Opinion ID: 1168818
Heading Depth: 1
Heading Rank: 2

Heading: The Homeowners' Action Against the Insurer

Text: [4a] The Sabellas, as appellants, contend that the rapid and severe damage which occurred to their home was not the result of settling within the terms of the exclusion in their policy. As hereinbefore set forth, the policy excluded coverage for loss by termites, wear and tear, and other causes such as mould. Following enumeration of the latter excluded perils, the following clause appeared excepting: settling, cracking, shrinkage, or expansion of pavements, foundations, walls, floors, or ceilings; [unless collapse ensues]. But it appears that an ordinary individual surveying the instant damage could properly conclude that the house settled, so that placement of the word settling in the exclusion clause would convey to the ordinary person reading the policy exceptions ( Prickett v. Royal Ins. Co. Ltd., 56 Cal.2d 234, 238 [14 Cal. Rptr. 675, 363 P.2d 907]), the meaning that the type of subsidence loss herein was meant to be excluded from coverage. It should be noted that the understanding as to non-coverage here relevant is that of the ordinary purchaser of insurance, desirous of knowing what he is getting for his money. ( Ransom v. Penn Mutual Life Ins. Co., 43 Cal.2d 420, 424-425 [274 P.2d 633]; Pacific etc. Co. v. Williamsburgh City Fire Ins. Co., 158 Cal. 367, 375 [111 P. 4].) While somewhat more clarity of statement might be desirable from the standpoint of the average lay purchaser of insurance, it would appear that the present exception was sufficiently understandable by an ordinary reader. Furthermore, defendant National Union correctly argues that the insurance contract excluded with sufficient clarity all loss by settling, whether gradual or rapid, unless collapse of the dwelling ensued, and since the house remained usable and continued to be occupied, it cannot be said that any collapse occurred. Thus the case at bar is not a proper one for application of the rule advanced by plaintiffs that `[P]rovisos and exceptions must be strictly construed against the insurer, who is bound to use such language as to make the conditions, specifications and provisions thereof clear to the ordinary mind, and in case it fails to do so any ambiguity or reasonable doubt must be resolved in favor of the assured.' ( Prickett v. Royal Ins. Co. Ltd., supra, 56 Cal.2d 234, 237.) Respondent National Union additionally contends that the reasoning in Prickett v. Royal Ins. Co. Ltd., supra, 56 Cal.2d 234, indicates that the instant policy exclusion should be deemed to encompass the damage herein. In Prickett, the policy excluded coverage for normal settling, and we held that the sudden drop of up to 12 inches of portions of a house due to improperly compacted fill beneath the house was not normal settling within the terms of that policy. (See 56 Cal.2d at p. 238.) But since the instant policy excludes merely settling, without use of qualifying adjectives such as normal or usual, the policy herein does indicate an intent to exclude any and all loss caused by settling, and settling did occur herein. Plaintiff Sabellas alternatively and correctly argue, however, that defendant National Union is liable because the rupture of the sewer line attributable to the negligence of a third party, rather than settling, was the efficient proximate cause of the loss. The policy excepted loss by settling, and the findings of the court below indicate that the broken sewer line emptied waste water into the loose fill, setting in motion the forces tending toward settlement. [5] As stated in 6 Couch, Insurance (1930) § 1466, [I]n determining whether a loss is within an exception in a policy, where there is a concurrence of different causes, the efficient cause  the one that sets others in motion  is the cause to which the loss is to be attributed, though the other causes may follow it, and operate more immediately in producing the disaster. [4b] The virtual absence of subsidence damage in the prior four years of the existence of the house here in question clearly indicates that the broken pipe was the predominating or moving efficient cause of the loss. (See 6 Couch, Insurance (1930) § 1463, p. 5298.) While defendant National Union contends that the trial court made a finding of fact that the proximate cause of said loss was settling, the above finding was made as a part of the following conclusion of law: That the cause of loss and damage to plaintiffs' dwelling is excluded by the terms of the policy of insurance issued by defendant National, in that the proximate cause of said loss was settling. [6] But the latter conclusion by the trial court concerning the proximate cause of the loss is not binding upon this court on the instant judgment roll appeal, since where the facts on appeal are settled or not in dispute, the determination of proximate cause becomes a question of law. ( Burdette v. Rollefson Const. Co., 52 Cal.2d 720, 726 [344 P.2d 307]; Stasulat v. Pacific Gas & Elec. Co., 8 Cal.2d 631, 638 [67 P.2d 678].) [4c] The instant problem in proximate causation is similar in principle to that in Brooks v. Metropolitan Life Ins. Co., 27 Cal.2d 305 [163 P.2d 689], wherein recovery was allowed on a policy insuring against death by accidental means where the insured, while suffering from incurable cancer, an excluded peril, died in a fire. It was there stated: [R]ecovery may be had even though a diseased or infirm condition appears to actually contribute to cause the death if the accident sets in progress the chain of events leading directly to death, or if it is the prime or moving cause. (27 Cal.2d at pp. 309-310.) Similarly, in Hanna v. Interstate Business Men's Acc. Assn., 