Court Opinion

ID: 4220430
Source: CourtListenerOpinion
Date Created: 2017-11-15 14:12:41.425327+00
Date Added: 2024-06-11T13:26:23.364231
License: Public Domain

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                  THE SUPREME COURT OF NEW HAMPSHIRE

                            ___________________________

Rockingham
No. 2016-0540

                            MICHELLE RUSSELL & a.

                                          v.

                           NGM INSURANCE COMPANY

                             Argued: May 16, 2017
                       Opinion Issued: November 15, 2017

      Law Office of John S. Wessler, of Lawrence, Massachusetts (John S.
Wessler on the brief and orally), for the plaintiffs.

      Getman, Schulthess, Steere & Poulin, P.A., of Manchester (Elizabeth L.
Hurley on the brief and orally), for the defendant.

       DALIANIS, C.J. The plaintiffs, Michelle and Robert Russell
(homeowners), appeal an order of the Superior Court (Anderson, J.) denying
their summary judgment motion and granting that of the defendant, NGM
Insurance Company (insurer). On appeal, the homeowners contend that the
trial court erred when it determined that their homeowners’ insurance policy
provided no coverage for the additional living expenses they incurred when they
were unable to live in their home because of mold contamination. We affirm.
I. Facts

      The following facts are derived either from the trial court’s order or the
record submitted on appeal. The insured residence is a custom home in
Windham, built in 2007. In early 2015, the homeowners discovered mold and
moisture in the home’s attic, which were the result of faulty workmanship. As
a result of the mold, they vacated the home in March 2015 so that the mold
could be eradicated. They moved back into the home in May 2016.

       In October 2015, the homeowners submitted a claim to the insurer for
loss of use damages under Coverage D of their homeowners’ policy. There is no
evidence in the record that they also submitted a claim to the insurer for mold
eradication. The insurer denied the loss of use claim in November 2015. The
denial letter explained that, pursuant to the “Limited Fungi, Wet or Dry Rot, or
Bacteria” endorsement to the homeowners’ policy (Mold Endorsement), “[m]old
is covered only if caused by a Peril Insured Against,” and, here, because the
mold was caused by faulty workmanship, which is an excluded peril, there is
no coverage.

      Thereafter, the homeowners brought a petition for declaratory judgment,
seeking a declaration that they are entitled to loss of use damages under
Coverage D. In their petition, they alleged that their loss of use damages were
not subject to the faulty workmanship exclusion because mold constitutes an
ensuing loss of the faulty workmanship that was not otherwise excluded under
the policy.

      Both the homeowners and the insurer moved for summary judgment.
The trial court granted the summary judgment motion of the insurer and
denied that of the homeowners. The homeowners unsuccessfully moved for
reconsideration, and this appeal followed.

II. Discussion

      A. Standards of Review

       In reviewing a trial court’s rulings on cross-motions for summary
judgment, we consider the evidence in the light most favorable to each party in
its capacity as the nonmoving party and, if no genuine issue of material fact
exists, we determine whether the moving party is entitled to judgment as a
matter of law. JMJ Properties, LLC v. Town of Auburn, 168 N.H. 127, 129
(2015). “If our review of that evidence discloses no genuine issue of material
fact and if the moving party is entitled to judgment as a matter of law, then we
will affirm the grant of summary judgment.” Id. at 129-30 (quotation omitted).
We review the trial court’s application of the law to the facts de novo. Brown v.
Concord Group Ins. Co., 163 N.H. 522, 524-25 (2012).

                                        2
       “In a declaratory judgment action to determine the coverage of an
insurance policy, the burden of proof is always on the insurer, regardless of
which party brings the petition.” Cogswell Farm Condo. Ass’n v. Tower Group,
Inc., 167 N.H. 245, 248 (2015) (quotation omitted). We interpret insurance
policy language de novo. See id. “The fundamental goal of interpreting an
insurance policy, as in all contracts, is to carry out the intent of the contracting
parties.” Bartlett v. Commerce Ins. Co., 167 N.H. 521, 530 (2015) (quotation
omitted). To discern the parties’ intent, we begin by examining the insurance
policy language. Id. In interpreting policy language, we look to the plain and
ordinary meaning of the policy’s words in context. Id. We construe the terms
of the policy as would a reasonable person in the position of the insured based
upon more than a casual reading of the policy as a whole. Id. at 530-31. This
is an objective standard. Great Am. Dining v. Philadelphia Indem. Ins. Co.,
164 N.H. 612, 616 (2013).

