Damage Cause Was Mudslide, Judge Rules

Frank and Mary own a beach house at the base of a hillside. After heavy rains and overflow of a drainage ditch at the top of the slope, their home was knocked off its foundation and damaged after being hit by a saturated mixture of soil, gravel, vegetation and rock.

They filed a claim under their flood insurance policy. Their insurer, United Service Automobile Assn., denied the claim. The insurer explained that the home damage was caused by an uninsured landslide rather than a mudslide, which is insured.

Frank and Mary sued their insurer. The insurer hired an expert who testified the slide was caused by a combination of factors, including saturation of the surface soils by heavy rainfall and build-up of ground water. He concluded it was an uninsured landslide, not an insured mudslide.

But Frank and Mary’s expert testified that the damage to their beach house was caused by a mudslide, precipitated by soil saturation and surface-water runoff from a natural drainage channel above the slide area.

If you were the judge, would you rule that the beach home was damaged by an insured mudslide?

The judge said yes.

“The torrential rain and the overflow of the natural drainage channel formed a liquidity which flowed down the slope and brought with it a saturated soil mass composed of soil, sand, gravel and underbrush,� the judge explained.

Flood insurance policies exclude coverage for damage caused to landslides and earth movement beneath a house, he continued. But this was a saturated soil mass flowing down a slope, the judge emphasized. Because the flow or inundation of liquid mud flowed down the hillside, following a period of heavy and sustained rain, this was a mudslide, not a landslide, the judge ruled. Therefore, the insurer must pay for mudslide damages to Frank and Mary’s beach home, he concluded.

Based on the 1999 U.S. Court of Appeals decision in McHugh vs. United Service Automobile Assn., 164 Fed.3d 451.

Robert J. Bruss is a syndicated columnist as well as a real estate investor, lawyer, broker and educator in the San Fransico Bay area.