41 Cal. App. 308 [182 P. 771], recovery was allowed on a policy covering death from external or violent means, but limiting recovery for hernia injuries, where a blow on the chest caused a hernia resulting in death. The court held that under the established rules governing proximate causation as applied to insurance cases, the hernia must be regarded as the result of the accident, and the accident itself, and not the resultant hernia, as the cause of the death. (41 Cal. App. at p. 310; see Note 108 A.L.R. 6.) Also relevant is Norwich Union Fire Ins. Soc. v. Board of Commissioners (1944) 141 F.2d 600, where corn in storage was insured against loss by fire but not against loss by deterioration. A fire destroyed the machinery necessary to air the corn and so prevent its deterioration, and the corn decayed from inherent natural causes. It was held that the fire was the proximate cause of the loss of the corn, even though the excepted peril of deterioration immediately caused the loss. (141 F.2d at p. 602; see Edgerton & Sons, Inc. v. Minneapolis Fire & Marine Ins. Co. (1955) 142 Conn. 669, 673-674 [116 A.2d 514] [policy covers though excluded peril immediately brings about damage, where the operation of the excluded peril is caused by a peril insured against]; Princess Garment Co. v. Fireman's Fund Ins. Co. (1940) 115 F.2d 380, 383 [recovery allowed where peril insured against causes the action of an excepted peril resulting in loss].) Defendant insurer attempts to establish its non-liability by reliance upon section 532 of the Insurance Code, which states that If a peril is specially excepted in a contract of insurance and there is a loss which would not have occurred but for such peril, such loss is thereby excepted even though the immediate cause of the loss was a peril which was not excepted. The insurer's argument is that since in a factual sense the loss herein would not have occurred but for the settling of the underlying earth and house, the plaintiffs are thereby exempt from coverage for this loss. But section 532 must be read in conjunction with related section 530 of the Insurance Code ( Pacific etc. Co. v. Williamsburgh City Fire Ins. Co., supra, 158 Cal. 367, 372), and section 530 provides that An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause. It is thus apparent that if section 532 were construed in the manner contended for by defendant insurer, where an excepted peril operated to any extent in the chain of causation so that the resulting harm would not have occurred but for the excepted peril's operation, the insurer would be exempt even though an insured peril was the proximate cause of the loss. Such a result would be directly contrary to the provision in section 530, in accordance with the general rule, for liability of the insurer where the peril insured against proximately resulted in the loss (See 6 Couch, Insurance (1930) § 1464.) [7] It would appear therefore that the specially excepted peril alluded to in section 532 as that but for which the loss would not have occurred, is the peril proximately causing the loss (see Herron v. Smith Bros., Inc., 116 Cal. App. 518, 521 [1] [2 P.2d 1012]), and the peril there referred to as the immediate cause of the loss is that which is immediate in time to the occurrence of the damage. (See Black's Law Dictionary (4th ed. 1951) Immediate Cause, p. 884; 6 Couch, Insurance (1930) § 1463, pp. 5298-5299; 28 Cal.Jur.2d, Insurance, § 446, pp. 160-161.) The latter conclusion as to the meaning of section 532 of the Insurance Code suggests disapproval of language to the contrary in Hughes v. Potomac Ins. Co., 199 Cal. App.2d 239, 245 [4] [18 Cal. Rptr. 650], wherein the but for provision of section 532 was interpreted to refer to a cause without which the loss would not in fact have occurred, and without reference to companion section 530 of the Insurance Code. [8] A further contention by respondent National Union is that since the insurance coverage herein extended to the underlying lot area (see Hughes v. Potomac Ins. Co., supra, 199 Cal. App.2d 239, 245-249), and since the damage occurred as the result of operation of forces inherent in the uncompacted fill and the defective workmanship in the installation of the sewer outflow, it was inevitable that the damage herein would have occurred to the house at some time. It is argued that the loss was not fortuitous, and hence not a risk properly the subject of insurance. (See 2 Richards, Insurance (5th ed. 1952) p. 710.) However, it is provided in section 250 of the Insurance Code, as instantly relevant, that any contingent or unknown event may be insured against, and it was recently stated in Snapp v. State Farm Fire & Cas. Co., 206 Cal. App.2d 827, 830 [24 Cal. Rptr. 44], on facts also involving movement of an uncompacted fill, that: [A]fter any movement of land has occurred it might be said to have been `inevitable' with semantic correctness, but such `inevitability' does not alter the fact that at the time the contract of insurance was entered into, the event was only a contingency or risk that might or might not occur within the term of the policy. Moreover, the breaking of the sewer pipe and consequent induction of quantities of waste water into the improperly compacted fill may be viewed as an unanticipated external event or casualty, operating to trigger the greatly accelerated action of possibly inherent vices. (Compare with Chute v. North River Ins. Co. (1927) 172 Minn. 13, 14-15 [214 N.W. 473, 55 A.L.R. 938].) The judgment is affirmed as to defendant-contractor Wisler and is reversed as to defendant National Union, and the cause remanded for a new trial as to defendant insurer's liability in accordance with the views herein expressed.