Court Opinion

ID: 4711013
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:36:17.620789+00
Date Added: 2024-06-11T08:07:06.348614
License: Public Domain

Talmadge, J.
(dissenting) — We are called upon in this case to decide whether the doctrine of efficient proximate cause in the interpretation of all-risk homeowner’s insurance contracts is a principle for policy construction, or a rule of public policy which the parties to the contract may *381not avoid.2 Without overruling earlier cases which found efficient proximate cause to be a rule of public policy, the majority holds the doctrine of efficient proximate cause is a principle of insurance policy construction because, in the majority’s view, public policy must be based on a statute or regulation. I respectfully disagree.
We adopted the efficient proximate cause rule in 1983 in Graham v. Public Employees Mut. Ins. Co., 98 Wn.2d 533, 538, 656 P.2d 1077 (1983). We have adhered to this rule in cases since that time. Villella v. Public Employees Mut. Ins. Co., 106 Wn.2d 806, 725 P.2d 957 (1986); Safeco Ins. Co. v. Hirschmann, 112 Wn.2d 621, 773 P.2d 413 (1989); McDonald v. State Farm Fire & Casualty Co., 119 Wn.2d 724, 837 P.2d 1000 (1992); and Kish v. Insurance Co. of N. Am., 125 Wn.2d 164, 883 P.2d 308 (1994). The doctrine of efficient proximate cause provides:
where a peril specifically insured against sets other causes into motion which, in an unbroken sequence, produce the *382result for which recovery is sought, the loss is covered, even though other events within the chain of causation are excluded from coverage. Graham, v. Public Employees Mut. Ins. Co., 98 Wn.2d 533, 538, 656 P.2d 1077 (1983). "Stated in another fashion, where an insured risk itself sets into operation a chain of causation in which the last step may have been an excepted risk, the excepted risk will not defeat recovery.” (Citation omitted.) Villella v. Public Employees Mut. Ins. Co., 106 Wn.2d 806, 815, 725 P.2d 957 (1986).
McDonald, 119 Wn.2d at 731.
A careful reading of the Graham case, however, plainly indicates the decision to adopt the doctrine of efficient proximate cause was a determination of public policy made by this Court in light of the serious consequences of the 1980 explosion of Mount St. Helens. In Graham, we overruled the rule of construction for causation in insurance contracts articulated in Bruener v. Twin City Fire Ins. Co., 37 Wn.2d 181, 222 P.2d 833, 23 A.L.R.2d 385 (1950), because the Bruener rule would have foreclosed coverage for innumerable Washington citizens affected by the eruption of Mount St. Helens and the resultant ice and snow melts, and mudflows. We abandoned immediate physical cause for proximate causation in insurance policies. Graham, 98 Wn.2d at 536-39.
The dissent in Graham believed the majority was making a public policy determination. In the dissent, then Chief Justice Brachtenbach suggested the analysis of the Graham Court "requires that we ignore clear provisions in the insurance contract.” Graham, 98 Wn.2d at 541. Chief Justice Brachtenbach also noted the insurer, as a private contractor, "is ordinarily permitted to limit its liability unless inconsistent with public policy or some statutory provision. Mutual of Enumclaw Ins. Co. v. Wiscomb, 97 Wn.2d 203, 210, 643 P.2d 441 (1982).” Graham, 98 Wn.2d at 540. Chief Justice Brachtenbach and the other Graham dissenters criticized the Graham majority for reaching the result by an implicit public policy analysis. It is ironic the majority here believes Graham’s efficient proximate cause rule is not based on public policy.
*383Our decisions in Villella and Hirschmann confirm the doctrine of efficient proximate cause is a rule of public policy. In Hirschmann, we stated:
The Graham rule suggests that whenever the term "cause” appears in an exclusionary clause it must be read as "efficient proximate cause.” This interpretation is confirmed by Villella. When an insured risk sets into operation a chain of causation in which the last step may be an excluded risk, the exclusion will not defeat recovery. See Villella [, 106 Wn.2d] at 815-16.
Hirschmann, 112 Wn.2d at 629. We further indicated insurance carriers may not alter policy language to circumvent the efficient proximate cause rule:
In Villella we noted the specific language in Pemco’s policy that purported to exclude coverage. It was uncontroverted that an excluded peril "contributed to or aggravated” the loss. Nevertheless, we declined to allow the insurer to circumvent the rule by use of its exclusionary clause. Similarly, we decline to allow Safeco to circumvent the rule by use of its exclusionary clause.
Hirschmann, 112 Wn.2d at 629. This result is inconsistent with the doctrine of efficient proximate cause as a mere rule of insurance policy construction.
The majority opinion in Hirschmann again provoked a dissent. Then Chief Justice Callow criticized the majority’s articulation of the efficient proximate cause rule as a rule of public policy, indicating his belief insurance carriers could define causation in their insurance contract as they saw fit. Hirschmann, 112 Wn.2d at 634. Chief Justice Callow criticized the majority for adopting a public policy analysis:
Contrary to settled law, the majority invalidates unambiguous language in an insurance contract without stating how it is inconsistent with this State’s public policy. The insurance industry’s ability to segregate and manage risk will be severely impaired. Insurance purchasers may be required to choose between high premiums or foregoing "all-risk” cover*384age entirely. Public policy does not uphold, but strongly indicates a result other than the majority position.
Hirschmann, 112 Wn.2d at 635. The Hirschmann dissent again indicated the efficient proximate cause doctrine is a rule of public policy.
In McDonald, we expressly reaffirmed our commitment to the efficient proximate cause rule and our decisions enforcing it. McDonald, 119 Wn.2d at 732. See also Pluta v. United Serv. Auto. Ass’n, 72 Wn. App. 902, 866 P.2d 690, review denied, 124 Wn.2d 1018 (1994); Sunbreaker Condominium Ass’n v. Travelers Ins. Co., 79 Wn. App. 368, 901 P.2d 1079 (1995); Eide v. State Farm Fire & Casualty Co., 79 Wn. App. 346, 901 P.2d 1090 (1995).
However, in Kish, we signaled for the first time an insurance carrier could write policy language to circumvent the rule of efficient proximate cause. Kish, 125 Wn.2d at 170-73. Now, the majority completes that work. The majority here indicates the doctrine of efficient proximate cause is a rule of policy construction rather than a rule of public policy. Therefore, insurance carriers may write policy language to circumvent efficient proximate cause. In effect, the majority has overruled Graham, Villella, Hirschmann, and McDonald sub silentio.
The principal basis for the majority’s analysis is its mistaken belief public policy may invalidate insurance contract provisions only when such policy is expressed in a statute or regulation, citing American Home Assurance Co. v. Cohen, 124 Wn.2d 865, 873-74, 881 P.2d 1001 (1994). In Cohen, we indicated public policy is rarely invoked to override the express terms of an insurance policy. This is appropriate. However, we also stated in Cohen an insurance contract may violate public policy where it is prohibited by statute, contrary to the public morals, or condemned by judicial decision. Cohen, 124 Wn.2d at 874; Brown v. Snohomish County Physicians Corp., 120 Wn.2d 747, 753, 845 P.2d 334 (1993).
Plainly, judicial decisions may also articulate the public *385policy of our State, and public policy may override an insurance policy provision even in the absence of a statute or regulation. Most recently, for example, we held in Gardner v. Loomis Armored, Inc., 128 Wn.2d 931, 913 P.2d 377 (1996), a validly determined company work rule must fail in light of the larger public policy of preserving human life. Such public policy is based on a "higher good” that any "right-thinking person” would recognize in the circumstances. Gardner, 913 P.2d at 387 (Guy, J., concurring). In Gardner, we found public policy in the morality and fundamental principles of our society, rather than in a statute or regulation, and expressed such policy in a judicial decision.
The majority’s opinion today ends the doctrine of efficient proximate cause as a rule of public policy and permits insurance carriers to write policy language on causation as they see fit. This is a mistake. In this case, in the guise of an exclusion in "all-risk homeowner’s” policy, the majority permits United Pacific to exclude coverage for the Findlays’ property loss which was occasioned by both rain and earth movement. By creative policy language, United Pacific avoids coverage for the Findlays, with the majority’s acquiescence, precisely in the manner denied to Safeco by this Court in Hirschmann. As we clearly learned when Mount St. Helens erupted in 1980, the efficient proximate cause rule better serves policyholders in Washington State, particularly policyholders believing they are insured against "all risks.” This interpretation has major consequences for policyholders in Washington who face such coverage questions each year when the rains come.
More fundamentally, the majority is wrong in its belief this Court cannot articulate public policy apart from a statute or regulation. This Court is not, and should not be, as powerless to determine public policy as the majority believes.
*386Johnson, J., concurs with Talmadge, J.
Reconsideration denied July 23, 1996.

