A few months ago I wrote about Nargizyan v. State Farm General Insurance Company, 1,, 2 an important California appellate decision involving a denied water loss claim. The opinion was originally unpublished. After a number of policyholder attorneys, public adjusters, consumer organizations, and others asked that it be published, the Court of Appeal agreed.
State Farm was apparently not happy about that. On July 13, 2026, State Farm asked the California Supreme Court to depublish the opinion. On August 12, 2026, the California Supreme Court denied that request, so Nargizyan stays published and can be cited.
Why did State Farm fight so hard to make this case disappear from the published books? State Farm’s own depublication request gives us a pretty good idea. State Farm argued that Nargizyan would lead to more cases surviving summary judgment, more punitive damage claims against corporate defendants, and more pressure on insurers and other corporations to settle cases.
That tells you quite a bit, given the scrutiny State Farm is under in Oklahoma right now. 3
One of the important issues in Nargizyan involved State Farm’s reliance on the continuous or repeated seepage or leakage exclusion. State Farm argued that the nature and extent of the water damage permitted the conclusion that the leak necessarily occurred over a sufficient period of time to fall within the exclusion. The Court of Appeal found there was a factual issue concerning whether State Farm could actually establish that.
In its depublication request, State Farm complained specifically about the suggestion that an insurer may have to prove the duration of the leak rather than simply infer it from the amount of damage. From my perspective, if you are denying a claim based on a temporal period – even if it’s a short window – the carrier should have the burden of proving the exclusion. If nobody knows how long the leak occurred, the insurer should not necessarily be able to turn an assumption about duration into an undisputed fact and win the case on summary judgment.
As I mentioned in my prior post, the bad faith portion of Nargizyan may be even more important. The case recognizes that there can be a jury question where an insurer relies on evidence supporting denial while ignoring or minimizing evidence supporting coverage. It also allowed the punitive damage claim to survive summary judgment, including the issue of whether a State Farm claims team manager could qualify as a managing agent. State Farm devoted a substantial portion of its depublication request to attacking that part of the opinion as well.
This is exactly why publication matters. Insurance companies cite published cases every day to support claim denials and motions for summary judgment. Similarly, policyholders should be able to do the same when a published decision says there are limits to how an insurer can investigate a claim, infer facts, and then characterize those conclusions as undisputed.
So in the end, Nargizyan remains published California law despite State Farm’s request to bury it. Its practical lesson is a fairly simple one: an insurance investigation should be designed to determine whether coverage exists, not to assemble enough evidence to justify a denial that has already been reached.
1 Derek Chaiken and Stephanie Rowe. State Farm Water Damage Denial Reversed as Court Limits Genuine Dispute Defense. Property Insurance Coverage Law Blog (May 23, 2026).
2 Nargizyan v. State Farm General Ins. Co., — Cal.App.5th — (Cal. App. May 14, 2026).
3 See Chip Merlin’s previous articles:
“Why is State Farm in the News So Often About Claims-Handling Issues?”
“A Former Chief Justice, State Farm, and a Constitutional Fight Over Oklahoma Hail Claims”
“Did State Farm Win the Battle but Lose the Advantage in the Oklahoma Hail Claims War?”
“The Hail Claim Playbook: Why State Farm’s Training May Become Exhibit A in Oklahoma”
