Filed 9/24/13

                            CERTIFIED FOR PUBLICATION


                COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                      DIVISION ONE

                                   STATE OF CALIFORNIA



VINCENT GUY ADAMO,                                D062361

        Plaintiff and Appellant,

        v.                                        (Super. Ct. No. 37-2009-00065797-
                                                  CU-IC-EC)
FIRE INSURANCE EXCHANGE,

        Defendant and Respondent.


        APPEAL from a judgment of the Superior Court of San Diego County, Joel L.

Pressman, Judge. Affirmed.



        Jack B. Winters, Jr., and Georg M. Capielo for Plaintiff and Appellant.

        White Oliver Amundson & Gallagher, Susan L. Oliver and Robert E. Gallagher;

Greines, Martin, Stein & Richland LLP, Robert A. Olson and Gary J. Wax, for Defendant

and Respondent.
      Plaintiff Vincent Guy Adamo filed a claim under his homeowner's policy after a

wildfire damaged his 1,000-tree avocado grove, 10,000-gallon water tank, irrigation

system, culverts, two woodsheds, and landscaping on his property. His insurance carrier,

defendant Fire Insurance Exchange (FIE), denied coverage for his avocado trees under a

commercial use/farming exclusion, but paid him $116,000 for various damages,

including the policy's $53,100 policy limit under Coverage B for "other structures." In

this action Adamo asserted he was entitled to additional benefits for damages to the

10,000-gallon water tank, irrigation system, and culverts associated with his avocado

growing operation under (1) Coverage A for structures that are "attached" to his dwelling;

(2) subsection 1 of "Other Coverages" which included "other structures"; or (3) under

Coverage A for "building equipment and outdoor equipment used for the service of and

located at the Described Location."

      This matter came on for a bench trial on stipulated facts. Following trial the court

ruled (1) the water tank, piping and other property were not "attached" for Coverage A to

apply; (2) none of the property was covered under Coverage A for "building equipment

and outdoor equipment"; and (3) subsection 1 of "Other Coverages" did not establish a

separate line of coverage but only established the Coverage B policy limits.

      On appeal, Adamo asserts the court erred in ruling in favor of FIE because (1) the

subject property is "attached" to the main dwelling for purposes of coverage under

Coverage A; (2) the property could be considered equipment used to service the property



                                            2
for purposes of coverage under Coverage A; and (3) the "Other Coverages" section of

Coverage A provides additional coverage. We affirm.

                   FACTUAL AND PROCEDURAL BACKGROUND

       A. Insurance Policy Language

       FIE insured Adamo under a standard first-party residential property insurance

policy. The policy provided two separate categories of coverage for: (1) the "Dwelling"

(Coverage A); and (2) "Other Structures" (Coverage B).

       Coverage A applies to four sub-categories, all related to or including the dwelling:

(a) "the dwelling on the Described Location, used principally for dwelling purposes";

(b) "structures attached to the dwelling"; (c) "materials and supplies on or adjacent to the

Described Location for use in the construction, alteration or repair of the dwelling or

other structures on this location"; and (d) "if not otherwise covered in this policy,

building equipment and outdoor equipment used for the service of and located on the

Described Location."

       Coverage B applies to "other structures on the Described Location, separated from

the dwelling by clear space." Specific examples of structures that fall under Coverage B

include those "connected to the dwelling by only a fence, utility line or similar

connection." The policy excludes "other structures" that would otherwise fall under

Coverage B when "used in whole or in part for commercial, manufacturing or farming

purposes."

       Coverage A and Coverage B have different coverage limits and sub-limits.

Coverage A has a $531,000 total liability limit. It also has a $26,500 sub-limit, covering

                                              3
fire or smoke damage to "lawns, plants, shrubs, or trees." A payment under this sub-limit

reduces the "Coverage A limit of liability" for the "dwelling" "by the amount paid."

       Coverage B for "other structures" has a lower $53,100 limit, which is defined

under the heading "Other Coverages" in subsection 1: "Other Structures—You may use

up to 10% of the Coverage A limit of liability [i.e., 10 percent of $531,000 or $53,100]

for loss by a Peril Insured Against other structures described in Coverage B. Use of this

coverage does not reduce the Coverage A limit of liability for the same loss." The

declarations page shows a $531,000 policy limit for Coverage A and a $53,100 policy

limit for Coverage B.

