Court Opinion

ID: 9896913
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:03:53.411552+00
Date Added: 2024-06-11T09:14:52.726041
License: Public Domain

Filed 11/14/23 Safarian v. Fire Insurance Exchange CA2/7
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        SECOND APPELLATE DISTRICT

                                     DIVISION SEVEN

VAHAGUN SAFARIAN,                                               B323862

         Plaintiff and Appellant,                               (Los Angeles County
                                                                Super. Ct. No.
         v.                                                     20STCV34672)

FIRE INSURANCE EXCHANGE,

         Defendant and Respondent.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Theresa M. Traber, Judge. Affirmed.
     Furtado Law and David J. Furtado for Plaintiff and
Appellant.
     Woolls Peer Dollinger & Scher, Gregory B. Scher,
H. Douglas Galt and Sean B. Dean for Defendant and
Respondent.

                               _________________________
       Vahagun Safarian appeals from the judgment entered after
the trial court granted the summary judgment motion filed by
Fire Insurance Exchange (Fire). Safarian sued Fire for breach of
contract and related claims after Fire denied in part Safarian’s
claim for coverage under his homeowner’s insurance policy for
damage to the foundation of his home resulting from a burst pipe
that flooded the soil around the home.
       Safarian contends the policy exclusions relied upon by Fire
to deny coverage, including exclusions for foundation damage,
water damage, and damage caused by earth movement, water, or
settling, do not apply because a policy extension provided
coverage for losses caused by accidental plumbing discharges,
which was the efficient proximate cause of the foundation
damage. Safarian also contends Fire waived its right to assert
the foundation damage exclusion by failing to raise it during the
adjustment process.
       The trial court correctly granted the summary judgment
motion because the coverage extension for accidental plumbing
discharges also excludes foundation damage. Therefore, the
efficient proximate cause doctrine does not apply. Further, there
was no waiver. We affirm.

      FACTUAL AND PROCEDURAL BACKGROUND

A.     The Policy
      Fire issued Safarian homeowner’s insurance policy number
97581-39-50, effective from June 13, 2017 through June 13, 2018
(Policy). The insured property was Safarian’s three-level hillside
home on Sunset Drive in Los Angeles (Property).

                                2
        The Policy introduction states with respect to property
coverage,1 “This policy will not pay for all types of loss or damage
or for all causes of loss or damage to covered property. Coverage
is dependent upon both the (1) cause of the loss or damage and
(2) type of loss or damage.” The principal property coverage
provision titled “Section I–Property Coverage . . . Loss or Damage
Insured” similarly provides that the policy does not insure
covered property for uninsured loss or damage and excluded
causes of loss or damage listed in “Section I—Uninsured Loss or
Damage and Excluded Causes of Loss or Damage.”
       “Section I—Uninsured Loss or Damage and Excluded
Causes of Loss or Damage” comprises two parts: Part A
addresses uninsured types of loss or damage, and part B
addresses excluded causes of loss or damage. Part A states in
relevant part, “Uninsured types of loss or damage are never
covered regardless of whether any acts, omissions . . . or any
other cause of loss or event contributes concurrently or in any
combination or sequence to cause the uninsured type of loss or
damage, except as may be stated otherwise.”
       Part A enumerates 13 types of uninsured loss or damage.
Paragraph 1, “Water Damage” (water damage exclusion), states,
“We do not insure loss or damage consisting of, composed of or
which is water damage, except as covered under Section I—
Extensions of Coverage, Limited Water Coverage.”
       Paragraph 12, “Movement, Settling, Cracking, Bulging,
Shrinking, Heaving or Expanding” (foundation damage

1     The Policy includes both property and liability insurance.
This case involve only the property coverage provisions found in
Section I of the Policy. We have omitted boldface when quoting
from the Policy.

