Opinion ID: 51585
Heading Depth: 3
Heading Rank: 3

Heading: Mudflow.

Text: 44 C.F.R. Pt. 61, App. A(1), App. A(2), App. A(3) (2006); see also Federal Emergency Management Agency, FloodSmart.gov: What is a Flood?, http://www. floodsmart.gov/floodsmart/pages/whatflood.jsp (last visited July 25, 2007). The NFIP makes no distinction between inundations of water caused by natural 46 No. 07-30119 levee ruptures and those caused by man-made ruptures (even if such a distinction were workable). The canals’ overflowing into the City of New Orleans due to the levee ruptures was certainly an overflow of inland waters as used in the NFIP’s definition, and it may also have been an unusual and rapid runoff of surface waters. In sum, we conclude that the flood exclusions in the plaintiffs’ policies are unambiguous in the context of the facts of this case. In the midst of a hurricane, three canals running through the City of New Orleans overflowed their normal boundaries. The flood-control measures, i.e., levees, that man had put in place to prevent the canals’ floodwaters from reaching the city failed. The result was an enormous and devastating inundation of water into the city, damaging the plaintiffs’ property. This event was a “flood” within that term’s generally prevailing meaning as used in common parlance, and our interpretation of the exclusions ends there. The flood is unambiguously excluded from coverage under the plaintiffs’ all-risk policies, and the district court’s conclusion to the contrary was erroneous.27 C. Efficient Proximate Cause and Anti-Concurrent-Causation Clauses Lastly we turn to the doctrine of efficient proximate cause. Under this doctrine, as it is applied in many jurisdictions, where a loss is caused by a combination of a covered risk and an excluded risk, the loss is covered if the covered risk was the efficient proximate cause of the loss.28 See, e.g., Chadwick 27 Because we reach this conclusion, we need not address the issue raised in the crossappeals of the impact of the “lead-in” language in the State Farm policies. 28 To our knowledge, the Louisiana Supreme Court has not addressed the applicability of the efficient-proximate-cause doctrine in the context of an all-risk policy. But it has concluded in the context of interpreting a windstorm insurance policy (which provided coverage only for loss caused by windstorm) that “if a windstorm is the dominant and efficient cause of the loss, the insured may recover notwithstanding that another cause or causes contributed to the damage suffered.” Lorio v. Aetna Ins. Co., 232 So. 2d 490, 493 (La. 1970); see also Roach-Strayhan-Holland Post No. 20, Am. Legion Club, Inc. v. Continental Ins. Co. of N.Y., 112 So. 2d 680, 683 (La. 1959) (“[I]t is sufficient, in order to recover upon a windstorm insurance 47 No. 07-30119 v. Fire Ins. Exch., 21 Cal. Rptr. 2d 871, 873 (Cal. Ct. App. 1993); Kish v. Ins. Co. of N. Am., 883 P.2d 308, 311 (Wash. 1994); see also COUCH, supra, at §§ 101:43- :45, :53-:55. The efficient proximate cause of the loss is the dominant, fundamental cause or the cause that set the chain of events in motion. See COUCH, supra, at § 101:45. Many of the insurance policies at issue in this appeal excluded “loss caused directly or indirectly by” flood “regardless of any other cause or event contributing concurrently or in any sequence to the loss.” This language, which the district court referred to as an anti-concurrent-causation clause, has been recognized as demonstrating an insurer’s intent to contract around the operation of the efficient-proximate-cause rule. See, e.g., TNT Speed & Sport Ctr., Inc. v. Am. States Ins. Co., 114 F.3d 731, 732-33 (8th Cir. 1997). The district court considered the anti-concurrent-causation clauses in this case and concluded that they are inapplicable here because there were not two separate causes of the plaintiffs’ damage. The court remarked that this case does not present a combination of forces that caused damage and that it therefore is not analogous to cases where Hurricane Katrina may have damaged property through both wind and water. Cf. Tuepker v. State Farm Fire & Cas. Co., 2006 U.S. Dist. LEXIS 34710 (S.D. Miss. May 24, 2006) (unpublished opinion) (Hurricane Katrina case involving alleged damage from wind, rain, and storm surge), appeal docketed, Nos. 06-61075 & 06-61076 (5th Cir.). Instead, the court stated that “in this case the ‘cause’ conflates to the flood,” meaning that the alleged negligent design, construction, or maintenance of the levees and the resulting flood were not separate causes of the plaintiffs’ losses. Consequently, policy not otherwise limited or defined, that the wind was the proximate or efficient cause of the loss or damage, notwithstanding other factors contributing thereto.”). We express no opinion on the extent to which Louisiana follows the efficient-proximate-cause rule in the context