The New Zealand Insurance Company, Limited v. Louis Lenoff and Ella Lenoff

This case, involving an action by homeowners (appellees) against their insurer (appellant), under an all physical loss home policy, for damages to their home as a result of movement of its supporting-earth, was tried and decided by the District Court prior to the filing on January 17, 1963, of the opinion of the Supreme Court of California in Sabella v. Wisler, 27 Cal.Rptr. 689 , 377 P.2d 889 .

The insurance policy here in question contained, exactly, the same insuring clause, as well as the same exceptions, as-that construed in Sabella v. Wisler.

The District Court in rendering judgment in favor of the homeowners based' its conclusion as to the insurer’s liability upon the theory that the exclusionary term “settling” as used in the policy meant, as a matter of law, “minor” or “normal settling,” so that while damage resulting from minor or normal settling was thereby excluded from coverage-under the policy, damage from major or extraordinary settling, such as here was found to have occurred, was not so excluded.

Since Federal jurisdiction here was-based upon diversity, it was conceded by both parties that the law of California controls the disposition of this case.

By virtue…