                                 3
exclusion), states, “We do not insure loss or damage consisting of,
composed of or which is the movement, settling, cracking,
bulging, shrinking, heaving, or expanding of any part of covered
property, whether natural or otherwise . . . . [¶] [This] includes
by way of example but not limited to foundations, foundation fill
material, foundation piers, foundation beams, slabs, pads, patios,
walls, floors.”
       Part B, setting forth excluded causes of loss or damage
(also referred to as “perils”), provides, “Except as expressly
provided elsewhere in this policy, we do not insure property
covered under this policy, . . . or extend coverage under any
Extensions of Coverage for loss or damage directly or indirectly
caused by, arising out of, or resulting from any of the Excluded
Causes of Loss or Damage listed below . . . .” Part B enumerates
36 excluded perils, including “1. Earth Movement”;2 “25. Soil
Conditions,” including “saturation of the soil”; and
“34. Movement, Settling, Cracking, Bulging, Shrinking, Heaving
or Expanding of any Structure” (collectively, settling). Paragraph
2 excludes water as a cause of loss or damage, specifying, “This
water exclusion applies even if water combines or contributes in
any way with any other excluded cause of loss or damage
hereunder to cause loss or damage . . . . However, see Section I—
Extensions of Coverage, . . . limited coverage for water damage.”

2     “Earth movement” is defined as “any movement of earth,”
including without limitation, “subsiding,” “shifting,” “expanding,”
and “compacting,” “pressure by surface earth or fill,” all of which
“whether combined with, caused by, or resulting from water and
all whether the water event is . . . sudden and accidental or is
constant . . . .”

                                 4
       Section I of the Policy also includes “Extensions of
Coverage,” which “are subject to all the policy terms,
exclusions, . . . and conditions, including without limitation the
terms and limitations of any uninsured loss or damage or
excluded cause of damage set forth in Section I–Uninsured Loss
or Damage and Excluded Causes of Loss or Damage . . . .”
Paragraph (a) provides a limited water coverage extension, which
states in relevant part, “We provide limited coverage for
accidental direct, distinct and demonstrable physical water
damage of covered property from direct contact with water, but
only if the water results from: [¶] . . . [¶] (4) a sudden and
accidental discharge, eruption, overflow, or release of water . . .
from within any portion of: [¶] (i) a plumbing system.”
Paragraph (b) provides that “[t]he limited coverage for water
damage described at subsection a.(4) above applies even if the
sudden and accidental discharge . . . is caused by” eight listed
categories of otherwise excluded perils under Part B. However,
paragraph (b) does not list earth movement, water damage, soil
conditions, and settling. And paragraph (f) specifically excludes
foundation damage: “We do not cover any loss or damage which
consists or is composed of or which is the movement, settling,
cracking, bulging, shrinking, heaving, erosion, washing out or
expanding of a foundation, slab, concrete floor, concrete pad or
sidewalk or patio, or a foundation wall, foundation fill, or
pavement.”

                                 5
B.      Property Damage, Claim, and Lawsuit3
       On December 6, 2017 Safarian discovered that a bidet
plumbing line on the top floor of the Property burst, flooding all
of the floors below with a large amount of water. Water flooded
the exterior of the Property as well. Safarian submitted a claim
to Fire for water damage to the Property. Andrew Hodson, a
senior general claims adjuster for the Farmer’s Group of
Insurance Companies, which includes Fire among its affiliated
underwriters,4 investigated and adjusted Safarian’s claim, and
Fire ultimately paid Safarian $637,999 in policy benefits,
including $313,371 for damage to the Property, with the
remainder for damage to personal property and loss of use.
       On December 27 Safarian hired William Musakhanyan, a
licensed public adjuster,5 to handle his claim. Musakhanyan
notified Hodson that the Property may have sustained foundation
damage as a result of the plumbing breach. On March 12, 2018 a
structural engineer retained by Safarian reported, “The water

3      Our summary of the damage to the Property and the
adjustment of Safarian’s insurance claim is based on undisputed
facts taken from the evidence submitted by the parties in
connection with Fire’s summary judgment motion.
4     In the trial court, Safarian at times referred to Farmers
when describing his claim and the adjustment process. Because
Fire underwrote the Policy and only Fire was named in the
lawsuit, we discuss only Fire.
5      A public adjuster is “a person who, for compensation, acts
on behalf of or aids in any manner, an insured in negotiating for
or effecting the settlement of a claim or claims for loss or damage
under any policy of insurance covering real or personal
property . . . .” (Ins. Code, § 15007.) Further undesignated
statutory references are to the Insurance Code.

