978-1285770178 Case Printout Case CPC-30-09 Part 2

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wind-water action.FN6 Such cases thus do not support the Leonards’ argument

that the Mississippi default rule in hurricane cases is always to allow recovery for

water. The evidence on behalf of the appellees tended to show that the damage

FN6. See, e.g., Liberty Universal Ins. Co. v. Hall, 289 So.2d 683, 684

to pay for damages resulting from a combination of covered and excluded perils

if the efficient proximate cause is a covered peril.” (citation omitted)); Garvey v.

State Farm Fire & Cas. Co., 48 Cal.3d 395, 257 Cal.Rptr. 292, 770 P.2d 704, 710

that abrogated the default efficient proximate causation rule and excluded

damage occasioned by the synergistic action of a covered and an excluded

peril.FN8 The cases reflect the general Mississippi contract principle that “where

a clause in a contract does not violate any statute, or public policy, and is

unambiguous and certain in its provisions, it is enforced as written.” Am. Bankers’

(S.D.Miss.2001); Rhoden v. State Farm Fire & Cas. Co., 32 F.Supp.2d 907

(S.D.Miss.1998); Boteler v. State Farm Cas. Ins. Co., 876 So.2d 1067

(Miss.Ct.App.2004).

Rhoden and Boteler are particularly instructive on this score. In Rhoden, State

Farm excluded losses from earth movement (the excluded peril) under an ACC

courts have not adopted the efficient proximate causation doctrine. Id. at 912;

Boteler, 876 So.2d at 1070. Boteler and Eaker echo Rhoden’s holding that ACC

clauses are enforceable, absolute bars to recovery “[w]hen a loss is caused by a

combination of a covered and specifically excluded risks.” See Eaker, 216

F.Supp.2d at 623 (quoting Rhoden, 32 F.Supp.2d at 911); see also Boteler, 876

Aug.14, 2006), a Katrina coverage case involving a concurrent-causation

provision that was before the district court on a Rule 12(b)(6) motion, the court

distinguished Eaker, Rhoden, and Boteler on the basis that “the records in [the

earth-movement] cases showed that the losses would not have occurred in the

absence of the excluded event.” Id. at *4. It is undisputed that the lion’s share of

cause. For instance, in TNT Speed & Sport Center, Inc. v. American States

Insurance Co., 114 F.3d 731 (8th Cir.1997), a vandal removed sandbags from a

levee protecting a go-cart track from the waters of the Mississippi River. As a

result, the levee collapsed and river water damaged TNT’s buildings. The

insurance policy covered losses caused by vandalism, but excluded flood losses,

upholding ACC clauses). See also Front Row Theatre, Inc. v. Am. Mfrs. Mut. Ins.

Companies, 18 F.3d 1343, 1347 (6th Cir.1994) (upholding an ACC clause barring

coverage for concurrently caused water losses (citing Schroeder v. State Farm

Fire & Cas. Co., 770 F.Supp. 558, 561 (D.Nev.1991))). A majority of states that

have considered the matter enforce ACC exclusion clauses. See 4 David L.

causation by statute.FN11

FN10. See Murray v. State Farm Fire & Cas. Co., 203 W.Va. 477, 509 S.E.2d 1,

12 (1998) (“We hold that, when examining whether coverage exists for a loss

under a first-party insurance policy when the loss is caused by a combination of

covered and specifically excluded risks, the loss is covered if the covered risk

section 530 as incorporating into California law the efficient proximate cause

doctrine, an interpretive rule for first party insurance.”); Western Nat’l Mut. Ins.

Co. v. Univ. of N.D., 643 N.W.2d 4, 13 (N.D.2002) (efficient proximate cause

doctrine codified at N.D. Cent.Code §§ 26.1-32-01, 26.1-32-03).

2. Public Policy

Mississippi has not adopted the efficient proximate cause doctrine as a matter of

public policy, there is no bar to Nationwide’s use of the ACC clause here. Most

jurisdictions concur that ACC clauses comport with state public policy. The

Alabama Supreme Court’s recent decision in State Farm Fire & Casualty Co. v.

