978-1285770178 Case Printout Case CPC-30-05 Part 3

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than “overtop,” which means “[t]o rise over or above the top of; to surpass in height,

Additionally, a levee is a flood-control structure; its very purpose is to prevent the

floodwaters of a watercourse from overflowing onto certain land areas, i.e., to prevent

floods from becoming more widespread. See 50 Am.Jur.2d Levees and Flood Control § 1

(2006) (defining “levee” as “an embankment constructed along the edge of a river to

prevention and control); Webster’s Third New International Dictionary 1300 (2002)

whenever a levee ruptures and fails to hold back floodwaters, the result is a more

widespread flood. That a levee’s failure is due to its negligent design, construction, or

maintenance does not change the character of the water escaping through the levee’s

breach; the waters are still floodwaters, and the result is a flood.

that a reasonable interpretation of the term is that it refers only to inundations of water

Before we address these contentions, we first question the notion that the flood in this

case was non-natural. The plaintiffs focus on the alleged negligent design, construction,

on cases interpreting flood exclusions in the context of broken water mains. They also

assert, applying two canons of construction, noscitur a sociis and ejusdem generis, that a

flood includes only natural events because the other terms in the water-damage

exclusions are natural phenomena. Additionally, they contend that a reasonable

policyholder would expect that only naturally occurring floods would be excluded.

or maintenance of the levees as being the cause of the flood, and we accept as true (for

the purpose of assessing the motions to dismiss) their allegation that the canals’

floodwaters would not have reached their property had the negligence not occurred. This

focus, however, ignores the sizeable natural component to the disaster: a catastrophic

hurricane and the excess water associated with it. The non-natural component is simply

that in certain areas, man’s efforts to mitigate the effect of the natural disaster failed, with

devastating consequences. But if man’s failure to adequately prepare for a natural disaster

could alone transform the disaster into a non-natural event outside the scope of a policy’s

exclusion, it is difficult to conceive how an insurer could ever exclude the resulting loss;

any natural event could be recharacterized as non-natural either because man’s

preventative measures were inadequate or because man failed to take preventative

measures at all.

Even if we accept the plaintiffs’ characterization of the flood in this case as non-natural,

first maintain that dictionary definitions support their interpretation, but the dictionaries

we have reviewed make no distinction between floods with natural causes and those with

non-natural causes.FN20 Indeed, the Columbia Encyclopedia specifically states that a

flood may result from the bursting of a levee. See Columbia Encyclopedia 1002.

Similarly, Appleman’s treatise states: “A ‘flood,’ contemplated by the exclusion, can

supra, at § 3145 (Supp.2007) (citing Kane, 768 P.2d 678).

FN20. Xavier points to the mentioning of “Act of God” in the sixth edition of Black’s

Law Dictionary’s definition of “flood” as authority for limiting floods to natural events.

Since an “Act of God” is “[a]n act occasioned exclusively by forces of nature without the

interference of any human agency,” Black‘s Law Dictionary 33 (6th ed.1990), Xavier

context of an enormous hurricane, and it thus had a significant natural component.

The plaintiffs next rely heavily on a line of cases, arising in the context of broken water

mains, holding that the term “flood” in a policy’s exclusion was ambiguous based on a

distinction between natural and non-natural events. For example, in Ferndale

Development Co. v. Great American Insurance Co., a Colorado intermediate court

water main”). Similarly, a New York intermediate court held that a flood exclusion did

not apply in the context of a broken water main because the term “flood” “connotes an

inundation; a deluge.” Popkin v. Sec. Mut. Ins. Co. of N.Y., 48 A.D.2d 46, 48, 367

N.Y.S.2d 492 (N.Y.App.Div.1975). That court also opined that even if the term “flood”

is to be read broadly so as to include any “great quantity” of water, the term should be

Mellon v. Hingham Mut. Fire Ins. Co., 19 Mass.App.Ct. 933, 472 N.E.2d 674, 675

(1984) (concluding that exclusion for “water below the surface of the ground” did not

exclude damage from drainage pipe’s rupture because the “loss was caused by an

accidental break rather than a natural occurrence” and, as a fortuity, was “the kind of risk

an ‘all risk’ policy is designed to cover”).FN21

Couch, supra, at § 153:65 (collecting cases); see also id. §§ 153:66-:67; Fayad v.

