It’s Deja Vu All Over Again: Rossie’s New Appleman’s analysis of Anti Concurrent Causation anyone? Big Insurance Chips in Big Time with AIG’s Lexington unit in Dickerson. Softly spoken magic spells….

Nowdy and I have kicked this news back and forth all afternoon and we’re inspired in completely different directions so I’ll go first with some Pink Floyd. Turn up your speakers, press play and read on.


Every year is getting shorter never seem to find the time.
Plans that either come to naught or half a page of scribbled lines
Hanging on in quiet desperation is the English way
The time is gone, the song is over,
Thought I’d something more to say.

Home, home again
I like to be here when I can
And when I come home cold and tired
Its good to warm my bones beside the fire
Far away across the field
The tolling of the iron bell
Calls the faithful to their knees
To hear the softly spoken magic spells. 

I was reminded of Time as I read the brief submitted by Team Insurance in AIG’s en banc reconsideration motion in the recently decided Dickerson v Lexington. We’ve been here before and as the lyrics in my post title suggests it seems the gang lead by Allstate thinks softly spoken magic spells will put a new spin on well established case law. Let’s take a look at what the best legal minds big insurance could buy have to say about Dickerson:

The Panel’s opinion contains dicta that could be construed to suggest that the burden of proof is on the insurer not only to prove the applicability of the exclusion (i.e., that a home was extensively flooded) but also to completely disprove the possibility of wind damage, and thereby segregate wind damage from water damage. To the extent that dicta in the Panel’s opinion could be read in that fashion, it is contrary to precedent, including prior panel decisions of this Court, and could eviscerate the insured’s burden to establish coverage and applicable policy language. The Panel’s opinion also incorrectly holds, contrary to a Louisiana Supreme Court decision, that emotional distress penalty damages may be awarded even where the insurance contract protects only pecuniary interests and where there is no proof that the Insurer intended to cause emotional injury.

Now let’s jump back into wayback machine because the one thing everyone seems to agree upon is Dickerson was based on well established legal principals. Anti Concurrent causation can be a tricky thing and after Edith Jones at the 5th Circuit butchered the concept in Leonard v Nationwide our own judge Senter had to bone up to make his rulings bulletproof. Where did he turn? David Rossmiller’s analysis of anti concurrent causation at New Appleman of course. And what does this have to do with presto chango “burden of proof”? Judge Senter hints at it in a case we covered back last April in Dickinson v Nationwide:

The meticulous analysis by David Rossmiller concerning the history, purpose, and meaning of the anti-concurrent cause provision, published at New Appleman on Insurance: Critical Issues in Insurance Law, makes it clear that an anti-concurrent cause provision has no application in a situation (such as Hurricane Katrina) where two distinct forces (wind and water) act separately and sequentially to cause different damage to insured property. Each force may cause damage to different parts or items of the insured property, as occurred in the Leonard case, or the two forces may cause damage to the same item of insured property at different points in time. But the two forces, i.e. wind and water, remain separate and not concurrent causes of this damage. In either case, the damage caused by wind is covered under the policy while the damage caused by water is not. Water damage is the excluded “loss” referred to in the anti-concurrent cause provision of the Nationwide policy.

Thus, the damage done by wind and wind-driven debris during Hurricane Katrina is a loss that is covered by the Nationwide homeowners policy, and any additional damage done by the rising waters incident to the storm is not a covered loss. In this situation, the anti-concurrent cause provision is not applicable and does not come into play because each force causes its own separate damage independent of the damage caused by the other even when the same item of property is damaged by both forces acting separately and sequentially. Wind and water are separate and not concurrent causes of the damage to the insured property……

Thus, Nationwide will not be liable for any damage the insured property sustained because of storm surge flooding, because the peril of flooding is excluded under the homeowners policy. Nationwide is only liable for the damage caused by the covered peril of windstorm, as defined in the endorsement granting that coverage. What remains to be decided, based upon the evidence presented by the parties–evidence that is certain to be conflicting–is whether…….Nationwide has fully and fairly compensated the plaintiffs for all the windstorm damage the insured property sustained during Hurricane Katrina.

Implied in the last sentence is the concept of claims adjustment. With today’s brief in Dickerson the insurance industry is saying in effect they have no duty to adjust their claims for covered perils when a noncovered peril also occurs instead placing the “burden of proof” on the policyholder. This flies in the face of well established case law. Chip Merlin explains why this is the case in Mississippi with his entry on Tuepker. I bet the same logic is in play in Louisiana since these principals are well established in common law:

There is no fair reading of this exclusionary language that would compel a different result from that reached by the District Court with respect to the burden of proof and the fact that State Farm must provide coverage for damage that is not caused by an excluded event. Indeed, in discussing the lead-in language to the losses not insured section of its policy, State Farm conceded in its brief “(i)t plainly states that ‘any loss which would not have occurred in the absence of’ certain excluded events, including water damage, is not covered under the policy, ‘regardless of’ the operation or effect of other causes of the loss.” Under the Mississippi Supreme Court’s allocation of the burden of proof, State Farm then has the burden of proof to establish what portion of the accidental direct physical “loss which would not have occurred in the absence of” an excluded event.