       B. Damages Adamo Suffered As a Result of the 2007 San Diego Wildfires

       The October 2007 wildfires in San Diego County damaged Adamo's landscaping,

retaining wall, two woodsheds (plus their contents), a 1,000-tree avocado grove and

"property associated with his avocado grove," including an irrigation system, culverts and

a detached 10,000-gallon water tank. Adamo's residence incurred some minor smoke

damage, but it didn't burn.

       The principal fire damage was to Adamo's landscaping, woodsheds and the water

system "associated with [the] avocado grove." The water system (i.e., the water tank,

irrigation system, and culverts) was separated from Adamo's dwelling by clear space and

was completely detached from the dwelling, except an underground water pipe

connecting the dwelling and water tank.




                                            4
       C. FIE's Investigation And Payment To Adamo

       Adamo filed a claim under his policy seeking payment for his damaged property.

Adamo admitted to FIE's adjuster that he had sold avocados grown on his property. After

completing her initial investigation and damages inventory, FIE's adjuster notified

Adamo that damage to the avocado trees was not covered under his policy because he

"indicated that they were being used for [a] commercial purpose," and such use is

excluded under Coverage B's commercial-use exclusion. FIE did, however, pay Adamo

for all the items that the adjuster initially found Adamo's policy did cover: the smoke

damage to the house, landscaping, and the two woodsheds plus their contents.

       After the first payment, FIE conducted a further investigation of Adamo's claim

for additional available coverage, including hiring an expert to evaluate the damages

Adamo sustained to his culvert system. FIE reimbursed Adamo under Coverage B for

damage to the culverts, which exhausted Coverage B's $53,100 policy limit.

       When it made the second payment, FIE informed Adamo that the applicable

coverages in his policy had been exhausted and that it did not owe more than the

$116,000 it had already paid.

       Adamo then sought payment under Coverage A (the "dwelling" coverage) for his

water tank and irrigation system as well as additional coverage for damage to his

culverts. FIE denied this claim, asserting the water tank was not "attached" to his

dwelling for purposes of Coverage A limits, and the property was used for commercial

purposes and thus excluded under Coverage B.



                                             5
       D. The Instant Action

       Adamo sued FIE for breach of contract, bad faith, promissory estoppel,

declaratory relief and reformation. The complaint alleged that FIE "refused, and

continues to refuse" to reimburse Adamo "for the cost of repair, replacement cost or the

actual cash value of [his] . . . irrigation system, or water tank as required by the terms and

conditions of [his] policy."

       The parties stipulated to try the coverage issue as a threshold matter based on

stipulated facts. The court conducted a bench trial to decide the following coverage

issue: Whether available coverage remained for the damaged water tank, irrigation

system and culverts.

       Adamo's theory at trial was that (1) Coverage A provided additional coverage for

any structure or equipment that is "physically attached" to the dwelling and "absolutely

necessary" for its use; (2) even though Coverage B expressly covers "other structures"

"separated from the dwelling by clear space" and connected by a "utility line or similar

connection," nothing in the policy precluded concurrent or additional coverage for the

same property under Coverage A; (3) even after Coverage B limits have been exhausted,

an additional $53,100—i.e., 10% of the limits available in Coverage A—was also

available to cover other structures defined in Coverage B; (4) FIE could not enforce the

commercial-use exclusion in Coverage B; and (5) the commercial-use exclusion is

inconspicuous, unclear and ambiguous.

       FIE in turn argued: (1) Adamo's water tank, irrigation system and culverts were

not "attached" to the dwelling so there was no coverage available under Coverage A;

                                              6
(2) coverage for the water tank would only be available under Coverage B (for "other

structures") because it expressly covered circumstances where, as here, there was "clear

space" between the dwelling and other structure, and they were only connected by a

"utility line"; (3) because it was undisputed that Coverage B's limit was fully exhausted,

no additional benefits were available to Adamo; (4) even if Coverage B's policy limit had

not been exhausted, the water tank and other property associated with the avocado grove

were not covered because they were used for a commercial purpose; and (5) the

commercial-use exclusion was clear, conspicuous and unambiguous.

       Following the trial, the court issued a statement of decision, finding in favor of

FIE. Specifically, the court found: (1) none of the applicable policy language was

ambiguous; (2) coverage for damage to the water tank, the irrigation system and culverts

fell under Coverage B and not Coverage A; (3) since Coverage B had already been

exhausted, there was nothing left for FIE to pay under the policy; and (4) since there were

no policy benefits due, there could be no breach of contract or bad faith.

       The court did not address the commercial-use exclusion.

       Adamo moved for a new trial on various grounds, including surprise and newly-

discovered evidence. In support of his motion, Adamo presented an expert declaration

and an insurance industry bulletin that asserted the "other coverages" section of his policy

provided a "distinct and separate category from which coverage is still available."