      Insurers are free to contractually limit the extent of their liability through
use of a policy exclusion provided it violates no statutory provision.
Progressive N. Ins. Co. v. Concord Gen. Mut. Ins. Co., 151 N.H. 649, 653
(2005). “Such language must be so clear, however, as to create no ambiguity
that might affect the insured’s reasonable expectations.” Id. (quotation
omitted). The insurer asserting an exclusion of coverage bears the burden of
proving that the exclusion applies. Id.

       “We need not examine the parties’ reasonable expectations of coverage
when a policy is clear and unambiguous; absent ambiguity, our search for the
parties’ intent is limited to the words of the policy.” Bartlett, 167 N.H. at 531.
“The fact that the parties may disagree on the interpretation of a term or clause
in an insurance policy does not necessarily create an ambiguity.” Id. “For an
ambiguity to exist, the disagreement must be reasonable.” Id.

       “In determining whether an ambiguity exists, we will look to the claimed
ambiguity, consider it in its appropriate context, and construe the words used
according to their plain, ordinary, and popular definitions.” Id. (quotation
omitted). “If one of the reasonable meanings of the language favors the
policyholder, the ambiguity will be construed against the insurer, in order to
honor the insured’s reasonable expectations.” Id. (quotation and citation
omitted). “However, when the policy language is clear, this court will not
perform amazing feats of linguistic gymnastics to find a purported ambiguity
simply to construe the policy against the insurer and create coverage where it
is clear that none was intended.” Id. (quotation omitted).

                                         3
      B. The Policy

       The homeowners’ insurance policy consists of a base policy modified by
endorsements that include the Mold Endorsement and the “Platinum
Homeowner Endorsement – New Hampshire” (New Hampshire Endorsement).
(Bolding and capitalization omitted.) The policy is an “all risk” policy that
insures “against risk of direct loss” to the homeowners’ dwelling, other
structures on the residence property, and personal property, if the loss “is a
physical loss to property.” See Michael C. Phillips & Lisa L. Coplen,
Concurrent Causation Versus Efficient Proximate Cause in First-Party Property
Insurance Coverage Analysis, 36 The Brief 32, 33 (Winter 2007) (explaining
that “[t]he typical ‘all risks’ policy begins with a broad insuring provision that
states that the policy covers ‘direct physical loss or damages to covered
property’” and “then specifies which risks [the insurer] will not assume by
listing those causes of loss as policy exclusions”). “An ‘all risk’ policy typically
covers any risk of direct physical loss or damage that is not specifically
excluded or limited by the terms of the policy.” Caryn L. Daum, A Primer on
New Hampshire First-Party Property Insurance, 52 N.H.B.J. 20, 21 (Autumn
2011). For the purposes of this appeal, there is no dispute that the loss for
which the homeowners seek coverage constitutes a direct, physical loss to the
property.

      The policy is divided into two sections: “Section I,” which pertains to
property coverages, and “Section II,” which pertains to liability coverages.
(Bolding and capitalization omitted.) The instant case concerns only Section I.

      Section I of the broad form policy has four components: “Property
Coverages,” “Perils Insured Against,” “Exclusions,” and “Conditions.” (Bolding
and capitalization omitted.) As relevant to this appeal, the New Hampshire
Endorsement modifies within Section I “Perils Insured Against” and
“Exclusions.” (Bolding and capitalization omitted.)

       “Property Coverages” specifies that coverage is available for: (1) the
homeowners’ dwelling on the “residence premises,” structures attached to the
dwelling, and materials and supplies located on or next to the “residence
premises” used to construct, alter or repair the dwelling or other structures on
the “residence premises” (Coverage A); (2) certain additional structures on the
“residence premises” (Coverage B); (3) personal property (Coverage C); (4) loss
of use (Coverage D); and (5) certain enumerated “Additional Coverages,” such
as coverage for “Debris Removal” and “Reasonable Repairs.” (Bolding,
quotations, and capitalization omitted.) The policy defines the “[r]esidence
premises” as the building in which the insured resides, whether that building
is a one-family dwelling or a two-family dwelling or some other structure or
building. (Quotation omitted.) The homeowners concede that Coverages B and
C are not at issue.

