efficient proximate cause and bongen and mt st helens and graham and 1980

This mini-essay, as promised, will try to understand the Earth Movement Exclusion in a homeowners policy by considering two cases. The first, Graham (656 P2d 1077 (Wash 1983)), considered the insurance "fallout" from the Mt. St. Helens eruption on 5/18/80.

Graham, along with many others, lost his home in the wake of the eruption of the mountain. As we know, the eruption caused molten lava to cascade down the mountain, mingling with water and ash to form a deadly mudflow, and knocking down trees and every living thing in its path. The insurer rejected Graham's claim, citing the "Earth Movement" provision. Interestingly enough, this exclusion had just been modified in March 1980. The former language was as follows:

"This policy does not insure against loss:....2. caused by, resulting from, contributed to or aggravated by any earth movement, including but not limited to earthquake, volcanic eruption, landslide, mudflow, earth sinking, rising or shifting; unless loss by fire, explosion or breakage of glass constituting a part of the building(s) covered hereunder....ensues."

The language of the policy adopted in March 1980 was as follows:

"SECTION 1--EXCLUSIONS. We do not cover loss resulting directly or indirectly from:....2. Earth Movement. Direct loss by fire, explosion, theft or breakage of glass or safety glazing materials resulting from earth movement is covered. 3. Water damage, meaning: a. flood..."

Earth Movement was not defined in the post-March policy language. Before going on, it might be instructive to compare the language of the standard form policy from p. 175 on Earth Movement. Note that volcanoes are back in there. Do you suppose that Mt. St. Helens may have had something to do with it?

In any case, the lower court upheld the insurer's denial of coverage but the WA Supreme Court reversed for a factual hearing. The court said that whether the movement of the mountain was an "explosion" within the terms of the policy was a question of fact to be determined by a jury. If the jury concluded that the eruption was an explosion, it would then be necessary to reach the issue of "whether the loss was a direct result of the eruption" (note the policy language). The court went on to define an efficient or predominant cause. Such a cause "sets into motion the chain of events producing the loss which is regarded as the proximate cause, not necessarily the last act in a chain of events."

Even though the court might find the eruption to be the cause which "set into motion" the rest of the volcanic activity, and thus would be a covered loss, the reasoning of the court strikes me as unconvincing. After all, didn't earth movement prior to the eruption really "cause" the whole thing? You begin to see how identifying the issue of cause is quite problematic, in addition to the problem regarding where you pinpoint the "efficient proximate" cause.

A Word on Bongen

We will discuss Bongen in class, and so I don't want to make many comments here about it. Suffice it to say that it is a case under theory (3) in the previous essay. That is, the insurance industry decided that it would take matters into its own hand and eliminate coverage for dual causation. The Bongen case had to determine whether the insurers were able to do that or whether the efficient proximate cause doctrine (in the more than 50% variety) would operate despite the plain language of the policy to the contrary. In other words, the court had to wrestle with the problem of whether the reasonable expectations of the insured would should lead to possible coverage when dual causes (one covered and one not) converged in a loss. The Alaska Court concluded that the insurer could so limit coverage. Not all courts agree. But it is the latest attempt to bring clarity into the complex world of dual causation in homeowners policies.