In Swenson v. State Farm Fire & Casualty Co., 2012 WL 3903610 (D.S.D. September 7, 2012), a Federal Judge applied both South Dakota law and a Fungus Exclusion. The Judge stated that in most jurisdictions, "exclusionary language designed to avoid the 'efficient proximate cause doctrine' is enforceable." Swenson v. State Farm Fire & Casualty Co., 2012 WL 3903610 *7 (D.S.D. September 7, 2012).
The Federal Court was facing a Fungus Exclusion in a Homeowner's Policy. The Fungus Exclusion carried with it the language of an Anti-Concurrent Cause Clause Exclusion, basically eliminating all Homeowner's Coverage for damage caused by any excluded event even if the excluded event operated 'concurrently' or together with a covered event. Therefore, in this case the Court held that the South Dakota Doctrine of Efficient Proximate Cause did not apply, the Fungus Exclusion with the ACCC language applied instead, and there was no Coverage under the Homeowner's Policy for the Fungus damage thus excluded in that case. Other damage was excluded as well, so that the holding in that case ultimately was that there was no Coverage available at all under the Homeowner's Policy at issue there. Swenson v. State Farm Fire & Casualty Co., 2012 WL 3903610 *8, *12 (D.S.D. September 7, 2012).
Previously, two known decisions have addressed the conflict between an ACCC Exclusion and a State's Efficient Proximate Cause Doctrine. A State Court in Louisiana held to the contrary of the ruling reached by the Federal Court in South Dakota, while a Federal Court sitting in Pennsylvania rather elliptically but apparently held the same way as the Federal Court did in this case. See Dennis J. Wall, ยง 7:5 "ACCC or 'lead-in language'" CATClaims: Insurance Coverage for Natural and Man-Made Disasters (Thomson Reuters West, with 2012 Supplements).
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