                                         4
        The homeowners’ claim is under Coverage D for loss of use. Coverage D
provides, in pertinent part, that “[i]f a loss covered under this Section makes
that part of the ‘residence premises’ where you reside not fit to live in, we cover
. . . Additional Living Expense, meaning any necessary increase in living
expenses incurred by you so that your household can maintain its normal
standard of living.” (Bolding omitted.) For the purposes of this appeal, there is
no dispute that the expenses submitted by the homeowners constitute
Additional Living Expenses under the policy.

        In referring to “a loss covered under this Section,” Coverage D
incorporates, by reference, the requirements for Coverages A, B, C, and
Additional Coverages. See Mellin v. N. Sec. Ins. Co., 167 N.H. 544, 556-57
(2015) (interpreting similar insurance policy language). In other words,
because Coverage D is in the same section of the policy as Coverages A, B, C,
and Additional Coverages, an insured is entitled to coverage under Coverage D
if the insured’s losses are covered under Coverages A, B, C, or Additional
Coverages. See id. at 557. In the instant case, because the homeowners
contend that their dwelling is uninhabitable, they are entitled to coverage
under Coverage D if their loss is covered under Coverage A.

       As modified by the New Hampshire Endorsement, the policy states that
the insurer does not insure for losses caused by several specifically identified
perils, including “[s]mog, rust or other corrosion, mold, wet or dry rot.”

       Also as modified by the New Hampshire Endorsement, at the end of
“Perils Insured Against” is the following language: “Under [the paragraphs
specifying excluded perils], any ensuing loss to property described in Coverages
A, B and C not excluded or excepted in this policy is covered.” (Bolding and
capitalization omitted.) This language constitutes an “ensuing loss” provision.
See Paul T. Sullivan & Jeffrey A. Gordon, A Review of Ensuing Loss Case Law:
2010 to Present, 43 The Brief 18, 19 & n.1 (Spring 2014). “Ensuing or
resulting loss provisions in an ‘all risk’ property insurance policy provide an
exception to coverage exclusions when an excluded peril in the chain of events
results in damage to covered property.” Id. at 19 (footnote omitted). “Ensuing
loss provisions were developed in response to property insurance coverage
issues arising from the San Francisco earthquake and fire in 1906.” Id.
(footnote omitted). “The San Francisco earthquake ruptured gas mains, which
in turn sparked massive fires that burned across the city for three days,
causing even greater damage than the earthquake itself.” Id. “Insurers
unsuccessfully argued that, because the earthquake started the causal chain
that resulted in all the fire damage, the earthquake exclusion applied to bar
coverage for fire damage as well.” Id. (footnote omitted). “Following the
disaster, the industry developed ensuing loss provisions in an effort to clarify

                                         5
the scope of coverage where an excluded peril is a link in the chain of property
damage causation.” Id.

       Under an ensuing loss clause, “when an excluded cause of loss, such as
an earthquake or earth movement, brings about a covered cause of loss, such
as fire, a property insurance policy may cover the ensuing loss.” James S.
Harrington, Lessons of the San Francisco Earthquake of 1906: Understanding
Ensuing Loss in Property Insurance, 37 The Brief 28, 28 (Summer 2008). “The
1906 San Francisco earthquake has become the classic ensuing loss paradigm
because fire (a covered peril) followed and arose from earthquake (not a covered
peril).” Id. “Property insurance covered the ensuing fire damage, but not the
earthquake damage, because fire was a covered cause of loss and earthquake
was not.” Id. (footnote omitted).

