Opinion ID: 1239373
Heading Depth: 1
Heading Rank: 5

Heading: Earth Movement Exclusion

Text: Both insurance policies in this case contain exclusions for earth movement. The policy issued by Allstate excludes coverage for any loss resulting from: 2. Earth movement, including, but not limited to, earthquake, volcanic eruption, landslide, subsidence, mud flow, sinkhole, erosion, or the sinking, rising, shifting, expanding, bulging, cracking, settling or contracting of the earth. This exclusion applies whether or not the earth movement is combined with water. Similarly, the policy issued by State Farm excludes coverage for losses resulting from: b. Earth Movement, meaning the sinking, rising, shifting, expanding or contracting of earth, all whether combined with water or not. Earth movement includes but is not limited to earthquake, landslide, mudflow, sinkhole, subsidence and erosion. When a policyholder shows that a loss occurred while an insurance policy was in force, but the insurance company seeks to avoid liability through the operation of an exclusion, the insurance company has the burden of proving the exclusion applies to the facts in the case. Syllabus Point 7, National Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987). Where the policy language involved is exclusionary, it will be strictly construed against the insurer in order that the purpose of providing indemnity not be defeated. Syllabus Point 5, Id. Both of the earth movement exclusions in this case refer to earth movement including, but not limited to earthquake, volcanic eruption, landslide, subsidence, mud flow, sinkhole, erosion, sinking, shifting, or settling. None of these terms is further defined in the insurance policies. The defendant insurance companies argue that the facts in this case show that the rocks and earthen debris that fell on the plaintiffs' homes constitute a landslide caused by erosion, an event within the earth movement exclusions. The plaintiffs, however, argue that the facts show the damage to their homes was caused by the negligent creation of the highwall in the 1950's and its negligent maintenance by defendant Harris today, two events that would be covered by the policies. On the one hand, the exclusions cited in the defendants' policies could bar coverage for solely natural events such as earthquakes, volcanic eruptions, and sinkholes. On the other hand, the same exclusions refer to events which could be man-made, such as subsidence or earth movement caused by equipment or a broken water line. Or, as alleged in this case, earth movement could be caused by both, man and nature over a period of time, such as landslides, mudflows, or the earth sinking, shifting, or settling. Because the policy language is reasonably susceptible to different meanings, we believe that the earth movement exclusions in the insurance policies at issue are ambiguous, and must have a more limited meaning than that assigned to it by the defendants. The majority of courts that have considered earth movement exclusions have found them to be ambiguous. [5] Having found the clause to be ambiguous, courts have used two methods of policy construction to examine whether coverage exists or is excluded under the earth movement exclusion. First, courts have applied two doctrines of construction, ejusdem generis and noscitur a sociis, to limit the application of the earth movement exclusion to natural, catastrophic events, rather than man-made events. Second, courts have examined the particular causes of the loss presented by the policyholder, and although an excluded event (such as earth movement) may have been a concurring or contributing cause of a loss, courts have allowed policyholders to recover under an insurance policy if the proximate cause of the loss was an event insured by the policy. We believe that both approaches are applicable in this case. [6] We therefore examine exclusions in the instant case using the same two approaches. First, having determined that the earth movement exclusions at issue in this case are ambiguous, we apply the construction principles of ejusdem generis and noscitur a sociis. Under the doctrine of ejusdem generis, [w]here general words are used in a contract after specific terms, the general words will be limited in their meaning or restricted to things of like kind and nature with those specified. Syllabus Point 4, Jones v. Island Creek Coal Co., 79 W.Va. 532, 91 S.E. 391 (1917). The phrase noscitur a sociis literally means it is known from its associates, and the doctrine implies that the meaning of a general word is or may be known from the meaning of accompanying specific words. See Syllabus Point 4, Wolfe v. Forbes, 159 W.Va. 34, 217 S.E.2d 899 (1975). The doctrines are similar in nature, and their application holds that in an ambiguous phrase mixing general words with specific words, the general words are not construed broadly but are restricted to a sense analogous to the specific words. In the seminal case of Wyatt v. Northwestern Mutual Ins. Co. of Seattle, 304 F.Supp. 781 (D.Minn.1969), the district court considered a summary judgment motion where an insurance company sought, through the operation of an earth movement exclusion, to avoid liability for losses caused by the negligence of a contractor excavating land adjacent to the policyholder's home. While holding that the exclusionary language was intended to remove from coverage losses resulting from natural causes and natural phenomena, such as earthquakes, the court concluded that questions of fact remained as to whether the movement of earth that damaged the policyholder's house was caused by the actions of third parties. The court reasoned that the earth movement exclusion was created by insurance companies ... to relieve the insurer from occasional major disasters which are almost impossible to predict and thus to insure against. There are earthquakes or floods which cause a major catastrophe and wreak damage to everyone in a large area rather than one individual policyholder. When such happens, the very basis upon which insurance companies operate is said to be destroyed. When damage is so widespread no longer can insurance companies spread the risk and offset a few or the average percentage of losses by many premiums. Looking at the special exclusionary clause in the policy here in question, it seems to cover situations where one single event could adversely affect a large number of policyholders.... All of these are phenomena likely to affect great numbers of people when they occur. This gives some force to the view that the various exclusions were not intended to cover the situation as here where earth movement occurred under a single dwelling, allegedly due to human action of third persons in the immediate vicinity of the damage. 