Tenants left the washer valves on when moving out causing serious damage when Water Authority turned the water back on. 

1) Tenants disconnected the water a week before the move-out date without informing my PM. The lease requires the water to stay connected for at least 3 business days after move out. Had the water service been on, their mover CORE FURNITURE when disconnecting the washer, would have seen the water gushing out from the open valves and would have known to turn the valves off. In this case, their Mover did not turn off the valves, although I believe the issue originated on tenants disconnecting the water service in violation of the lease as it set off what happened next. 

2) Tenants chose to not notify.  I (Landlord) did ask the water authority to turn water on but I don't have enough experience to realize the washer valves were left open.   So when the water service was turned on at the street, based on the technician, he said for a few minutes he saw the meter spinning and turned it off within a few minutes.  The damage though appears at least 50-100 gallons were gushing out as extensive ceiling, flooring damage occurred.  My insurance did accept my claim but I have a 1% deductible (around $3500). 

3) Water service was turned on and off around 10:30 am per Water Authority. Tenants came back to vacant property to return keys around 2:30 pm and stayed for a while.  He would have noticed the water damage at that time throughout the house but chose to not notify anybody. Had he informed the PM right away, I would have deployed a remediation company in the afternoon instead of finding out the damage in the evening when it was too late to set up the drying system that night, causing continued water damage.

4) I requested tenants to pay for the deductible that I pay out of pocket.  Tenants did file a claim under the liability clause of their own home owner insurance USAA (they leased from me as they had a fire in their own house).  Their insurance added me as a claimant.  USAA hired ALE Solutions to place them in my rental property. Core Furniture was providing leased furniture and washer and dryer as part of the ALE solutions arrangement.  USAA now advised me that they will not accept liability because their insured (my tenants) said they did not touch the valves and it is CORE FURNITURE/MOVER who did not turn it off.  I believe ALE and CORE furniture are the tenants agents and tenants owe me the duty of care and due to their negligence I had a loss on me. 

5) I believe ALE and USAA and Tenants also defrauded us because they signed a 1 year lease which they early terminated and they did not disclose that they had a fire and was displaced.  So the PM brought in this high risk tenants and they caused a smaller water damage a few weeks after they moved in due to loose washer hose.  This last water damage was 4 months after they moved in. 

I believe tenants ultimately are liable for the damage due to neglect and that is covered under their liability policy with USAA.  USAA initially appeared to be helpful but second conversation w/ their adjuster they do not accepting liability.  All I am asking is for the tenants to pay the deductible $3500.  The rest is taken care of by my insurance.  I do not intend for USAA to pay the entire claim. 

One major question I have is: Is there room to legally argue that it was tenants 1) disconnect water service 2) left valves open that led to subsequent damages and therefore they are liable?  Tenant vs Landlord law seems to support this view.  I do understand I am responsible for checking the washer valves when authorizing the turn on of the water service. I admit I do not have prior experience on this and did not know to check this.   Thank you.