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28 1 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs.

E.D. Cal. Local Rule 78-230(h).

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

INDIAN HARVEST SPECIALTIFOODS, 

INC.,

Plaintiff,

NO. CIV. S-04-1055 FCD/KJM

v.

MEMORANDUM AND ORDER

WESTCHESTER FIRE INSURANCE 

COMPANY,

Defendant.

----oo0oo----

Plaintiff, Indian Harvest Specialtifoods, Inc.,

(“plaintiff”), filed suit against defendant Westchester Fire

Insurance Co. (“defendant”), based on defendant’s denial of

plaintiff’s insurance claim to recover for damage to equipment

caused by glass found in rice being processed by plaintiff.1

Plaintiff filed a motion for partial summary judgment of

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2

defendant’s seventh affirmative defense contending that the

policy’s contamination endorsement violates the efficient

proximate cause doctrine under California law. Defendant crossmoved for summary judgment asking the court to find that

plaintiff’s loss was excluded from coverage. For the reasons

stated herein, the court denies both plaintiff’s motion for

partial summary judgment and defendant’s motion for summary

judgement, finding that material issues of fact remain as to

whether the loss is excluded under this all-risk policy.

BACKGROUND 

Defendant issued plaintiff a Commercial Property Insurance

Policy, No. FPA 359784 (“the Policy”), which was effective from

February 19, 2002 through February 19, 2003. (Pl’s Resp. to

Def.’s Separate Stmt. of Undisputed Facts, (“RUF”) at ¶ 5.)

Plaintiff asserts that the Policy is an all-risk policy, while

defendant contends it is a specifically-enumerated risk policy. 

In September 2002, plaintiff, a rice processor and packager,

discovered large quantities of glass in wild rice it was

processing and in its processing machinery. (Id. at ¶ 1.) 

On September 12, 2002, plaintiff filed a claim with

defendant, their insurer, to recover costs incurred from the

extra cleaning, storage and loss of product. (RUF at ¶ 6.)

Defendant’s claim adjustor assessed the claim. (Id. at ¶ 4.) 

Neither party has provided direct evidence of how the glass

entered the wild rice. (Id. at ¶¶ 3-4.) 

In late January 2003, defendant denied the claim after

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2 Plaintiff’s hearsay objection to defendant’s January

23, 2003 letter is overruled. The court cites the letter, not

for the truth of the matter asserted therein, but to show that

the claim was denied. 

3 Plaintiff’s hearsay objection to defendant’s January

23, 2003 letter is overruled. The court cites the letter, not

for the truth of the matter asserted therein, but to show that

the claim was denied. Both plaintiff and defendant make further

evidentiary objections to statements and exhibits submitted by

the other party. However, it is unnecessary to rule upon these

objections to dispose of the motions at hand except as otherwise

noted by the court.

4 Further stating that “even of [sic] a covered loss were

established, its contamination exclusion bars coverage”. (DF at

¶ 6.)

3

finding that plaintiff’s loss was not covered under the policy.2

(Def.’s Opposing Separate Stmt of Disputed and Undisputed Facts

in Opp’n to Pl.’s Partial MSJ (“DF”), at ¶ 4; RUF at ¶¶ 9-11). 

Plaintiff then notified defendant that it believed the glass

entered the rice through an act of vandalism by unknown persons.

(DF at ¶ 5.) Again, on September 23, 2003 defendant denied the

claim noting that the “denial of this claim as set forth in the

January 24, 2003 letter is appropriate.” (RUF at ¶ 16.)3

The parties disagree about the cause of the loss. Plaintiff

claims that the cause of the loss was an act of vandalism. (DF at

¶ 5.) Defendant asserts that any claim plaintiffs made for its

loss was denied because plaintiff has not met its burden to show

that the loss is covered under the Policy. (DF at ¶ 6.)4 

On June 15, 2005 plaintiff filed a motion for partial

summary judgment of defendant’s seventh affirmative defense that

Endorsement ACE “D” (the “Contamination Endorsement”) bars

coverage of its loss. Plaintiff alleges that as a matter of law,

the Contamination Endorsement violates California law and thus

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4

defendant is prohibited from using it to exclude plaintiff’s loss

from coverage.

