Having now read the full Corban decision, I am impressed with the clarity of the analysis set forth in the opinion. See Corban v. United Services Automobile Assoc., 2009 Miss LEXIS 481 (Miss. Sup. Ct. Oct. 8, 2009). The Mississippi Supreme Court carefully considered the facts, offered a common sense analysis to the anti-concurrent causation clause, and determined the provision had no application to the facts at hand. The case has implications for Hawai`i because homeowners' policies issued here typically include an anti-concurrent causation clause.
The Corban's home suffered significant damage from Hurricane Katrina. They held both homeowner's and flood policies with USAA, and submitted a claim for $1,607,926. USAA hired an engineer who determined all of the first floor damage was caused by flood. Therefore, coverage was limited to replacing the roof and repairing some of the damage around the house. The Corbans eventually received $433,903.77 from USAA (the maximum payment of $350,000 under the flood policy and $83,903.77 under the homeowner's policy), leaving $1,174,022 in claimed losses unsatisfied.
When the Corbans sued, USAA's motion for partial summary judgment was granted. The trial court judge found "storm surge" was within the definition of "water damage" and therefore an excluded peril. The anti-concurrent causation clause was unambiguous, but barred coverage for any damage caused by water or caused concurrently or sequentially by wind and water in combination.
The Corbans filed an interlocutory appeal. The Mississippi Supreme Court considered three issues: (1) did the trial court err in finding that "storm surge" was included in the "water damage" exclusion; (2) did the trial court err in finding that the anti-concurrent causation clause was applicable; (3) which party bore the burden of proof?
The Supreme Court rejected the Corban's argument that "storm surge" was a covered peril because it was not included in the definition of "water damage." "Storm surge" was plainly encompassed within the "flood" or "overflow of a body of water" portions of the policy's "water damage" exclusion.
The Court next focused on the anti-concurrent causation clause, which excludes listed categories of loss "regardless of any other cause or event contributing concurrently or in any sequence to the loss." The terms analyzed by the Court were "loss," "concurrently," and "in any sequence."
Regarding "loss," the Court criticized other courts, including the Fifth Circuit Court of Appeals, for conflating the terms "loss" and "damage." "Loss" typically follows "damage" to property. Policies do not cover or exclude "damage," but focus on coverage or exclusion of "loss." The insured's right to be indemnified for a covered loss vests at the time of loss. Here, the Corbans were entitled to recover for all covered "direct, physical losses" to the property, unless excluded.
The Mississippi Supreme Court shined in its analysis of the term "concurrently." The Court reasoned the anti-concurrent causation clause only applied when perils acted in conjunction, as an indivisible force, occurring at the same time, to cause direct physical damage resulting in loss. Under such circumstances, the Court accepted the Fifth Circuit's interpretation of the clause to exclude coverage. The facts presented in the Corban case, however, did not include an "indivisible" force (wind and flood), occurring at the same time, causing direct physical damage resulting in simultaneous loss to the property. Here the perils (wind and flood) acted in sequence, not concurrently, i.e., at different times, causing different damage, resulting in separate losses.
Next, the Court found the phrase "in any sequence" in the policy troubling. Because loss occurred when the insured suffered deprivation of physical damage to property, the phrase "in any sequence" could not divest an insured's right to indemnity for a covered loss. This interpretation was consistent with other provisions in the policy which clearly stated indemnity to the insured was established at the time of the loss.
Considering all of these key terms in the anti-concurrent causation clause together, the provision did not apply here. The same loss with multiple causes, some covered (wind) and some not (flood), was simply not at issue.
Finally, the court considered the burden of proof. Under "Coverage-A - Dwelling" and "Coverage B - Other Structures," the Corbans were required to prove a "direct, physical loss to property." Thereafter, USAA had the burden to prove, by a preponderance of the evidence, that the causes of the losses were excluded by the policy, i.e., flood damage. USAA had to indemnify the Corbans for all losses which USAA could not establish, by a preponderance of the evidence, to have been caused or concurrently contributed to by flood damage.
With these straight-forward interpretations of the policy provisions, the case was remanded for trial. It is not surprising that the Mississippi Supreme Court repeatedly referred to and complimented another well-reasoned decision interpreting the anti-concurrent causation clause, Judge Senter's decision in Dickinson v. Nationwide Mut. First Ins. Co., 2008 WL 1913957 (S.D. Miss. 2009) [reviewed here]. Together, the Corban and Dickinson decisions suggest it will be a rare case in which the anti-concurrent causation clause actually applies to deny coverage. It is difficult to imagine circumstances under which multiple perils (wind and flood) act concurrently to cause the same property damage.
