Lead Opinion
In this appeal, we must decide whether a business insurance policy covers water damage inside a building resulting when a corroded interior drainpipe bursts during a summer rainstorm. The pipe carried rainwater from the roof to a storm sewer. The policy only insures damage “caused by rain” if an insured event first ruptures the roof or exterior walls to allow the rain to enter or if the damage results from melting ice or snow. The district court granted summary judgment for the insurer, concluding the water damage was caused by rain. The court of appeals reversed, concluding that damage from “rainwater” flowing from the broken interior drainpipe is not damage “caused by rain.” We granted the insurer’s application for further review.
This case presents our first opportunity to adjudicate coverage claims under a rain limitation in an insurance policy. For the reasons explained below, we conclude the unambiguous language of the rain limitation precludes coverage for the damage caused by the rainwater escaping the ruptured interior drainpipe. We, like the district court, also reject the insured’s alternative argument that coverage is available because the damage resulted from the “breaking or cracking of any part of a system containing water or steam.” That argument fails because the policy does not provide coverage for damage “caused by rain,” even if a system containing water was involved. We therefore vacate the decision of the court of appeals and affirm the district court’s summary judgment in favor of the insurer.
I. Background Facts and Proceedings.
Amish Connection, Inc. leased space in Crossroads Shopping Mall in Waterloo, where it operated the Amish Connection Store. In 2008, Amish Connection moved into Suite 102. This litigation arises from the failure of a leaky four-inch cast-iron drainpipe that ran above the ceiling tiles
In May 2010, the owner of Amish Connection approached the mall manager about closing the store until November “because business was bad.” New lease contracts were prepared to allow Amish Connection to close its business to the public through October and reopen November 1. During that period, Amish Connection would continue paying rent for Suite 102 and store property there. On June 14, the new lease agreements were executed. It rained heavily that night. The rainstorm caused no damage to the roof, windows, or exterior walls of the building. The next morning, however, the mall maintenance staff discovered the interior drainpipe had failed, flooding the back room of Suite 102 with up to several inches of rainwater and soaking the carpet in much of the front showroom. The rainwater caused substantial damage to Amish Connection’s office, bathroom, and property stored there, including its samples, inventory, office supplies, and business records.
Amish Connection promptly submitted a claim under its business insurance policy with State Farm Fire and Casualty Company (State Farm). Section I of the policy, entitled “LOSSES INSURED AND LOSSES NOT INSURED,” provides:
We insure for accidental direct physical loss to property covered under this policy unless the loss is:
1. limited in the PROPERTY SUBJECT TO LIMITATIONS section; or
2. excluded in the LOSSES NOT INSURED section that follows.
The relevant provisions of those two sections state:
PROPERTY SUBJECT TO LIMITATIONS
We will not pay for loss:
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6. to the interior of any building or structure, or the property inside any building or structure, caused by rain, snow, sleet, ice, sand, or dust, whether driven by wind or not, unless:
a. the building or structure first sustains damage by an insured loss to its roof or walls through which the rain, snow, sleet, ice, sand or dust enters; or
b. the loss is caused by thawing of snow, sleet or ice on the building or structure....
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LOSSES NOT INSURED
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2. We do not insure for loss either consisting of, or directly and immediately caused by, one or more of the following:
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d. smog, wear, tear, rust, corrosion, fungus, mold, decay, deteriora*234 tion, hidden or latent defect or any quality in property that causes it to damage or destroy itself.
But if accidental direct physical loss by any of the “Specified Causes of Loss” or by building glass breakage results, we will pay for that resulting loss....
The definitions section of the policy defined “Specified Causes of Loss” to include:
14. water damage, meaning accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of any part of a system or appliance containing water or steam.
On June 16, State Farm declined Amish Connection’s claim based on the rain limitation in paragraph 6 of the property subject to limitations section. On December 27, Amish Connection filed a civil action against its landlord and the mall operator alleging they had concealed the water infiltration problem the tenant discovered when ceiling tiles were removed after the drainpipe failed. Amish Connection alleged those defendants “took insufficient efforts to remedy the water infiltration problem and Defendants’ actions caused further water damage to the lower level unit # 102.” The lawsuit further alleged the mall owner and operator “were guilty of gross negligence and willful misconduct by renting [Suite 102] while knowing of, not disclosing, and not taking remedial action to resolve the significant long-standing water problems.”
