### Th e Honorable John R. Tunheim, United States District Judg e 1 

### for the District of Minnesota, sitting by designation. ___________ No. 96-2303

___________ 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. *

___________ Submitted: December 13, 1996 Filed: May 27, 1997

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

___________ TUNHEIM, District Judge.

Appellant TNT Speed & Sport Center, Inc. (“TNT”) sold golf carts and operate d a go-cart track in West Quincy, Missouri. On July 16, 1993, a vandal removed sandba gs 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 perso nal property. TNT brought
a declaratory judgment action against its insurer, American State s Insurance Company (“American States”). On cross-motions for summary

### The Honorable Mary Ann Medler, United States M agistrate Judge 2 

### for the Eastern District of Missouri, presiding by consent of the parties. See 28 U.S.C. § 636(c).

- 2 - judgment , the district court ruled that the insurance policy America n 2 States issued to TNT did not cover TNT’s losses. TNT appeals. We affirm.

I. BACKGROUND

On or about October 1, 1992, TNT andAmerican States entered into an insurance coverage agreement. American States agreed to provide commercia l prope rty, commercial liability, commercial inland marine and commercia l 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 t o specif ied exclusions and limitations. One of the express exclusion s provided:

We will n ot pay for loss or damage caused directly o r in directlyby any of the following. Such loss or damage i s exclud ed regardless of any other cause or event tha t 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 , over flowof any body of water, or their spray, all whethe r driven by wind or not; . . .

The district court, applying Missouri law in this diversity case, foun d that the insurance policy’s exclusion of water loss or damage wa s unambiguous and prevented TNT from recovering under the policy. TNT argue s
on appeal that the district court improperly applied Missouri law regardin g the efficient proximate cause doctrine and that the proximate cause o f 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 summar y judgment de novo. Columbia Insurance Co. v. Bak er , 108 F.3d 148, 149 (8th Cir. 1997). The interpretation of insurance pol icies is governed by state law, and we review th e district court’s application of state law de novo. Dupp v. Travelers Ins. Co. , 80 F.3d 312, 313 (8th Cir. 1996). Under Mis souri law, an insurance policy is a contract and the rules of co ntract construction apply. Herpel v. Farmers Ins. Co., Inc. , 79 5 S.W.2d 508, 510 (Mo. App. 1990). “If the language of an insurance contrac t is clear and unambiguous, the court does not hav e the power to rewrite the cont ract for the parties and must construe the contract as written. ” Sha ffner v. Farmers Mut. Fire Ins. Co. , 859 S.W.2d 902, 906 (Mo. App

. 1993). Although ambiguities in insurance polici es are generally construed as liberally as possi ble in favor of the insured, a court must accept the written policy as the expression of the agreement between the parties and giv e effect to the parties as disclosed by clear, unambiguous language

. Landes v. State Farm Fire & Cas. Co. , 907 S.W.2d349, 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 doctrin e of efficient proximat e cause governs situations where a risk specifically insured against sets other causes in motion in an unbroken sequence betwee n 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 th e las t step in the chain of causation was an excepted risk. Id. at 17 5 (citing 5 Appleman, Ins. Law and Practice § 3083 at 309-11 (1970)). If th e efficient proximate cause doctrine applied to th is case, TNT could recover under its policy with American States because a covered risk, vandalism, set in motion a sequence of

### - 4 -

events which ultimate ly caused the loss from water damage. The vandalism would be the efficien t proximate cause of the loss, regardless of whether the last step in the chain of causation was an excepted risk, water damage

.

The is sue in this case is whether the exclusionary language i n American States’ insurance policy precludes application of the efficient prox imate cause doctrine. The district court found that the expres s language of the exclusion was clear and unambiguous, and that Missour i courts had found simi lar language to be unambiguous. Rodin v. State Farm Fire and Cas. Co. , 844 S.W.2d 537, 539 (Mo. App. 1992). The district cour t therefore concluded that, in accordance with Missouri law, the exclusion language must be enforced in accordance with its plain meaning. See Safec o 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 directl y 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 controllin g Misso uri case which directly addressed the relationship between th e efficient proximate c ause rule and an exclusionary provision like the one in Ame rican States’ policy, the district court reviewed decisions fro m other states’ highest courts to determine the approach the Missouri Suprem e Court would most like ly take to resolving the issue. The court concluded that the most analogous and more persuasive cases from other state s
rec ognize that parties may contract out of application of the efficien t proximate cause doctr ine. 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 67 8 (Co lo. 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)

### - 5 - Appellant argues that the district court erred in reviewing case s from other jurisdicti ons and contends that Missouri law is clear that the ef ficient proximate cause doctrine applies and that the exclusionar y lan guage in American States’ policy is indistinguishable from th e exclus ionarylanguage at issue in Bartholomew , which did not preclud e applic ation of the doctrine. We disagree. First, we agree with th e district court that t he Missouri Supreme Court has not decided the effect of t he exclusionary language at issue. The exclusionary language i n Bartholomew

stated that the policy did not “insu re against loss caused by, resulti ng from, contributed to or aggravated by any of the following : 1. flood, surface water, . . ..” This policy did not employ languag e referencing directly the efficient proximate cau se doctrine. In contrast, Americ an States’ policy excluded “loss or damage caused directly o r indire ctlyby any of the following. Such loss or damage is exclude d regardless of any other cause or event that cont ributes concurrently or in any seque nce to the loss .” The language in American States’ polic y reflects an intent to contract out of application of the efficien t proximate cause doctrine. When a st ate’s highest court has not addressed the precise question of state law at issue, a federal court must deci de “what the highest state court would probably hold were it called upon to decide the issue.” Hazen
v. Pasle y , 768 F.2d 226, 228 (8th Cir. 1985). In determining what th e Missouri Supreme Cour t would probably hold if it were presented with this issue, it was entirel y 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.

### - 6 - A true copy.

Attest:

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