The Honorable John R. Tunheim, United States District Judge

1

for the District of Minnesota, sitting by designation.

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No. 96-2303

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TNT Speed & Sport Center, Inc., *

d/b/a TNT Golf Cars & Utility *

Systems, *

 * Appeal from the United States

Appellant, * District Court for the

 * Eastern District of Missouri

v. *

 *

American States Insurance 

Company, *

 *

Appellee. *

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Submitted: December 13, 1996

 Filed: May 27, 1997 

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Before WOLLMAN and MURPHY, Circuit Judges, and TUNHEIM, District Judge. 1

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TUNHEIM, District Judge.

Appellant TNT Speed & Sport Center, Inc. (“TNT”) sold golf carts and

operated a go-cart track in West Quincy, Missouri. On July 16, 1993, a

vandal removed sandbags and dirt from a levee protecting West Quincy from

the rising waters of the Mississippi River. The levee subsequently broke

and river water flooded the West Quincy area. The water flooded TNT’s

property and destroyed TNT’s buildings and personal property. TNT brought

a declaratory judgment action against its insurer, American States

Insurance Company (“American States”). On cross-motions for summary
The Honorable Mary Ann Medler, United States Magistrate Judge 2

for the Eastern District of Missouri, presiding by consent of the

parties. See 28 U.S.C. § 636(c).

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judgment, the district court ruled that the insurance policy American

2

States issued to TNT did not cover TNT’s losses. TNT appeals. We affirm.

I. BACKGROUND

On or about October 1, 1992, TNT and American States entered into an

insurance coverage agreement. American States agreed to provide commercial

property, commercial liability, commercial inland marine and commercial

auto insurance to TNT for a one-year period starting on October 1, 1992.

The policy listed losses covered and made all covered losses subject to

specified exclusions and limitations. One of the express exclusions

provided:

We will not pay for loss or damage caused directly or

indirectly by any of the following. Such loss or damage is

excluded regardless of any other cause or event that

contributes concurrently or in any sequence to the loss.

The policy defines one of the excluded causes as:

Water . . . Flood, surface water, waves, tides, tidal waves,

overflow of any body of water, or their spray, all whether

driven by wind or not; . . . 

The district court, applying Missouri law in this diversity case, found

that the insurance policy’s exclusion of water loss or damage was

unambiguous and prevented TNT from recovering under the policy. TNT argues

on appeal that the district court improperly applied Missouri law regarding

the efficient proximate cause doctrine and that the proximate cause of

TNT’s loss was the act of vandalism, a covered loss.
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II. ANALYSIS

We review the district court’s ruling on a motion for summary

judgment de novo. Columbia Insurance Co. v. Baker, 108 F.3d 148, 149 (8th

Cir. 1997). The interpretation of insurance policies is governed by state

law, and we review the district court’s application of state law de novo.

Dupp v. Travelers Ins. Co., 80 F.3d 312, 313 (8th Cir. 1996). 

Under Missouri law, an insurance policy is a contract and the rules

of contract construction apply. Herpel v. Farmers Ins. Co., Inc., 795

S.W.2d 508, 510 (Mo. App. 1990). “If the language of an insurance contract

is clear and unambiguous, the court does not have the power to rewrite the

contract for the parties and must construe the contract as written.”

Shaffner v. Farmers Mut. Fire Ins. Co., 859 S.W.2d 902, 906 (Mo. App.

1993). Although ambiguities in insurance policies are generally construed

as liberally as possible in favor of the insured, a court must accept the

written policy as the expression of the agreement between the parties and

give effect to the parties as disclosed by clear, unambiguous language.

Landes v. State Farm Fire & Cas. Co., 907 S.W.2d 349, 358 (Mo. App. 1995).

Missouri courts have recognized the doctrine of efficient proximate

cause as a basis for recovery under insurance contracts. Bartholomew v.