                                 6
leak also appears to have caused fill soils in the crawl [space]
. . . to settle,” which in turn caused interior floor tiles to separate
and an exterior foundation wall to develop cracks. Musakhanyan
transmitted the engineer’s report to Hodson, who on April 10
responded by email, “Per our conversation—as you know, Earth
movement is not covered.” Hodson added, “the policy does not
cover water damage, but there are limited circumstances where
water damage is covered . . . .” Citing the water coverage
extension policy language, which was pasted into the email,
Hodson wrote, “You will see . . . under ‘f’ how this damage is not
covered.”
         Fire denied Safarian’s claim for foundation damage. Fire’s
April 10, 2018 claim outcome letter (the claims denial) was
signed by Hodson and addressed to Musakhanyan. The letter
stated, “As we discussed on April 10, 2018, you reported
additional damage due to expansive soils and movement.
Unfortunately, there is no coverage for this portion of your claim
based on the facts known to us at the present time.” The letter
referenced the foundation damage exclusion in paragraph 12 of
Section I – Part A (“Uninsured Types of Loss or Damage”) and
the earth movement and settling cause of loss exclusions in
paragraphs 1 and 34 of Section I – Part B (“Excluded Causes of
Loss or Damage”). The letter did not reference the water damage
exclusion, the water peril exclusion, or the paragraph (f)
foundation damage exclusion in the water coverage extension.
However, the letter stated, “We reserve all rights and defenses
under the policy and law and no activity on our part should be
construed as a waiver. Even though only parts of the policy may
be mentioned or quoted in this letter, additional portions if found
to be relevant will be applied.”

                                   7
       Safarian filed this action on September 10, 2020, asserting
causes of action for breach of contract, breach of the duty of good
faith and fair dealing, and unfair business practices. Safarian
alleged that on March 25, 2020 Fire closed his claim without
paying any damages for structural issues affecting the Property,
despite Safarian’s reports showing the damage to the Property
resulted from a “covered water loss.” Fire breached the Policy by
failing to pay Safarian benefits he was entitled to under the
Policy. Fire also breached the duty of good faith and fair dealing
by, among other things, delaying and withholding payment for
claims Fire knew were valid under the Policy, misrepresenting
Policy benefits, failing to engage in a good faith settlement of
Safarian’s claim, and failing to provide a reasonable basis for
delaying or denying payment. Safarian’s unfair business
practices claim incorporated the allegations supporting his other
causes of action and alleged Fire’s conduct constituted “unlawful,
unfair, fraudulent, deceptive, untrue or misleading statements
and certifications, and other acts prohibited by law” in violation
of the Unfair Competition Law (UCL; Bus. & Prof. Code, § 17200
et seq.).

C.     Fire’s Motion for Summary Judgment
      On April 28, 2022 Fire filed its motion for summary
judgment or in the alternative summary adjudication. Fire
argued it paid all covered damages and therefore did not breach
the Policy. The damage to the Property’s foundation—caused,
according to Safarian, when water flooded the soils at the base of
the structure, causing settlement and cracking in the tiles and
walls—was not covered under the Policy. First, foundation
damage was an uninsured type of loss under the general

                                 8
foundation damage exclusion and the water damage exclusion.
Second, earth movement, water damage, and settling were
excluded perils. Further, the paragraph (f) foundation damage
exclusion within the water coverage extension excluded “any loss
or damage which consists or is composed of or which is the
movement, settling, cracking, bulging, shrinking, heaving,
erosion, washing out or expanding of a foundation, slab, concrete
floor, concrete pad or sidewalk or patio, or a foundation wall,
foundation fill, or pavement.” Accordingly, even if the foundation
damage to the Property had been caused by a covered peril under
the water coverage extension, the damage was uninsured.
Because there was no breach of the Policy, there was no bad faith
in administering the policy and no unfair business practices
based on the same conduct.
       In his opposition, Safarian argued the existence and cause
of the foundation damage to the Property were disputed issues of
material fact, and the exclusions relied on by Fire to deny
coverage were unenforceable under section 5306 and the efficient
proximate cause doctrine. According to Safarian, the sudden
plumbing failure was a covered cause of loss under the Policy’s
water coverage extension, and “because the water loss was the
efficient proximate cause of the loss, and because the resultant
earth movement and foundation damage were set in motion by
the failure of the plumbing line and contributed to the loss, the
exclusions for earth movement and foundation damage are

6      Section 530 states, “An insurer is liable for a loss of which a
peril insured against was the proximate cause, although a peril
not contemplated by the contract may have been a remote cause
of the loss; but he is not liable for a loss of which the peril insured
against was only a remote cause.”