Clarendon Nat’l Ins. Co., 899 So.2d 1082, 1086-89 (Fla.2005); Murray, 509 S.E.2d at 4-

5, 10; Peach State Uniform Serv., Inc. v. Am. Ins. Co., 507 F.2d 996, 1000 (5th Cir.1975)

(applying Georgia law).

We do not question the holdings or the rationale of the earth-movement cases. But the

Although we do not quibble with the results reached in the water-main cases, we do not

believe that a distinction between natural and non-natural causes is applicable in this

context. First, unlike a canal, a water main is not a body of water or watercourse. Many

(although not all) dictionary definitions define “flood” as an overflow or inundation of a

body of water or watercourse. FN22 Likewise, Appleman’s treatise observes that flood

(distinguishing between rupture of water main and overflow of watercourse, regardless of

whether the watercourse was originally man-made or forged from nature). Couch on

Insurance recognizes a distinction between water-main breaks and the overflow of a body

of water and opines that the body-of-water delineation is more useful than the

natural/non-natural distinction in determining whether an event is a flood:

been maintained for a sufficient length of time. Black’s Law Dictionary 1623 (8th

ed.2004); see also Wallis v. Country Mut. Ins. Co., 309 Ill.App.3d 566, 243 Ill.Dec. 344,

723 N.E.2d 376, 382 (2000) (stating that a permanent watercourse with a defined bed,

visible banks, and a recurrent water flow is considered natural, even if it was originally

man-made).

distinction. Instead, the key to reconciling these cases lies in the common definition of a

flood as an overflow from a body of water. Thus, when the inundation results from the

overflow of a body of water, whether natural or artificial, the event is a flood.

Conversely, if the inundation does not arise from the overflow of a body of water, as

when a water main breaks, the event is not a flood.

Second, the amount of water generally released from a broken water main is not

comparable to the massive inundation of water that occurred when the levees in New

Orleans ruptured. Cf. Kane, 768 P.2d at 681 (distinguishing water-main cases on the

basis that the amount of water released from a broken water main is “less clearly an

inundation or deluge” (quotation marks omitted)). A broken water main or other pipe

is a flood. See Popkin, 48 A.D.2d at 48, 367 N.Y.S.2d 492 (concluding that flood

exclusion does not encompass water-main break because the term “flood” “connotes an

inundation; a deluge”).

Third, and most important, unlike water mains, levees are flood-control structures, which

by definition means that they interact with floodwaters. Because levees are man-made,

floodwaters to be diverted downstream to another area of land, the resulting flood

downstream occurs because the levee performs as designed. Any time a flooded

watercourse encounters a man-made levee, a non-natural component is injected into the

flood, but that does not cause the floodwaters to cease being floodwaters. Cf. Smith v.

Union Auto. Indem. Co., 323 Ill.App.3d 741, 257 Ill.Dec. 81, 752 N.E.2d 1261, 1267

effective).

[30] Link to KeyCite Notes[31] Link to KeyCite Notes The plaintiffs additionally

contend that the canons of construction known as noscitur a sociis and ejusdem generis

support the proposition that the term “flood” is limited to purely natural events. FN25

Although we have concluded that the distinction between natural and non-natural events

Under the canon of ejusdem generis, “where general words follow the enumeration of

particular classes of persons or things, the general words will be construed as applicable

only to persons or things of the same general nature or class as those enumerated.” First

Am. Title Ins. Co. v. First Trust Nat’l Ass’n (In re Biloxi Casino Belle Inc.), 368 F.3d

491, 500 (5th Cir.2004); see also Black’s Law Dictionary 556 (8th ed.2004). The

naturally occurring earth movements. See Couch, supra, at § 153:66; Murray v. State

Farm Fire & Cas. Co., 203 W.Va. 477, 509 S.E.2d 1, 9 (1998).