On November 28, 2011, counsel for Amish Connection wrote to State Farm asking it to reconsider its denial of the claim and provide coverage for the water damage. State. Farm responded on' December 22 that it would investigate further and cited paragraph 2(d) excluding coverage for “rust, corrosion, ... and deterioration,” in addition to the rain limitation in paragraph 6. On January 8, 2012, State Farm sent another letter confirming its denial of coverage based on both provisions. On January 20, Amish Connection moved to amend its petition to add State Farm as a defendant to a claim of breach of its insurance contract. Amish Connection later dismissed its claims against the mall owner and operator. The lawsuit proceeded against State Farm alone.
On July 27, State Farm filed a motion for summary judgment based on paragraph 6 excluding coverage for “damage caused by rain.” Amish Connection resisted, arguing that the water damaging the interior of Suite 102 was no longer “rain,” and the actual cause of the loss was the failure of the drainage pipe, falling within coverage under paragraph 14. On October 18, the district court granted State Farm’s motion based on paragraph 6, stating “as a matter of law the water running through the pipe which caused the loss was rainwater.” Amish Connection moved for a more specific ruling to address its alternative argument under the exception to the rust- and-corrosion exclusion for water damage resulting from the “breaking or cracking of any part of a system or appliance containing water or steam.” State Farm resisted, arguing that the ruling on the rain limitation was dispositive under the language of the insuring agreement that provides coverage for accidents “unless the loss is: 1. limited [by the rain limitation]; or 2. Excluded in the Losses Not Insured section.” On December 20, the district court agreed with State Farm’s interpretation and denied Amish Connection’s motion, stating:
The policy reads that “We insure for accidental physical loss to property covered under this policy unless the loss is: 1) Limited in the PROPERTY SUBJECT TO LIMITATIONS section; or 2)*235 Excluded in the LOSSES NOT INSURED section that follows.” (Emphasis Added). Therefore, if a loss is excluded under either the PROPERTY SUBJECT TO LIMITATIONS section or the LOSSES NOT INSURED section, then it is excluded, and analysis under the other section is not necessary. Therefore, the Court declines to rule on whether the LOSSES NOT INSURED provision applies, as the loss is already excluded by the other section.
Amish Connection appealed, and we transferred the case to the court of appeals. The court of appeals reversed the summary judgment, concluding the “district court erred by finding the rain limitation [in paragraph 6] was applicable to this case.” The court of appeals, citing dictionaries and cases from other jurisdictions, distinguished “rain” from “rainwater”:
The definitions of “rain” and “rainwater,” although similar, encompass two different points in time. As water is falling, it is considered “rain.” After it has fallen — and, as here, been collected on a rooftop and channeled into pipes for transport to a storm sewer — it is considered “rainwater.”... While the water emitting from the burst pipe may fall within the definition of “rainwater,” it does not fall within the definition of “rain”. Because loss caused by “rainwater” is not excluded or otherwise limited under the policy, the district court erred in interpolating the term “rainwater” into the policy and concluding the interpolated term was unambiguous.
The court of appeals further concluded to the extent the limitation of coverage for damage “caused by rain” in paragraph 6 is ambiguous, it must be construed against State Farm. The court of appeals determined the parties’ arguments under other terms of the policy “are best addressed by the district court in the first instance” on remand. We granted State Farm’s application for further review.
II. Standard of Review.
We review a district court’s summary judgment ruling that interprets an insurance policy for correction of errors at law. Boelman v. Grinnell Mut. Reins. Co.,
III. Analysis.
This case presents our court’s first opportunity to adjudicate an insurance claim under a policy limiting coverage for losses “caused by rain.” The facts are undisputed as to the source of the water damage— a corroded interior drainpipe burst during a rainstorm, flooding the rooms inside with rainwater. The fighting issue is whether the damage was “caused by rain” within the meaning of paragraph 6 of the limitations of coverage. Neither side has offered any extrinsic evidence on the meaning of the insurance contract. Accordingly, its interpretation is for the court to decide. See id. (“Policy interpretation is always an issue for the court, unless we are required to rely upon extrinsic evidence or choose between reasonable inferences from extrinsic evidence.”). We conclude State Farm was entitled to summary judgment in its favor based on the limitation of coverage. Our holding is consistent with the decisions of other courts construing equivalent policy language.