United Pacific Insurance Co. (United Pacific) marketed the insurance policy at issue in this case as an "all-risk homeowner’s insurance policy.” While a certain amount of hyperbole is to be expected from the marketing departments of insurance carriers, it is plain the insurance policy in this case did not cover all risks. As we observed in McDonald v. State Farm Fire & Casualty Co., 119 Wn.2d 724, 731 n.5, 837 P.2d 1000 (1992) (quoting 2 W. Freedman, Richards on Insurance, § 212 (5th ed 1952)), an "all-risk” homeowners policy promises " 'to pay upon the fortuitous and extraneous happening of loss or damage . . . from any source whatsoever,. . . except when occasioned by the willful or fraudulent act or acts of the insured.’ ” As noted in Lawrence A. Wans, Washington’s Judicial Invalidation of Unambiguous Exclusion Clauses in Multiple Causation Insurance Cases, 67 Wash. L. Rev. 215, n.2 (1992):
An all-risk insurance policy extends coverage for all losses to the subject matter unless the loss or its cause is specifically excluded. The specified risk or named peril policy extends coverage only if a peril enumerated in the policy causes the loss. In theory, the all-risk policy provides broader coverage than the specified risk policy. See Litsey, Property Insurance Coverage and Policy Exclusions: Problems of Multiple Causation, 35 FIC Q. 415 (1985).
The exclusions here were far more extensive than the term "all-risk” suggests. Insurance carriers would be well advised that unless they wish to have their marketing departments establish the scope of coverage for their underwriting departments, they should describe the actual coverage undertaken in the policies with greater precision and less salesmanship: "Courts and consumers have good reason to insist that if insurers promise an all-risk policy, insurers should deliver an all-risk policy.” Wans, 67 Wash. L. Rev. at 227.