123 So. 3d 787
La. Ct. App.2013Background
- Hurricane Katrina (Aug. 29, 2005) damaged Orleans Parish School Board (OPSB) property; OPSB had layered insurance (Lexington primary; Clarendon & Essex first excess; Westchester second excess; RSUI top layer).
- Excess insurers (Clarendon, Essex, Westchester, RSUI) moved for partial summary judgment asserting mold/fungus exclusions in their excess policies bar recovery for mold-related losses.
- Trial court granted summary judgment for Clarendon, Essex, and Westchester (holding the exclusions unambiguously barred mold-related damages regardless of source) and denied RSUI’s motion; OPSB appealed.
- Central legal dispute: whether policies exclude (a) all losses "caused by" mold and/or (b) mold itself when mold results from an otherwise covered peril; and whether anti-concurrent-cause (ACC) language defeats coverage for losses initially caused by a covered peril.
- The appellate court reversed summary judgment for Clarendon, Essex, and Westchester, holding material factual issues remain about which damages are attributable to mold versus to an initial covered loss and that ACC clauses cannot strip coverage for damages already incurred from a covered peril.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of mold exclusions — mold as cause vs mold as loss | OPSB: exclusion bars only losses caused by mold; if mold results from a covered peril (e.g., wind-driven rain), mold-related damage (including remediation tied to that covered loss) is covered | Insurers: exclusion unambiguously excludes all mold-related loss/damage regardless of whether a covered peril preceded or contributed | Court: recognizes distinction between mold as cause and mold as loss; mold resulting from a covered peril can be covered, but damages directly caused by mold may be excluded; factual causation required |
| Effect of ACC clauses ("regardless of any other cause or event…in any sequence") | OPSB: ACC cannot be read to eliminate coverage for losses that were initially caused by a covered peril; such an interpretation yields absurd results | Insurers: ACC language bars coverage for mold-related losses even if a covered peril contributed | Court: ACC bars damages attributable to mold itself even if other causes contributed, but ACC cannot divest insured of coverage for damages already caused by a covered peril before mold appeared |
| Appropriateness of summary judgment | OPSB: summary judgment improper because causation and allocation of damages between covered peril vs mold are factual | Insurers: wording is plain and summary judgment should be entered to bar coverage | Court: reversed — material issues of fact exist about which specific damages are attributable to mold vs the covered peril; summary judgment inappropriate |
| Public policy / regulatory guidance | OPSB: Louisiana DOI advisory letters support narrow drafting of exclusions and that presence of mold should not convert a covered claim into a non-covered claim | Insurers: rely on plain policy language to exclude broad categories of mold-related costs | Court: finds DOI guidance persuasive and consistent with its interpretation favoring coverage for repair/replacement due to a covered cause while excluding consequential damages uniquely attributable to mold |
Key Cases Cited
- Liristis v. American Family Mut. Ins. Co., 204 Ariz. 140, 61 P.3d 22 (Ariz. Ct. App.) (distinguishing mold as loss from loss caused by mold)
- Simonetti v. Selective Ins. Co., 372 N.J. Super. 421, 859 A.2d 694 (N.J. Super. Ct. App. Div.) (holding mold resulting from a covered peril may be covered, including removal costs)
- Reynolds v. Travelers Indem. Co. of Am., 233 S.W.3d 197 (Ky. Ct. App.) (coverage for mold removal where mold was direct result of a covered peril)
- Siegel v. Chubb Corp., 33 A.D.3d 565, 825 N.Y.S.2d 441 (App. Div.) (mold itself as proximate cause excludes coverage)
- Ross v. C. Adams Const. & Design, 70 So.3d 949 (La. App. 5 Cir.) (insured’s effort to treat corrosion as "the loss itself" rejected; exclusion applied)
- Stewart Enters., Inc. v. RSUI Indem. Co., 614 F.3d 117 (5th Cir.) (ACC clause cannot be read to produce absurd result that strips coverage for combined causes where covered peril contributed)
- Corban v. United Servs. Auto. Ass’n, 20 So.3d 601 (Miss.) (ACC inapplicable to divest indemnity once covered peril caused the loss)
- Builders Mut. Ins. Co. v. Glascarr Prop. Inc., 202 N.C. App. 323, 688 S.E.2d 508 (N.C. Ct. App.) (mold remediation costs excluded where exclusion unambiguously barred loss caused by fungi)
- De Vore v. American Family Mut. Ins. Co., 383 Ill. App. 3d 266, 322 Ill. Dec. 490, 891 N.E.2d 505 (Ill. App. Ct.) (mold remediation excluded under unambiguous mold exclusion)