Written by attorney Jonathan Craig Reed

When is the Uphill Property Owner Liable for Water Damage to the Downhill Property?

There is actually a Nevada Supreme Court case in point, Shepard v. Harrison, 100 Nev. 178, 678 P.2d 670 (1984). In that case there were two adjacent homes, one higher than the other. During a heavy rain a retaining wall between the two properties collapses causing a large quantity of water to cascade into the lower home, whose owner sued the owner of the upper home. In this case the Nevada Supreme Court ruled that since the lower home owner could not show how the upper home owner was negligent, the lower home owner had no case.

Recently, a friend of mine who owns a second floor rental had her plumbing fail with the result that water flooded into the downstairs unit and did damage. My friend, being a good neighbor, personally paid for the repairs to the downstairs unit and then called her insurance company to make a claim. The claims adjuster asked my friend (who was not my client at the time) whether she thought she was at fault. She said, "No, the plumber who recently did repairs was at fault." Based on this and the above case her insurance company denied the claim and told her they were not responsible for her "voluntary" payment.

If she had refused to pay and the downstairs owner had sued her, given the small amount of money involved (just a few hundred dollars) the insurance company which would have had a duty to provide a defense, would probably have paid the claim rather than incur a lot legal expense over such a small amount.

As a favor to her, I wrote the insurance company a letter and the response I got was more of the same plus this rather surprising additional response: "We offer additional 'good neighbor' coverage which would have paid this claim even though we don't think there was legal liability but your client did not buy that coverage." (I bet virtually no one buys that coverage and that agents don't even waste their time offering it.)

I told my client that she might sell her claim to a small claims court judge but she didn't want to spend her time, so the insurance company "got away" with its denial of the claim. If there had been a lot more at stake, I could have sued both the plumber and the insurance company and let them fight out whether the plumber was at fault, or whether the plumber could blame the flood on my friend, but obviously such a small claim was not worth a lawsuit.

I was involved in somewhat similar case that went to arbitration. The upstairs condo toilet started overflowing at a time when the unit was unoccupied. The downstairs unit got flooded with substantial damage to the property of the downstairs tenants. Neither party had any insurance. The downstairs tenants sued the upstairs owner along with the HOA and the Property Management Company. These latter two defendants counterclaimed against the upstairs owner. When the property manager went into the upstairs unit to get the leak stopped she photographed what she claimed were duct tape repairs on the toilet. This was enough for the arbitrator to find negligence on the part of the upstairs owners and rule against them.

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