Damage to the YMCA recreation center was not covered due to application of the earth movement exclusion. YMCA of Pueblo v. Secura Ins. Co., 2015 U.S. Dist. Lexis 15249 (D. Colo. Feb. 6, 2015).
On October 11, 2013, the insureds discovered a leaking water line in the men's shower, where one of the shower's on/off valves had detached from the water pipe behind the wall. The leak was repaired the same day.
On October 13, 2013, the pool deck near the therapy pool and surrounding block walls shifted and collapsed. The insurer admitted there was damage to the property. Several leaks were discovered in the pipes under and near the therapy pool, and the pool lost several inches of water.
The insureds filed a claim for damage to the pool, pool deck, and surrounding walls. Coverage was denied based upon the earth movement exclusion. The insureds filed suit.
The parties agreed that soil settlement created the damage to the building. The insureds argued that Paragraph B.2.d (4) provided coverage for losses caused by water leaks when those water leaks were caused by "settling, cracking, shrinking or expansion." But this exclusion for "settling, cracking, shrinking or expansion" could only apply to damage not caused by earth movement. Otherwise, the earth movement exclusion would be superfluous.
When damage was caused by earth movement, Paragraph B.1.b. controlled. This provision barred coverage "for loss or damage caused directly or indirectly, by":
Earth sinking . . . risking, or shifting including soil conditions which caused settling, cracking or other disarrangement of foundations or other parts of realty.
Both parties agreed that the damage - settling, cracking, or disarrangement of the building's slab-on-grade concrete foundation - was caused by shifting soil, itself caused by the action of water under the ground surface. Therefore, the damage fell entirely within the earth movement exclusion.
The insureds argued that the October 11, 2013 leak was the actual cause of the loss, making the efficient proximate cause rule applicable. But the October 11th leak itself was an excluded loss if it was caused by soil settlement. Further, the anti-concurrent causation cause was applicable. If earth movement, an excluded event, was a cause, it did not matter if a second cause (water leak) was a covered cause.