       As modified by the New Hampshire Endorsement, the insurance policy
also states that the insurer does not insure for losses “[e]xcluded under . . .
Exclusions.” (Capitalization omitted.) “Exclusions” consists of two paragraphs,
numbered “1.” and “2.” (Bolding and capitalization omitted.) Paragraph “1.”
begins: “We do not insure for loss caused directly or indirectly by any of the
following. Such loss is excluded regardless of any other cause or event
contributing concurrently or in any sequence to the loss.” (Bolding omitted.)
The language of the second quoted sentence constitutes an “anti-concurrent
causation” provision. See Annotation, Validity, Construction, and Application
of Anticoncurrent Causation (ACC) Clauses in Insurance Policies, 37 A.L.R. 6th
657, 668 (2008). “An anticoncurrent causation clause . . . states that where a
property loss is caused by a combination of excluded and covered perils, the
entire loss is excluded from coverage.” Id. Such a provision “has the effect of
precluding coverage for damage that was caused by any of the [excluded perils]
listed, to which the [anti-concurrent causation] clause applies, regardless of
whether the damage may have also been caused, in some way, by a covered
cause of loss.” Daum, supra at 21; see Boazova v. Safety Ins. Co., 968 N.E.2d
385, 393 (Mass. 2012); see also Bates v. Phenix Mut. Fire Ins. Co., 156 N.H.
719, 723 (2008) (enforcing an anti-concurrent causation clause over the
insured’s objection).

       Paragraph “2.” of “Exclusions” begins: “We do not insure for loss to
property described in Coverages A and B caused by any of the following.
However, any ensuing loss to property described in Coverages A and B not
excluded or excepted in this policy is covered.” (Bolding omitted.) This, too,
constitutes an “ensuing loss” clause. See Sullivan & Gordon, supra at 19 &
n.1. Among the exclusions listed in paragraph “2.” of “Exclusions” is an
exclusion for losses “to property described in Coverage[ ] A . . . caused by . . .
[f]aulty, inadequate or defective . . . workmanship.” (Bolding and capitalization
omitted.)

                                        6
       The Mold Endorsement modifies the policy in the following relevant ways:
First, it adds to the “Additional Coverages” section coverage for “‘Fungi’, Wet or
Dry Rot, or Bacteria” and defines “‘Fungi’” to mean “any type or form of fungus,
including mold or mildew, and any mycotoxins, spores, scents or byproducts
produced or released by fungi.” (Bolding and capitalization omitted.) There is
no dispute that the mold at issue in this case falls within the policy’s definition
of “Fungi.”

      The additional coverage added by the Mold Endorsement includes,
subject to certain limitations of liability, recovery of:

            (1) [t]he total of all loss payable under Section I – Property
            Coverages caused by ‘fungi’, wet or dry rot, or bacteria;

            (2) [t]he cost to remove ‘fungi’, wet or dry rot, or bacteria
             ...;

            (3) [t]he cost to tear out and replace any part of the building
             . . . as needed to gain access to the ‘fungi’, wet or dry rot, or
            bacteria; and

            (4) [t]he cost of testing of air or property to confirm the
            absence, presence or level of the ‘fungi’, wet or dry rot, or
            bacteria . . . .

(Bolding omitted.)

       Second, the Mold Endorsement states that such additional coverage
“only applies when [the] loss or costs are a result of a Peril Insured Against that
occurs during the policy period and only if all reasonable means were used to
save and preserve the property from further damage at and after the time the
Peril Insured Against occurred.” For the purposes of this appeal, there is no
dispute that the homeowners used “all reasonable means” to save and preserve
their home as required by this provision.

       Third, the Mold Endorsement deletes the reference to “mold, wet or dry
rot” in the exclusion for “[s]mog, rust or other corrosion” and adds the following
as an excluded peril:

         Constant or repeated seepage or leakage of water or the
      presence or condensation of humidity, moisture or vapor, over a
      period of weeks, months or years unless such seepage or leakage of
      water or the presence or condensation of humidity, moisture or
      vapor and the resulting damage is unknown to all “insureds” and

                                         7
      is hidden within the walls or ceilings or beneath the floors or above
      the ceilings of a structure.

       Fourth, the Mold Endorsement adds the following exclusion to paragraph
“1.” of “Exclusions”:

      i.   “Fungi”, Wet or Dry Rot, or Bacteria

           “Fungi”, Wet or Dry Rot, or Bacteria meaning the presence,
           growth, proliferation, spread or any activity of “fungi”, wet or
           dry rot, or bacteria.

