Source: https://www.insurancelawhawaii.com/insurance_law_hawaii/2016/01/index.html
Timestamp: 2019-04-23 12:19:44+00:00

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Relying upon the policy's anti-concurrent causation clause, the Illinois Court of Appeals affirmed the trial court's ruling that there was no coverage for a pool that popped out of the ground. Bozek v. Erie Ins. Group, 2015 Ill. App. LEXIS 940 (Ill. Ct. App. Dec. 17, 2015).
Following a rainstorm, the insureds reported damage to the swimming pool to Erie. An investigation determined that the heavy rain saturated soils around the pool. This created a significant uplift hydrostatic pressure. The weight of the water in the pool typically prevented the uplift forces, but the pool had been emptied to clean debris making it susceptible to uplift. The pool had a pressure relief valve to prevent uplift, but it was not working properly.
As a result, the pool was damaged to the point that it had to be replaced in its entirety. The heaving of the pool also damaged the concrete slab around the pool, which also had to be replaced.
We do not pay for loss resulting directly or indirectly from any of the following, even if other events or happenings contributed concurrently, or in sequence, to the loss . . . .
The policy excluded: (1) loss by weight of water to a deck, swimming pool, and foundation; (2) loss by mechanical breakdown; (3) loss by water damage, including water that exerted pressure on swimming pool or decks.
The insureds filed suit. They conceded that hydrostatic pressure was an excluded cause. However, they argued that Erie did not establish that the failure of the pressure-relief valve was an excluded cause. They reasoned that the anti-concurrent causation clause dictated that, because the failure of the pressure-relief valve (a covered event) preceded the increase in the hydrostatic pressure (an excluded event) the loss was covered. To support their position, the insureds pointed to the anti-concurrent causation clause's use of the phrase, "in sequence." A reasonable definition of "in sequence" was "subsequent to." Because the covered cause (the failure of the pressure-relief valve) happened prior to the excluded cause (the hydrostatic pressure) the anti-concurrent causation clause did not apply.
Erie argued that the use of the words "concurrently" and "in sequence" precluded coverage where two events occurred at the same time or one after the other. Where an excluded cause was a cause, there was no coverage.
The trial court granted summary judgment to Erie and an appeal was filed.
The appellate court faulted the insureds for focusing on the phrase "in sequence." Instead, the use of the words "concurrently" and "in sequence" avoided coverage where two events, one covered and one excluded, contributed to the loss at the same time or one after the other. When two perils converged at the some time, contemporaneously and operating in conjunction, there was a "concurrent" cause or event.
The uplifting of the pool and damage to the concrete did not occur until the hydrostatic pressure acted upon the sides of the pool. The uplift of the pool resulted from the convergence of two causes, the hydrostatic pressure and the valve's failure to relieve that pressure. The two causes "contributed concurrently" to the loss. Therefore, the anti-concurrent causation clause precluded coverage.
The Texas Court of Appeals found that Exxon Mobil Corporation was an additional insured under the CGL policy for Exxon's service provider. Liberty Surplus Ins. Corp. v. Exxon Mobil Corporation, 2015 Tex. App. LEXIS 12757 (Tex. Ct. App. Dec. 17, 2015).
Exxon contracted with Wyatt Field Service Company to perform "services" as set forth in various work orders from Exxon's affiliates. The contract also required Wyatt to maintain $5 million of commercial general liability insurance. The contract provided that the policies must cover Exxon and its affiliates "as additional insureds in connection with the performance of Services."
In 2008, Wyatt was assigned to work on a flexicoker unit at Exxon's refinery. Wyatt was to reinstall dummy nozzles and chains. It completed this service in October 2008. Three years later, one of the dummy nozzles pulled free, and the escaping steam and coke burned three individuals who were working on the unit. After the accident, it was discovered that the safety chain had been installed in the wrong location so that it did not properly secure the dummy nozzle.
The injured workers sued Exxon and Wyatt. Exxon demanded a defense and indemnity from Liberty Surplus, Wyatt's primary carrier, and from Commerce & Industry Insurance Company, Wyatt's excess umbrella insurer. Neither insurer defended or contributed to the settlement Exxon reached with the injured workers.