304 F.Supp. at 783. We believe that similar reasoning underlies the exclusions in this case. Examining the exclusionary terms used by Allstate and State Farm in their context, and applying the rule that ambiguities must be resolved in favor of the insured, we conclude that both earth movement exclusions must be read to refer only to phenomena resulting from natural, rather than man-made, forces. Therefore, when an earth movement exclusion in an insurance policy contains terms not otherwise defined in the policy, and the terms of the exclusion relate to natural events (such as earthquakes or volcanic eruptions), which events, in some instances, may also be attributed to a combination of natural and man-made causes (such as landslides, subsidence or erosion), the terms of the exclusion must be read together and limited to exclude naturally-occurring events rather than man-made events. The second approach consistently taken by courts in construing insurance policies is that for coverage to exist under an insurance policy, policyholders are required to prove that the efficient proximate cause of the loss was an insured risk. [7] For example, in Huntington, Ashland & Big Sandy Transportation Co. v. Western Assur. Co. of Toronto, Ont., 61 W.Va. 324, 57 S.E. 140 (1907), an insurance policy on the policyholder's steamboat excluded coverage for loss, damage or expense resulting from stranding or grounding, unless caused by stress of weather. The evidence suggested that heavy, gusting winds caused the steamboat to run aground. This Court held that high wind was a stress of weather, and whether wind was a proximate cause of the loss was a question of fact for the jury. 61 W.Va. at 325-26, 57 S.E. at 140. The Court sustained a jury verdict for the policyholder. Another example is LaBris v. Western National Ins. Co., 133 W.Va. 731, 59 S.E.2d 236 (1950), where a policyholder sought to recover for the collapse of the roof of a tire repair shop under a policy insuring against direct loss by windstorm. We stated that in order for a policyholder to recover under such a policy, wind must be an efficient cause of the loss, and the qualifying word `direct' in referring to the cause of the loss means `proximate or immediate.' 133 W.Va. at 739, 59 S.E.2d at 240. We stated in Syllabus Point 2 that it must be established by a preponderance of the evidence that a windstorm of itself was sufficient to, and did cause the alleged damage to the property insured, though there may be other contributing causes. We concluded that there was no coverage for the policyholder because the evidence showed that the roof collapse was caused by water accumulating on the roof, and not wind. In accord, Lewis v. St. Paul Fire & Marine Ins. Co., 155 W.Va. 178, 182 S.E.2d 44 (1971) (no coverage because policyholder failed to prove damage to building was a direct loss by windstorm). The scope of coverage under an all-risk homeowner's policy includes all risks except those risks specifically excluded by the policy. A majority of jurisdictions use the efficient proximate cause doctrine [8] in adjudicating coverage issues for all-risk insurance policies, where both a covered and a non-covered peril contribute to a loss. [9] When a loss is caused by a combination of covered and specifically excluded risks, the loss is covered if the covered risk was the proximate cause of the loss. Two leading treatises support this position. According to Couch on Insurance: In determining cause of loss for purposes of fixing insurance liability, if there is evidence of concurrent causes for the damage, the proximate cause to which the loss is to be attributed is the dominant, efficient one that sets the other causes in operation; causes which are incidental are not proximate, even though they may be nearer the loss in both time and place. Where it is said that the cause to be sought is the direct and proximate cause, it is not meant that the cause or agency which is nearest in point of time or place to the result is necessarily to be chosen, since there may be a dominant cause even though concurrent or remote in point of time or place. L. Russ, 7 Couch on Insurance 3d § 101:44 (1997). Similarly, Professor Appleman's treatise states that where the insured risk was the last step in the chain of causation set in motion by an uninsured peril, or where the insured risk itself set into operation a chain of causation in which the last step may have been an excepted risk, recovery may be allowed. J. Appleman, 5 Insurance Law and Practice § 3083 (1969). [10] We hold that, when examining whether coverage exists for a loss under a first-party insurance policy when the loss is caused by a combination of covered and specifically excluded risks, the loss is covered if the covered risk was the efficient proximate cause of the loss. No coverage exists for a loss if the covered risk was only a remote cause of the loss, or conversely, if the excluded risk was the efficient proximate cause of the loss. The efficient proximate cause is the risk that sets others in motion. It is not necessarily the last act in a chain of events, nor is it the triggering cause. The efficient proximate cause doctrine looks to the quality of the links in the chain of causation. The efficient proximate cause is the predominating cause of the loss. [11] One more point is made clear by courts considering the problem of concurrent risks: the question of which event was the efficient proximate cause of the loss is generally a question of fact. State Farm, Fire & Cas. Co. v. Von Der Lieth, 54 Cal.3d 1123, 1131, 2 Cal.Rptr.2d 183,188-89, 820 P.2d 285, 290-91 (1991). After reviewing the record, we conclude that substantial questions of material fact remain for jury resolution. The earth movement exclusions apply to exclude naturally occurring risks. The plaintiffs argue that the evidence currently in the record suggests that the rocks fell from the quarry highwall due to its negligent vertical construction in the 1950's, and its negligent maintenance by the current owner. These risks facially appear to be covered by the language in both policies. Conversely, the defendants argue that the plaintiffs' losses are the result of the excluded event of a landslide caused by another excluded event, erosion. We believe that whichever of these events was the efficient proximate cause of the plaintiffs' losses is a question for the finder of fact. C.