Thereafter on June 21, 2005, defendant filed a cross motion

for summary judgement asserting that, as a matter of law, no

material question of fact existed as to whether plaintiff’s claim

was covered since plaintiff failed to demonstrate that the loss

was covered under the Policy. 

STANDARD

Summary judgment is appropriate when it is demonstrated that

there exists no genuine issue as to any material fact, and that

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

Fed. R. Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144,

157 (1970). 

When parties submit cross-motions for summary judgment, the

court must review the evidence submitted in support of each

cross-motion and consider each party’s motion on its own merits. 

Fair Housing Council of Riverside County, Inc. v. Riverside Two,

249 F.3d 1132, 1136 (9th Cir. 2001). The court must examine each

set of evidence in the light most favorable to the non-moving

party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).

The moving party “always bears the initial responsibility of

informing the district court of the basis for its motion, and

identifying those portions of ‘the pleadings, depositions,

answers to interrogatories, and admissions on file, together with

the affidavits, if any,’ which it believes demonstrate the

absence of a genuine issue of material fact.” Celotex Corp. v.

Catrett, 477 U.S. 317, 323 (1986). If the moving party meets its

initial responsibility, the burden then shifts to the opposing

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party to establish that a genuine issue as to any material fact

actually does exist. Matsushita Elec. Indust. Co., Ltd. v.

Zenith Radio Corp., 475 U.S. 574, 585-87 (1986); First Nat'l Bank

of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-289 (1968). 

Genuine factual issues must exist that “can be resolved only by a

finder of fact, because they may reasonably be resolved in favor

of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

256 (1986). 

In judging evidence at the summary judgment stage, the court

does not make credibility determinations or weigh conflicting

evidence. See T.W. Elec. Serv., Inc. v. Pacific Elec.

Contractors Ass’n, 809 F.2d 626, 630-31 (9th Cir. 1987) (citing

Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S.

574, 587 (1986)). The evidence presented by the parties must be

admissible. Fed. R. Civ. P. 56(e). Conclusory, speculative

testimony in affidavits and moving papers is insufficient to

raise genuine issues of fact and defeat summary judgment. See

Falls Riverway Realty, Inc. v. City of Niagara Falls, 754 F.2d

49, 57 (2d Cir. 1985); Thornhill Publ’g Co., Inc. v. GTE Corp.,

594 F.2d 730, 738 (9th Cir. 1979).

ANALYSIS

1. The Insurance Contract at Issue is an All-Risk Policy

Defendant argues that the insurance policy it issued

plaintiff (“the Policy”), is a specifically-enumerated risk

policy, under which plaintiff bears the burden of demonstrating

that its loss is specifically within the policy coverage. 

According to defendant, plaintiff cannot satisfy this burden and

therefore summary judgment should be granted in its favor.

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Plaintiff, however, contends that the Policy is an all-risk

policy. Unlike a specifically-enumerated risk policy, an allrisk policy creates a special type of coverage allowing for all

fortuitous losses not resulting from misconduct or fraud, unless

the Policy contains a specific provision expressly excluding the

loss from coverage. C. H. Leavell & Co. v. Fireman's Fund Ins.

Co., 372 F.2d 784, 787 (9th Cir. 1967); Assoc. Engineers, Inc. v.

American Nat'l Fire Ins. Co., 175 F. Supp. 352 (N.D. Cal. 1959). 

If plaintiff’s contention is correct, that the Policy is

all-risk, then all plaintiff must prove is that it suffered a

fortuitous and extraneous loss on covered property. Id. The

burden then shifts to defendant to prove that plaintiff’s loss is

specifically excluded or limited under the Policy. Aydin Corp.

v. First State Ins. Co., 18 Cal. 4th 1183, 1188 (Cal., 1998);

Weil v. Federal Kemper Life Assurance Co., 7 Cal. 4th 125, 148

(1994); Garvey v. State Farm Fire & Cas. Co., 48 Cal. 3d 395, 406

(1989); Royal Globe Ins. Co. v. Whitaker, 181 Cal. App. 3d 532,

537 (1986). 