Slade, 747 So.2d 293 (Ala.1999), is representative of this trend.

substantively indistinguishable from the one contested here. Slade held that the

occasional citation of the efficient proximate cause rule in Alabama caselaw did

not require the court to invalidate the disputed ACC clause because the rule is

not a “principle of public policy.” 747 So.2d at 314. Instead, the court adhered to

Alabama’s “long-standing rule against rewriting unambiguous insurance policies

efficient proximate causation doctrine. Mississippi insurance law, in fact, lends

some support to Nationwide. Under state law, all insurance providers are

required to file “all rates, supplementary rate information, policy forms and

endorsements” with the Mississippi Department of Insurance. See Miss.Code

Ann. § 83-2-7(1). The state Insurance Commissioner must reject any rate or

of coverage, exclusions, disclaimers, definitions, and other provisions, in order to

receive the benefit of their bargain and to ensure that rates have been properly

calculated.”); see also 7 Couch on Ins. § 101:54 (“Causes that fall within the

policy coverage may be considered to be those that the insurer has assessed in

setting its premium or that the insured would have derived from the language of

Legislature to address” rather than the state judiciary. Wooten v. Miss. Farm

Bureau Ins. Co., 924 So.2d 519, 523 (Miss.2006).

The Leonards object to Nationwide’s citation of the filed-rate doctrine, contending

that it “has never been held to be an absolute bar to litigation” and would

constitute “an encroachment by regulatory agencies into the court system and

For all these reasons, we conclude that use of an ACC clause to supplant the

default causation regime is not forbidden by Mississippi caselaw (including the

Camille cases which antedate such clauses), statutory law, or public policy.

Because the ACC clause is unambiguous and not otherwise voidable under state

law, it must stand.

as a term commonly understood “among residents of Pascagoula” as distinct

from a flood.FN12 Thus, the argument goes, because “[t]he literal wording of the

‘water damage’ exclusion does not contemplate the exclusion of [damage from]

‘storm surge,’ ” recovery is available. See 11 Couch on Ins. § 153:48 (“Because

exclusions are read narrowly, a policy excluding damage from some natural

policy. See Am. States Ins. Co. v. Natchez Steam Laundry, 131 F.3d 551, 555

(5th Cir.1998); Heartsouth, PLLC v. Boyd, 865 So.2d 1095, 1105 (Miss.2003).

Even so, the authority cited in support of the Leonards’ proposition, Red Panther

Chem. Co. v. Ins. Co. of Penn., 43 F.3d 514 (10th Cir.1994), is less than

convincing on this score. Red Panther applied Mississippi law to a set of

clause is practically indistinguishable from provisions used in insurance policies

for two centuries, and hurricane damage is anything but novel.

Courts have interpreted water-damage exclusions like the one found in the

Leonards’ policy to encompass the peril of wind-driven inundation by water, or

storm surge, for ages.FN13 Mississippi courts have upheld such exclusions

from Lake Pontchartrain ….”).FN14 Further, this court’s most recent consideration

of the term “flood” also supports Nationwide’s contention that the term is

unambiguous and has a concrete meaning, whether or not used in the context of

an insurance policy. See In re Katrina Canal Breaches Litigation, 495 F.3d 191,

2007 WL 2200004, at *16-*18 (5th Cir. Aug.2, 2007) (considering the term in the

(holding that wind-driven storm surge was an excluded peril under a flood

exclusion and rejecting policyholder’s contention that because “the water was

made high, not by normal tidal influences, but by wind, the element insured

against, and that in driving the water against the foundations of the house, the

water was the passive and the wind the efficient force which proximately caused

FN14. See also Buente v. Allstate Property & Cas. Ins. Co., 2006 WL 980784, at

*1 (S.D.Miss. April 12, 2006) (finding that “[water-damage] exclusions are drawn

quite broadly” and clearly include storm-surge damage); Tuepker v. State Farm

Fire & Cas. Co., 2006 WL 1442489, at *3 (S.D.Miss. May 24, 2006)

(unpublished) (“ ‘storm surge’ [losses] are excluded from coverage because this