           This exclusion does not apply:

           (1) When “fungi”, wet or dry rot, or bacteria results from fire or
              lightning; or

           (2) To the extent coverage is provided for in the “Fungi”, Wet or
              Dry Rot, or Bacteria Additional Coverage under Section I –
              Property Coverages with respect to loss caused by a Peril
              Insured Against other than fire or lightning.

      Direct loss by a Peril Insured Against resulting from “fungi”, wet or
      dry rot, or bacteria is covered.

(Bolding and capitalization omitted.)

      C. Coverage

      The homeowners first argue that they have coverage for their loss of use
damages because their damages constitute “ensuing losses” of faulty
workmanship. They contend that hidden and unknown accumulation of
moisture is an ensuing loss of faulty workmanship, that it led to the mold, and
that the mold led to mold contamination, illness, and, ultimately, loss of use.
The homeowners’ reliance upon the policy’s ensuing loss clauses is misplaced.

       “[C]ourts generally agree . . . that when a workmanship exclusion is
triggered, an ensuing loss clause applies only when there is significant
attenuation between the direct result of a workmanship defect and the ultimate
loss for which coverage is sought, usually due to an independent or fortuitous
intervening cause.” Taja Investments LLC v. Peerless Insurance Company, No.
16-1854, 2017 WL 4534788, at *2 (4th Cir. Oct. 11, 2017) (applying Virginia
law); see Weeks v. Co-Operative Ins. Cos., 149 N.H. 174, 177 (2003) (explaining
that, under New Hampshire law, an ensuing loss provision applies when there
is a peril that causes a loss or injury that is “separate and independent but

                                          8
resulting from the original excluded peril, and this new peril is not an excluded
one, from which loss ensues” (quotation omitted)); see also Prudential Property
& Casualty Ins. Co. v. Lillard-Roberts, No. CV–01–1362–ST., 2002 WL
31495830, at *20 (D. Or. June 18, 2002) (“An ensuing loss requires an
unexpected loss due to an intervening or contributing cause other than the
mere passage of time.” (applying Oregon law)).

       “In other words, an ensuing loss provision excludes from coverage the
normal results of defective construction, and applies only to distinct, separable,
and ensuing losses.” Taja Investments LLC, 2017 WL 4534788, at *2
(quotation omitted); see Friedberg v. Chubb & Son, Inc., 691 F.3d 948, 953
(8th Cir. 2012) (applying Minnesota law); see also Alton Ochsner Medical v.
Allendale Mut. Ins. Co., 219 F.3d 501, 507 (5th Cir. 2000) (resulting loss
clause generally applies only to damage that “result[s] fortuitously from events
extraneous to the construction process” (quotation omitted) (applying Louisiana
law)); In Re Chinese Manufactured Drywall Products Liab., 759 F. Supp. 2d
822, 850 (E.D. La. 2010) (reasoning that ensuing loss clause does not apply to
damages that are a direct and continuous result of workmanship defect
(applying Louisiana law)). To be covered under an ensuing loss provision, “the
damage that falls under the exclusion and the ensuing damage must be
separable events in that the damage and the ensuing loss must be different in
kind, not just degree.” In Re Chinese Manufactured Drywall Products Liab.,
759 F. Supp. 2d at 850 (quotation omitted); see id. at 850-51 (concluding that
odors emitted by drywall did not constitute ensuing losses from the drywall
because they “are inseparable from the drywall and are a continuous result of
the drywall”).

       Courts interpret ensuing loss clauses in this way so as to “assure that
the exception does not supersede the exclusion by disallowing coverage for
ensuing loss directly related to the original excluded risk.” Vermont Elec.
Power v. Hartford Steam Boiler Insp., 72 F. Supp. 2d 441, 445 (D. Vt. 1999)
(quotation omitted). Such an interpretation is consistent with the original
purpose of ensuing loss provisions, which “has been and remains to preserve
coverage for insured losses, such as the fires after the San Francisco
earthquake, and not to create a ‘grant-back’ through which coverage may be
had for the original excluded loss, whether it be an earthquake, a design defect,
or any other excluded cause of loss.” Harrington, supra at 32 (footnote
omitted); see Weeks, 149 N.H. at 177-78 (concluding that it is “not reasonable”
to interpret the ensuing loss provision to apply to “any damage caused by
faulty workmanship” because such an interpretation “contravenes the explicit
language of the policy and renders the negligent work exclusion meaningless”);
see also In Re Chinese Manufactured Drywall Products Liab., 759 F. Supp. 2d
at 849, 850-51 (rejecting the plaintiffs’ “claim that although a loss may be
excluded from the [insurance] policies, the ensuing loss provisions are
‘Lazarus-like,’ resurrecting coverage for the excluded losses”).