                                  9
inconsistent with the [efficient proximate cause] [d]octrine and
unenforceable as a matter of law.” Safarian also argued that Fire
waived its right to assert the paragraph (f) foundation damage
exclusion by failing to assert it during the two-year adjustment
process.
       In its reply, Fire argued there were no triable issues of fact
because even assuming the foundation damage was caused by the
plumbing discharge inundating the soils underneath and around
the Property, the foundation damage was expressly excluded
from coverage under the paragraph (f) foundation damage
exclusion. Therefore, the efficient proximate cause doctrine did
not apply. Fire also argued it did not waive the applicable
exclusions because its denial letter quoted the earth movement
and settlement exclusions and included a reservation of rights.
       After a hearing, on August 10, 2022 the trial court granted
Fire’s summary judgment motion.7 In its nine-page ruling, the
court found the language of the Policy was undisputed and
neither party offered extrinsic evidence in support of its
interpretation of the coverage provisions and exclusions.
Further, “the efficient proximate cause doctrine does not apply
when all relevant perils are excluded from coverage.” In
addition, paragraph (f) of the water coverage extension “expressly
excludes any loss or damage to a foundation,” and “[t]he only
reasonable explanation for its presence within the [water
coverage extension] was that this exclusion was intended to

7     The trial court declined to rule on Safarian’s evidentiary
objections because the court did not rely on any evidence to which
Safarian objected. Safarian does not renew his objections on
appeal.

                                 10
modify the extension to expressly exclude damage to foundations
caused by one of the covered sources of water damage.”
       With respect to Safarian’s claim of waiver, the trial court
found under Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th
1 (Waller) that Safarian failed to meet his burden to prove Fire
intentionally relinquished its right to invoke the paragraph (f)
foundation damage exclusion, and he could not meet this burden
based only on Fire’s denial of coverage in light of Fire’s
reservation of rights in the denial letter. Finally, the court found
that because there was no breach of contract, Fire was entitled to
summary adjudication of Safarian’s derivative claims for bad
faith and unfair competition and summary judgment as to the
entire action.
       On September 1, 2022 the trial court entered judgment
against Safarian. Safarian timely appealed.

                          DISCUSSION

A.     Standard of Review
      Summary judgment is appropriate only if there are no
triable issues of material fact and the moving party is entitled to
judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c);
Regents of University of California v. Superior Court (2018)
4 Cal.5th 607, 618; Doe v. Roman Catholic Archbishop of Los
Angeles (2021) 70 Cal.App.5th 657, 668.) “‘“‘“We review the trial
court’s decision de novo, considering all the evidence set forth in
the moving and opposing papers except that to which objections
were made and sustained.”’ [Citation.] We liberally construe the
evidence in support of the party opposing summary judgment and
resolve doubts concerning the evidence in favor of that

                                11
party.”’” (Hampton v. County of San Diego (2015) 62 Cal.4th 340,
347; accord, Doe, at p. 669; Sabetian v. Exxon Mobil
Corporation (2020) 57 Cal.App.5th 1054, 1068.)
       A defendant moving for summary judgment has the initial
burden of presenting evidence that a cause of action lacks merit
because the plaintiff cannot establish an element of the cause of
action or there is a complete defense. (Code Civ. Proc., § 437c,
subd. (p)(2); Aguilar v. Atlantic Richfield Co. (2001)
25 Cal.4th 826, 853; Sabetian v. Exxon Mobil Corporation, supra,
57 Cal.App.5th at p. 1068.) If the defendant satisfies this initial
burden, the burden shifts to the plaintiff to present evidence
demonstrating there is a triable issue of material fact. (Code Civ.
Proc., § 437c, subd. (p)(2); Aguilar, at p. 850; Sabetian, at
p. 1069.)

