## Facts

- In early January 1982, a heavy Northern California storm caused widespread property damage associated with subsurface/ground water and earth movement conditions.
- Farmers Insurance Exchange and related Farmers entities issued homeowners “all risk” policies to hundreds of insureds across the region.
- More than 300 insureds reported storm-related property damage and submitted claims under one of several Farmers policy forms.
- The policies contained exclusions addressing, among other things, losses tied to earth movement, water damage, and enforcement of ordinance or law.
- Farmers denied the claims, asserting the efficient proximate cause of each insured’s loss was an excluded peril.
- Farmers filed a single complaint for declaratory relief against the insureds (and thousands of Doe defendants), seeking a broad declaration that the policies did not cover the storm losses where the efficient proximate cause was an excluded cause, even if other causes contributed.
- The trial court sustained demurrers without leave to amend and dismissed the action, reasoning that coverage and causation could not be decided on an across-the-board basis and that the multi-insured pleading amounted to improper joinder given the individualized causation questions.

## Issues

1. Whether an insurer may use one declaratory-relief action against hundreds of insureds to obtain a generalized declaration of storm-loss noncoverage where coverage depends on property-specific causation determinations.
2. Whether the complaint stated a justiciable “actual controversy” suitable for declaratory relief, or instead sought an abstract advisory ruling about policy language divorced from individualized facts.
3. Whether the trial court properly sustained the demurrers without leave to amend and dismissed the declaratory-relief complaint.

## Decision

- The Court of Appeal affirmed the judgment sustaining the demurrers without leave to amend and dismissing Farmers’ declaratory-relief action.
- The court held that the relief sought depended on individualized determinations of causation for each insured’s property and claimed loss, making a single aggregated declaration inappropriate.
- The court agreed that the complaint, in practical effect, attempted to obtain a broad legal ruling about coverage rather than resolve concrete, fact-specific disputes for each insured.
- The court concluded the defects were not curable by amendment because the problem was the form of the lawsuit itself: combining many separate coverage disputes that required separate causation analyses.

## Legal Principles

- Declaratory relief requires a concrete, justiciable controversy; courts will not issue advisory opinions on insurance policy wording in the abstract.
- In first-party property coverage disputes involving multiple contributing causes, the efficient proximate cause inquiry is typically fact-dependent and must be evaluated in light of the circumstances of each claimed loss.
- Joinder is improper where defendants’ claims do not arise from the same transactional nucleus of facts and resolution would require separate, insured-by-insured proof on causation and coverage.

## Conclusion

*Farmers Insurance Exchange v. Adams* affirmed dismissal of Farmers’ mass declaratory-relief lawsuit filed after the January 1982 storm because the insurer’s requested blanket noncoverage declaration could not be resolved without individualized efficient-proximate-cause determinations for each insured and each loss, and the aggregated pleading failed to present a single, fit controversy for declaratory adjudication.


Farmers Insurance Exchange v. Adams, 170 Cal. App. 3d 712, 216 Cal. Rptr. 287 (1985)