Adamo's claim of surprise was FIE's alleged change of position that the "other coverages"

section was a separate category of coverage.



                                               7
       The court denied Adamo's new trial motion. The court found that he "failed to

meet his burden on any of the grounds he raised in his motion or otherwise." It also

sustained FIE's objections to Adamo's newly proffered expert testimony and insurance

industry bulletin.1

                                      DISCUSSION

                               I. STANDARD OF REVIEW

       Where, as here, the relevant facts are stipulated, the meaning and interpretation of

the policy provisions at issue are reviewed de novo under well-settled rules of contract

interpretation. (E.M.M.I. Inc. v. Zurich American Ins. Co. (2004) 32 Cal.4th 465, 470;

Employers Mut. Cas. Co. v. Philadelphia Indem. Ins. Co. (2008) 169 Cal.App.4th 340,

347.) Moreover, whether or not a policy provision is ambiguous is reviewed de novo as

are the objectively reasonable expectations of coverage. (Union Oil Co. v. International

Ins. Co. (1995) 37 Cal.App.4th 930, 936.)

                                      II. ANALYSIS

       A. Applicable Authority

       "While insurance contracts have special features, they are still contracts to which

the ordinary rules of contractual interpretation apply." (Bank of the West v. Superior

Court (1992) 2 Cal.4th 1254, 1264.) "The rules governing policy interpretation require


1      On appeal, Adamo does not challenge the propriety of the court's denial of his new
trial motion, or the admissibility of the proffered extrinsic evidence. Thus, any such
argument has been waived. (See Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th
659, 685.)
                                             8
us to look first to the language of the contract . . . to ascertain its plain meaning or the

meaning a layperson would ordinarily attach to it." (Waller v. Truck Ins. Exchange, Inc.

(1995) 11 Cal.4th 1, 18.) "The fundamental rules of contract interpretation are based on

the premise that the interpretation of a contract must give effect to the 'mutual intention'

of the parties . . . . 'Such an intent is to be inferred, if possible, solely from the written

provisions of the contract. [Citation.] The "clear and explicit" meaning of these

provisions, interpreted in their "ordinary and popular sense," unless "used by the parties

in a technical sense or a special meaning is given to them by usage" [citation], controls

judicial interpretation. [Citation.]' [Citations.]" (Ibid.)

       "Ambiguity exists when an insurance policy provision is susceptible to two or

more constructions that are reasonable and not based on strained interpretations." (Shell

Oil Co. v. Winterthur Swiss Ins. Co. (1993) 12 Cal.App.4th 715, 737.) " '[L]anguage in a

contract must be construed in the context of that instrument as a whole, and in the

circumstances of that case, and cannot be found to be ambiguous in the abstract.' " (Bank

of the West v. Superior Court, supra, 2 Cal.4th at p. 1265, italics omitted.) If "a term in

an insurance policy has been judicially construed, it is not ambiguous and the judicial

construction of the term should be read into the policy unless the parties express a

contrary intent." (Bartlome v. State Farm Fire & Casualty Co. (1989) 208 Cal.App.3d

1235, 1239.)

       B. The Trial Court Did Not Err In Finding FIE Owed No Additional Coverage

       The $53,100 coverage for "other structures" was the only coverage available for

Adamo's water system. Coverage B for "other structures" applies to the 10,000-gallon

                                                9
water tank, irrigation system and culverts because Coverage B defines "other structures"

as those "separated from the dwelling by clear space." Although the policy does not

define the phrase "clear space" it has a plain meaning based on common understanding.

It refers to an open area.

       Moreover, Coverage B's definition also contains a non-exhaustive list of "other

structures" that it covers, including structures, like the water tank, connected to the

dwelling only by a "utility line or similar connection." Adamo concedes that the water

tank is "only connected to the dwelling by a water pipe." Various statutes in this state

define "utility service" as including water service. (See Civ. Code, § 1001; Pub. Util.

Code §§ 12819.5, 16480.5; Pen. Code, § 498.)

       Adamo contends, however, that there is some ambiguity in the language used in

Coverage B because the terms "clear space" and "utility line" are undefined. This

contention is unavailing. The lack of a policy definition for every word used does not

create ambiguity where none otherwise exists. (Bay Cities Paving & Grading, Inc. v.

Lawyers' Mutual Ins. Co. (1993) 5 Cal.4th 854, 866.) The terms "clear space" and

"utility line" have common sense meanings. Further, even if the water pipe somehow

was not a "utility line," it is a "similar connection," that would still keep it within

Coverage B's coverage.

