Claims And Issues

WHEN DEFECTS IN THE CONSTRUCTION PROCESS, NO RESULTING MOLD COVERAGE.

          When is there insurance coverage for mold under a residential tenant insurance policy?  Not when the mold is caused by defects in the construction process, it was pretty clear in Abraham v. Universal Ins. Co. of N. Am., 120 So. 3d 114, 115 (Fla. 4th DCA 2013)(also explaining succinctly that "the policy did not cover mold unconnected to a peril covered by the policy.").

          Every so often, as in this case, the insurance coverage question is not nearly as complicated as insurance coverage questions raised by other cases.

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One No Coverage Reason Proven, Enough: Affirm Carrier's Summary DJA.

          In Abraham v. Universal Ins. Co. of N. Am., 2013 WL 4081030 (Fla. 4th DCA August 14, 2013)(STATED NOT FINAL), the appellate court applied what is often called "the tipsy coachman rule" of appellate jurisprudence:  Where there is even one ground to affirm the trial court's judgment, even though the trial court entered judgment for the wrong reason, affirm the judgment.

          In that case, the carrier contended in pertinent part that the insured came within an exclusion for operating the premises for commercial purposes, and that coverage was excluded anyway because there is no coverage for construction defects and mold damage resulting from them.

          The appellate court noted that there was no record evidence of a commercial enterprise being operated by the policyholder.  However, the record evidence concerning the excluded construction defects and resulting mold damage, presented different stories:

The insurance company presented undisputed evidence that there was no water leak, and the policy did not cover mold unconnected to a peril covered by the policy. Defects in the construction process, as the expert testified was how the mold occurred, are not covered by the policy. Therefore, the summary judgment was appropriately entered.

Abraham v. Universal Ins. Co. of N. Am., 2013 WL 4081030 *1 (Fla. 4th DCA August 14, 2013).  The tipsy coachman rules again.

 

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FUNGUS EXCLUSION DELETES EFFICIENT PROXIMATE CAUSE DOCTRINE IN SOUTH DAKOTA.

            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, § 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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"Review Insurance Policies Now" Says Orlando Newspaper.

   Good advice with related links in this newspaper article published in the Orlando Sentinel, February 22, 2008, by Greg Groeller, "Review Insurance Policies Now".  Every Policyholder and their Agents and Brokers holding every kind of Insurance Policy can benefit from following the good advice published by this linked newspaper article.

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MOLD COVERS HOMES, HELD: INSURANCE DOES NOT COVER MOLD

                    Who Rebuilds and Repairs Where No Insurance Exists.

[THIS POST WAS ORIGINALLY PLACED ONLINE ON OCTOBER 11, 2006.  A POSTSCRIPT HAS BEEN ADDED THIS 16th DAY OF DECEMBER, 2006.]

    It is a fact that mold covers homes.  It is held under a standard Exclusion that insurance does not cover mold in Fiess v. State Farm Lloyds, 2006 WL 2505995 (Tex. Case No. 04-1104 Opinion Filed Aug. 31, 2006, answering this Question Certified by the Federal Fifth Circuit Court of Appeals) (subscription required), public access provided by Texas Supreme Court.

   The Fiess case in Texas involved a standard Exclusion used throughout the United States for "ensuing loss".  In a homeowner's policy, including the one in Fiess, water damage is ordinarily listed as a covered peril.  An Exclusion for "ensuing loss" excludes all coverage, however, for damage that ensues from an otherwise covered peril.  The modern homeowner's policy adds "mold" to the list of excluded ensuing loss.

    In Fiess, the Supreme Court held that mold damage is an excluded ensuing loss even though water damage is otherwise covered.  As a Federal Court recently held:  "After Fiess, even if the water damage is otherwise covered, resulting mold contamination is not."  Download gordon_publicly_issued_opinion_and_order_9_27_06.pdf

    The legal holding is clear.  The factual result is, well, a little more moldy and unclear.  The practical, if not legal question that remains, is:  Who will repair and replace when no insurance exists?

Postscript added Saturday, December 16, 2006:
The practical, if not legal question, that ended this post in October, 2006 still remains.  However, in the Fiess case itself, the Federal Fifth Circuit Court of Appeals affirms the District Court holding "that the Fiesses' Homeowners Form B (HO-B) policy did not cover mold contamination."   (Slipsheet at 1, Fifth Circuit Opinion Filed December 12, 2006.)  The District Court's holding and judgment of No Coverage now conforms to the Texas Supreme Court's "holding that the ensuing-loss provision did not provide coverage for mold contamination."  (Id. at 2.)

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.