After the manager removed the debris, water began to flow off the roof.

That day, a representative of the Stanford Apartments reported the damage to SAT's insurance carrier, Eagle West Insurance Company, which had issued SAT an “all-risk” policy.

In the course of investigating SAT's claim, Eagle West hired several independent parties, including consultant Independent Roof Inspection, Inc. (“IRI”), to evaluate the damage and determine its cause. During its evaluation, IRI inspected the apartment's roof, including the roof's construction and maintenance as well as its drainage system.

In its report, IRI concluded that water had seeped through the building's roof in areas near the roof's drain. The report further mentioned problems with both the roof and its drain.

First, IRI believed that the roof had outlived its normal useful life and had begun to show signs of age-related wear.

Second, although the roof's drainage system was considered sufficient when the building was constructed in the early 1900s, IRI thought it was undersized by modern standards and lacked an ancillary drain to allow water discharge in the event the primary drain became clogged.

On October 28, 2013, Eagle West denied SAT's insurance claim, citing its investigation, drainage issues, and exclusions included in SAT's policy.

After SAT disputed Eagle West's denial of coverage, Eagle West filed an action seeking a declaratory judgment that it was not obligated to cover damage from the September 6 claim. It moved for summary judgment, claiming that its denial had been proper because damage to the apartment's roof was a result of wear and tear and that, regardless, both the roof and drain had been improperly maintained and, therefore, were covered by the policy.

The Eagle West Policy

The policy excluded coverage for

damage caused by or resulting from

any

water that backs up or overflows from a sewer, drain or sump

The district court ruled that the water exclusion did not preclude coverage for SAT's claim.

In its decision, the district court rejected Eagle West's contention that the evidence indicated “an overflow situation” because water had pooled on the apartment's roof as a result of debris blocking its drain.

According to the district court, for water to overflow from something, it first must “start in a reservoir and spill out over its edges, rather than merely pass over it.” On that basis, the court continued, water overflowed from a drain when it exceeded the drain's capacity, not when its flow was “diverted entirely.”

Because the building's rooftop drain was blocked by debris, the result was “not that water overwhelmed the drain's capacity,” but rather “that the clogged drain was unable to divert water effectively to begin with.”

The district court concluded that the policy did “not address this specific peril” – when water could not enter a blocked drain – and, therefore, the damage caused by that peril was a “Covered Cause of Loss.”

The case is Eagle West Ins. Co. v. SAT 2400, LLC, No. C15-1098RSL (W.D. Wash. May 20, 2016).