Last month, we discussed a recent Texas Supreme Court decision that enforced an anti-concurrent causation (ACC) clause. The month of April also saw a unanimous panel on Iowa’s intermediate level appellate court do the same thing. In Salem United Methodist Church v. Church Mut. Ins. Co., 2015 WL 1546431, 2015 Iowa App. LEXIS 308 (Iowa Ct. App., Apr. 8, 2015), the judges held that ACC provisions unambiguously exclude loss caused by a concurrent combination of excluded perils and included perils and that the question of whether an excluded peril played any causative role must therefore be put to the finder of fact.
The policyholder had a church in Cedar Rapids. On June 11-12, 2008, the Cedar River overflowed its banks, and the basement of the church sustained damage from sewer backup. The insurer denied the claim, and the insured put the matter in suit. After a jury trial, the district court awarded $705,765.07 to the policyholder, and an appeal followed.
The contract of insurance excluded the peril of flood using ACC language (“Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.”) It also contained an “Additional Coverage – Back Up Through Sewers and Drains” provision, however, that recited as follows:
[W]e will pay for direct physical loss or damage to Covered Property caused by back up of water or sewage through sewers or drains only if caused by an event away from the described buildings and when the damage is not caused by flood[.]
* * *
Sewer or water damage occurring as a result of, either before or after, the excluded flood . . . is not covered.
The jury had answered eight questions on a special verdict form. In doing so, they concluded: (1) that there was a sewer backup caused by an off-premises event; and (2) that flood was not “the sole cause” of the damage. On the basis of that, the lower court had invoked the concurrent cause doctrine, stating that “If a covered peril combines with any other peril to cause the loss, there is coverage for the loss.”
On April 8th, the Court of Appeals reversed and remanded for a new trial. Speaking for the three-member panel, Chief Judge David Danilson held that the district court had erred in looking to the concurrent cause doctrine when construing a policy with ACC language. As his decision explained:
The exclusion for flood damage is clear. The policy . . . unambiguously excludes coverage for damages that are concurrently caused by a covered cause – such as sewer back up – and an uncovered cause – such as flooding by its language. . . . [I]f a flood is a concurrent cause, there is no coverage.
The Chief Judge also determined that a new trial was necessary because the special verdict form’s questions could not be harmonized with the law. In his words:
We do not know the probable resolution by the district court had it considered the fact that the policy prohibited coverage when a covered peril and an uncovered peril or perils jointly caused the damage.
* * *
[T]he jury was never asked if Salem’s damages were caused by concurrent causes and if so, whether Church Mutual proved that the flood was a concurrent cause of Salem’s damages.
