FILED
                                                             United States Court of Appeals
                                                                     Tenth Circuit

                                                                    April 16, 2009
                     UNITED STATES COURT OF APPEALS
                                                  Elisabeth A. Shumaker
                                                                     Clerk of Court
                            FOR THE TENTH CIRCUIT




    RUTH ANN ELLIS,

                Plaintiff-Appellant,

    v.                                                    No. 08-7072
                                                (D.C. No. 6:07-CV-00410-RAW)
    STATE FARM FIRE AND                                   (E.D. Okla.)
    CASUALTY COMPANY,
    a domesticated insurer,

                Defendant-Appellee.


                             ORDER AND JUDGMENT *


Before LUCERO, PORFILIO, and ANDERSON, Circuit Judges.



         Plaintiff Ruth Ann Ellis appeals the district court’s entry of summary

judgment in favor of defendant State Farm Fire and Casualty Co. (“State Farm”).

Ms. Ellis sued in Oklahoma state court asserting that her homeowner’s insurance

policy with State Farm covered damage to the concrete foundation slab of her


*
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
home, and she brought additional related claims. Invoking diversity jurisdiction,

State Farm removed the case to the United States District Court for the Eastern

District of Oklahoma. See 28 U.S.C. § 1332(a). There, both parties requested

summary judgment on the issue of policy coverage. The district court held that

the damage was not insured because it fell under the exception for loss caused by

“continuous or repeated seepage or leakage of water or steam.” See Aplt. App. at

321-22. We exercise jurisdiction under 28 U.S.C. § 1291 and affirm.

                                   Background

      We provide only a brief statement of the underlying facts that are pertinent

to the issues presented on appeal. While doing some work at Ms. Ellis’s property

in 2002, Burl Faulk discovered that a drain pipe under the foundation of her house

had broken and water was leaking out. He repaired the break. In 2006, a crack in

the concrete foundation was discovered. Ms. Ellis made a claim on her

homeowner’s insurance policy with State Farm. After an investigation that

included inspections by Mr. Faulk and two other foundation experts, State Farm

ultimately denied the claim based on the policy’s “continuous or repeated seepage

or leakage” clause:

      We do not insure for any loss to the [insured] property . . . which
      consists of, or is directly and immediately caused by, one or more of
      the perils listed in items a. through n. below, regardless of whether
      the loss occurs suddenly or gradually, involves isolated or
      widespread damage, arises from natural or external forces, or occurs
      as a result of any combination of these:


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             ....

      f. continuous or repeated seepage or leakage of water or steam from
      a: . . . plumbing system, including from, within or around any shower
      stall, shower bath, tub installation, or other plumbing fixture,
      including their walls, ceilings or floors;

      which occurs over a period of time. If loss to covered property is
      caused by water or steam not otherwise excluded, we will cover the
      cost of tearing out and replacing any part of the building necessary to
      repair the system or appliance. We do not cover loss to the system or
      appliance from which the water or steam escaped . . . .

Aplt. App. at 175-76.

      After her claim was denied, Ms. Ellis sued, asserting that the policy

covered the damage to her home, and alleging that State Farm had breached its

duty to deal with her fairly and in good faith. The district court entered summary

judgment in State Farm’s favor on the ground that the damage to the concrete slab

was excluded under the “continuous or repeated seepage or leakage” clause.

Ms. Ellis appeals, arguing that the clause is not applicable and renewing her

bad-faith claim. In addition, she appeals a pretrial ruling precluding her from

presenting evidence on her claims for emotional distress and punitive damages.

Because we agree with the district court that the “continuous or repeated seepage

or leakage” clause excludes coverage for the damage to the concrete slab, we do

not address Ms. Ellis’s other appellate arguments.




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                                    Legal Standards

      We review de novo the district court’s grant of summary judgment, viewing

the record in the light most favorable to the party opposing summary judgment.

Warren v. Liberty Mut. Fire Ins. Co., 

, 1145 (10th Cir. 2009).

Summary judgment is appropriate if there is no genuine issue of material fact and

the moving party is entitled to judgment as a matter of law. Celotex Corp. v.

Catrett, 

, 322-23 (1986); Fed. R. Civ. P. 56(c). To resist summary

judgment, the nonmovant must demonstrate specific evidence of a genuine issue

concerning a material fact, which requires a showing that a reasonable jury could

find in the nonmovant’s favor. Rice v. Office of Servicemembers’ Group Life Ins.,

, 1249 (10th Cir. 2001). “The mere existence of a scintilla of

evidence in support of the nonmovant’s position is insufficient to create a dispute

of fact that is genuine . . . .” 

             Oklahoma substantive law applies to this diversity action. See
      Air Liquide Am. Corp. v. Cont’l Cas. Co., 

, 1275
      (10th Cir. 2000). Its approach to interpreting insurance policies is
      unremarkable: The foremost principle is that an insurance policy is a
      contract. Parties are at liberty to contract for insurance to cover such
      risks as they see fit and they are bound by terms of the contract. It
      necessarily follows that courts are not at liberty to rewrite the terms
      of an insurance contract. The interpretation of the policy, with its
      exclusions, is a law question, unless the facts necessary to apply the
      decided law question are in dispute.