Cameron County Mut. Ins. Co., 882 S.W.2d 173 (Mo. App. 1994). The doctrine

of efficient proximate cause governs situations where a risk specifically

insured against sets other causes in motion in an unbroken sequence between

the insured risk and the ultimate loss. In such situations, the insured

risk is regarded as the proximate cause of the entire loss, even if the

last step in the chain of causation was an excepted risk. Id. at 175

(citing 5 Appleman, Ins. Law and Practice § 3083 at 309-11 (1970)). If the

efficient proximate cause doctrine applied to this case, TNT could recover

under its policy with American States because a covered risk, vandalism,

set in motion a sequence of
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events which ultimately caused the loss from water damage. The vandalism

would be the efficient proximate cause of the loss, regardless of whether

the last step in the chain of causation was an excepted risk, water damage.

The issue in this case is whether the exclusionary language in

American States’ insurance policy precludes application of the efficient

proximate cause doctrine. The district court found that the express

language of the exclusion was clear and unambiguous, and that Missouri

courts had found similar language to be unambiguous. Rodin v. State Farm

Fire and Cas. Co., 844 S.W.2d 537, 539 (Mo. App. 1992). The district court

therefore concluded that, in accordance with Missouri law, the exclusion

language must be enforced in accordance with its plain meaning. See Safeco

Ins. Co. v. Hamm, 718 F. Supp. 744, 747 (E.D. Mo. 1989). The court found

that the plain meaning of the exclusionary language was to directly

address, and contract out of, the efficient proximate cause doctrine and

exclude coverage for losses caused by water, regardless of the existence

of any other contributing causes in any sequence. 

Because the district court found that there was no controlling

Missouri case which directly addressed the relationship between the

efficient proximate cause rule and an exclusionary provision like the one

in American States’ policy, the district court reviewed decisions from

other states’ highest courts to determine the approach the Missouri Supreme

Court would most likely take to resolving the issue. The court concluded

that the most analogous and more persuasive cases from other states

recognize that parties may contract out of application of the efficient

proximate cause doctrine. See, e.g. Alf v. State Farm Fire and Cas. Co.,

850 P.2d 1272 (Utah 1993); Kane v. Royal Ins. Co. of Am., 768 P.2d 678

(Colo. 1989); State Farm Fire Cas. Co. v. Paulson, 756 P.2d 764 (Wyo.

1988). See also Schroeder v. State Farm Fire and Cas. Co., 770 F. Supp.

558 (D. Nev. 1991) (applying Nevada law); Millar v. State Farm Fire & Cas.

Co., 804 P.2d 822 (Ariz. App. 1990)
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Appellant argues that the district court erred in reviewing cases

from other jurisdictions and contends that Missouri law is clear that the

efficient proximate cause doctrine applies and that the exclusionary

language in American States’ policy is indistinguishable from the

exclusionary language at issue in Bartholomew, which did not preclude

application of the doctrine. We disagree. First, we agree with the

district court that the Missouri Supreme Court has not decided the effect

of the exclusionary language at issue. The exclusionary language in

Bartholomew stated that the policy did not “insure against loss caused by,

resulting from, contributed to or aggravated by any of the following:

1. flood, surface water, . . ..” This policy did not employ language

referencing directly the efficient proximate cause doctrine. In contrast,

American States’ policy excluded “loss or damage caused directly or

indirectly by any of the following. Such loss or damage is excluded

regardless of any other cause or event that contributes concurrently or in

any sequence to the loss.” The language in American States’ policy

reflects an intent to contract out of application of the efficient

proximate cause doctrine.

When a state’s highest court has not addressed the precise question

of state law at issue, a federal court must decide “what the highest state

court would probably hold were it called upon to decide the issue.” Hazen

v. Pasley, 768 F.2d 226, 228 (8th Cir. 1985). In determining what the

Missouri Supreme Court would probably hold if it were presented with this

issue, it was entirely proper for the district court to consider relevant

precedents from other jurisdictions. See Gilstrap v. Amtrak, 998 F.2d 559,

560 (8th Cir. 1993). 

We affirm the district court’s grant of summary judgment in favor of

American States and its denial of TNT’s motion for summary judgment. 
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A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.