“[A] policy is ambiguous if the language is susceptible to two reasonable interpretations” when the contract is read as a whole. Id. “If the policy is ambiguous, we adopt the construction most favorable to the insured.” Id. at 502. “An insurance policy is not ambiguous, however, just because the parties disagree as to the meaning of its terms.” Id. Moreover, “ ‘[a]mbiguity is not present merely because the provision “could have been worded more clearly or precisely than it in fact was.” ’ ” Am. Family Mut. Ins. Co. v. Corrigan,
A. The Rain Limitation. Applying these principles here, we conclude the rain limitation in paragraph 6 unambiguously defeats coverage for the rainwater damage to Suite 102. This provision states that subject to two exceptions the insurer “will not pay for loss ... to the interior of any building ... or the property inside ... caused by rain.” Neither exception applies. The first allows coverage if “the building ... first sustains damage by an insured loss to its roof or walls through which the rain ... enters.” This exception would allow coverage, for example, if a tornado dropped a tree on the roof, opening a hole through which rain entered. Amish Connection alleges no damage to the building’s roof or walls through which rain entered Suite 102. Rather, the rainwater damage occurred when the interior drainpipe failed. The second exception to the rain limitation provision allows coverage if “the loss is caused by thawing of snow, sleet or ice on the building or structure.” The June rainstorm involved no thawing of precipitates.
Amish Connection acknowledges these exceptions do not apply, but argues the water damage in suite 102 was not “caused by rain” within the meaning of paragraph 6. It contends the water escaping the ruptured drainpipe was no longer “rain” but rather “rainwater.” The court of appeals agreed, stating, “We think it fair to say that a reasonable person standing in the interior of a shopping mall underneath a burst drainpipe would not conclude that he or she was standing in the ‘rain.’ ” True enough. But, “rainwater” unquestionably is “caused by rain,” and it is undisputed the water damage occurred during a rainstorm when the drainpipe ruptured to spill rainwater into Suite 102. We hold as a matter of law that water damage is “caused by rain” within the meaning of paragraph 6 of the limitations of coverage when an interior drainpipe fails during a
Under common parlance, damage caused by “rainwater” is “caused by rain.” If water is only considered rain while it is falling and becomes rainwater after it strikes a surface then the policy’s limitation on coverage for damage “caused by rain” would be eviscerated. Water does not damage property while merely falling through the air, but only after it strikes a surface. Under the court of appeals’ interpretation, the rain limitation in the policy would be superfluous, and the coverage for rainwater damage would extend to leaky roofs and skylights. See Iowa Fuel & Minerals, Inc. v. Iowa State Bd. of Regents,
State Farm argues its commercial property insurance policy is not intended to provide coverage for damage resulting from deferred maintenance. Other courts have agreed. In Petrick v. State Farm Fire & Casualty Co., the New Jersey appellate court affirmed summary judgment for the insurer based on a rain limitation and noted insurance is not intended to pay costs resulting from poor maintenance:
If that coverage were found to exist, State Farm would become the insurer of all water damage to personalty caused by inadequate or delayed maintenance of a premises. That is clearly a risk that the insurer did not agree and could not reasonably be found to assume. We will not write for plaintiffs a better policy of insurance than the one purchased.
No. A-1152-09T3,
Other courts have reached the same result we do under equivalent policy language. In Horizon III Real Estate v. Hartford Fire Insurance Co., the insured’s office basement flooded during a torrential rainstorm that overwhelmed the building’s interior drainpipes or the connecting storm sewer system.
The Nebraska Court of Appeals, applying the same rain limitation in a business policy, likewise rejected the argument that rain is no longer rain once it lands on a rooftop:
[The insured] first argues that the damage he suffered was not caused by rain, on the theory that the water which entered his building had lost its nature as “rain” once it entered the building. We are unswayed by this tortured reading of a clearly worded exclusion. [The in*238 sured] does not deny that rain fell and that the water resulting from that rain, however characterized, entered the building. The policy excludes damage “caused by or resulting from rain,” which is precisely what happened in this case.
