from the District Court of the First Judicial District of the
State of Idaho, Kootenai County. Cynthia C. K. Meyer,
district court's grant of summary judgment in favor of
Mid-Century on ABK's breach of contract and bad faith
claims is affirmed. Costs on appeal are
awarded to Mid-Century as the prevailing party.
Phillabaum, Ledlin, Matthews & Sheldon PLLC, Spokane,
Washington, attorneys for Appellant. Douglas R. Dick argued.
& Burke, P.A., Boise, attorneys for Respondent. Jaclyn T.
Nature of the Case
LLC, owns and operates a gas station in Post Falls, Idaho
where underground storage tanks were damaged due to water
infiltration into the gas stored in the tanks. After the
damage occurred, ABK submitted a claim to its insurer,
Mid-Century Insurance Company ("Mid-Century").
Mid-Century denied the claim. ABK then sued Mid-Century
alleging breach of contract and bad faith. Mid-Century moved
for summary judgment on both claims. The district court
granted summary judgment for Mid-Century on ABK's breach
of contract claim finding ABK failed to raise a genuine
dispute as to the fact the underground storage tanks were
damaged by water, an excluded peril. The district court also
granted summary judgment for Mid-Century on ABK's bad
faith claim finding ABK failed to establish coverage. ABK
appeals the district court's grant of summary judgment in
favor of Mid-Century on both claims. We affirm.
Factual and Procedural Background
owns and operates a gas and convenience store doing business
as Jones Chevron and Deli in Post Falls, Idaho. When the
described events occurred, ABK was insured by Mid-Century
under a Business Owners Special Property Coverage Form
("the Policy"). The all-risk policy covered any
physical loss or damage, other than losses or damages
specifically excluded such as water damage, or damages caused
by negligent maintenance, wear and tear, or weather
conditions. Specifically, the Policy provides:
1. We will not pay for loss or damage caused directly or
indirectly by any of the following. Such loss or damage is
excluded regardless of any other cause or event that
contributes concurrently or in any sequence to the loss.
. . .
(1) Flood, surface water, waves, tides, tidal waves, overflow
of any body of water, or their spray, all whether driven by
wind or not; . . .
(4) Water under the ground surface pressing on, or flowing or
(a) Foundations, walls, floors or paved surfaces;
(b) Basements, whether paved or not; or
(c) Doors, windows or other openings. . . .
2. We will not pay for loss or damage caused by or resulting
from any of the following:
. . .
k. Other Types of Loss
(1) Wear and tear; . . .
3. We will not pay for loss or damage caused by or resulting
from any of the following B.3.a. through
B.3.c. But if an excluded cause of loss that
is listed in B.3.a. through
B.3.c. results in a Covered Cause of Loss,
we will pay for the loss or damage caused by that Covered
Cause of Loss.
a. Weather Conditions
Weather conditions. But this exclusion only applies if
weather conditions contribute in any way with a cause or
event excluded in Paragraph 1. above to produce the loss or
damage. . . .
c. Negligent Work
Faulty, inadequate or defective: . . .
(4) Maintenance; of part or all of any property on or off the
January 18, 2017, ABK discovered water infiltrating multiple
underground storage tanks ("USTs") on its property.
ABK contacted its servicer, Coeur d'Alene Service Station
Equipment, Incorporated ("CDASSE"), to remediate
the damage. At the initial visit, CDASSE noted: "the ATG
[(automatic tank gauging)] probe manholes on each UST were
full of ice and water." That same day CDASSE replaced
the seal caps located on the top of the riser for the ATG
probe on the diesel and premium unleaded USTs. A few days
later CDASSE observed that the "vapor recovery manholes
were full of ice" and that "[t]he seal cap on the
regular unleaded vapor recovery riser was cracked and the
plunger on the adaptor was not sealing." Phase
separation was detected in both the regular unleaded
and premium unleaded USTs on January 23, 2017. CDASSE purged
the product lines, removed the vapor recovery adapters from
the USTs and installed new cap seals on the risers. The phase
separated regular unleaded and premium unleaded gasoline was
pumped out of the USTs and disposed of. Despite these repairs
and the purging of the tainted gas, phase separated gasoline
was again discovered two days later. On January 31, 2017,
Northwest Environmental Solutions Incorporated performed leak
testing on the tanks and ultimately determined there were no
leaks in the USTs. Even so, ABK reported two additional
instances of water infiltration on February 10, 2017, and
February 17, 2017.
the initial water infiltration, ABK submitted a claim to
Mid-Century for the cost of repairing the USTs and for the
loss of business during the time the USTs were inoperative.
Mid-Century enlisted Envista Forensics to complete a desk
review of the claim. Timothy Hurley, the engineer assigned,
reviewed the multiple pressure and leak tests completed after
water infiltrated the USTs and reviewed the invoices from
CDASSE detailing the work that had been performed to date. In
a report dated February 20, 2017, Hurley concluded that water
likely infiltrated the system because of "multiple
maintenance related issues with the regular unleaded and
premium unleaded riser cap seals and vapor adapters. . .
." Relying on Hurley's review, Mid-Century denied
ABK's claim finding the Policy excluded coverage for
damage caused by or resulting from wear and tear or faulty or
inadequate maintenance. The denial letter also stated
"though only parts of your policy are mentioned and
quoted in th[e] letter, additional portions may apply. If
they are found to be relevant and applicable, they will be
April 11, 2017, Don Boyd, an estimator with CDASSE, sent a
letter to ABK detailing his review of the incident. Boyd
assumed "water entered the Unlead and Premium tanks when
the area over the fill buckets, stage one vapor caps and ATG
caps [were] flooded with surface water." He explained
further how "the stage one vapor adaptors were
compromised by the force of the ice ...