Insurer Wins in Foundation Damage Case

A state Court of Appeal has ruled that soil corrosion that caused foundation damage to a La Palma couple’s home is not covered by property insurance, a decision that could affect almost 200 similar cases filed by Southern California homeowners.

Steven and Francine Brodkin filed their suit after the State Farm Fire & Casualty Co. denied their claim for damages to their home in 1985. The Brodkins contended that cracks in the floor and foundation of their house were due to corrosive material in the soil, possibly containing cow urine because the site of their property was once a dairy farm. In their suit against State Farm, they also contended that the damage was due to negligent construction.

Their attorneys argued that the Brodkins’ policy did not specifically exclude coverage for corrosion.

But State Farm attorneys argued that the damage was due to earth movement, an element of normal wear and tear and therefore not covered by the policy.

The 4th Court of Appeal agreed, ruling that the policy would not cover any of the potential causes for the damage, including soil corrosion, builder negligence and earth movement.

“Damage caused by contact between the soil and foundation of the house is precisely the type of loss the exclusion was meant to cover,” Judge P.J. Scoville wrote in his opinion, filed Dec. 21 and ordered published Wednesday. “The fact State Farm did not use the term ‘corrosion’ does not mean it was not excluded.”

Jeff Leo, an attorney for State Farm, said that this ruling, coupled with a U.S. 9th Circuit Court of Appeal decision in favor of an insurance company in a similar suit last year, settles the issue.

“The decision should apply across the board to all property policies, both homeowner and commercial,” he said.

Brodkin and his attorney, Michael Bidart, could not be reached for comment Friday night. But homeowners involved in similar suits reacted angrily.

Katherine and Bill Weatherill are a La Palma couple with a suit pending. Their home is one of 426 built by the Landmark Co. in the mid-1960s. They and scores of others others began noticing the damage in the late 1970s and early 1980s. Suits also have been filed by homeowners in Cypress and parts of southeast Los Angeles County.

“I have developed an ulcer over all this,” said Katherine Weatherill, who along with her husband has a suit pending against an insurance company to cover damage to their home.

Weatherill said that they haven’t been able to sell their home, which they have owned for 27 years, because the foundation has bulged and broken apart and cracks have appeared on interior walls.