The California Court of Appeal issued a decision this week analyzing the applicability of the Efficient Proximate Cause Doctrine in denying coverage under a homeowners policy.  De Bruyn v. The Superior Court, B198622, Court of Appeal of the State of California, Second Appellate District.

     California has codified the Efficient Proximate Cause Doctrine.  Under the doctrine, when a loss is caused by a combination of a covered and specifically excluded risk, the loss is covered if the covered risk was the efficient proximate cause of the loss.  Conversely, the loss is not covered if the covered risk was only a remote cause of the loss, or the excluded risk was the efficient proximate, or predominate, cause.

     In De Bruyn, the insured returned from vacation to find a toilet had overflowed, causing significant water damage to his home.  As a result of the water damage, the house became contaminated by mold.  The policy covered water damage from sudden and accidental discharge of water from within a plumbing system.  Mold, however, was not covered, even if resulting from water damage.  Consequently, the insurer denied coverage for mold damage.

     The issue was whether the insurer could rely on the absolute mold exclusion to deny coverage for mold damage resulting from the covered discharge of water in light of the Efficient Proximate Cause Doctrine.  The insurer argued the doctrine did not apply because an insurance company could limit coverage for some, but not all, manifestations of water damage.  The Court of Appeal agreed.  The policy expressly provided there was no coverage for losses caused by mold resulting from a sudden and accidental discharge of water.  The exclusion of mold resulting from a sudden release of water did not violate the Efficient Proximate Cause Doctrine.

     Hawaii has never codified the Efficient Proximate Cause Doctrine.  Further, the Hawaii appellate courts have never applied the doctrine.