       Although no California cases have interpreted this exact policy language, a federal

case has interpreted this language and found it unambiguous. (Porco v. Lexington Ins.

Co. (S.D.N.Y. 2009) 679 F.Supp.2d 432, 439-440 (Porco) ["the Court has found no

decisions holding that the plain language used in Coverage A and Coverage B is

                                               10
ambiguous"].) As in this case, in Porco the court interpreted the phrase "set apart from

the dwelling by clear space . . . [and] connected to the dwelling by only a fence, utility

line or similar connection." (Id. at p. 434.) As with the water tank and dwelling here,

clear space separated the disputed damaged property, a swimming pool, from the

dwelling and a water pipe connected the two structures. (Id. at p. 439.)

       Reading Coverage B's language in conjunction with Coverage A, the court in

Porco had "little difficulty" in concluding that the swimming pool unambiguously fell

within Coverage B ("other structures") and not within Coverage A ("dwelling"). (Porco,

supra, 679 F.Supp.2d at pp. 439-441.) The court held that "the connection between the

pool and the dwelling through the filtering pipes is precisely the type of 'similar

connection' to a 'utility line' that also defines 'other structures' in Coverage B." (Id. at

p. 439.) The court concluded that because the damage fell under Coverage B, as a matter

of law it could not also fall under Coverage A. (Id. at p. 441.)

       Thus, because Coverage B's $53,100 limit was fully paid, there was no additional

coverage for "other structures." It is undisputed that after FIE's second payment to

Adamo, there was "no more available coverage under the policy under Coverage B since

the policy limits ha[d] been paid."

       An insurance carrier is permitted to set policy limits on a homeowner's fire policy.

(Everett v. State Farm General Ins. Co. (2008) 162 Cal.App.4th 649, 656.) "It is up to

the insured to determine whether he or she has sufficient coverage for his or her needs."

(Id. at p. 660.) In this case, Adamo purchased a policy that expressly capped benefits



                                               11
when the policy's limits were met: "[W]e shall not be liable [¶] . . . [¶] for more than the

limit of liability that applies."

       Accordingly, FIE was not in breach of Adamo's policy for refusing to pay

additional amounts for "other structures" because no additional coverage was available

under Coverage B.

       Adamo contends that even though Coverage B's $53,100 limit was fully paid and

exhausted, additional coverage exists because "the stipulated facts and the policy

language established coverage was still available to indemnify for the loss" under

Coverage A's $531,000 limit. Adamo argues that both Coverage A and Coverage B

should apply to the same loss suffered as to the same property. We reject this contention.

       As we have stated, ante, insurance policies are to be read as a whole. That means

where multiple coverages are afforded, they are read as covering different, separate

items. (Fibreboard Corp. v. Hartford Accident & Indemnity Co. (1993) 16

Cal.App.4th 492, 509 (Fibreboard) [interpreting premises liability coverage in light of

fact that separate products liability coverage was provided].)

       It appears that Adamo is asserting that when the applicable coverage's limits have

been exhausted, payment should be made under another inapplicable coverage. A

common sense reading of the policy means giving effect to the language in Coverage B,

not ignoring it. (Employers Reinsurance Co. v. Superior Court (2008) 161 Cal.App.4th

906, 911, fn. 2 [finding that coverages for products and non-products "are complementary

and not overlapping"].)



                                             12
       In the policy at issue here, the plain language and physical relationship between

Coverage A and Coverage B dictate that the two coverages are mutually exclusive, not

compounded. Coverage B for "other structures" immediately follows Coverage A for the

"dwelling." In addition, "other structures" are defined in relationship to the "dwelling."

They must be "separated from the dwelling by clear space" to qualify. Property is

covered under either Coverage A or B, not both. Structures covered under Coverage B

are structures "other" than, and distinct from, those covered under Coverage A. (See

Black's Law Dict. (6th ed. 1990) p. 1101, col. 1 [defining "Other" as "Different or distinct

from that already mentioned".)

       Moreover, nothing in the plain language of Coverage A would afford coverage to

the 10,000-gallon water tank, irrigation system and culverts because they are not

"attached" to the dwelling as required for Coverage A to apply.

       The ordinary meaning of the word "attached" in the context of Coverage A "is the

physical union [or joining of two] structures." (Black's Law Dict., supra, at p. 125, col.

2.) The irrigation system and culverts are not physically attached in any way to the

dwelling. Therefore, they are not covered under subparagraph (b).