of all-risk policies because we conclude that the rule is inapplicable to this case. 48 No. 07-30119 the court concluded that the anti-concurrent-causation clauses needed not be addressed at that time but stated that they may need to be addressed at later stages in the litigation. On appeal, several insurers rely in part on the language in their anticoncurrent-causation clauses to demonstrate that floods are excluded regardless of the cause. The Chehardy plaintiffs respond that “the District Court correctly determined that the anti-concurrent causation clauses were inapplicable,” contending that the cause of their damage (“man-made inundation of water or inundation resulting from third-party negligent acts”) was a covered peril.29 Xavier responds that the district court “correctly noted that [the anti-concurrentcausation clause] is inapplicable because there is no separate or other cause of damage.” We agree with the district court’s determination that we need not address whether insurers may contract around the efficient-proximate-cause rule under Louisiana law, nor need we address the operation of the efficient-proximatecause rule itself in this case. The efficient-proximate-cause doctrine applies only where two or more distinct actions, events, or forces combined to create the loss. See Pieper v. Commercial Underwriters Ins. Co., 69 Cal. Rptr. 2d 551, 557 (Cal. Ct. App. 1997) (“For the efficient proximate cause theory to apply, . . . there must be two separate or distinct perils . . . .”); Kish, 883 P.2d at 311 (“The efficient proximate cause rule applies only where two or more independent forces operate to cause the loss.”). But here, on these pleadings, there are not two independent causes of the plaintiffs’ damages at play; the only force that damaged the plaintiffs’ properties was flood. To the extent that negligent design, construction, or maintenance of the levees contributed to the plaintiffs’ losses, it was only one factor in bringing about the flood; the peril of negligence did not 29 The Vanderbrook plaintiffs and Humphreys adopted the Chehardy plaintiffs’ arguments. 49 No. 07-30119 act, apart from flood, to bring about damage to the insureds’ properties. Consequently, as the plaintiffs argue and as the district court held, the efficientproximate-cause doctrine is inapplicable. See Chadwick, 21 Cal. Rptr. 2d at 1117 (“When, however, the evidence shows the loss was in fact occasioned by only a single cause, albeit one susceptible to various characterizations, the efficient proximate cause analysis has no application.”); see also Cornhusker Cas. Co. v. Farmers Mut. Ins. Co., 680 N.W.2d 595, 601-02 (Neb. 2004); Kish, 883 P.2d at 311. Moreover, to the extent that the plaintiffs do attempt to recharacterize the cause of their losses by focusing on negligence as the cause rather than water damage, their argument fails. “An insured may not avoid a contractual exclusion merely by affixing an additional label or separate characterization to the act or event causing the loss.” Kish, 883 P.2d at 311; Chadwick, 21 Cal. Rptr. 2d at 874. “If every possible characterization of an action or event were counted an additional peril, the exclusions in all-risk insurance contracts would be largely meaningless.” Chadwick, 21 Cal. Rptr. 2d at 874. Thus, in Pieper v. Commercial Underwriters Insurance Co., where a policy covered loss caused by arson but excluded loss caused by brush fire, a brush fire caused by arson was excluded. 69 Cal. Rptr. 2d at 557-58. The Pieper court determined that the cause of the brush fire was irrelevant; the plaintiffs’ property was damaged by one cause alone, brush fire, and thus, the efficient-proximate-cause rule was inapplicable. Id. And in Kish v. Insurance Co. of North America, where a policy covered loss caused by rain but excluded loss caused by flood, the court held that the insured could not avoid the operation of the flood exclusion by merely recharacterizing the flood as rain. 883 P.2d at 311-13. The court held that there was one cause of the plaintiffs’ loss—rain-induced flood—which was excluded, and concluded that the efficient-proximfate-cause rule was inapplicable. Id. We similarly reject any attempt on the plaintiffs’ part to avoid the operation of the 50 No. 07-30119 flood exclusion by recharacterizing the flood as negligence; the sole cause of the losses for which they seek coverage in this litigation, flood, was excluded from coverage regardless of what factors contributed to its development. In sum, we need not address the applicability of anti-concurrent-causation clauses or the efficient-proximate-cause rule because, as pleaded, there was not more than one separate cause of the plaintiffs’ losses. As the district court recognized, there are other cases arising in the context of Hurricane Katrina where these issues may come into play, but this is not the case for their resolution.