Court Opinion

ID: 9717725
Source: CourtListenerOpinion
Date Created: 2023-08-26 07:09:28.793349+00
Date Added: 2024-06-11T18:23:54.952762
License: Public Domain

DANIEL E. SCOTT, Chief Judge,
dissenting.
I respectfully dissent. The court finds the “Mechanical, Electrical or Pressure Systems Breakdown” endorsement does not merely add such coverage; it also boosts the policy limits for fire, windstorm, hail, and every other insured risk. By analogy, my basic $100,000 homeowner’s policy pays nothing if a power surge ruins my TV and computers. Under the principal opinion, if I insure those via the endorsement in this case, I luck into doubling my other policy limits as well.1
I have several concerns. First, Appellants’ fire coverage did not stem from the “specified causes of loss” definition, but from the policy’s obligation to “pay for direct physical loss ... caused by or resulting from any Covered Cause of Loss,”2 the latter being risks not excluded or limited by the policy.3 “Specified causes of loss,” by contrast, are exceptions to the policy’s exclusions — none applicable here— for damage due to rust, fungus, smog, bird nesting, etc.4 The principal opinion misses the critical distinction between “covered” and “specified” causes of loss.
Second, and more broadly, I think the principal opinion endangers an oft-used and reasonable method of revising contracts and complex writings. Our legislature, for example, can amend a statute by passing a bill that adds a word to the end of one line, removes a clause and punctuation from the next, and makes other line-by-line changes to the existing text. Commonly, however, legislative bills delete and replace entire statutory sections with new sections incorporating all the changes, a process that presumably reduces the risk of error.
As this case illustrates, insurers use the same process to amend policies by endorsement. I think the principal opinion unwittingly punishes this by potentially doubling the insurer’s exposure solely, in that opinion’s words, because:
Nothing in the endorsement indicated that any of the identical specified causes of loss were to be excluded from the endorsement’s coverage because they were already covered in the policy. An ordinary person of average understanding could reasonably construe that since “fire” ivas listed in both the policy and the endorsement, there was additional coverage, [my emphasis]
Again, “specified causes of loss” are contractually irrelevant to this case. But even if they applied, the endorsement expressly says its list of “specified losses” deletes and replaces the base policy’s list.5 *340For all these reasons, I believe no reasonable policyholder would think this endorsement did other than its title and language in context suggest.
In summary, the principal opinion hinges on a policy definition inapplicable to this loss. It also, in my opinion, adds risk to a common and legitimate way of amendment, and may subject many policies and endorsements to similar attacks. I have found no cases with comparable results or reasoning. I do not think we should be among the first to so hold.

. Although Appellants claim they meant to increase their coverage, subjective intent is irrelevant under the principal opinion, which finds additional coverage from the policy’s four corners as a matter of law.

. Building and Personal Property Coverage Form, Section A., titled ’’COVERAGE.”

. Causes of Loss — Special Form, Section A., titled "COVERED CAUSES OF LOSS.”

. Causes of Loss — Special Form, Section B.2 ("But if an excluded cause of loss that is listed in 2.d. (1) through (7) results in a 'specified cause of loss'... we will pay for the loss or damage caused by that 'specified cause of loss.' "). Exclusions 2.d. (1) through (7), as noted above, include losses caused by rust, fungus, smog, bird nesting, etc.

. Consider the principal opinion's analysis on a comparable attempt to narrow a policy's scope. Assume an endorsement that "deleted *340and replaced” this base policy’s covered losses with an otherwise identical list omitting “hail.” By still treating the original list as part of the policy, and not "deleted” as the endorsement requires, hail still may be covered and all else double-covered.