Exxon filed a separate suit against the insurers. The trail court granted summary judgment in Exxon's favor.
WHO IS AN INSURED is amended to include as an insured any person or organization with whom you have agreed to add as a additional insured by written contract but only with respect to liability arising out of your operations . . . .
There was no dispute that Exxon was an additional insured in some circumstances. The court considered whether the endorsement incorporated any coverage restrictions in the underlying contract. The endorsement referred the reader to the written contract when identifying who was an insured, but not when limiting the circumstances under which such a person or organization was considered to be an insured. The court did not consider the underlying contract's coverage limitations unless the policy so directed. Therefore, Exxon was an additional insured with respect to liability arising out of Wyatt's operations.
The insurers also argued that Exxon could not conclusively establish that the injured workers' claims fell within the scope of coverage until Wyatt was found to be liable. The court disagreed. Exxon's additional-insured coverage was neither dependent on a finding that Wyatt was negligent nor excluded if Exxon's negligence was found to be the sole proximate cause of the workers' injuries. Exxon was an additional insured "with respect to liability arising out of [Wyatt's] operations." This language did not require proximate cause or legal causation. To secure coverage, Exxon was not required to prove that Wyatt proximately caused the workers' damages. The jury's negligence findings in the underlying case did not create a genuine issue of material fact precluding summary judgment in Exxon's favor.
The court applied the efficient proximate cause doctrine to find coverage under a property policy for a building's collapse. Vardanyan v. Amco Ins. Co., 2015 Cal. App. LEXIS 1181 (Cal. Ct. App. Dec. 11, 2015).
The insured submitted a claim to Amco for damage to the flooring of the house and for mold. Amco's adjustor reported that the house seemed to be settling, possibly due to a water leak. A structural engineer then inspected and found multiple potential leaks in the roof, gutters in disrepair, downspouts that deposited water at the base of the walls of the house, and evidence that a faucet had been spraying the wall in one area. Water damage was noticed in these areas. Further, the kitchen was water damaged and had past termite infestation.
Amco denied coverage based upon multiple exclusions, including exclusions for damage caused by seepage and faulty or defective design. The insured sued, alleging that the house collapsed and that the policy provided coverage for collapse. The policy stated there was coverage for collapse of a building or any part of a building "caused only by one or more" of a list of perils, including hidden decay and hidden insect damage.
The evidence at trial indicated there were multiple causes of the damage to the insured's house. The insured argued that there was coverage for collapse because hidden decay or hidden insect damage were the predominant causes of the collapse. The insured requested a standard jury instruction explaining that, when a loss is caused by a combination of covered and excluded risks, the loss is covered if the most important or predominant cause is a covered risk. Amco requested a jury instruction placing on the insured the burden of proving the collapse of the house was "caused only by one or more" of the perils listed in the collapse section of the policy.
The court indicated it would give Amco's proposed instruction. The insured felt this was tantamount to directing a verdict in favor of Amco because there was no dispute that the damage to the house was caused by perils in addition to those listed in the collapse provisions. Amco then moved for a directed verdict, which the court granted.
On appeal, the insured argued that the language "caused only be one or more of the following" in the collapse section of the policy meant that this was a complete list of the perils causing collapse that were covered under the policy. If any one or any combination of the listed perils caused the collapse, the loss was covered. If some unlisted peril contributed to the collapse, the efficient proximate cause doctrine required that the jury determine which cause was the predominant or most important. If the predominant cause was a peril listed in the collapse section, then the loss by collapse would be covered.
Amco contended the use of the word "only" meant that a collapse was a covered loss only if no peril other than those listed contributed to the collapse. Amco argued the efficient proximate cause doctrine did not apply to such a provision.
The court sided with the insured. Amco's construction would exclude coverage any time a peril not listed in the collapse section contributed to the loss, even minimally. A reasonable insured would not anticipate that a listed, covered peril, if combined with some completely unrelated, unspecified peril, would result in an exclusion of coverage. The insured's interpretation, on the other hand, was consistent with the efficient proximate cause doctrine.
