Opinion ID: 796324
Heading Depth: 2
Heading Rank: 4

Heading: Efficient Causation

Text: 62 Parks claims that the District Court's most critical error was its determination that the particulate cloud resulting from the collapse of the World Trade Center was the efficient cause of alleged loss and therefore was not covered by the Policy. In order to obtain coverage under a first-party [insurance] policy, the insured must suffer a loss caused by a covered peril (in a named perils policy) or suffer a loss not caused by an excluded peril (in an all risk policy). A covered peril and an excluded peril can combine to cause a covered loss. Ostrager & Newman, supra, § 21.02[c], at 1313 (citing Shelter Mut. Ins. Co. v. Maples, 309 F.3d 1068, 1070-71 (8th Cir.2002)). In a case where a covered and excluded peril combine to cause a covered loss, courts typically apply the efficient proximate cause rule — meaning, that the insured is entitled to coverage only if the covered peril is the predominant cause of the loss or damage. Id. 63 The efficient proximate cause of a loss is the cause that originally sets other events in motion. Kula v. State Farm Fire & Cas. Co., 212 A.D.2d 16, 628 N.Y.S.2d 988, 991 (N.Y.App.Div.1995). A court must not, however, examine or identify the event that merely set[s] the stage for [a] later event. Kosich v. Metro. Prop. & Cas. Ins. Co., 214 A.D.2d 992, 626 N.Y.S.2d 618, 618 (N.Y.App.Div.1995) (internal quotation marks omitted). Only the most direct and obvious [efficient] cause should be looked to for purposes of the exclusionary clause. Kula, 628 N.Y.S.2d at 991. When the court interprets an insurance policy excluding from coverage any injuries `caused by' a certain class of conditions, the causation inquiry stops at the efficient physical cause of the loss; it does not trace events back to their metaphysical beginnings. Kimmins Indus. Serv. Corp. v. Reliance Ins. Co., 19 F.3d 78, 81 (2d Cir.1994) (internal citations and selected quotation marks omitted). 64 Parks contends that the efficient cause of its loss was the collapse of the Twin Towers in the first instance, an event that the parties agree would be covered under the Policy. In rejecting Parks' argument, the District Court found that while the collapse of the World Trade Center was the efficient cause of the particulate cloud, it was not the efficient cause of the damage to the building: the efficient cause of [Parks'] loss was not the collapse of the [World Trade Center] as [Parks] contend[s] but rather the contamination that affected the Property in the wake of the collapse. Parks Real Estate, 2005 WL 2414771, at . The court further determined that contamination occurred with the actual contact between the Particulate and the Property — an occurrence that is excluded under the Policy's Contamination Exclusion. Id. at . 65 We agree with the District Court to the extent that it found that the actual contact of the airborne particulate matter with the Property, id. at , was the efficient cause of damage to the insured Building. The cloud of particulate matter was capable of producing damage only upon contact with the insured Property. At best, contamination was not the cause of the damage that resulted from contact between the cloud of particulate matter and the Building, but the resulting damage itself. Whether that damage is contamination, however, is a question yet to be resolved in this case. Said differently, while the cloud of particulate matter caused damage to the insured Property, coverage will depend upon whether that damage was contamination within the meaning of this Policy. Insofar as the damage constituted contamination, it is excluded from coverage. Insofar as the damage was not contamination, however, it is covered.