Safeco Insurance Co. Of America v. William Guyton

This is a consolidated appeal from a district court judgment 471 F.Supp. 1126 awarding declaratory relief to insurance companies from coverage liability and dismissing counterclaims brought by policyholders. The policyholders contend the district court erred in: (1) ruling that the policy did not cover the loss suffered, even though one proximate cause of the loss was covered under the policy; (2) dismissing one of the policyholders’ counterclaims for want of subject matter jurisdiction; (3) dismissing a counterclaim alleging bad faith denial of the policyholders’ claims; and (4) refusing expert testimony to explain the policy’s meaning.

FACTS

On September 10, 1976, record rains accompanying Hurricane Kathleen broke through flood control facilities and inundated parts of the City of Palm Desert, California. The appellants (“the Policyholders”) are property-owners who suffered extensive property damage from the floodwaters.

Palm Desert, located in the Coachella Valley, is in an area historically vulnerable to flooding. Various measures have been taken to prevent floodwaters from invading inhabited areas. A channel and sand levee of unknown origin were built between 1939 and 1949…