{"id":892078,"date":"2017-05-03T16:34:56","date_gmt":"2017-05-03T22:34:56","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=892078"},"modified":"2017-05-03T16:34:56","modified_gmt":"2017-05-03T22:34:56","slug":"washington-supreme-court-applies-efficient-proximate-cause-test-pollution-exclusion","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/washington-supreme-court-applies-efficient-proximate-cause-test-pollution-exclusion\/","title":{"rendered":"Washington Supreme Court Applies Efficient Proximate Cause Test to Pollution Exclusion"},"content":{"rendered":"

Traub Lieberman Straus & Shrewsberry LLP<\/a> | May 2, 2017<\/p>\n

In its recent decision in Xia v. ProBuilders Specialty Ins. Co. RRG<\/em>, 2017 Wash. LEXIS 443 (Wash. Apr. 27, 2017), the Supreme Court of Washington had occasion to address the concept of efficient proximate cause as it relates to the application of a pollution exclusion.<\/p>\n

At issue in Xia<\/em> was ProBuilders\u2019 coverage obligation under a general liability policy for an underlying claim involving a hot water heater in a new home constructed by its insured.\u00a0 An exhaust vent for the heater had not been properly installed, thus allowing for carbon monoxide to be released directly into the home and causing injury to the home purchaser.\u00a0 ProBuilders denied coverage to its insured on the basis of its policy\u2019s pollution exclusion, as well as on the basis of another exclusion not at issue on appeal.<\/p>\n

The Court began its analysis by looking to its prior case law concerning the pollution exclusion, in particular its decisions in Cook v. Evanson<\/em>, 920 P.2d 1223 (1996), Kent Farms, Inc. v. Zurich Ins. Co<\/em>., 969 P.2d 109 (1998), and Quadrant Corp. v. American States Insurance Co<\/em>., 110 P.3d 733 (2005).\u00a0 Through these decisions, the Court limited application of the pollution exclusion to traditional environmental harms or to harms inflicted on persons as a result of pollutants acting as pollutants.<\/p>\n

In Kent Farms<\/em>, the Court held that the exclusion was inapplicable where an individual was injured as a result of being sprayed by diesel fuel whereas in Quadrant<\/em>, the Court held the exclusion applied to a claim involving alleged injuries resulting from decking sealant.\u00a0 The Court harmonized these cases by noting that in Kent Farms<\/em>, the claimant was not injured as a result from the diesel fuel acting as a pollutant, but instead from the force and impact of the spray. By contrast, in Quadrant<\/em>, the claimant was injured as a result of the toxicity of the sealant.\u00a0 As the Court noted:<\/p>\n

As discussed in Quadrant<\/em>, the facts in Kent Farms<\/em> did not result in a pollutant acting as a pollutant in such a way that would trigger the pollution exclusion. If the diesel fuel in Kent Farms<\/em> had been replaced with water, for example, the liquid would still have struck, choked, and engulfed the victim just as surely as the diesel fuel\u2014albeit with less severe consequences. As this court noted, the toxic nature of the pollutant was not central to the event that triggered coverage under the insurance policy. Id<\/em>.<\/p><\/blockquote>\n

With this context in mind, the Court agreed that the underlying claim in Xia<\/em>, involving injuries as the result of exposure to carbon monoxide, could come within the pollution exclusion.\u00a0 The Court nevertheless observed that per the rule of efficient proximate cause, when a \u201ccovered peril\u201d sets in motion a causal chain, the last link of which is an \u201cuncovered peril,\u201d then there is coverage under the policy.\u00a0 The Court reasoned that this analysis should apply in the context of a general liability policy if a covered \u201coccurrence\u201d gives rise to a loss that might otherwise be excluded.\u00a0 The Court noted, however, that there are limitations to this rule:<\/p>\n

\u2026 the efficient proximate clause rule applies only \u201cwhen two or more perils combine in sequence to cause a loss and a covered peril is the predominant or efficient cause of the loss.\u201d \u2026 It is perfectly acceptable for insurers to write exclusions that deny coverage when an excluded occurrence initiates the causal chain and is itself either the sole proximate cause or the efficient proximate cause of the loss.<\/p><\/blockquote>\n

But such an exclusion, explained the Court, cannot overcome the efficient proximate cause rule.\u00a0 The Court reasoned that the non-standard pollution exclusion in ProBuilders\u2019 policy applicable to any harm \u201cregardless of the cause of the pollution and whether any other cause of said bodily injury, property damage, or persona injury acted jointly, concurrently, or in any sequence with said pollutants or pollution\u201d was improperly broad since it would have circumvented the efficient proximate cause rule.\u00a0 The Court, therefore, held that this causation language was unenforceable.<\/p>\n

With this in mind, the Court turned to the question of what was the efficient proximate cause of the underlying claim.\u00a0 The Court observed that the underlying suit alleged that the carbon monoxide resulted from the improper installation of the hot water heater\u2019s venting, which in and of itself would be a covered \u201coccurrence\u201d under ProBuilders\u2019 policy.<\/p>\n

ProBuilders\u2019 argued that the Court\u2019s application of the efficient proximate cause rule would essentially negate the pollution exclusion, since all acts of pollution can be traced to an accident or an instance of negligence that could qualify as an \u201coccurrence\u201d under a general liability policy.\u00a0 The Court did not agree, observing that when the pollution event is the first step in the chain of causation leading to the injury, such as application of flooring sealant, then the pollution exclusion will apply.\u00a0 The Court further reasoned that ProBuilders could have drafted a more specific exclusion applicable to the occurrence giving rise to the pollution, such as an exclusion applicable to installation of home fixtures of hot water heaters, which would have avoided the efficient proximate cause rule.<\/p>\n

In summing up its decision, the Court explained:<\/p>\n

Pollution exclusion clauses are an important tool for insurers to avoid liability stemming from loss caused by pollutants acting as pollutants where the insured has paid no premiums for such coverage. However, emphasis must be given to the phrase \u201ccaused by.\u201d The efficient proximate cause rule continues to serve the underlying purpose of insurance policies and applies just as effectively to these facts as it has in prior cases. We hold that the efficient proximate cause of Xia\u2019s loss was a covered peril: the negligent installation of a hot water heater. Although ProBuilders correctly applied the language of its pollution exclusion to the release of carbon monoxide in Xia\u2019s home, ProBuilders breached its duty to defend in the face of an alleged covered occurrence that was the efficient proximate cause of the loss.<\/p><\/blockquote>\n

The Court therefore held that ProBuilders improperly breached its duty to defend, and did so in bad faith.<\/p>\n","protected":false},"excerpt":{"rendered":"

Traub Lieberman Straus & Shrewsberry LLP | May 2, 2017 In its recent decision in Xia v. ProBuilders Specialty Ins. Co. RRG, 2017 Wash. LEXIS 443 (Wash. Apr. 27, 2017), the Supreme Court of Washington had occasion to address the concept of efficient proximate cause as it relates to the application of a pollution exclusion.… Continue reading Washington Supreme Court Applies Efficient Proximate Cause Test to Pollution Exclusion<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4,3],"tags":[9895,22,530,306],"class_list":["post-892078","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-insurance-claims","tag-advise-consult","tag-insurance","tag-pollution-exclusion","tag-washington","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nWashington Supreme Court Applies Efficient Proximate Cause Test to Pollution Exclusion - 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