Respectfully, I just wish this point had been made more forcefully in the oral argument. These Jurists are conservative by nature and do not want to deviate from the recent Leonard precedent. But, State Farm is having its attorneys argue out of a product and burden of proof that I am certain its claims management is well aware of-just to avoid a significant loss. As a student and critic of this clause for a long period of time, I actually think the State Farm clause may come closest to expressing the intent of what the industry wanted to say in the first place. From our perspective, it is a shame they will not honor the benefit of the all risk nature of the policy they sell when they cannot prove the storm surge exclusion. (Emphasis Sop)

Perhaps we all have better idea why Chip wanted that point made more forcefully. Soon we’ll all know if the law or smoke and mirrors is decided at the 5th Circuit.


11 thoughts on “It’s Deja Vu All Over Again: Rossie’s New Appleman’s analysis of Anti Concurrent Causation anyone? Big Insurance Chips in Big Time with AIG’s Lexington unit in Dickerson. Softly spoken magic spells….”

  1. It’s not so much that I was inspired in a different direction, Sop, as that I had trouble writing my way through “fluff” – you’ll note that I didn’t reach the core issues until after page 28 of the 43!

    I need to double check, but the listed Amici all seem to be companies that did not have clear language about flood exclusion.

    Remember the Mowbray article mentioned in this post

    But after Katrina, questions arose over whether a manmade flood was really a flood excluded by most insurance companies, especially since some companies, such as State Farm and Hartford Group, had language specifically banning coverage for manmade events.

    Enjoyed your music btw!

  2. I thought the song “Crying” by Roy Orbison might be appropriate for “Team Big Insurance.”

  3. We got Roy saved for a special occasion Rick.

    Nowdy where else can insurance oriented readers get tie ins to the King and Roger Waters in one day? Only on slabbed.


  4. Where? I don’t know but I’d bet one/both of us has been there and would go again if we got the chance. Sorry that I jumped the gun on Roy but I haven’t figured out how to get the new setup to hold a youtube in drafts.

  5. Roy Orbison indeed!
    I can think of a few soundtracks to this turgid fabel and ain’t one of them printable. Anything from English Bedlam works for me since they invented this stuff anyway, bedlam that is.
    I’m still stuck on Hank III and you definitely can’t print any of That.
    “Marylin Chambers Does the Muppets”? Naahh, too deadpan.
    Ooh Ooh Ooh! “Riders on the Storm” ? Yeah that’s the ticket!

  6. We can’t print Hank III but I watched what you sent…and that really wild whatever Steve sent last night.

    Of course, I’m partial to Elvis and am fairly current on the muppets but you guys are introducing me to newer music – good thing, too, as “the King” died at age 42, would be 74 now and everyone should update their music at least every 32 years and I don’t think adding the muppets counts!

    I enjoyed the Roy Orbison and the duet, too, Editilla – don’t laugh and I send you an Elvis story from my past.

  7. Insurance lawyers are experts at sophistry. Their statements and arguments are so subtly deceptive.
    Note the passage regarding the burdon to “prove the applicability of the exclusion (i.e., that a home was extensively flooded)…”

    No, No, No. A thousand times: “No.”

    The policy does not exclude coverage if the home was flooded. The policy excludes coverage of losses that were caused by flooding.
    The fact that a home flooded does not prove how much, if any, of the loss was caused by flooding, so it does not prove the applicability of the exclusion.
    This is the kind of b.s. that State Farm taught all the Renfroe adjusters that had them believing that “if the water touched it, we don’t pay.”

  8. Brian:

    I take issue with your statement that the insurers’ arguments in the Dickerson amicus pleading are “subtly deceptive.” Guess which word of the quote I take issue with.

  9. The burden of proof issues are the most important criteria in flood versus wind cases. These issues are equally important in all cases where some “excluded” damage exists.

    The insurance companies are now using their lawyers to falsely argue these points. They all should be ashamed that they are hoping to “dupe” jurists with such a bad faith attempt—the clients of these lawyers know better and so do the lawyers that have been in the property insurance law business.

    For decades, virtually every insurer has taught its adjusters that they have to determine “how much” of the loss is excluded. Most insurers, knowing that they ethically have to act in “good faith,” even teach their adjusters to give the benefit of the doubt to the policyholder regarding the amount of covered versus uncovered damage so that the loss is maximized. It is recognized that it is often difficult to separate the two and thus, ethical treatment is to give as broad as possible coverage to the policyholder respecting that the product was sold that way– as an all-risk policy which places proof of exclusion duties squarely on the insurer.

    This is another shameful example of insurance companies trying to change what they have done for years to save money in the short term. All CPCU’s of these companies that are allowing their attorneys to argue these points should have their certificates taken away.

  10. Katrina’s “hall of shame” has to be just about full by now.

    Thanks for your comment, Chip, and thanks for caring.

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