Interpretation of an insurance policy, like other questions

of contract interpretation, is a question of law. Waller v.

Truck Ins. Exch., Inc., 11 Cal. 4th 1, 18 (1995). While

insurance contracts have special features, their interpretation

still follows the ordinary rules of contract interpretation. If

the contracts language is clear, that meaning governs. Cal. Civ.

Code § 1638; Bank of the West v. Superior Court, 2 Cal. 4th

1254, 1264 (1992). The ‘clear and explicit’ meaning of a

contract’s provisions, interpreted in their ‘ordinary and popular

sense,’ controls judicial interpretation unless they are used by

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5 Plaintiff alleges the loss occurred on Covered

Property. For the purposes of this motion, and only this motion,

defendant does not dispute that allegation. (Def.’s MSJ at 7:8-

7

the parties in a technical sense or if a special meaning is given

to them by usage. AIU Ins. Co. v. Superior Court, 51 Cal.3d 807,

822 (1990). Thus, if the meaning a layperson would ascribe to

contract language is not ambiguous, the court applies that

meaning. Id. The intent of the parties, if possible, must be

inferred solely from the written provisions of the contract. Id. 

The contract’s language must be interpreted as a whole, and

in the circumstances of the case, and cannot be found to be

ambiguous in the abstract. Waller, 11 Cal. 4th at 18-19. Courts

will not strain to create an ambiguity where none exists. Id.

The fact that a term is not defined in the policies does not make

it ambiguous. Foster-Gardner, Inc. v. Nat. Union Fire Ins. Co.,

18 Cal. 4th 857, 868 (1998). 

If an asserted ambiguity is not eliminated by the language

and context of the policy, courts then invoke the principle that

ambiguities are generally construed against the party who caused

the uncertainty to exist (i.e., the insurer) in order to protect

the insured’s reasonable expectation of coverage. La Jolla Beach

& Tennis Club, Inc. v. Indus. Indem. Co., 9 Cal. 4th 27, 37

(1994). 

The Policy language at issue is as follows:

The Coverage section of the Building and Personal Property

Coverage Form states:

We will pay for direct physical loss of or damage to

Covered Property5 at the premises described in the

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5(...continued)

10.)

8

Declarations caused by or resulting from any Covered

Cause of Loss.

(Kearney Dec., Ex. H at 148.) Within the Policy’s various

Coverage Forms, references to Covered Causes of Loss direct the

reader to the Declarations page for a definition of the term. 

(Id. at 149.) (“See applicable Causes of Loss Form as shown in

Declarations”). 

The Commercial Property Declarations Form (“Declaration

form”) states that the term Covered Cause of Loss is determined

by Special Form - CP1030 (10-00) (“Causes of Loss Form”). (Id.

at 139.) 

The Causes of Loss Form states: 

A. Covered Causes of Loss. When special is shown in the

Declarations, Covered Causes of Loss means Risks Of Direct

Physical Loss unless the loss is: 1. Excluded in Section B.,

Exclusions; or 2. Limited in Section C., Limitations . . ..

(Id. at 169.) As previously noted, the word ‘special’ does

appear on the face of plaintiff’s Policy Declaration form. (Id.

at 169.) 

When read together, the aforementioned sections provide that

defendant will pay for risks of direct physical loss unless the

loss is within the enumerated exclusions or limitations. The

plain meaning of this language is that the loss is covered unless

specifically excluded, which is the essence of an all-risk

policy. See C. H. Leavell, 372 F2d at 784; 30 A.L.R.5th 170, §

3. If this were indeed a specifically-enumerated risk policy, as

defendant suggests, there would be no need for a broad statement

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9

of coverage limited only by exceptions. The exceptions would be

the rule. Absent ambiguity, the court must interpret this

contract based on its plain meaning. Bank of the West, 2 Cal.4th

at 1264.

