Most of our prior posts regarding the efficient proximate cause doctrine arise from cases in Mississippi and Louisiana, two states heavily impacted by Hurricane Katrina. See, e.g. posts here, here, and here. Considering some creative arguments, the Sixth Circuit recently weighed in on the applicability of the efficient proximate cause doctrine under Michigan law. See Iroquois on the Beach, Inc. v. General Star Indemn. Co., 2008 U.S. App. LEXIS 25864 (6th Cir. Dec. 23, 2008).
The insured owned a seasonal hotel built in 1903 on Mackinac Island, Michigan. Several additions had been made, the last of which was in 1979 or 1980. An inspection was made in 2005 because the back of the building would not hold paint and the windows did not open and close properly. Decay was discovered in several areas of the 1979/1980 addition. The inspector determined water had entered the building because an insufficient steel frame had failed to protect the building in windy conditions.
The insured submitted a notice of loss to General Star, its insurer under an "all risk" policy. Coverage was denied based upon an exclusion for "continuous or repeated seepage or leakage of water . . . that occurs over a period of 14 days or more." The insured sued. Relying on this exclusion, the district court granted General Star's motion for summary judgment.
On appeal, the insured argued the exclusion was inapplicable because windstorms, a covered loss, initiated the sequence of events that resulted in water damage, and the policy had no anti-concurrent causation clause. Therefore, the insurer intended to cover loss caused by wind if it was the first or last step leading to water damage. In other words, the insured argued the doctrine of efficient proximate cause should apply: when two or more identifiable causes, at least one of which is covered and at least one of which is excluded under the policy, contributed to a single loss, there was coverage.
The Sixth Circuit was unpersuaded. Although many jurisdictions have adopted the doctrine of efficient proximate cause, Michigan was not one of them. Instead, under the default rule in Michigan, a loss is notcovered when it is concurrently caused by the combination of a covered cause and an excluded cause. Accordingly, the exclusion for water damage for at least fourteen days was dispositive in this case.
Moreover, the absence of an anti-concurrent causation clause from General Star's policy was irrelevant. Since Michigan did not follow the doctrine of efficient proximate cause, adding an anti-concurrent causation clause to a policy would be mere surplusage.