            When addressing a dispute concerning the language of an
      insurance policy, our first step is to determine as a matter of law
      whether the policy language at issue is ambiguous. If it is not
      ambiguous, we accept the language in its plain, ordinary and popular

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         sense. We must construe the policy to give a reasonable effect to all
         of its provisions, construing liberally words of inclusion in favor of
         the insured and construing strictly words of exclusion against the
         insurer. Duensing v. State Farm Fire & Cas. Co., 

, 134
         (Okla. Civ. App. 2005) (citations omitted) (summarizing Oklahoma
         Supreme Court caselaw). “Insurance contracts are ambiguous only if
         they are susceptible to two constructions.” Max True Plastering Co.
         v. U.S. Fid. & Guar. Co., 

, 869 (Okla. 1996). When a
         contract is ambiguous, extrinsic evidence is necessary to resolve the
         ambiguity. See Campbell v. Indep. Sch. Dist. No. 01 of Okmulgee
         County, 

, 1039 (Okla. 2003). In considering ambiguous
         insurance contracts, courts “examine the policy language objectively
         to determine whether an insured could reasonably have expected
         coverage. . . . [A]mbiguities are construed most strongly against the
         insurer.” Max 

.

Yaffe Companies, Inc. v. Great Am. Ins. Co., 

, 1185-86 (10th Cir.

2007).

                                        Analysis

         Ms. Ellis contends that the district court erred in applying the “continuous

or repeated seepage or leakage” clause for three reasons: (1) the evidence on

summary judgment was disputed as to whether the sand fill under the foundation

was washed away by water or whether “the sand sifted into the drain pipe and was

washed out by effluent that stayed within the pipe,” Aplt. Opening Br. at 13;

(2) the policy language refers to “water or steam,” not to sewage, so the clause is

either ambiguous or simply does not apply to this situation where the sand fill was

carried away by sewage; and (3) under the doctrine of “reasonable expectations,”

Ms. Ellis is entitled to coverage because an insured would reasonably expect the




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clause to apply to “a water supply line or a steam line, both of which are under

pressure, rather than a drain line,” 

       We decline to address the merits of Ms. Ellis’s “reasonable expectations”

argument because she has raised it for the first time on appeal. We deem this

issue waived because it was not presented to the district court. See Wilburn v.

Mid-South Health Dev., Inc., 

, 1280 (10th Cir. 2003) (“An issue is

waived if it was not raised below in the district court.”).

       Turning to Ms. Ellis’s argument that the policy’s terms “water [and] steam”

do not apply to a drain or sewer line, clearly the drain or sewer line contained

water. The fact that it also contained waste matter does not alter the fact that it

was water that carried away the waste. “Sewage” is defined as “refuse liquids or

waste matter usually carried off by sewers.” Merriam-Webster’s Online

Dictionary, http://www.merriam-webster.com/dictionary/sewage. Moreover, the

policy excludes leakage or seepage from a “plumbing system, including from . . .

[any] plumbing fixture.” Aplt. App. at 176. A plumbing system includes a drain

or sewer line. Consequently, we agree with the district court that the policy

language is not ambiguous and that the exclusion applies to the drain or sewage

line at issue here.

       Finally, we address Ms. Ellis’s argument that the evidence established a

dispute over a material issue of causation, thus precluding summary judgment.

She maintains that the district court erred in concluding that “[b]y all accounts,

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the damage to Plaintiff’s home was caused by the continuous leakage of water

from the drain line repaired by Mr. Faulk in 2002.” Aplt. App. at 322. Rather,

she asserts that Mr. Faulk’s deposition testimony showed that the sand fill under

the foundation was depleted by sand sifting into the sewer pipe, rather than by the

sand being washed away.

      We have carefully reviewed the evidence provided by Mr. Faulk,

particularly his deposition testimony on which Ms. Ellis relies. See Aplt. Opening

Br. at 4 (citing Aplt. App. at 89, 91, 95, and 97). At his deposition, Mr. Faulk

testified that when he repaired the leak in 2002, he saw that the fill under the

concrete slab “was not up against the concrete like it’s supposed to be. Most of it

I’m sure was – was washed down the sewer line . . . .” Aplt. App. at 89.

Mr. Faulk opined as to the cause of the crack as follows: “I think all the water

that flowed underneath the house all that time caused the fill to wash down the

drain.” 

He further indicated that sand compacted into the sewer line,

which was caused by pumping water into the sand. 

He also stated that

he had cleaned out the clogged sewer pipe before the discovery of the crack and

had seen fill sand in the sewer pipe. See 

96-97.

      In addition to Mr. Faulk’s opinion, the district court had written reports by

White Engineering Associates, Inc. and Ram Jack Foundation Repair concerning

the reason the foundation slab cracked. White Engineering stated that “[t]he

water likely washed out the supporting sand and soil, thus removing the support

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of the concrete slab on grade.” 

According to Ram Jack, “[t]he interior

elevation loss and signs of damage are consistent with the effects of a plumbing

leak.” 

see also 

(deposition testimony of the Ram Jack

representative that the damage was consistent with a plumbing leak).

      Mr. Faulk’s opinion does not differ from those of White Engineering and

Ram Jack, nor does it contradict the district court’s conclusion that the damage to

the slab was caused by the water leaking under the foundation. Even if the water

under the foundation caused the sand to wash into the drain pipe, it was the water

that caused the sand to wash away. Accordingly, no disputed issue of material

fact remains as to whether the damage to the concrete slab was caused by

continuous or repeated seepage or leakage of water. Therefore, the district court’s

entry of summary judgment was appropriate.

                                    Conclusion

      The judgment of the district court is AFFIRMED.



                                                    Entered for the Court



                                                    John C. Porfilio
                                                    Circuit Judge




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