Courts that have confronted identical or nearly identical

language interpreted it to describe an all-risk policy. See Ward

Gen. Ins. Serv., Inc., v. Employers Fire Ins. Co., 114 Cal. App.

4th 548, 552 (2003); Nat. Union Fire Ins. Co. v. Travelers Indem.

Co., 210 F. Supp. 2d 479 (S.D.N.Y. 2002); York Ins. Co. v.

Williams Seafood of Albany, Inc., 544 S.E.2d 156, 157-58 (Ga.

2001). 

Defendant argues that the relevant definition explaining

coverage is provided by the term “Specified Causes of Loss,”

(Causes of Loss Form, Section F. - Definitions.) This term,

which appears in quotes has a recognized “special meaning” and

appears only four places within the Policy, all within the Causes

of Loss Form. The first three occur within the exclusions and

limitations sections of the form and the fourth in its own 

section on definitions. The term is defined in Section F:

“Specified Causes of Loss” means the following: Fire;

lightning; explosion; windstorm or hail; smoke; aircraft or

vehicles; riot or civil commotion; vandalism; leakage from

fire extinguishing equipment; sinkhole collapse; volcanic

action; falling objects; weight of snow, ice or sleet; water

damage.

(Id. at 175.)

Defendant’s interpretation is unpersuasive because it

violates the plain meaning of the contract where no ambiguity

exists. First, the phrase “Specified Cause of Loss” is a

different phrase than Covered Cause of Loss. It is not the term

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6 Causes of Loss Form, Section C, part 2(d) allows an 

excluded cause of loss listed in the wear in tear section to

be covered if it results in a “specified cause of loss.” 

Part 2(k) states that if a collapse results in a Covered

Cause of Loss, the policy will pay for the damage caused by

that Covered Cause of Loss. 

Causes of Loss Form, Section D. Additional Coverage

Collapse states that Covered Causes of Loss include the

(continued...)

10

that appears in the Declarations Form, Business and Personal

Property Coverage Form, or elsewhere in the contract to provide

direction on what is covered under the policy. The phrase

repeatedly used is Covered Causes of Loss, which is explained on

the Causes of Loss form in a section entitled Covered Causes of

Loss.

Further, the phrase “Specified Causes of Loss” does not

appear in the contract anywhere except the Causes of Loss Form. 

Most importantly, this term is not used in the Coverage section

of the Causes of Loss form. The drafters of the contract did not

need the excess language about what is a Covered Cause of Loss

and its exceptions if the term “specified causes of loss” was the

defining term. For the court to construe this as such, it would

create ambiguity that does not exist. Waller, 11 Cal.4th at 18-

19. 

Moreover, any potential ambiguity on the face of the

document disappears when the Policy is review in its context. 

Within the Causes of Loss Form, the term Covered Cause of Loss

and “specified cause of loss” are used in the same section and

reference each other. If “specified cause of loss” defined

coverage, as defendant contends, the contract would not state

that Cause of Loss includes “specified causes of loss.”6

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6(...continued)

additional direct physical loss or damage to covered

property if it was caused by “2.a. the ‘specified cause of

loss’ or breakage of building glass.” Later in that section

it states that the policy will pay for loss caused by such

collapse of personal property if “the collapse was caused by

a Cause of Loss listed in 2.a through 2f. above. 

7 Endorsement ACE “D” states in relevant portion: 

SEEPAGE AND/OR POLLUTION AND/OR CONTAMINATION EXCLUSION

Notwithstanding any provision in the Policy to which

this Endorsement is attached, this Policy does not

insure against loss, damage, costs or expenses in

(continued...)

11

(Kearney Dec., Ex. H at 174.) 