B.      Interpretation of Insurance Contracts
       “In general, interpretation of an insurance policy is a
question of law that is decided under settled rules of contract
interpretation.” (State of California v. Continental Ins. Co. (2012)
55 Cal.4th 186, 194; accord, JRK Property Holdings, Inc. v.
Colony Ins. Co. (2023) 96 Cal.App.5th 1, 10.) “‘Our goal in
construing insurance contracts, as with contracts generally, is to
give effect to the parties’ mutual intentions. [Citations.] “If
contractual language is clear and explicit, it governs.”
[Citations.] If the terms are ambiguous [i.e., susceptible of more
than one reasonable interpretation], we interpret them to protect
“‘the objectively reasonable expectations of the insured.’”
[Citations.] Only if these rules do not resolve a claimed
ambiguity do we resort to the rule that ambiguities are to be
resolved against the insurer.’” (Minkler v. Safeco Ins. Co. of

                                12
America (2010) 49 Cal.4th 315, 321 (Minkler); accord, Montrose
Chemical Corp. of California v. Superior Court (2020) 9 Cal.5th
215, 230; Marina Pacific Hotel & Suites, LLC v. Fireman’s Fund
Ins. Co. (2022) 81 Cal.App.5th 96, 105 (Marina Pacific); see Wolf
v. Walt Disney Pictures & Television (2008) 162 Cal.App.4th
1107, 1126 [“Ordinarily, the objective intent of the contracting
parties is a legal question determined solely by reference to the
contract’s terms.”].)
      “The ‘tie-breaker’ rule of construction against the insurer
stems from the recognition that the insurer generally drafted the
policy and received premiums to provide the agreed protection.”
(Minkler, supra, 49 Cal.4th at p. 321; accord, Marina Pacific,
supra, 81 Cal.App.5th at p. 106.) “[I]n cases of ambiguity, basic
coverage provisions are construed broadly in favor of affording
protection, but clauses setting forth specific exclusions from
coverage are interpreted narrowly against the insurer. The
insured has the burden of establishing that a claim, unless
specifically excluded, is within basic coverage, while the insurer
has the burden of establishing that a specific exclusion applies.”
(Minkler, at p. 322; accord, Montrose Chemical Corp. of California
v. Superior Court, supra, 9 Cal.5th at p. 230.)

C.     The Trial Court Properly Granted Summary Judgment
       Because the Policy Did Not Cover Foundation Damage to
       the Property
      “[T]he elements of a cause of action for breach of contract
are (1) the existence of the contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) the
resulting damages to the plaintiff.” (Oasis West Realty, LLC v.
Goldman (2011) 51 Cal.4th 811, 821; accord, Marina Pacific,

                                 13
supra, 81 Cal.App.5th at p. 108.) Fire’s summary judgment
motion challenged only the third element, arguing Fire did not
breach an obligation to pay for damage to the Property’s
foundation because the damage was not a covered loss under the
Policy.8 On appeal, Safarian contends the water coverage
extension provided coverage for any damage to the Property
resulting from a plumbing breach, regardless of whether the
damage was an uninsured loss under the Policy’s general terms.
We agree with the trial court that foundation damage is not a
covered loss under the Policy, regardless of the cause, and Fire
was entitled to judgment as a matter of law.
       Safarian does not assert that any term or provision of the
Policy is ambiguous, nor does he argue there is extrinsic evidence
bearing on the interpretation of the Policy. Accordingly, the plain
language of the Policy governs its interpretation. (Minkler,
supra, 49 Cal.4th at p. 321; accord, Waller, supra, 11 Cal.4th at
p. 18; see Civ. Code, § 1638 [“The language of a contract is to
govern its interpretation, if the language is clear and explicit, and
does not involve an absurdity.”].) In determining whether there
is coverage, we consider the policy as a whole, including “the
endorsements broadening coverage, if any, included in the policy
terms.” (Waller, at p. 18.)
       The Policy, in clear and unambiguous language, did not
provide coverage for the claimed damage to the foundation wall
and floor. The Policy introduction and the principal definition of
an insured loss prominently state there is no coverage for the

8     As noted, the trial court found (and Safarian does not
dispute) Fire was entitled to judgment on all three causes of
action of the complaint if the damage to the Property was not a
covered loss.