                                        9
        We are not persuaded by the homeowners’ attempts to characterize the
events that followed the faulty workmanship in this case as “ensuing losses.”
In that regard, we find TMW Enterprises instructive. See TMW Enterprises,
Inc. v. Federal Ins. Co., 619 F.3d 574 (6th Cir. 2010). In that case, decided
under Michigan law, the insurance policy, like the policy in this case, was an
“all-risk policy” that covered “any direct physical loss or damage to the property
unless caused by or resulting from an excluded peril.” Id. at 575 (quotations
omitted). As in this case, faulty workmanship was among the policy
exclusions. Id. Similarly, as in this case, the faulty workmanship exclusion
included an ensuing loss clause. Id.

      The building in TMW Enterprises, like the home in the instant case, had
been improperly constructed. Id. The construction defects in the TMW
Enterprises building made it “vulnerable to water infiltration,” and, without
repair, the building “faced potential mold growth.” Id. (quotation omitted).
Similarly, the construction defects in the instant case led to moisture and
mold. The insurer in TMW Enterprises, like the insurer here, denied coverage
based upon the faulty workmanship exclusion. Id.

      The insured in TMW Enterprises argued that, although faulty
workmanship may have allowed water to seep into the building, the intruding
water, nevertheless, constituted a covered peril “because the water caused
some of the damage, and water-related damage is not otherwise specifically
excluded—making it an ‘ensuing loss’ and thus a covered loss.” Id. at 576.
Similarly, in the instant case, the homeowners argue that, even though faulty
workmanship “occurred first in time,” and caused moisture to accumulate
“behind walls and ceilings” of their home, because moisture accumulation
caused the mold to develop and because such unknown, hidden moisture
accumulation is a covered peril, the damages that follow constitute a covered
loss.

      The court in TMW Enterprises rejected such reasoning as follows:

                                              Instead of carving out an
      exception to [the faulty workmanship] exclusion, this theory of
      interpretation would create a virtual, if not complete, exclusion of
      the exclusion. When a policy excludes “loss or damages caused by
      or resulting from faulty workmanship or construction” of a
      building, it should come as no surprise that the botched
      construction will permit the elements—water, air, dirt—to enter the
      structure and inside of the building and eventually cause damage
      to both. TMW’s chain of reasoning—that water technically was the
      final causative agent of the damage, as opposed to the faulty
      construction, that “water damage” is not specifically

                                       10
      excluded from the policy, that coverage accordingly applies—
      essentially undoes the exclusion.

Id. (quotations, ellipses, and brackets omitted). The court continued:

          As an “all-risk” policy, this insurance policy basically covers
      everything unless specifically excluded. That means the number of
      possibilities for last-in-time “but for” causes of damage are limited
      only by the imagination of the reader. What if a roof contains a
      flawed design, . . . and it leaks water into the house, which ruins
      one of the floors? But for the water, no damage to the floor would
      have occurred. Yet the contract does not exclude damages caused
      by “water.” Coverage? What if faulty construction allows humid
      summer air to enter the building, which rusts metal fixtures? But
      for the exposure to the summer air, no damage to the fixtures
      would have occurred. Yet the contract does not exclude damages
      caused by “air.” Coverage? What if a poorly constructed ceiling
      beam falls, smashing the floor below? But for the force of gravity,
      no damage to the floor would have occurred. Yet the contract does
      not exclude damages caused by “gravity.” Coverage? As in each of
      these examples, so too here: The very risk raised by the flawed
      construction of a building came to pass. To say that the risk was
      not covered because other elements or natural forces were the last
      causative agents of the damage, though to be sure utterly
      foreseeable causes of the damages, is to eliminate the exclusion. It
      is exceedingly strange to think that a single phenomenon that is
      clearly an excluded risk under the policy was meant to become
      compensable because in a philosophical sense it can also be
      classified as water damage.