As stated previously, the court finds that the Policy

defendant issued plaintiff is an all-risk policy and thus, the

court cannot find as a matter of law that plaintiff’s loss is

excluded. Under an all-risk policy, plaintiff only must show

that it suffered a fortuitous and extraneous loss on covered

property. The burden then shifts to defendant to prove that

plaintiff’s loss is specifically excluded or limited under the

Policy. Aydin Corp. v. First State Ins. Co., 18 Cal. 4th at

1188. Plaintiff claims to have sustained a fortuitous loss

occurring on its property. Defendant has stated that it will not

contest, for the instant motion, that plaintiff’s loss occurred

on Covered Property. Thus, for purposes of this motion,

plaintiff has met its burden, which now shifts to defendant to

prove the loss is excluded by the Policy. 

2. Endorsement ACE “D” Does not Violate California Law

Defendant has asserted in its seventh affirmative defense

that plaintiff’s loss is excluded from coverage based under

Endorsement ACE “D” (“Contamination Endorsement”).7 (Def.’s

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7(...continued)

connection with any kind or description of seepage

and/or pollution and/or contamination, direct or

indirect, arising from any cause whatsoever.

NEVERTHELESS, if fire is not excluded from this Policy

and a fire arises directly or indirectly from seepage

and/or pollution and/or contamination, any loss or

damage insured under this Policy arising directly from

that fire shall (subject to the terms, conditions and

limitations of the Policy) be covered.

However, if the insured property is the subject of

direct physical loss or damage for which Underwriters

have paid or agreed to pay, then this Policy (subject

to its terms, conditions and limitations) insures

against direct physical loss or damage to the property

insured hereunder caused by resulting seepage and/or

pollution and/or contamination.

12

Answer to Compl. at ¶ 3.) Plaintiff has filed a motion for

partial summary judgment seeking a ruling that, as a matter of

law, the Contamination Endorsement may not be asserted to bar

coverage because it conflicts with California law. 

Under California law, an insurer is liable for losses

proximately caused by a peril covered under an insurance policy,

even when an excepted loss was a remote cause of the loss. Cal.

Ins. Code § 530. However if the peril is specially excepted by

the insurance policy, and the loss would not have occurred but

for that excepted peril, the insurer is not liable even though

the immediate cause of the loss was a covered peril. Cal. Ins.

Code § 532. 

California courts have interpreted these code sections to

find an insurer liable whenever a covered loss was the efficient

proximate cause of the loss. Sabella v. Wisler, 59 Cal. 2d 21,

31-32 (1963). An efficient proximate cause is a loss which “sets

the others in motion” and is the “predominating or moving

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13

efficient cause.” Howell v. State Farm Fire & Cas. Co., 218 Cal.

App. 3d 1446, 1452 (1990) (citing Sabella, 59 Cal. 2d at 31-32). 

The courts have found that an insurer may not preclude

application of efficient proximate cause analysis through

inconsistent policy language. Julian v. Hartford Underwriters

Ins. Co., 35 Cal. 4th 747, 754 (2005) (citing its reaffirmation

of this principle from Garvey v. State Farm Fire & Cas. Co., 48

Cal. 3d 395, 413 (1989)). Additionally, courts have found that

insurance policy exclusions which violate Cal. Ins. Code § 530

are not enforceable. Howell, 218 Cal. App. 3d at 1459. 

Further, the courts have held that the issue of efficient

proximate causation is a question of fact for the jury. Garvey,

48 Cal. 3d at 413 (“the ultimate coverage determination is for

the jury”).

Plaintiff contends that the Policy’s Contamination

Endorsement violates California Insurance Code section 530 by

attempting to exclude a Covered Causes of Loss, here vandalism,

which resulted in contamination. The court disagrees. The court

finds within the Contamination Endorsement’s plain meaning an

interpretation which is lawful and reasonable. As such, there is

no need to invalidate that portion of the contract. 