Einspahr v. United Fire & Cas. Co., No. A-99-371,
The court of appeals relied on State Farm Fire & Casualty Co. v. Paulson for its conclusion that rain is “water falling from the sky.”
The court of appeals also relied on Unobskey v. Continental Insurance Co., which is also inapposite.
B. The “Water System” Exception to the Rust-and-Corrosion Exclusion. Because the rain limitation is dispositive, we, like the district court, reject Amish Connection’s alternative argument for coverage based on paragraph 14 of the definitions. That provision defines “Specified Causes of Loss”
In general, “an exception to an exclusion cannot create coverage where none exists. Exclusion clauses do not grant or enlarge coverage; rather, they are limitations on the insuring clause.” “In*240 simplistic terms, the process is such: if the insuring clause does not extend coverage, one need look no further. If coverage exists, exclusions must then be considered. If an exclusion excludes coverage, an exception to the exclusion may re-grant coverage.”
Hartford Cas. Ins. Co. v. Evansville Vanderburgh, Pub. Library,
Unlike the exclusion for rust or corrosion, the rain limitation contains no exception for “Specified Causes of Loss.” Yet, other provisions in the “PROPERTY SUBJECT TO LIMITATIONS” section of the policy do include exceptions for “Specified Causes of Loss.” For example, on the same page, the policy provides:
We will not pay for loss: ...
2. to fragile articles, such as glassware, statuary ... and other articles of a brittle nature, if broken, unless caused by any of the ‘Specified Causes of Loss’ or by building glass breakage.
If the State Farm policy were intended to cover water 'damage from a breaking gutter or drainpipe releasing rainwater, then the rain limitation in paragraph 6 likewise would have included an exception for specified causes of loss such as a breaking pipe in a water system. See Oyens Feed & Supply, Inc. v. Primebank,
We assume for the sake of argument the interior drainpipe that failed while carrying rainwater from the roof to the storm sewer may be considered “part of a system ... containing water” within the meaning of paragraph 14. Cf. Cameron v. USAA Prop. & Cas. Ins. Co.,
Nevertheless, paragraph 14 does not provide coverage because State Farm’s policy effectively has an anticoncurrent-cause provision. This means the rain limitation controls regardless of whether the breaking drainpipe is considered a concurrent cause of the rainwater damage. The operative anticoncurrent-cause language turns on the word “or” in the lead paragraph of Section I of the policy, entitled “LOSSES INSURED AND LOSSES NOT INSURED”:
We insure for accidental direct physical loss to property covered under this policy unless the loss is:
1. limited in the PROPERTY SUBJECT TO LIMITATIONS section; or
2. excluded in the LOSSES NOT INSURED section that follows.
(Emphasis added.) The district court quoted and relied on this provision in denying Amish Connection’s motion for a more specific ruling on summary judgment. The “or” in this provision is disjunctive. See Denison Mun. Utils. v. Iowa Workers’ Comp. Comm’r,
This makes sense. Water damage resulting from a breaking sprinkler or hot water pipe or radiator could be covered despite the rust-and-corrosion exclusion, but not water damage resulting from a breaking gutter or roof drainpipe for rainwater subject to the rain limitation. Why the difference? Because the insurer expects the property owner to keep the rain out and writes the policy to avoid paying for damage from rain resulting from deferred maintenance. See Petrick,
The anticoncurrent-cause language in State Farm’s policy is enforceable. See, e.g., TNT Speed & Sport Ctr., Inc. v. Am. States Ins. Co.,
When insurance policies lack such an anticoncurrent-cause provision, we have .held an accident that has two independent causes, one of which is covered and one excluded, is covered unless the excluded cause is the sole proximate cause of injury. See, e.g., Grinnell Mut. Reins. Co. v. Emp’rs Mut. Cas. Co.,
More recently, in Corrigan, parents of a child injured in day care sued the day-care providers, who sought liability coverage under their homeowners policy.
Amish Connection relies heavily on a New York trial court decision, Wider v. Heritage Maintenance, Inc.,
*243 The ordinary business person purchasing the Policy at issue here would not have expected the Rain Limitation to apply to an incident in which a temporary, man-made structure collected rainwater, diverting it from the ground and into the policyholder’s Building. Therefore, the Rain Limitation cannot be used to disclaim covered for damage and losses stemming from the September Incident.
