Last Friday, a unanimous panel of the Ninth Circuit held that loss from the excluded peril of mudslide occurring one month after a wildfire could be covered as the “direct” result of the blaze. In Stankova v. Metropolitan Prop. & Cas. Ins. Co., 2015 WL 3429395, 2015 U.S. App. LEXIS 8935 (9th Cir., May 29, 2015), it reached that result even though Arizona has not adopted the efficient proximate cause rule, saying that it did not need to apply that doctrine to determine that the mudslide “could have been directly and proximately caused by the wildfire.” It also blithely ignored anti-concurrent causation (ACC) language, which is given effect in Arizona, as “inconsistent with Arizona’s standard fire insurance policy, which insures…
Blog Archives
Ninth Circuit: Under Arizona Law Mudslide Can Be Covered as the Direct Result of Fire
Tagged with: Arizona, Ninth Circuit
Posted in Anti-Concurrent Causation, Causation, Direct Physical Loss or Damage, Efficient Proximate Cause, Exclusions, Flood, Mudslide, Wildfire
Posted in Anti-Concurrent Causation, Causation, Direct Physical Loss or Damage, Efficient Proximate Cause, Exclusions, Flood, Mudslide, Wildfire
Arizona Court: Argument that All Business Income Loss Caused by a Wildfire is Covered is “Off Base”
Several weeks ago in White Mt. Communities Hosp., Inc. v. Hartford Cas. Ins. Co., 2015 WL 1755372, 2015 U.S. Dist. LEXIS 50900 (D. Ariz., Apr. 17, 2015), an Arizona federal court underscored that business interruption losses flowing from a wildfire are only covered to the extent that they stem directly from physical loss or damage to the policyholder’s property. In other words, loss of income due to the fire in general is beyond the scope of such coverage absent a causal nexus with repairs necessitated by the blaze. The policyholder White Mountain owned a hospital in Springerville, Arizona. On May 29, 2011, a blaze was started by an abandoned campfire in the nearby Bear Wallow Wilderness Area. The wildfire ultimately…
Tagged with: Arizona
Posted in Business Interuption, Causation, Contamination, Direct Physical Loss or Damage, Fire, Smoke and Soot, Wildfire
Posted in Business Interuption, Causation, Contamination, Direct Physical Loss or Damage, Fire, Smoke and Soot, Wildfire
Smelly Cat – Closely-Divided New Hampshire Supreme Court Addresses Whether Cat Urine Is a Pollutant
Last Friday, New Hampshire’s highest court unanimously held that the pungent aroma of cat urine could constitute physical loss or damage under a property policy. In Mellin v. Northern Security Ins. Co., 2015 WL 1869572, 2015 N.H. LEXIS 32 (N.H., Apr. 24, 2015), it split on whether such a loss was barred by standard pollution exclusion language, however. Three of the five justices (including a specially-appointed retiree) held that the exclusion was ambiguous in nature. The Chief Justice and another member of the court disagreed, labeling the provision “plain and unambiguous” and clearly applicable to preclude coverage for a pervasive cat odor problem. On the TV show “Friends,” Phoebe Buffay used to entertain patrons at the Central Perk coffee shop…
Tagged with: Ammonia, Cat Urine, New Hampshire
Posted in Ambiguity, Direct Physical Loss or Damage, Homeowners Coverage, Odors, Pollution
Posted in Ambiguity, Direct Physical Loss or Damage, Homeowners Coverage, Odors, Pollution
Eleventh Circuit: Sinkhole Loss in Florida Must Impair the Property’s Structural Integrity to be Covered
Effective in 2005, Florida statutes defined “sinkhole loss” to mean “structural damage to the building, including the foundation, caused by sinkhole activity,” and they left the all-important term “structural damage” undefined. Homeowner’s policies issued in the state employed that formulation until May 17, 2011, when Florida adopted a much narrower five-part definition of structural damage that applied to policies affording coverage for sinkhole loss, and many courts construing the 2005 language held that the term “structural damage” meant nothing more than “damage to the structure.” Several weeks ago in Hegel v. First Liberty Ins. Corp., 778 F.3d 1214 (11th Cir., Feb. 27, 2015), a unanimous Eleventh Circuit panel held: (1) that defining structural damage to mean any “damage to the…