Plaintiff’s argument focuses solely on the first paragraph

of the Contamination Endorsement:

Notwithstanding any provision in the Policy to which this

Endorsement is attached, this Policy does not insure against

loss, damage, costs or expenses in connection with any kind

or description of seepage and/or pollution and/or

contamination, direct or indirect, arising from any cause

whatsoever.

(Kearney Dec., Exh. H at 192.) But, when read as a whole, the

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8 As such, the court rejects plaintiff’s alternative

contentions that Endorsement ACE “D” is vague and contrary to

(continued...)

14

Contamination Endorsement’s language does not exclude

contamination-related loss “arising from any cause whatsoever,”

regardless of whether it was a proximate cause of a Covered Loss. 

The aforementioned language of the Contamination Endorsement is

followed by two paragraphs which provide exceptions to this broad

exclusion. 

In the instant case, the court need only focus on the second

exception found in the third paragraph of the Contamination

Endorsement to harmonize the form with California Law. The

section states:

However, if the insured property is the subject of direct

physical loss or damage for which Underwriters have paid or

agreed to pay, then this Policy (subject to its terms,

conditions and limitations) insures against direct physical

loss or damage to the property insured hereunder caused by

resulting seepage and/or pollution and/or contamination.

(Id.) (emphasis added.) This language complies with the

efficient proximate cause doctrine as articulated in Sabella and

Howell. Indeed, read in context, the exception is quite broad. 

It holds the insurer liable if there is a loss to the Covered

Property that occurs due to a Covered Loss which results in

contamination. 

Accordingly, plaintiff’s motion for partial summary judgment

of defendant’s seventh affirmative defense is DENIED because the

Contamination Endorsement, when read in context of the contract

as a whole, is consistent with Cal. Ins. Code § 530 and does not

violate California law.8

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8(...continued)

other sections of the Policy. 

15

3. Endorsement ACE “D” Does Not Bar Coverage of

Plaintiff’s Claim. 

Since plaintiff’s motion for partial summary judgment is

denied, the court must determine whether, as defendant contends,

plaintiff’s loss is excluded by said Contamination Endorsement as

a matter of law. The court cannot find that as a matter of law

plaintiff’s claim is excluded. 

As found above, the Contamination Endorsement is an

exclusion with exceptions. Relevant here is the exception in the

third paragraph which the court interprets in harmony with

statutory requirements that an insurer cover the efficient

proximate cause of a covered loss. Sabella, 59 Cal. 2d at 31-32;

see also Julian, 35 Cal. 4th at 754. Specifically, the court

interprets the language to hold the insurer liable for damage to

Covered Property caused by resulting contamination and/or

pollution if it was the efficient proximate cause of a Covered

Loss. Here plaintiff and defendant dispute not only whether

there was a Covered Cause of Loss, but whether a Covered Cause of

Loss was the efficient proximate cause of the “contamination” in

this case. (RUF at ¶¶ 18, 25; DF at ¶ 5(plaintiff claims

vandalism was the Covered Cause of Loss and the efficient

proximate cause)); (RUF at ¶¶ 17, 24 (defendant referring to lack

of specifics on glass contamination, which is not covered by the

policy)); (DF at ¶¶ 6,8 (defendant stating claim was denied

because there was no Covered Cause of Loss, but if there was it

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was excluded by the Contamination Endorsement)). The California

Supreme Court in Garvey, held that determining the efficient

proximate cause is a question of fact for the jury. Garvey, 48

Cal. 3d at 413 (“the ultimate coverage determination is for the

jury”). As such, there is a genuine issue of material fact

regarding whether plaintiff’s loss is excluded by the

Contamination Endorsement. Therefore, defendant’s motion for

summary judgement is DENIED.

CONCLUSION

Accordingly, the court finds that:

1) Plaintiff’s motion for partial summary judgment of

defendant’s seventh affirmative defense is DENIED. 

2) Defendant’s motion for summary judgment is DENIED. 

IT IS SO ORDERED.

DATED: August 11, 2005

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

Case 2:04-cv-01055-FCD-KJM Document 52 Filed 08/11/05 Page 16 of 16