NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS OCT 25 2024

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

SAUL MARK GERSHKOWITZ, an No. 23-55432 individual; ROBERTA ELLEN GERSHKOWITZ, D.C. No. 2:21-cv-01655-SPG-E Plaintiffs-Appellants,

v. MEMORANDUM*

STATE FARM GENERAL INSURANCE

COMPANY,

Defendant-Appellee.

SAUL MARK GERSHKOWITZ, an No. 23-55473 individual; ROBERTA ELLEN GERSHKOWITZ, D.C. No. 2:21-cv-01655-SPG-E Plaintiffs-Appellees,

v.

STATE FARM GENERAL INSURANCE

COMPANY,

Defendant-Appellant.

Appeal from the United States District Court for the Central District of California Sherilyn Peace Garnett, District Judge, Presiding

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.

Panel Submitted October 22, 2024** Pasadena, California

Before: TALLMAN, R. NELSON, and BRESS, Circuit Judges.

State Farm General Insurance Company denied Saul and Roberta

Gershkowitzes’ insurance claim after an investigation. The Gershkowtizes’ claim

stemmed from water damage in their house. State Farm denied the claim after

concluding it was due to “continuous or repeated seepage or leakage,” losses for

which are expressly excluded from coverage under the policy.

The Gershkowitzes sued State Farm for breach of contract and breach of the

implied duty of good faith and fair dealing. The district court entered summary

judgment against the Gershkowitzes on their bad-faith claim but allowed the

breach-of-contract claim to proceed to trial. At trial, the jury awarded the

Gershkowitzes $51,006.54. The Gershkowitzes appeal the entry of summary

judgment on their bad-faith claim. State Farm cross-appeals on the breach-of-

contract claim but asks that we reach its cross-appeal only if we reverse on the bad-

faith claim. We affirm.

As the district court concluded, no reasonable juror could conclude under the

totality of the circumstances that State Farm acted unreasonably or in bad faith.

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).

Panel 2 23-55432 See Wilson v. 21st Century Ins., 42 Cal. 4th 713, 723 (2007) (“An insurer’s good or

bad faith must be evaluated in light of the totality of the circumstances surrounding

its actions.”). None of the Gershkowitzes’ arguments to the contrary are

persuasive.

First, it was reasonable that State Farm did not examine or inspect the failed

pipe, and no reasonable factfinder could conclude otherwise. The Gershkowitzes’

plumber, Beny, had discarded the failed section of pipeline before the

Gershkowitzes contacted State Farm, so State Farm could not examine or inspect

it. Additionally, State Farm reviewed Beny’s invoice, which stated that the pipe

had a pinhole leak.

Second, it was reasonable for State Farm not to conduct rate and flow

measurements because the piping had already been replaced. Further, Ms. Urquilla

asked Mr. Gershkowitz whether rate and flow measurements were taken before the

leak was fixed, but Mr. Gershkowitz reported he didn’t know. Ms. Urquilla asked

Beny for that information, but Beny never responded.

Third, it was reasonable for State Farm to contest the claim based on its

initial understanding that the pipe failed under the house despite open questions

regarding the location of the failed pipe. Mr. Gershkowitz told State Farm multiple

times that the pipe failed under the house. Beny’s invoice concurs; it reports a leak

“under [the] house” and refers to “replacing [a] broken section under the house.”

Panel 3 23-55432 And even if Mr. Gross told State Farm that he believed the leak developed above

the floor, it was reasonable for State Farm to discredit these statements since Mr.

Gross never saw the leak.

Fourth, it was reasonable that State Farm did not interview Beny or Ms.

Gershkowitz. Mr. Gershkowitz suggested that State Farm did not need to speak to

Beny, and that he would pass any questions along. State Farm sent questions for

Beny, but Beny never answered. After Ms. Urquilla later called and left a message

for Beny, she learned that Beny was hospitalized. And, in any case, State Farm

had received and reviewed Beny’s invoice. Similarly, it was not necessary to

interview Ms. Gershkowitz because there is no evidence that she saw the leak or

could explain its cause.

Fifth, it was reasonable under these facts for State Farm not to retain an

independent plumber for its investigation. Even without an independent expert,

State Farm had a reasonable basis to contest the claim.

Sixth, State Farm did not intentionally ignore evidence of inundation. Mr.

Gross was not present at the house before the leak was repaired, the photos it

submitted to State Farm do not establish inundation, and Mr. Gershkowitz said he

didn’t remember seeing water on the floor.

Finally, State Farm reasonably discounted Mr. Gross’s opinion about a lack

of mold or microbial growth. His testimony on this point is equivocal.

Panel 4 23-55432 Additionally, State Farm relied on its employees’ experience that gradual leaks do

not always cause mold, which was reasonable.

On this record, no reasonable juror could conclude, under the totality of the

circumstances, that State Farm “lacked any factual basis” for its coverage decision,

Wilson, 42 Cal. 4th at 724, failed to give due consideration to competing evidence,

id. at 724 n.8, or used an investigation as a mere pretext for denial. Id. at 725.

Thus, no reasonable factfinder could conclude that State Farm acted unreasonably

or in bad faith. Id. at 723.1

AFFIRMED.

1 Since we conclude State Farm’s investigation was reasonable, it is not necessary to consider the Gershkowitzes’ additional arguments related to increased water usage or damage in the water heater closet, the Gershkowitzes’ claim for punitive damages, or State Farm’s conditional cross-appeal.

Panel 5 23-55432