The Doctrine of Efficient Proximate Cause, the Katrina Disaster, Prosser’s Folly and the Third Restatement of Torts: Cracking the Conundrum

Courts across the country have been unable to agree whether an insurer of real property is liable for loss caused by a combination of covered and excluded risks. In some jurisdictions, courts have found the loss covered, borrowing from analytical models of concurrent causation used to assign legal responsibility for tortious conduct. In other jurisdictions, courts have found the loss excluded, owing to disagreement over resorting to tort models of causation to inform contract construction. Unable to agree upon a well-suited paradigm to assess the responsibility of insurers in instances of concurrent causation, courts nationwide have applied indistinguishable contractual provisions inconsistently and un-predictably, repetitively reaching contradictory results on practically identical facts.Catastrophic losses, which know no jurisdictional boundaries, draw particular attention to these paradoxical results. Identical classes of loss following an event such as Hurricane Katrina may be covered by insurance in one state, but excluded in another - solely because of varying enforcement of standardized insurance policy exclusions. This irregularity across jurisdictions has led to threats by some insurers to embargo states refusing to enforce exculpating provisions governing the concurrent causation issue. At the same time, residents of devastated communities, left without expected sources of insurance revenue for rebuilding, insist that underwriters’ expectations yield to those of consumers bound to the invariable terms of an insurance product.Most courts refusing to enforce as written provisions of an insurance contract that purport to exclude loss concurrently caused by covered and excluded perils have relied upon the widely accepted, but poorly conceived “doctrine of efficient proximate cause.” The doctrine is deeply rooted in outdated and obsolete models of causation in tort law, some notably promulgated by Dean William L. Prosser and fixed in the Second Restatement of Torts while he served as its Reporter.A model of causation more rational than the “doctrine of efficient proximate cause” is necessary to more reliably determine whether loss attributable to both insured and excluded causes is covered by standardized insurance policies - and that model is extant. This Article proposes supplanting the doctrine of efficient proximate cause with refinements in contemporary causation theory embodied by the forthcoming Restatement (Third) of Torts: Liability for Physical Harm.Part One of this Article examines the doctrine of efficient proximate cause, and surveys the uneven and idiosyncratic application of the doctrine in Louisiana and Mississippi following Hurricane Katrina.Part Two opposes selected root constructs of causation theory in tort upon which the doctrine of efficient proximate cause relies, and explores the toppling of those constructs, as described in the forthcoming Restatement (Third) of Torts: Liability for Physical Harm.Part Three proposes uniform rules of contract construction, based on contemporary causation theory analytically superior to the doctrine of efficient proximate cause, and better able to address the concurrent causation conundrum in insurance coverage disputes.