Id. at 576-77 (quotations and citation omitted).

        Similarly, here, we conclude that the homeowners’ chain of reasoning—
that hidden and unknown accumulated moisture was the causative agent of
the damage, as opposed to the faulty workmanship; that hidden and unknown
accumulated moisture is not specifically excluded from the policy; that
coverage accordingly applies—essentially undoes the faulty workmanship
exclusion. See id. at 576. We agree with the Sixth Circuit Court of Appeals
that, when there is an exclusion for loss caused by faulty workmanship, “it
should come as no surprise that the botched construction will permit . . . water
. . . to enter the structure and inside of the building and eventually cause
damage to both.” Id. This is particularly so in the instant case when,
according to the homeowners, the faulty workmanship consists of “ventilation
and insulation construction defects.”

                                       11
      We, likewise, agree with the courts that have concluded that “mold is a
natural and expected, as opposed to a separate and independent, result of
water damage,” and, thus, cannot be an “ensuing loss” of accumulated
unknown and hidden moisture. Lillard-Roberts, 2002 WL 31495830, at *20.
As the court in Lillard-Roberts explained:

          Though not inevitable, mold is a natural event that often
      manifests after and as a direct result of the entry of water caused
      by some other peril, such as a roof opened by a hailstorm, a leaky
      pipe or defectively installed roof flashing. Mold cannot exist or
      sustain itself without some moisture source, such as water
      intrusion. When water intrudes into a residence, mold, unlike fire,
      is not a surprise . . . .

Id. (footnotes omitted); see Bloom v. Western Nat. Mut. Ins. Co., No. A05-2093,
2006 WL 1806415, at *5 (Minn. Ct. App. July 3, 2006) (explaining that “[i]n
order for mold and rot to take hold and cause injury, water or moisture must
be present”). “[T]he water intrusion and resulting . . . mold are ‘a single
phenomenon,’” in that “[t]here was no intervening cause other than time.”
Bloom, 2006 WL 1806415, at *5. For similar reasons, we reject the
homeowners’ assertion that mold contamination is an ensuing loss of mold
because contamination by the toxins released by mold spores is, somehow,
separate and independent from the mold itself. See Cooper v. American Family
Mut. Ins. Co., 184 F. Supp. 2d 960, 964-65 (D. Ariz. 2002) (applying Arizona
law).

       In sum, the ensuing loss provisions in the homeowners’ policy do not
entitle the homeowners to recover for any of their alleged ensuing losses. See
Sapiro v. Encompass Ins., 221 F.R.D. 513, 522 (N.D. Cal. 2004) (applying
California law). Under New Hampshire law, an ensuing loss is a loss that is
separate and independent from the original excluded peril (here, faulty
workmanship). Weeks, 149 N.H. at 177. The homeowners’ “losses are
neither.” Sapiro, 221 F.R.D. at 522. Rather, the homeowners’ alleged hidden
and unknown accumulated moisture and mold losses are “directly attributable
to the initial negligent” workmanship. Id.

       The homeowners next contend that, because hidden and unknown
accumulated moisture, a covered peril, “is the more direct proximate cause[ ]”
of their loss, their loss is covered even though it was “set in motion by a more
remote but excluded cause” (faulty workmanship). According to the
homeowners, “[p]roximate cause in the context of insurance does not denote
the remote or originating cause,” but, rather, “refers to the more direct causes
which follow the excluded cause.”

