy, effective November 16, 2011. Allstate sought summary judgment to dismiss the complaint, arguing that its denial of coverage was justified by policy exclusions. The policy covered sudden and accidental direct physical loss, but excluded losses due to wear and tear, mechanical breakdown, and continuous seepage.

On December 25, 2011, the Ellisons discovered a water leak in their basement, traced to a cracked copper drain pipe. Allstate's adjustor, after inspecting the damage, concluded that the pipe failure was due to wear and tear and that the leak had begun prior to the reported date. Consequently, Allstate denied coverage citing relevant exclusions.

The Ellisons contended that the damage was caused by a sudden freezing of the pipe, not by any excluded causes, and sought compensatory and punitive damages totaling $1.5 million. The court outlined that summary judgment would only be granted if there were no genuine issues of material fact, emphasizing that the evidence must be viewed favorably towards the non-movant, in this case, the Ellisons. As a result, the court denied Allstate's motion for summary judgment.

Allstate argues for summary judgment based on clear and unambiguous policy exclusions, asserting that the water damage reported by the Ellisons on December 25, 2011, was the result of long-preexisting seepage rather than a sudden, accidental loss. Conflicting evidence exists regarding the cause of the copper pipe failure and the presence of long-term seepage. Allstate adjustor Clifton noted significant deterioration, moisture, and discoloration around the leak, suggesting it was not a recent event. Contractor Clark Viele testified to visible damage in the kitchen cabinet from a prior leak, indicating possible ongoing issues. Allstate expert Jonathan Solomon concluded that the leak began before November 18, 2011, citing signs of wood rot and multiple water stains. Conversely, the Ellisons argue that there are material questions of fact regarding the leak's suddenness, with Anita Ellison stating she only discovered the leak on December 25, 2011. Contractor Robert Sutherby, who repaired the leak, reported no pre-existing damage and attributed the pipe burst to freezing. Although Allstate's Clifton believed the leak started before December 25, he acknowledged the lack of visible signs of chronic issues and could not determine the leak's age solely from the pipe inspection. Allstate's reliance on Viele's testimony is complicated by the fact that he referred to a different, PVC pipe and did not observe issues with the copper plumbing. A reasonable fact-finder could conclude that any observed wetness from before 2008 was related to the PVC pipe, not the copper pipe that later failed.

Viele’s testimony regarding a prior leak may contradict Allstate’s interpretation of the evidence by providing an alternative explanation for the discoloration and staining near the kitchen sink in 2011, besides the alleged long-term seepage from the copper pipe. The review of presented evidence indicates that summary judgment is not appropriate at this time due to multiple triable issues of material fact regarding whether the water damage was due to pre-existing seepage, a sudden accidental event, or a combination of both, and which cause may have been predominant. Addressing these issues requires a detailed factual analysis, including the credibility of witnesses and expert opinions, as well as the photographic evidence. Furthermore, despite Allstate's claim that the plaintiffs failed to submit a timely expert report to counter their expert’s opinion, significant factual questions about the water damage's appearance, extent, and source remain unresolved. Such material questions must be determined by a jury, not by the court. Consequently, Allstate’s motion for summary judgment is denied.