We disagree that the other terms in the exclusion necessarily refer to natural events. For

example, a “surface water” exclusion has been held to bar coverage where the inadequate

design of a drainage system caused water to accumulate rather than drain away, resulting

both natural and non-natural events, the canon of noscitur a sociis does not support the

plaintiffs’ proposed limitation of the term “flood.” And ejusdem generis is not at all

applicable in interpreting “flood” in the exclusions before us. This canon is used to

interpret general terms (e.g., “and the like”) following a list of specific terms. See First

Am. Title Ins. Co., 368 F.3d at 500. But “flood” is not a general term; it is one of the

used to defeat the obvious purpose or plain meaning of the text”); Schenkel & Shultz,

Inc. v. Homestead Ins. Co., 119 F.3d 548, 551 (7th Cir.1997) (“We cannot use the

doctrine [of noscitur a sociis] to create uncertainty in an otherwise unambiguous term

….”).

[32] Link to KeyCite Notes The plaintiffs finally contend that the reasonable

unambiguous.” Coleman v. Sch. Bd. of Richland Parish, 418 F.3d 511, 522 (5th

Cir.2005). As we have explained, the flood exclusions in the policies are unambiguous in

the context of the specific facts of this case; thus, we need not resort to ascertaining a

reasonable policyholder’s expectations. For the sake of thoroughness, however, we will

briefly address a few of the parties’ arguments.

risk policies do generally extend to all fortuitous losses, this is true only to the extent that

the policy does not expressly exclude the loss from coverage. See Alton Ochsner Med.

Found., 219 F.3d at 504. Each policy in this case contains a specific provision expressly

excluding damage caused by flood, and none of the exclusions indicates that whether a

particular flood is excluded depends on whether its cause is purely natural. Given the

materially similar to the following, from Humphreys’s policy with Encompass Indemnity:

We will pay only that part of the total of the loss for all Property Coverages that exceeds

the hurricane deductible stated on the Coverage Summary. The hurricane deductible

shown on the Coverage Summary applies to all covered property for direct physical loss

or damage caused directly or indirectly by a hurricane as defined below. Such deductible

be a hurricane by the National Weather Service ….

….

All other provisions of this policy apply.

The plaintiffs assert that in light of this language, a reasonable policyholder would have

expected the water damage in this case to be covered. Humphreys goes a step further and

definition of “hurricane.” Further, the endorsements state that all other provisions of the

policies apply, indicating that the flood exclusions remain in effect. The hurricane-

deductible endorsements therefore would not give a reasonable policyholder the

impression that flood resulting from a breached levee would be covered.

Finally, several defendantsFN26 argue that in light of flood insurance available though

natural, and that property owners who want flood coverage must purchase it through the

NFIP; a reasonable policyholder thus would not expect the inundation of water in this

case to be covered under a standard homeowners, renters, or commercial-property

insurance policy.

FN26. Specifically, Standard, Hanover, Great Northern, and the ISO Defendants make

We do not rely upon the NFIP to decide this appeal. Our decision is based instead upon

our determination that the flood exclusions in the policies before us unambiguously

preclude the plaintiffs’ recovery. But to the extent that the NFIP’s definition of “flood” is

further evidence of the term’s generally prevailing meaning, we note that it is consistent

with our interpretation. Standard insurance policies issued under the NFIP define “flood”

c. Mudflow.

44 C.F.R. Pt. 61, App. A(1), App. A(2), App. A(3) (2006); see also Federal Emergency

Management Agency, FloodSmart.gov: What is a Flood?, http:// www. floodsmart. gov/

floodsmart/ pages/ whatflood. jsp (last visited July 25, 2007). The NFIP makes no

distinction between inundations of water caused by natural levee ruptures and those

through the City of New Orleans overflowed their normal boundaries. The flood-control

measures, i.e., levees, that man had put in place to prevent the canals’ floodwaters from

reaching the city failed. The result was an enormous and devastating inundation of water

into the city, damaging the plaintiffs’ property. This event was a “flood” within that

term’s generally prevailing meaning as used in common parlance, and our interpretation

Lastly we turn to the doctrine of efficient proximate cause. Under this doctrine, as it is

applied in many jurisdictions, where a loss is caused by a combination of a covered risk

and an excluded risk, the loss is covered if the covered risk was the efficient proximate

cause of the loss.FN28 See, e.g., Chadwick v. Fire Ins. Exch., 17 Cal.App.4th 1112, 21

Cal.Rptr.2d 871, 873 (1993); Kish v. Ins. Co. of N. Am., 125 Wash.2d 164, 883 P.2d

provided coverage only for loss caused by windstorm) that “if a windstorm is the

dominant and efficient cause of the loss, the insured may recover notwithstanding that

another cause or causes contributed to the damage suffered.” Lorio v. Aetna Ins. Co., 255

La. 721, 232 So.2d 490, 493 (1970); see also Roach-Strayhan-Holland Post No. 20, Am.

