In Amherst Country Club, Inc. v. Harleysville Worcester Ins. Co., 2008 U.S. Dist. LEXIS 48481 (D. N.H. June 24, 2008), the District Court determined there was no coverage when the loss was caused by both a covered event and an excluded event. The court analyzed the efficient proximate cause doctrine, but found the doctrine was not applicable. Based on the policy’s anti-concurrent causation clause, however, there was no coverage.
The insured Club’s swimming pool was destroyed after a flood in 2006. Heavy rains and flooding caused increased groundwater levels. After the flood, the pool was drained for an annual cleaning. The soil surrounding the concrete pool was saturated with groundwater, creating pressure that, once enough water was drained from the pool, caused the pool to float up and out of the ground. The pool’s structure cracked and was destroyed.
The Club requested coverage from its insurer. The property policy excluded loss caused by earth movement or water, including damage to foundations, walls, floors or paved surfaces. When the insurer declined coverage based on the water exclusion, the Club sued for declaratory relief.
The court first found there was no ambiguity in either the earth movement and water exceptions. Moreover, coverage could be excluded by either exclusion. The court then turned to causation. The parties agreed that increased groundwater levels caused the pool to float upward as its weight was decreased when the pool water was emptied. The dispute, however, was whether the emptying of the pool or the groundwater beneath it was the cause of its destruction within the meaning of the exclusions.
New Hampshire follows the efficient proximate cause doctrine, which applies where two or more identifiable causes, at least one of which was covered under the policy and at least one of which was excluded, contribute to a single loss. If the cause which set the chain of events in motion, i.e., the efficient proximate cause, was covered under the policy, the loss would be covered. The Club argued the efficient proximate cause of the loss was the draining of the pool, making the loss covered despite the exclusions. For the efficient proximate cause doctrine to apply, however, there must be several causes of loss in a chain of causation and each cause must be independently capable of causing the loss. Here, the parties agreed the groundwater pressure would not have floated the pool out of the ground had the pool not be emptied. Further, emptying the pool in the absence of the elevated water table could not have itself caused the pool to float. Because New Hampshire required an excluded cause to be the efficient proximate cause of the loss to trigger an exclusion, the exclusions would not apply here.
Nevertheless, the policy’s anti-concurrent causation clause would control the outcome even if the efficient proximate cause doctrine was applicable. The clause excluded any loss caused "directly" or "indirectly" by any of the excluded causes, "regardless of any such cause or event that contributes concurrently or in any sequence to the loss." Although the groundwater pressure, or flood, was not the efficient proximate cause of the loss, it was at least an indirect cause of the loss bringing it under the policy’s anti-concurrent cause provision. Finally, the court determined that even though New Hampshire recognized the efficient proximate cause doctrine, the anti-concurrent cause provisions were enforceable under New Hampshire law..