Anti-Concurrent Causation in New York

Last week’s Nor’easter brought back memories of Superstorm Sandy in 2012 with high winds, storm surge, flooding, rain, and power outages.

As is usually the case, the catastrophic event results in property damage, claims are reported, requiring the insurance carriers to investigate and uphold their part of the contract, and then the coverage questions arise. Years later, those coverage questions end up in court, and new case law is written by the courts interpreting the insurance policy language, state statutes, and existing case law; this is the normal course in the world of insurance law.

What is the law in New York with respect to the Anti-Concurrent Causation (ACC) language in the insurance policy after Superstorm Sandy?

When There Are Two ACC Clauses in the Insurance Policy

In the case of Madelaine Chocolate Novelties, Inc. v. Great Northern Insurance Company, ¹ the policy contained a typical ACC clause excluding flood:

This insurance does not apply to loss or damage caused by or resulting from:

• waves, tidal water or tidal waves; or
• rising, overflowing or breaking of any boundary, of any natural or man-made lakes, reservoirs, ponds, brooks, rivers, streams, harbors, oceans or any other body of water or watercourse, whether driven by wind or not, regardless of any other cause or event that directly or indirectly:
• contributes concurrently to; or
• contributes in any sequence to, the loss or damage, even if such other cause or event would otherwise be covered.

Under Normal circumstances, the storm surge would have been excluded, but this insurance policy contained an additional ACC clause within the Windstorm endorsement.

The policy covered damage or direct physical loss to a building or personal property caused by or resulting from Windstorm:

Windstorm means:

• wind;
• wind-driven rain;
• erosion of soil or other land caused by or resulting from wind or wind driven rain;
• hail; or
• collapse of a building or other structure caused by or resulting from wind, regardless of any other cause or event that directly or indirectly:
• contributes concurrently to; or
• contributed in any sequence to, the loss or damage, even if such other cause or event would otherwise be covered.

Windstorm does not mean:

• frost;
• cold weather;
• snow; or
• sleet or ice (other than hail), whether driven by wind or not.

The Second Circuit Court of Appeals determined that the second ACC clause embedded within the Windstorm endorsement should be read using strict and narrow construction, and any ambiguity should be construed in favor of the insured. The appellate court remanded the case to the trial court to assess whether the Windstorm endorsement containing the additional ACC Clause conflicted with or created an ambiguity vis-à-vis the policy’s flood exclusion.

If the district court finds the Windstorm ACC clause conflicts with or creates an ambiguity with the Flood ACC clause, then Storm Surge is covered under this policy’s Windstorm coverage.

What happens when a covered peril and an excluded peril concurrently cause physical damage to a property?

In Iannucci v. Allstate Insurance Company, ² the policyholder, Robert Iannucci, filed suit in New York Supreme Court after Allstate denied his claim for roof collapse, and the case was then removed to federal court in the Northern District of New York. After a two-day bench trial and six witnesses having testified, the court held that while the witnesses differed as to the cause of the collapse (hidden decay, deterioration due to lack of maintenance, or a combination thereof), all of the witnesses testified that the collapse was caused, at least in part, by the weight of the snow.

When concurrent causes of loss are covered and excluded, the court must look to the efficient or dominant cause of the loss, not the event that merely set the stage for that later event. “Only the most direct and obvious [efficient] cause should be looked to for the purposes of the exclusionary clause.” ³

In this case, the trial court reasoned that the evidence at trial did not show that any cause was predominant to the weight of snow in directly bringing about the collapse of the roof. Rather, the preponderance of the evidence indicated that the most direct and obvious cause of the collapse of the roof was the weight of approximately 37.5 inches of snow that had accumulated over the course of the winter. While other causes—including deterioration or inadequate maintenance—likely “set the stage” for the collapse during the snowstorm, Allstate failed to prove that any of these causes—considered separately or together—predominated over the weight of the snow as the efficient cause of the collapse.

The court’s reasoning is simple and straightforward: The deteriorated roof in need of maintenance did not collapse by itself, but for the weight of the snow contributing to the already existing condition of the roof resulting in the collapse, and there was no evidence presented showing that 37.5 inches of snow would not have caused the collapse but for the deterioration of the roof.

“As the last straw [snow flake] breaks the laden camel’s back.” — Charles Dickens, Dombey and Son, Chapter II.

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¹ Madelaine Chocolate Novelties, Inc. v. Great N. Ins. Co., 752 F. App’x 47 (2d Cir. 2018).

² Iannucci v. Allstate Ins. Co., 354 F. Supp. 3d 125 (N.D.N.Y. 2018).

³ Id. at 142 (quoting Parks Real Estate Purchasing Grp. v. St. Paul Fire & Marine Ins. Co., 472 F.3d 33, 48 (2^nd Cir. 2006)).