                                 14
types of damage enumerated in Section I, Part A. The foundation
damage exclusion in paragraph 12 of Part A states there is no
coverage for “loss or damage consisting of, composed of or which
is the movement, settling, cracking, bulging, shrinking, heaving,
or expanding of any part of covered property,” including without
limitation “foundations, foundation fill material, foundation
piers, foundation beams, slabs, pads, patios, walls, floors.” And
paragraph 1 excludes water damage. Safarian does not dispute
the damage to the Property falls within these categories of
uninsured losses under the Policy’s general provisions.
       Safarian instead relies on the water coverage extension as
a basis for coverage. Under this extension, Fire agreed in
paragraph (a)(4)(i) to provide “limited coverage for accidental
direct, distinct and demonstrable physical water damage” where
the water damage is caused by a sudden plumbing discharge.
Safarian argues this provision operated to extend coverage to any
damage caused by a sudden plumbing discharge, and it is
undisputed the burst bidet pipe was a sudden plumbing
discharge. However, paragraph (f) of the extension excludes
coverage for “the movement, settling, cracking, bulging,
shrinking, heaving, erosion, washing out or expanding of a
foundation, slab, concrete floor, concrete pad or sidewalk or patio,
or a foundation wall, foundation fill, or pavement.” Considering
paragraphs (a) and (f) together, as we must, the water coverage
extension as a whole provides “limited” coverage for some, but not
all, types of water damage, and it unambiguously does not cover
foundation damage even when caused by a sudden plumbing
discharge. (See Wind Dancer Production Group v. Walt Disney
Pictures (2017) 10 Cal.App.5th 56, 69 [“‘We consider the contract
as a whole and interpret its language in context so as to give

                                15
effect to each provision, rather than interpret contractual
language in isolation.’”].)
       Safarian’s reliance on the efficient proximate cause
doctrine to circumvent the plain meaning of the water coverage
extension is misplaced. “The efficient proximate cause doctrine,
codified at [section 530], provides that when ‘“‘a loss is caused by
a combination of a covered and specifically excluded risks, the
loss is covered if the covered risk was the efficient proximate
cause of the loss,’ but ‘the loss is not covered if the covered risk
was only a remote cause of the loss, or the excluded risk was the
efficient proximate, or predominate cause.’”’” (Brown v. Mid-
Century Ins. Co. (2013) 215 Cal.App.4th 841, 855, footnote
omitted; accord, Julian v. Hartford Underwriters Ins. Co. (2005)
35 Cal.4th 747, 750 (Julian); see Sabella v. Wisler (1963)
59 Cal.2d 21, 31-32 [“‘[i]n determining whether a loss is within an
exception in a policy, where there is a concurrence of different
causes, the efficient cause—the one that sets others in motion—is
the cause to which the loss is to be attributed, though the other
causes may follow it, and operate more immediately in producing
the disaster’”].)
       The dispositive issue here is not, as argued by Safarian, the
convergence of a covered peril (flooding from the burst pipe) and
an excluded peril (earth movement, water, soil conditions, and
settling). As discussed, the purported covered peril is not covered
at all because the water damage extension for a burst pipe itself
has an exclusion in paragraph (f) for foundation damage. Thus,
neither peril provides coverage.
       The Supreme Court’s analysis of excluded perils in Julian,
supra, 35 Cal.4th 747 is directly on point. In Julian, the
homeowners’ insurance policy excluded losses caused by earth

                                16
movement and water damage. It also excluded losses from
weather conditions that “contribute in any way with,” among
other things, earth movement or water damage. (Id. at pp. 751-
752, 758.) The policy was otherwise an “open-peril” policy,
covering all perils not expressly excluded. (Id. at p. 758.) The
insurer denied the homeowners’ claim for damage sustained after
a landslide caused a tree to fall on their home, arguing that the
weather conditions exclusion precluded coverage because heavy
rains soaked the hillside soils and contributed to the landslide.
(Id. at pp. 752-753.) Affirming summary judgment for the
insurer, the Supreme Court rejected the homeowners’ argument
that the weather conditions exclusion was unenforceable under
the efficient proximate cause doctrine by providing coverage for
weather conditions under some circumstances but not others.
(Id. at pp. 758-759.)
       The Supreme Court in Julian explained, “‘[A]n insurance
company can limit the coverage of a policy issued by it as long as
such limitation conforms to the law and is not contrary to public
policy.’ [Citation.] ‘An insurance policy may exclude coverage for
particular injuries or damages in certain specified circumstances
while providing coverage in other circumstances.’ [Citation.] It
follows that an insurer is not absolutely prohibited from drafting
and enforcing policy provisions that provide or leave intact
coverage for some, but not all, manifestations of a particular
peril. This is, in fact, an everyday practice that normally raises
no questions regarding section 530 or the efficient proximate
cause doctrine. For example, a policy might exclude losses
caused by freezing to plumbing, but provide coverage for other
types of freezing, or vice versa. The fact that the exclusion does

