State Farm Insurance Company has been defeated in a court trial after it sued a Northern California restoration company established in 1973.  State Farm alleged that the contractor performed unnecessary demolition during an emergency response to a sewage flood at a three-story home in Kentfield, CA insured by State Farm. 

Marin County Superior Court

Sewage backed up from a shower drain, flowed over the shower dam, onto the bathroom floor and through several rooms of the raised-foundation home.  The contractor conducted an inspection and found that water had seeped through the walls and into the crawlspace.  Large amounts of water were found in the crawlspace, and the subfloor beneath a shower pan registered wet with a hammer probe.

The contractor discussed its findings with the insured, and explained that the area beneath the shower pan was not accessible without removing the pan and the shower tile.  The insured approved the removal of the shower pan and tile.  After removing the pan and other materials, the contractor cleaned and decontaminated the area, and dried the structure.  Reconstruction was not part of the contractor’s scope.

One month after the structure was dried, State Farm engaged the services of a structural/civil engineer to render an opinion as to whether the loss required removal of the shower pan and shower tiles.  The engineer reported that “the moisture-damaged surfaces of the shower pan and shower tiles could have been cleaned without removing them” and that the proper procedure would have been to “remove all gross overflow contamination, thoroughly wash and/or clean all surfaces, disinfect the surfaces, and dry all the moisture-damaged surfaces.”  He opined that the area below the shower area had not been affected by sewage because he did not see any staining of the wood subfloor beneath.  He therefore concluded that the removal of the shower pan and tile “was in error.”  State Farm then filed a subrogation lawsuit against the restoration contractor for the costs to rebuild the shower and replace the tile, alleging that the contractor was negligent and that its conduct fell below the standard of care.

The engineer admitted that the majority of the evidence had been removed prior to his inspection.  However, he dismissed the possibility that sewage could have leaked into the crawlspace because he saw “no visible excessive fresh water stains in the floor wood members.”  Accordingly, he offered no explanation as to how sewage under the pan could have been remediated without removing the pan.  The engineer recommended “professional carpet cleaning” to address sewage damage to carpet, and referred to the restorer’s demolition work as “a retrofit.”  The report did not reflect that the engineer held any certifications or training related to water damage restoration, indoor air quality or industrial hygiene. 

Prior to trial, the contractor had offered $1,000 to settle the claim, which State Farm rejected.  Evidence of the settlement offers is inadmissible in court.  The case went to trial in the Superior Court of California for the County of Marin, the Honorable Andrew E. Sweet, presiding.  The parties presented extensive evidence and argument about standards of care for inspection and restoration. 

Counsel for the contractor argued that a mere visual inspection for stains is not a proper way to determine the nature and extent of a water loss, and that State Farm and its agents did not perform a timely or proper inspection of the property and were simply “Monday Morning Quarterbacking” to try to recoup some of its loss.  Counsel for the contractor further argued that the standard of care requires a contractor to take reasonably prudent steps to protect the occupant and the structure from suspected contamination, and that State Farm was incorrectly treating this black water loss as a clean water loss. 

Counsel for State Farm argued that the contractor had no proof the water had gone under the shower and that its hammer probe must have malfunctioned because the subfloor under the shower had no visible water damage.  State Farm attempted to introduce into evidence the invoice it paid to replace the shower.  The restoration contractor objected to the invoice on grounds that its author was not present to testify and that the invoice had therefore not been properly authenticated.  The objection was sustained and the court never saw the invoice.

The court found that the restoration contractor’s project manager was a “highly certificated specialist in the areas of water and sewage damage” and very experienced in testing procedures and the use of tools to determine saturation levels of building materials.  The court noted that State Farm did not perform any sort of tests at the property or even touch the materials the contractor reported as wet.

The court awarded State Farm nothing on its claim, entered judgment in favor of the contractor, Ideal Restoration, Inc., and found State Farm liable for the contractor’s costs of suit.  In his Statement of Decision, Judge Sweet stated that State Farm had failed to prove that the contractor’s conduct was below the standard of care.  “To the contrary,” he wrote, “the evidence presented established that removal of the shower was reasonable and necessary” and that the contractor “used accepted procedures to test for saturation and reasonably determined the subfloor was saturated.”  He concluded that the contractor acted reasonably when it removed the shower.

Ideal Restoration, Inc. was represented at trial by Edward H. Cross of Law Offices of Edward H. Cross & Associates, PC.  State Farm Insurance Company was represented at trial by Syndey E. Fairbairn on behalf of Goldsmith & Hull, PC.

Edward H. Cross, the “Restoration Lawyer,” represents restoration professionals and environmental consultants nationwide. Please send comments to ehc@edcross.com.