The Ninth Circuit determined that a mudslide destroying the insureds' home may be covered as a direct loss due to fire that preceded the mudslide. Stankova v. Metro. Prop. & Cas. Ins. Co., 2015 U.S. App. LEXIS 8935 (9th Cir. May 29, 2015).

   The insureds' garage was destroyed by a massive fire in Arizona in 2011. The fire did not reach the house. A month after the wildfire was contained, a mudslide and runoff water from the hillside destroyed the insureds' house. 

   The insureds' policy provided coverage for "sudden and accidental direct physical loss or damage" if the loss was caused by one of several named perils. "Fire or Lighting" was a covered peril, but water damage and earth movement, including mudslides, were not covered. The loss of the garage was covered, but coverage for the home was denied due to flood water and earth movement exclusions. The insured contested this determination, arguing the fire was the actual and proximate cause of the loss.

   The insureds sued and both parties moved for summary judgment. The district court found in favor of the insurer.

   On appeal, the Ninth Circuit noted that Arizona had not adopted the doctrine of "efficient proximate cause." The key question, therefore, was whether the mudslide that damaged the home was "directly" caused by fire. Under the definition of direct and proximate cause as adopted by Arizona, it was possible that the fire directly caused the insureds' loss in an unbroken sequence between the wildfire and the destruction of the home. A reasonable fact finder could conclude that the destruction of the house was caused by the fire, which likely caused the mudslide. 

   It was not necessary to apply the efficient proximate cause doctrine to find that the damage here could have been directly and proximately caused by the wildfire. The evidence in the record was limited, but the district court erred in concluding that, under Arizona law, the insurer was entitled to summary judgment. There was a triable issue as to whether the fire directly caused the destruction of the home.