Court Rules in Favor of Insurer on Scope of Surface Water Exclusion

November 5, 2025

Attorneys Deborah Etlinger and Erin Canalia recently prevailed on a breach of insurance contract and bad faith claim on behalf of their insurance company client. In Elmwood Automotive, LLC v. United Ohio Insurance Company, docket number 3:24-cv-012299 (VDO), the Plaintiff’s claim arose out of its property damage due to a broken water main which caused water to enter its commercial property. The insurer had denied coverage for the Plaintiff’s claim on the basis that the damage was caused by surface water and therefore fell within the surface water exclusion in the policy. The Plaintiff brought suit asserted a breach of contract and statutory bad faith claim.

On behalf of the client, Attorneys Etlinger and Canalia moved to bifurcate discovery as to the bad faith claim until after the Court ruled on their anticipated dispositive motion. In the Motion to bifurcate, the attorneys argued bifurcation was warranted because if the Court found there was no contractual breach, the Plaintiff could not prevail on its bad faith claim. The Court agreed and granted the Motion to bifurcate; the parties conducted discovery on the breach of contract claim and Attorneys Etlinger and Canalia filed a Motion for Summary Judgement in which they sought the entry of judgment in favor of the insurer as to both of the Plaintiff’s claims.

Attorneys Etlinger and Canalia conducted limited discovery and then filed a Motion for Summary Judgment. The Court granted the client’s Motion for Summary Judgment and dismissed the Plaintiff’s claims. The Court ruled there was no coverage for the Plaintiff’s claims because the Policy’s surface water exclusion operated to preclude coverage for the claim. The Court rejected the Plaintiff’s argument that the surface water exclusion only excluded coverage for claims cause by naturally occurring surface water. It held that neither the plain definition of surface water nor the Policy language supported such an interpretation.

Whether a surface water exclusion only operated to exclude damage caused by naturally occurring surface water was an open question in Connecticut, and the Elmwood case is the first decision in which a court has issued a decision on this issue.

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