The United States District Court for the District of Arizona recently held that the efficient proximate cause doctrine does not exist in Arizona and, therefore, a policy’s concurrent causation language should be given effect.
In Stankova et al. v. Metropolitan Property and Casualty Ins. Co., 2012 U.S. Dist. LEXIS 150900 (D. Ariz. Oct. 17, 2012), a wildfire began on May 29, 2011, which destroyed the insureds’ detached garage but did not damage the house. After the wildfire was contained, an August 6, 2011 mudslide subsequently destroyed the insureds’ house.
Following the loss, the plaintiffs submitted a claim to its insurer under a homeowner’s policy that provided coverage for “sudden and direct physical loss caused by fire.” The policy excluded, however, water damage and earth movement (including mudslides) and these exclusions were preceded by an anti-concurrent causation preamble. (The court refers to this as a “concurrent cause” provision but the more common terminology is an anti-concurrent causation provision.) The insurer covered the claim for the garage, but denied the claim for the residence on the basis of the water damage and earth movement exclusions.
Thereafter, the plaintiffs filed suit and the parties cross-moved for summary judgment. The determinative issue before the district court was the applicability of the policy’s exclusionary language. The plaintiffs argued that the exclusions, when read in conjunction with the anti-concurrent causation preamble, were unenforceable in Arizona and against public policy. Specifically, the plaintiffs claimed that an efficient proximate cause analysis should be applied because the Arizona standard fire policy (which is required to comply with the New York standard fire policy) mandates coverage for “all direct loss by fire” and, therefore, evinced a strong public policy against anti-concurrent causation language. Plaintiffs further argued that the loss of their residence was directly caused by the fire because direct loss, as used in the standard fire policy, means a loss proximately caused by fire.
The district court rejected plaintiffs’ argument by stating that Arizona does not have a statute mandating coverage for events that are the efficient proximate cause of a loss, and has not adopted the efficient proximate cause rule. Id. at * 9 (citing Millar v. State Farm Fire and Cas. Co., 804 P.2d 822, 824-25 (Ariz. Ct. App.1990), which appears to be the most recent appellate authority on whether Arizona has adopted the efficient proximate cause doctrine). As a result, the court granted the insurer’s motion for summary judgment and concluded:
[a]s set forth in Plaintiffs’ homeowners policy, the water damage and earth movement exclusions, together with the concurrent cause provision, are narrow, specific, and unambiguous. The efficient proximate cause doctrine does not exist in Arizona, nor is it mandated by the standard fire policy, so the parties were free to opt out of such coverage by way of the concurrent cause provisions.