Tagged with: Eleventh Circuit, Florida, Structural Damage
Posted in Direct Physical Loss or Damage, Homeowners Coverage, Sinkhole
Posted in Direct Physical Loss or Damage, Homeowners Coverage, Sinkhole
Minnesota Holds “Comparable Material and Quality” Requires Wholesale Replacement Where Undamaged Siding Is Faded
Matching issues are frequently problematic when storms damage only portions of an insured structure’s exterior and it proves impossible to replace the damaged sections with material that is an exact match for the rest of the building’s roof or siding. Earlier this month, the Minnesota Supreme Court held that the phrase “comparable material and quality” means material that is suitable for matching; with respect to color, a reasonable match – not an identical match – is all that is required. In Cedar Bluff Townhome Condominium Ass’n. v. American Family Mut. Ins. Co., – N.W.2d – , 2014 WL 7156914, 2014 Minn. LEXIS 661 (Minn., Dec. 17, 2014), however, the court held that that meant that all of the siding on…
Tagged with: Comparable Material and Quality, Like Kind and Quality, Minnesota
Posted in Direct Physical Loss or Damage, Hailstorm, Replacement Cost, Valuation
Posted in Direct Physical Loss or Damage, Hailstorm, Replacement Cost, Valuation
New Jersey Court: Loss of Use – Without More – Can Be “Direct Physical Loss or Damage”
Last month, a New Jersey federal court held that the term “direct physical loss of or damage to” property did not require that the property be physically altered in any permanent way. In Gregory Packaging, Inc. v. Travelers Property Cas. Co., 2014 WL 6675934, 2014 U.S. Dist. LEXIS 165232 (D.N.J., Nov. 25, 2014), the court determined that an ammonia release that rendered the insured manufacturing plant unusable until the gas had been dissipated “physically transformed the air” within the facility and thereby inflicted direct physical loss or damage to the plant. Gregory Packaging manufactured and sold juice cups, and it was in the process of installing a refrigeration system at a new plant in Newman, Georgia when anhydrous ammonia was…
Tagged with: Ammonia, Georgia, New Jersey
Posted in Direct Physical Loss or Damage, Explosion, Seepage or Leakage
Posted in Direct Physical Loss or Damage, Explosion, Seepage or Leakage
California Court: An Insurance Claim for Feng Shui Is Not Harmonious Qi
Feng shui is a Chinese philosophical system that supposedly orients buildings and their contents in an auspicious manner. Last month in Patel v. American Economy Ins. Co., — F.Supp.2d —, 2014 WL 1862211 (N.D. Cal., May 8, 2014), however, a California court rejected the notion that it was compensable under a first-party property insurance policy as either a legitimate expense to repair direct physical loss or damage or a necessary extra expense to avoid additional business income loss. On October 14, 2009, a fire filled the dental offices of Dr. Namrata Patel with smoke. Dental and electronic equipment was damaged, and she incurred costs for cleaning and repair, inventory replacement, and lost business income during a one-month closure after the…
A New York Court Bars Coverage for a Power Outage Caused by Superstorm Sandy
This week saw a New York court bar a policyholder’s claim for business interruption occasioned by the loss of off-site power after Superstorm Sandy. In Johnson Gallagher Magliery, LLC v. Charter Oak Fire Ins. Co., 2014 WL 1041831 (S.D.N.Y., March 18, 2014), the federal court held that a law firm could not recover for the six-day period during which one of Consolidated Edison’s networks was out-of-service. The network was shut down preemptively several hours before the storm, and the contract of insurance’s “acts or decisions” exclusion was held to bar coverage for that period of time. In addition, a “water” exclusion operated to preclude coverage for the time necessary to clean, repair, and re-energize the system after the flooding where…
Tagged with: New York
Posted in Acts or Decisions, Business Interuption, Direct Physical Loss or Damage, Flood, Superstorm Sandy
Posted in Acts or Decisions, Business Interuption, Direct Physical Loss or Damage, Flood, Superstorm Sandy