Legion Club, Inc. v. Continental Ins. Co. of N.Y., 237 La. 973, 112 So.2d 680, 683

indirectly by” flood “regardless of any other cause or event contributing concurrently or

in any sequence to the loss.” This language, which the district court referred to as an anti–

concurrent-causation clause, has been recognized as demonstrating an insurer’s intent to

contract around the operation of the efficient-proximate-cause rule. See, e.g., TNT Speed

& Sport Ctr., Inc. v. Am. States Ins. Co., 114 F.3d 731, 732-33 (8th Cir.1997).

LEXIS 34710 (S.D.Miss. May 24, 2006) (unpublished opinion) (Hurricane Katrina case

involving alleged damage from wind, rain, and storm surge), appeal docketed, Nos. 06–

61075 & 06-61076 (5th Cir.). Instead, the court stated that “in this case the ‘cause’

conflates to the flood,” meaning that the alleged negligent design, construction, or

maintenance of the levees and the resulting flood were not separate causes of the

causation clauses were inapplicable,” contending that the cause of their damage (“man–

made inundation of water or inundation resulting from third-party negligent acts”) was a

covered peril.FN29 Xavier responds that the district court “correctly noted that [the anti–

concurrent-causation clause] is inapplicable because there is no separate or other cause of

damage.”

more distinct actions, events, or forces combined to create the loss. See Pieper v.

Commercial Underwriters Ins. Co., 59 Cal.App.4th 1008, 69 Cal.Rptr.2d 551, 557 (1997)

(“For the efficient proximate cause theory to apply, … there must be two separate or

distinct perils ….”); Kish, 883 P.2d at 311 (“The efficient proximate cause rule applies

only where two or more independent forces operate to cause the loss.”). But here, on

inapplicable. See Chadwick, 17 Cal.App.4th at 1117, 21 Cal.Rptr.2d 871 (“When,

however, the evidence shows the loss was in fact occasioned by only a single cause,

albeit one susceptible to various characterizations, the efficient proximate cause analysis

has no application.”); see also Cornhusker Cas. Co. v. Farmers Mut. Ins. Co., 268 Neb.

168, 680 N.W.2d 595, 601-02 (2004); Kish, 883 P.2d at 311.

would be largely meaningless.” Chadwick, 21 Cal.Rptr.2d at 874. Thus, in Pieper v.

Commercial Underwriters Insurance Co., where a policy covered loss caused by arson

but excluded loss caused by brush fire, a brush fire caused by arson was excluded. 69

Cal.Rptr.2d at 557-58. The Pieper court determined that the cause of the brush fire was

irrelevant; the plaintiffs’ property was damaged by one cause alone, brush fire, and thus,

reject any attempt on the plaintiffs’ part to avoid the operation of the flood exclusion by

recharacterizing the flood as negligence; the sole cause of the losses for which they seek

coverage in this litigation, flood, was excluded from coverage regardless of what factors

contributed to its development.

In sum, we need not address the applicability of anti-concurrent-causation clauses or the

for judgment on the pleadings is AFFIRMED. The denial of the motions for judgment on

the pleadings filed by Hanover and Standard Fire is VACATED and REMANDED.

With respect to the Xavier action, the motion to certify questions to the Louisiana

Supreme Court is DENIED. The district court’s grant of partial summary judgment in

favor of Xavier is VACATED and REMANDED.

With respect to the Humphreys action, the district court’s denial of Humphreys’s partial-

summary-judgment motion on the question of coverage under the policy’s hurricane-

deductible endorsement is AFFIRMED. The grant of partial summary judgment in

Humphreys’s favor on the question of the interpretation of the policy‘s flood exclusion is

VACATED and REMANDED.

Motions DENIED; AFFIRMED in part, VACATED in part, and REMANDED for

further proceedings consistent with this opinion. The appellees shall bear the cost of this

appeal.