Efficient proximate cause issues have been much in the news lately as insureds and insurers joust over wind-water and anti-concurrent causation clauses throughout the Fifth Circuit. In an ew opinion, however, the Vermont Supreme Court has ruled that courts need not consider the efficient or predominant cause of a loss, much less ACC clauses, if the exclusion itself focuses on the nature of the loss, rather than its cause.
In Sperling v. Allstate Indemnity Co., 2007 VT 126 (Vt. November 9, 2007), a homeowner sought coverage for the cost of cleaning up oil that spilled out of a home heating tank in the insured’s basement after a suitcase fell on it breaking a valve through which oil passed on the way to the tank. Allstate denied coverage, citing an exclusion in the homeowner’s policy for loss to property caused by “vapors, fumes, acids, toxic chemicals, toxic gases, toxic liquids, toxic solids, waste materials or other irritants, contaminants or pollutants.”
The Supreme Court rejected the insured’s contention that pollution was not the efficient proximate cause of the oil spill, holding that the exclusion in question included not only losses caused by listed events but also losses “consisting” of the listed conditions. The court observed that “although contamination or pollution can be a cause of loss, it is most often an effect of other causes, that is a ‘loss consisting of’ rather than a cause.”
The court also refused to find that the circumstances of the spill could be viewed as an “explosion” so as to trigger the policy’s personal property coverage holding that, “whatever the force of the discharge of the oil, the tank did not rupture because of the internal pressure of the oil” so as to fit within the common case law or dictionary meaning of an “explosion.”
This is hardly the first time that homeowners have sued to get first party coverage for pollution claims. Indeed, prior to the widespread use of ACC clauses, several courts had ruled that coverage was required, notwithstanding first party pollution exclusions, if the negligence of a third party was a contributing cause. Thus, in Jussim v. Massachusetts Bay Ins. Co., 415 Mass. 24 (1993), the Supreme Judicial Court of Massachusetts found first party coverage for the cost of cleaning up fuel oil that migrated into the insured's well after a fuel oil dealer negligently delivered a load of oil into a neighbor's basement. The court ruled that the pollution exclusion did not defeat coverage where the "efficient proximate cause of the loss" was the negligence of a third party, "even though the final form of the property damage, produced by a series of related events, appears to take the loss outside of the terms of the policy."
The Sperling opinion takes a very different approach since the exclusion in question applies not only to loss caused by pollution but damage that "consists" of pollution.