                               17
not apply to all types of freezing does not, by itself, render it
invalid.” (Julian, supra, 35 Cal.4th at p. 759.)9
      Because under Julian, supra, 35 Cal.4th at page 759 an
insurer may exclude “‘coverage for particular injuries or damages
in certain specified circumstances while providing coverage in
other circumstances’” without running afoul of the efficient
proximate cause doctrine, Fire was allowed to specify that the
water coverage extension did not apply to foundation damage.

9      The cases cited by Safarian precede Julian and involve
application of the efficient proximate cause doctrine to the
combination of covered and uncovered perils. Safarian
principally relies on Howell v. State Farm Fire & Casualty Co.
(1990) 218 Cal.App.3d 1446, disapproved on another ground in
Reid v. Google, Inc. (2010) 50 Cal.4th 512, 528. In Howell, the
homeowner’s policy listed earth movement and water damage as
excluded perils, but provided fire was a covered peril. The policy
further stated losses due to these perils were “excluded
regardless of any other causes or event contributing concurrently
or in any sequence to the loss.” (Id. at pp. 1450-1451, fn omitted.)
The Court of Appeal reversed the trial court’s grant of summary
judgment in favor of the insurer, holding there was a triable issue
of fact whether a fire that denuded the hillside was the efficient
proximate cause of a landslide that damaged the homeowner’s
property. (Id. at pp. 1458-1459.) The Supreme Court in Julian,
supra, 35 Cal.4th at page 756 distinguished Howell, explaining it
brought about a “‘fair result’” within the reasonable expectations
of the insured and insurer by declining to give effect to an
overbroad exclusion, while enforcing “the exclusions to the extent
that they applied to losses proximately caused by the peril
explicitly named therein.” As discussed, here, as in Julian, there
was no covered peril that contributed to the property damage.

                                18
D.    Safarian Presented No Evidence To Show Fire Waived the
      Paragraph (f) Foundation Damage Exclusion
      Safarian contends Fire waived its right to enforce the
paragraph (f) foundation damage exclusion by failing to assert it
during the adjustment of his claim. Safarian failed to present
evidence to create a triable issue of fact as to waiver.
      “‘“[W]aiver is the intentional relinquishment of a known
right after knowledge of the facts.” [Citations.] The burden . . . is
on the party claiming a waiver of a right to prove it by clear and
convincing evidence that does not leave the matter to speculation,
and “doubtful cases will be decided against a waiver” [citation].’
[Citations.] The waiver may be either express, based on the
words of the waiving party, or implied, based on conduct
indicating an intent to relinquish the right.” (Waller, supra,
11 Cal.4th at p. 31; accord, Santa Clara Valley Water Dist. v.
Century Indemnity Company (2023) 89 Cal.App.5th 1016, 1055
(Santa Clara Valley).)
      In the insurance context, “California courts have applied
the general rule that waiver requires the insurer to intentionally
relinquish its right to deny coverage and that a denial of coverage
on one ground does not, absent clear and convincing evidence to
suggest otherwise, impliedly waive grounds not stated in the
denial.” (Waller, supra, 11 Cal.4th at p. 31; see Santa Clara
Valley, supra, 89 Cal.App.5th at p. 1055 [“‘“[A] waiver exists
whenever an insurer intentionally relinquishes its right to rely on
the limitations provision. [Citation.]” [Citation.] Whether a
waiver has occurred depends solely on the intention of the
waiving party.’”].) Waiver “is not established merely by evidence
the insurer failed to specify the exclusion in a letter reserving
rights.” (State Farm Fire & Casualty Co. v. Jioras (1994)