The insured also contended that Amco's proposed jury instruction was improper because it placed on the insured the burden of proving his loss fell within the provision of the collapse section, instead of requiring Amco to prove that the loss was excluded. The court agreed with the insured here as well. In an all-risk policy, such as the policy at issue, the insured did not have to prove that the peril proximately causing the loss was covered by the policy. This was because the policy covered all risks except for those risks specifically excluded. The insurer, since it was denying liability upon the policy, had to prove the policy's noncoverage of the insured's loss, i.e., that the insured's loss was proximately caused by a peril specifically excluded from coverage.
The insurer's depreciation of labor in the calculation of actual cash value was found to be against Arkansas public policy. Shelter Mut. Ins. Co. v. Goodner, 2015 Ark. LEXIS 460 (Ark. Dec. 10, 2015).
Shelter Mutual's policy provided that it would pay the insured "the actual cash value of all the damaged parts of the covered property." "Actual cash value" was defined as "total restoration cost less depreciation." The policy explained, "When calculating depreciation, we will include the depreciation of the materials, the labor, and the tax attributable to each party which must be replaced to allow for replacement of the damaged part, whether or not that part is damaged."
The Goodners property incurred a loss. Shelter Mutual estimated the total restoration cost to be $10,319.23. With a deduction for depreciation for $3,397.24, the estimated actual cash value came to $6,921.99. The deduction for depreciation included depreciation of both materials and labor.
The Goodners filed suit for declaratory judgment. The trial court granted summary judgment in favor of the insureds. Following a prior case, Adams v. Cameron Mut. Ins. Co., 430 S.W. 3d 675 (Ark. 2013), the court found that depreciation of labor in calculating actual case value was against public policy in Arkansas.
In Adams, the court held that the costs of labor may not be depreciated when determining the actual cash value of a covered loss under an indemnity policy that did not define the term "actual cash value." Shelter Mutual argued that a different result was justified here because its policy did define "actual cash value" and defined it to include depreciation of labor. In Adams, the court concluded that the concept of depreciating labor was illogical and inconsistent with the principle of indemnity. The holding applied here with equal weight.
The district court found that under Illinois law, the damage caused by the insured's faulty workmanship to portions of building beyond the scope of its own work was covered under a CGL policy. Westfield Ins. Co. v. Nat'l Decorating Serv., 2015 U.S. Dist. LEXIS 159140 (N.D. Ill. Nov. 25, 2015).
200 North Jefferson, LLC was the owner and developer of a 24- story condominium building. 200 North Jefferson retained as the general contractor McHugh Construction Co. McHugh Construction retained National Decorating Service, Inc. as the subcontractor to perform all painting work on the project.
The Condominium Association sued 200 North Jefferson, McHugh Construction, MCZ/Jameson Development Group, LLC, National Decorating for faulty workmanship. The alleged damages included:(1) cracking of the exterior concrete walls, interior walls and ceilings; (2) significant leakage through the exterior concrete walls, balconies, and windows; (3) defects to the common elements of the building; and (4) damage to the interior ceilings, floors, interior painting, drywall and furniture in the units.
Westfield insured National Decorating, the named insured. 200 North Jefferson, McHugh Construction and MCZ/Jameson were additional insureds.The Additional Insured Endorsement included as an additional insured named entities, "but only with respect to liability arising out of your ongoing operations performed for [the named insured]."
Westfield refused to defend and a coverage suit was filed. Cross motions for summary judgment were filed.
There was no question that the costs to repair and replace National Decorating's faulty painting work was not covered. Instead, the dispute centered on whether the damage that National Decorating caused to parts of the building beyond the scope of work triggered a duty to defend.
Looking to Illinois case law, the court determined that damage beyond the scope of named insured's work at a building was "property damage" resulting from an "occurrence." Therefore, summary judgment for National Decorating and the additional insureds was warranted. The damages claimed in the underlying complaint included the building's ceilings, drywall and floors, which were all beyond the scope of National Decorating's work and thus were covered damages.

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