Grebow v. Mercury Insurance Co.

(Preventative Measures Not Covered Under Homeowners Insurance Policy)

In Grebow v. Mercury Insurance Company, 241 Cal. App. 4th 564 (2015), the California Court of Appeal affirmed the trial court's grant of summary judgment to Mercury Insurance Company ("Mercury"), finding Arthur and Helen Grebows' claim for expenditures to prevent a collapse (an insurable loss) was not covered by the terms of their homeowners policy.

The Grebows purchased a superior property homeowners policy from Mercury for their residence located in Tarzana, California. The Grebows asked a general contractor to inspect the rear deck because of recurring watermarks. The contractor found severe decay in the steel beams that supported the second floor of the house, and reported that the beams and poles could no longer support the upper portion of the house, a large portion of which would fall. Upon inspection, a structural engineer agreed with the general contractor's findings. The engineer also opined the failure of the poles and beams was caused by concealed decay and corrosion. The Grebows were advised not to enter the top portion of their home until repair work was completed. The Grebows authorized the purchase of shoring material, which was installed the next day, and entered into a construction contract for the repairs. Nearly a month later, the Grebows orally notified Mercury of their claim, which they submitted in writing the following day. Mercury investigated and, approximately four months after the Grebows submitted their claim, denied the claim. The Grebows had paid approximately $91,000 to remediate their home.

The Grebows filed an action against Mercury, asserting claims of breach of contract and tortious breach of insurance contract. The Grebows filed a motion for summary adjudication regarding coverage. Mercury filed a motion for summary judgment that there was no coverage as a matter of law so Mercury was not obligated to reimburse the Grebows. The trial court denied the Grebows' motion, but granted Mercury's. The trial court then denied the Grebows' motion for new trial, and the Grebows appealed the trial court's decisions as to all three motions.

In ruling on the Grebows' appeal, the Court of Appeal noted that the general rules of contract interpretation apply to insurance disputes:

The California Supreme Court has established the following rules of interpretation: "Interpretation of an insurance policy is a question of law and follows the general rules...