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24 Cal.App.4th 1619, 1627-1628, fn. 7; accord, Velasquez v. Truck
Ins. Exchange (1991) 1 Cal.App.4th 712, 722 [“An intention to
waive a limitations provision is not evinced by the failure to raise
that point in a letter denying a claim.”]; see Waller, at p. 31
[general liability insurer did not impliedly waive defenses to
coverage that it did not mention in a claims denial letter where
the letter did not indicate an intention to relinquish additional
bases for denial].)10 “‘[W]aiver is ordinarily a question of fact but
becomes a question of law where the facts can support only one
conclusion,’” and “the issue of waiver may be . . . properly
resolved by summary judgment [where] the evidentiary record
compel[s] the conclusion that there was no waiver.” (Santa Clara
Valley, at p. 1056.)
      Safarian did not present evidence that Fire intentionally
relinquished its right to assert the paragraph (f) foundation
damage exclusion. He cited the April 10, 2018 claim denial that
Hodson transmitted to Musakhanyan, which referred only to the

10    Safarian relies on two federal district court cases,
McLaughlin v. Connecticut General Life Ins. Co. (N.D.Cal. 1983)
565 F.Supp. 434, 451 to 452 and Zumbrun v. United Services
Auto. Ass’n (E.D.Cal. 1989) 719 F.Supp. 890, 896, to argue that
an insurer waives a defense to coverage by failing to assert it in
the denial letter. But the Supreme Court in Waller explicitly
declined to follow this rule: “We . . . decline to follow the
McLaughlin rule of automatic waiver. A holding that an insurer
waives defenses not asserted in its initial denial of a duty to
defend would be inconsistent with established waiver principles
by erroneously implying an intent to relinquish contract rights
where no such intent existed. Such a conclusion would contradict
the holdings of the majority of California and sister-state cases
addressing the waiver issue.” (Waller, supra, 11 Cal.4th at p. 33.)

                                 20
general foundation damage exclusion (as well as the excluded
perils of earth movement and settling) and not the paragraph (f)
foundation damage exclusion. The letter further stated, “We
reserve all rights and defenses under the policy and law and no
activity on our part should be construed as a waiver. Even
though only parts of the policy may be mentioned or quoted in
this letter, additional portions if found to be relevant will be
applied.” The letter, as a matter of law, did not constitute an
implied waiver of an unasserted defense to coverage. (Waller,
supra, 11 Cal.4th at p. 31; State Farm Fire & Casualty Co. v.
Jioras, supra, 24 Cal.App.4th at pp. 1627-1628, fn. 7; Velasquez v.
Truck Ins. Exchange, supra, 1 Cal.App.4th at p. 722.)
       Moreover, Safarian’s contention that Fire never raised the
paragraph (f) foundation damage exclusion during the two-year
adjustment process is false. Hodson sent Musakhanyan an email
on the same day as Fire’s claims denial in response to the
structural engineering report Musakhanyan sent Hodson to
support additional foundation damages. In his email, Hodson
stated the language of the water coverage extension and
emphasized that although “there are limited circumstances
where water damage is covered,” “[y]ou will see . . . under ‘f’ how
this damage is not covered.” Both Hodson and Musakhanyan
were professional adjusters engaged in an ongoing process of
adjusting the claim. Further, the fact the parties subsequently
engaged in a protracted process of disputing the extent to which
the plumbing discharge caused the foundation damage does not
support an inference Fire relinquished its right to rely on
paragraph (f) because Fire was free to develop one defense
without impliedly waiving another. (Waller, supra, 11 Cal.4th at
p. 31.) And Safarian failed to identify any actions by Fire that

                                21
were inconsistent with its enforcement of the Policy exclusions.
Finally, Safarian’s contention that he relied to his detriment on
his belief Fire was not asserting the exclusion—by commissioning
additional reports and making certain repairs—is irrelevant to
the threshold question of whether there was a waiver. (Santa
Clara Valley, supra, 89 Cal.App.5th at p. 1055 [“‘Whether a
waiver has occurred depends solely on the intention of the
waiving party.’”].)

                         DISPOSITION

     The judgment is affirmed. Fire is to recover its costs on
appeal.

                                          FEUER, J.
We concur:

             PERLUSS, P. J.

             EVENSON, J.*

*     Judge of the Alameda County Superior Court, assigned by
the Chief Justice pursuant to article VI, section 6 of the
California Constitution.

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