                                       12
       The homeowners’ argument rests upon a mistaken premise. The
homeowners are mistaken as to the concept of proximate cause in the
insurance law context in New Hampshire. New Hampshire, like a majority of
jurisdictions, follows the “efficient proximate cause” doctrine. See Nassif Realty
Co. v. National Fire Ins. Co., 109 N.H. 117, 119 (1968); Terrien v. Insurance
Co., 96 N.H. 182, 185 (1950); see also Phillips & Coplen, supra at 33, 34. “The
efficient proximate cause is the risk that sets others in motion.” Phillips &
Coplen, supra at 39. “If the cause which is determined to have set the chain of
events in motion, the efficient proximate cause, is covered under the terms of
the policy, the loss will likewise be covered.” 7 Steven Plitt et al., Couch on
Insurance 3d § 101:45, at 101-85 (2013). Conversely, if the cause that set the
other causes in motion is an excluded peril, then the entire claim may be
excluded, “even if there are covered events that contributed along the chain of
events.” Phillips & Coplen, supra at 34, 39. Thus, under the efficient
proximate cause doctrine because, as the homeowners assert, their loss was
“set in motion” by faulty workmanship (an excluded peril), there is no coverage
for their loss.

       In other words, the law in New Hampshire is the exact opposite of what
the homeowners argue. The homeowners argue that there is coverage for their
loss even though an excluded peril set all of the other causes of their loss in
motion. However, under New Hampshire law, in fact, the opposite result
obtains. Under the efficient proximate cause doctrine, there is no coverage for
an insured’s loss when the efficient proximate cause of that loss is an excluded
peril.

      The homeowners next argue that there is coverage for their loss because
the anti-concurrent causation provision in paragraph “1.” of “Exclusions” and
the ensuing loss provisions are inherently contradictory. (Bolding and
capitalization omitted.) See Barking Dog, Ltd. v. Citizens Ins. Co. of America,
164 N.H. 80, 85-86 (2012). They contend that, if the anti-concurrent causation
provision “is read to take all coverage away for any loss caused directly or
indirectly by an excluded peril . . . , then there could never be coverage for an
ensuing loss” from that excluded peril.

       The conflict the homeowners posit is not present under the facts of this
case. As previously explained, the homeowners are not entitled to coverage
under the ensuing loss provisions. Thus, even if we were to interpret the anti-
concurrent causation provision to “take all coverage away for any loss caused
directly or indirectly” by any “excluded peril,” there is no conflict between that
interpretation of the anti-concurrent causation provision and the ensuing loss
provisions under which there, also, is no coverage for the homeowners’ loss.

      The homeowners’ argument is based upon an interpretation of ensuing
loss provisions that we have not adopted. See Christopher C. French, The

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“Ensuing Loss” Clause in Insurance Policies: The Forgotten and
Misunderstood Antidote to Anti-Concurrent Causation Exclusions, 13 Nev. L.
J. 215, 251 (Fall 2012); see also Weeks, 149 N.H. at 177. Under that broad
interpretation, an ensuing loss is one that merely follows (meaning, is
subsequent to) an excluded peril. See French, supra at 251; see also Leep v.
Trinity Universal Insurance Company, CV 16–57–BLG–TJC, 2017 WL 2457882,
at *9-10 (D. Mont. June 6, 2017) (citing cases and concluding, in dicta, that
Montana law would broadly interpret an ensuing loss provision). By contrast,
in New Hampshire, as in several other jurisdictions, an ensuing loss is one that
not only is subsequent to an excluded peril, but is also separate and
independent from that peril. See Weeks, 149 N.H. at 177; see also Leep, 2017
WL 2457882, at *9-10 (citing cases); Harrington, supra at 30-34 (citing cases).

      The homeowners next contend that we must adopt an interpretation of
the policy that comports with their reasonable expectations, which, they assert,
were that their loss would be covered. However, that principle applies only
when we are “forced to reconcile contradictory clauses in an insurance policy,”
Barking Dog, 164 N.H. at 86, or when we determine that an ambiguity exists,
see Bartlett, 167 N.H. at 531. In those circumstances, “we must adopt the
interpretation which most correctly reflects the reasonable expectations of the
insured.” Barking Dog, 164 N.H. at 86 (quotation omitted); see Bartlett, 167
N.H. at 531. The principle does not apply to this case given that the
homeowners do not argue that the policy provisions are ambiguous and that
we have rejected their assertion that the anti-concurrent causation provision
and the ensuing loss clauses are contradictory. We have reviewed the
homeowners’ remaining arguments and conclude that they do not warrant
further discussion. See Vogel v. Vogel, 137 N.H. 321, 322 (1993).

                                                 Affirmed.

      HICKS, LYNN, and BASSETT, JJ., concurred.

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