California Court of Appeals, Fourth District, First Division
APPEAL from a judgment of the Superior Court of San Diego County, No. 37-2009-00065797- CU-IC-EC Joel L. Pressman, Judge.
Jack B. Winters, Jr., and Georg M. Capielo for Plaintiff and Appellant.
White Oliver Amundson & Gallagher, Susan L. Oliver and Robert E. Gallagher; Greines, Martin, Stein & Richland LLP, Robert A. Olson and Gary J. Wax, for Defendant and Respondent.
Plaintiff Vincent Guy Adamo filed a claim under his homeowner's policy after a wildfire damaged his 1, 000-tree avocado grove, 10, 000-gallon water tank, irrigation system, culverts, two woodsheds, and landscaping on his property. His insurance carrier, defendant Fire Insurance Exchange (FIE), denied coverage for his avocado trees under a commercial use/farming exclusion, but paid him $116, 000 for various damages, including the policy's $53, 100 policy limit under Coverage B for "other structures." In this action Adamo asserted he was entitled to additional benefits for damages to the 10, 000-gallon water tank, irrigation system, and culverts associated with his avocado growing operation under (1) Coverage A for structures that are "attached" to his dwelling; (2) subsection 1 of "Other Coverages" which included "other structures"; or (3) under Coverage A for "building equipment and outdoor equipment used for the service of and located at the Described Location."
This matter came on for a bench trial on stipulated facts. Following trial the court ruled (1) the water tank, piping and other property were not "attached" for Coverage A to apply; (2) none of the property was covered under Coverage A for "building equipment and outdoor equipment"; and (3) subsection 1 of "Other Coverages" did not establish a separate line of coverage but only established the Coverage B policy limits.
On appeal, Adamo asserts the court erred in ruling in favor of FIE because (1) the subject property is "attached" to the main dwelling for purposes of coverage under Coverage A; (2) the property could be considered equipment used to service the property for purposes of coverage under Coverage A; and (3) the "Other Coverages" section of Coverage A provides additional coverage. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Insurance Policy Language
FIE insured Adamo under a standard first-party residential property insurance policy. The policy provided two separate categories of coverage for: (1) the "Dwelling" (Coverage A); and (2) "Other Structures" (Coverage B).
Coverage A applies to four sub-categories, all related to or including the dwelling: (a) "the dwelling on the Described Location, used principally for dwelling purposes"; (b) "structures attached to the dwelling"; (c) "materials and supplies on or adjacent to the Described Location for use in the construction, alteration or repair of the dwelling or other structures on this location"; and (d) "if not otherwise covered in this policy, building equipment and outdoor equipment used for the service of and located on the Described Location."
Coverage B applies to "other structures on the Described Location, separated from the dwelling by clear space." Specific examples of structures that fall under Coverage B include those "connected to the dwelling by only a fence, utility line or similar connection." The policy excludes "other structures" that would otherwise fall under Coverage B when "used in whole or in part for commercial, manufacturing or farming purposes."
Coverage A and Coverage B have different coverage limits and sub-limits. Coverage A has a $531, 000 total liability limit. It also has a $26, 500 sub-limit, covering fire or smoke damage to "lawns, plants, shrubs, or trees." A payment under this sub-limit reduces the "Coverage A limit of liability" for the "dwelling" "by the amount paid."
Coverage B for "other structures" has a lower $53, 100 limit, which is defined under the heading "Other Coverages" in subsection 1: "Other Structures—You may use up to 10% of the Coverage A limit of liability [i.e., 10 percent of $531, 000 or $53, 100] for loss by a Peril Insured Against other structures described in Coverage B. Use of this coverage does not reduce the Coverage A limit of liability for the same loss." The declarations page shows a $531, 000 policy limit for Coverage A and a $53, 100 policy limit for Coverage B.
B. Damages Adamo Suffered As a Result of the 2007 San Diego Wildfires
The October 2007 wildfires in San Diego County damaged Adamo's landscaping, retaining wall, two woodsheds (plus their contents), a 1, 000-tree avocado grove and "property associated with his avocado grove, " including an irrigation system, culverts and a detached 10, 000-gallon water tank. Adamo's residence incurred some minor smoke damage, but it didn't burn.
The principal fire damage was to Adamo's landscaping, woodsheds and the water system "associated with [the] avocado grove." The water system (i.e., the water tank, irrigation system, and culverts) was separated from Adamo's dwelling by clear space and was completely detached from the dwelling, except an underground water pipe connecting the dwelling and water tank.
C. FIE's Investigation And Payment To Adamo
Adamo filed a claim under his policy seeking payment for his damaged property. Adamo admitted to FIE's adjuster that he had sold avocados grown on his property. After completing her initial investigation and damages inventory, FIE's adjuster notified Adamo that damage to the avocado trees was not covered under his policy because he "indicated that they were being used for [a] commercial purpose, " and such use is excluded under Coverage B's commercial-use exclusion. FIE did, however, pay Adamo for all the items that the adjuster ...