       Adamo asserts the water tank falls under Coverage A because it is "integral and

necessary for legal occupancy" and thus, "reasonably considered part of the home."

However, the policy does not contain any such "integral and necessary" language.

       The only case Adamo cites in support of this proposition is Meyerstein v. Great

American Ins. Co. (1927) 82 Cal.App. 131 (Meyerstein). However, that case dealt with

different policy language. There, the sole issue was how the word "additions" should be

                                             13
interpreted. At issue was whether the parties intended to cover a separate laundry

building and water tank as "additions" in connection with the main building. (Id. at

p. 134.)

       "Additions" coverage is not at issue here. Moreover, the policy in Meyerstein had

no separate, express coverage for "other structures." Thus, Meyerstein does not assist our

analysis.

       Adamo also relies on Coverage A, subparagraph (d), which states "if not otherwise

covered in this policy, building equipment and outdoor equipment used for the service of

and located on the Described Location." Adamo contends that this is a "catch-all

provision" duplicatively covering "[a]nything related to the occupation, use, and function

of the entire property" even if the property is covered elsewhere in the policy as it is in

Coverage B. According to Adamo's interpretation, where policy limits have been met,

the loss "if not 'otherwise covered' " for purposes of Coverage A, subparagraph (d).

Adamo provides no authority for this proposition. He merely argues that this

interpretation is "objectively reasonable."

       However, as the trial court found in rejecting this argument, prior to full payment

of the Coverage B policy limit, the water system was " 'otherwise covered' under

Coverage B," and therefore, subparagraph (d) does not apply. Adamo's strained

interpretation cannot create an ambiguity where none exists. (Reserve Insurance Co. v.

Pisciotta (1982) 30 Cal.3d 800, 807; Bosetti v. U.S. Life Ins. Co. in City of New York

(2009) 175 Cal.App.4th 1208, 1227.) The water system is "otherwise covered" under



                                              14
Coverage B. This "catch-all" provision is for property not otherwise covered, not for

covered property once a policy limit is exhausted.



       The plain language of subdivision (d) applies only where the policy provides no

other coverage. Here, the property at issue is "otherwise covered" under Coverage B.

       Adamo argues that where the loss has not been fully paid, but Coverage B's

$53,100 limit has been exhausted, "Other Coverages, Subsection 1" provides "an

additional benefit under the policy allowing [Adamo] to use 10 percent for whatever [he]

want[s] elsewhere" beyond the limits stated on the policy's declarations page. This

contention is unavailing.

       As the court found, "Other Coverages, Subsection 1" is "a quantitative definition"

of the policy limits for the various coverages, including Coverage B.

       In other words, Coverage B's limit is calculated under "Other Coverages,

Subsection 1." Coverage B's limit is 10 percent of Coverage A. That amount is $53,100,

because it is 10 percent of Coverage A's $531,000 limit shown on the declarations page.

That same 10 percent number, $53,100, is reflected as the Coverage B policy limit on the

declarations page.

       In support of this assertion, Adamo cites to the two pieces of extrinsic evidence

that Adamo attached, for the first time, to his new trial motion: an insurance industry

bulletin and an expert declaration. However, in denying the new trial motion, the trial

court rejected Adamo's claim of surprise or newly discovered evidence and sustained



                                            15
FIE's objections to the bulletin and expert declaration. Adamo has not challenged those

rulings on appeal. (See p. 8, fn. 1, ante.)



       Moreover, this extrinsic evidence is inadmissible to interpret the policy because,

as we have already concluded, the policy language was unambiguous. There must be "a

showing of ambiguity before extrinsic evidence may be admitted to shed light on that

ambiguity." (ACL Technologies, Inc. v. Northbrook Property & Casualty

Ins. Co. (1993) 17 Cal.App.4th 1773, 1790-1791; see also Fire Ins. Exchange v. Superior

Court (2004) 116 Cal.App.4th 446, 457 [rejecting plaintiff's request to consider extrinsic

evidence to interpret terms where the policy's terms were explicit, clear and

unambiguous]; Transport Indem. Co. v. American Fid. & Cas. Co. (1970) 4 Cal.App.3d

950, 960 [where policy language is unambiguous, expert testimony is inadmissible]).2

                                       DISPOSITION

       The judgment is affirmed. FIE shall recover its costs on appeal.


                                                                                NARES, J.

WE CONCUR:


BENKE, Acting P. J.


McINTYRE, J.


2      Because we have concluded that no additional coverage exists, we need not
address the policy's commercial-use exclusion raised by FIE, or Adamo's claim that FIE
acted in bad faith.
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