The court considered whether rain damage to a house was barred by the policy's mold exclusion. Stewart v. State Farm Fire & Cas. Co., 2012 U.S. Dist LEXIS 127804 (D. S.D. Sept. 7, 2012).
The insureds hired DJ Construction to build a new home. Before construction was completed, it was discovered that DJ Construction and some of its subcontractors had failed to protect the partially constructed house from the elements, which allowed melting snow and rain to intrude into the house. Soon after this discovery, DJ Construction abandoned the project. The house remained incomplete and uninhabitable.
The insureds sued DJ Construction. They also filed a claim under their homeowner's policy with State Farm. The insureds claimed the cause of their loss was rainwater. When the claim was denied, the insureds sued State Farm.
The fungus exclusion contained an "anti-concurrent causation clause," which stated the policy did not cover any loss which would not have occurred in the absence of fungus regardless of "whether other causes acted concurrently or in any sequence with the excluded event to produce the loss." The court held this provision precluded application of the efficient proximate cause doctrine to the fungus exclusion itself. The insureds could not recover for any loss that would not have occurred in the absence of fungus, regardless of whether a covered peril was the efficient proximate cause of the loss.
