With two states of ambiguity, whose side is Nationwide on?

I’ve been watching the number of insurances cases filed in the Southern District Federal Court during August and was surprised to find Nationwide in the lead last time I checked with over 20 new cases filed this month – now, up to 30 as of a moment ago.

Since all new cases may not be Katrina related, I was also surprised the two I randomly plucked from the list for review were both Katrina related and virtually identical in key issues. Plaintiff’s in both had policies with Hurricane Coverage and Deductible Provision Endorsement – and, in yet another surprise, plaintiff’s claims had also been denied on the same basis in both cases:

Ultimately, Nationwide denied the Plaintiffs’ claim not because it determined Plaintiffs’ home and property were completely destroyed by an allegedly excluded peril, but because Nationwide determined it could not find evidence of wind damage

However, the more compelling reasons for my surprise at seeing so many newly filed suits against Nationwide are two-fold.  First, my research has lead me to understand there are two states of ambiguity at play in these wind and water cases.  Secondly; Nationwide was the Defendant in one of the landmark Katrina cases, Leonard, successfully appealed to the Fifth Circuit – a ruling it appears everyone but Nationwide understood was flawed.

The validity of the ACC clause is the key interpretive battleground of this appeal…

…Before trial, Nationwide moved for partial summary judgment, arguing that: (1) the ACC clause and water-damages exclusion unambiguously precluded coverage for any damage not solely attributable to wind…

The district court’s unsupported conclusions that the ACC clause is ambiguous and that the policyholder can parse out the portion of the concurrently caused damage that is attributable to wind contradict the policy language. (emphasis mine)

David Rossmiller posted the Leonard decision and comment on his insurance law blog. However, it was not Rossmiller’s post on the wind and water issues of Leonard that I found most enlightening on the ACC clause; but his post on a Canadian case where the issue was mold damage. It’s a shame the Fifth Circuit didn’t read that one. If they had, they might have better understood ambiguity and upheld Judge Senter’s decision.

Causal relationships are among the most intellectually perplexing constructs of human thought, and theories of concurrent and sequential causation are likewise theoretically complex.

Anti-concurrent cause language posits an arbitrary analysis of causation — arbitrary in the sense that the areas of inquiry are limited so that, when certain factors are present, the result of the analysis each time will be the same: no coverage.

These clauses were developed to deal with adverse court precedent in first-party property policies, however, and I have expressed some skepticism about how well the language transfers to liability policies. Consider this: property insurance causation has traditionally been viewed far differently from tort causationthe blurring of the distinction between the two, in fact, resulted in the development of the modern anti-concurrent cause clause. But tort causation is what liability insurance is all about, so whenever anti-concurrent cause language is inserted into the liability portion of a policy, sharp lawyers will look to attack it as incompatible with the underlying concept behind liability insurance — tort law can and does impose liability for concurrent causes of damage, so limitations on that theory of causation, some will say, are inherently ambiguous.

Rossmiller’s thought here make so much sense to me.  In other words, there are two states of ambiguity to resolve – one, the wording of the clause; and, the other the clause relative to tort law.  Judge Senter’s decision in Leonard appears to have been rooted in one but appealed on the other.  In over-ruling him, it appears the Fifth Circuit did likewise based on the diverse set of Mississippi cases referenced.

When I started this post, Sop reminded me of related posts here on SLABBED.  In this one, Sop does an excellent job of painting the big picture from Leonard forward and sets the stage for what is soon to come – the Mississippi Supreme Court will rule on the appeal filed in Corban v USAA – background posts on that are here and here.

Sop also reminded me we’d be hearing a familiar name in this case – and a respected one, too. Coast attorney Judy Guice, queen of slabbed and their defender.  No need to worry the Supremes will let their recent flap spill over to Corban with Ms. Guice there.  Her reputation is that it took a Katrina to slab her.

I’m hoping Sop will pick up here and tell the rest of the story; however, I just noticed that he’d added a Gustav feed on Slabbed and has a new post up that I’ve not read that’s been updated twice – so I imagine I’ll be back with more as bellesouth is preparing to become a shelter for friends from New Orleans.

Meanwhile, if Nationwide is your insurer, you might want to make extra preparations for Gustav. One of the lessons from Katrina is that there’s ambiguity in that catchy slogan and they may not be on your side after all.

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