Opinion ID: 1059141
Heading Depth: 1
Heading Rank: 3

Heading: duties in the event of loss

Text: You must see that the following are done in the event of loss to Covered Property: . . . . 4. Take all reasonable steps to protect the Covered Property from further damage and keep a record of your expenses necessary to protect the Covered Property, for consideration in the settlement of the claim. This will not increase the Limit of Insurance. However, we will not pay for the subsequent loss resulting from a cause of loss that is not a Covered Cause of Loss. Essentially, NHBC claims it would have been under a contractual duty, had it been listed as a named insured, to have undertaken the mitigation resulting in the remediation expenses in order to prevent loss to the uphill apartment buildings, which are Covered Property under the Policy. That duty, if it existed, does not afford a right to compensation to NHBC under the facts of this case. No damage occurred to the apartment buildings or other Covered Property. Therefore, as the trial court noted, there was no loss to Covered Property. Such loss is a condition precedent to any compensation under the Duties in the Event of Loss section, A `loss' to Covered Property, the Policy's predicate to mandatory mitigation, did not occur, and therefore no obligation to compensate NHBC arose under the Policy. Moreover, subparagraph 4 of the Duties in the Event of Loss section further limits any obligation of the insurer because the contractor's expenses to protect Covered Property are to be considered in the settlement of the claim. The claim, under the facts of this case and policy, would be resulting from a cause of loss that is not a Covered Cause of Loss and therefore not compensible. In effect, NHBC attempts to bootstrap its remediation expenses into a covered claim through the Duties in the Event of Loss provision, despite the clear exclusion from coverage for loss caused by NHBC's defective design. We agree with the trial court that the Policy's plain language does not permit NHBC to circumvent the exclusion from coverage in this manner and recoup its remediation expenses. See Southern Cal. Edison Co. v. Harbor Ins. Co., 83 Cal.App.3d 747, 759-60, 148 Cal.Rptr. 106 (1978) (The duty of an insured to, prevent and mitigate insurable loss and the obligation of the insurer to reimburse for expenses so incurred are separate questions. The fulfillment of the duty to mitigate does not necessarily give rise to the obligation of reimbursement.....). Even if the Policy does not permit NHBC to recover its remediation expenses, NHBC claims that its common law duty to mitigate damages allows recovery of the remediation expenses from Acordia. Usually, the failure to mitigate damages is an affirmative defense and, therefore, on that point the breaching party, not the injured party, has the burden to produce evidence. Marefield Meadows, Inc. v. Lorenz, 245 Va. 255, 266, 427 S.E.2d 363, 369 (1993). However, this case does not involve a failure to mitigate damages. In a case such as this, where the injured party asserts as part of his recovery the expense of' taking corrective measures to mitigate the potential liability of the defendant, the cost of mitigation is simply another element of his damages. It is axiomatic that where there is no liability, ... there can be no recovery. Southern Railway Co. v. Lewis, 113 Va. 117, 120, 73 S.E. 469, 470 (1912). NHBC's theory of liability is that but for Acordia's negligence, its damages, including the cost of mitigation, would have been recoverable under the insurance contract. As we have demonstrated, however, those losses were not a liability covered by the policy and, thus, Acordia's negligence was not a proximate cause of NHBC's losses. Regardless of whether NHBC premises its theory of recovery on contract law or common law, it cannot recover damages where there is no liability.