Id. at 845. Wider is distinguishable from this case in which the drainpipe, installed to carry rainwater falling on the roof to the storm sewer, failed and spilled rainwater as it flowed down during the rainstorm. Nor are we persuaded by Tento International, Inc. v. State Farm Fire & Casualty Co., which held a contractor’s negligent failure to temporarily cover a hole it opened in the insured’s roof, rather than rain, was the efficient proximate cause of water damage to electrical equipment within the building.
We hold that under the unambiguous terms of State Farm’s policy, damage from rainwater released by a breaking drainpipe during a rainstorm is not an insured loss because the damage is caused by rain within the meaning of the rain limitation, even though the breaking drainpipe is a concurrent cause.
IV. Disposition.
For those reasons, the district court correctly granted State Farm’s motion for summary judgment based on the rain limitation. We therefore vacate the decision of the court of appeals and affirm the summary judgment entered by the district court. ■
DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT SUMMARY JUDGMENT AFFIRMED.
Notes
. The cases that Amish Connection relies upon are likewise inapposite. Amish Connection cites two cases for the proposition that water may change its character by entering an artificial channel. Heller v. Fire Ins. Exch.,
. The State Farm policy uses the term "Specified Causes of Loss” in some provisions and the term "insured loss” in others. We read the policy as a whole. Boelman,
Rather, it is clear from reading State Farm’s' policy as a whole that the terms "Specified Causes of Loss" and “insured loss” have different meanings, and a specified cause of loss is not a covered loss under some circumstances. For example, the defined specified causes of loss include the "weight of snow, ice or sleet” in paragraph 13, yet the policy specifically excludes losses to "gutters and downspouts caused by weight of snow, sleet or ice” in limitation 9. Thus, merely because a matter is included within the policy’s defined "Specified Causes of Loss” does not mean it cannot be subject to a separate limitation or exclusion.
. State Farm previously relied on that exclusion in addition to the rain limitation in denying the insurance claim. At oral argument, counsel for State Farm noted it was no longer relying on that exclusion found in the "LOSSES NOT INSURED” section of the policy, which provides:
2. We do not insure for loss either consisting of, or directly and immediately caused by, one or more of the following:
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d. smog, wear, tear, rust, corrosion, fungus, mold, decay, deterioration, hidden or latent defect or any quality in property that causes it to damage or destroy itself. But if accidental direct physical loss by any of the "Specified Causes of Loss" or by building glass breakage results, we will pay for that resulting loss ...
Dissenting Opinion
(dissenting).
I respectfully dissent. While I agree with my colleagues in the majority that the policy exclusion for losses “caused by rain” is an important aspect of a proper analysis of this case, I disagree that our disposition turns on the perceived distinction between rain and rainwater.
It is important to understand precisely the loss for which Amish Connection seeks coverage. Amish Connection does not claim coverage for the cost of repairing or replacing the failed drain pipe. Cf. Berry v. Commercial Union Ins. Co.,
Water damage is among the “Specified Causes of Loss” covered by the policy. The policy definition of “water damage” expressly includes “accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of any
My colleagues in the majority conclude as a matter of law the policy provides no coverage for Amish Connection’s loss because it was caused by rainwater. Because I believe a genuine issue of material fact remains on the question whether the loss was in fact caused by rain or, instead, by some other covered occurrence (or a combination of covered and uncovered occurrences), summary judgment is inappropriate and the case should proceed to trial.
“Causation has always been a troublesome concept for lawyers.” Banks McDowell, Causation in Contracts and Insurance, 20 Conn. L.Rev. 569, 569 (1988) [hereinafter McDowell]. Particularly troublesome are instances of “dual or concurrent causation — where two or more occurrences lead to a loss and at least one is covered under the terms of a single insurance policy.” Id. at 570 (footnotes omitted). In my view, this case presents one such instance. Amish Connection suffered a loss when a pipe burst during a heavy rainstorm. State Farm asserts the loss was “caused by rain” because the pipe would not have failed without the volume of water the storm produced. Yet, the summary judgment record in this case leaves room for a reasonable fact finder to find the loss Amish Connection suffered would not have occurred as a consequence of the rain alone, but only because the pipe failed while the rainwater was passing through it. In other words, a fact question remains whether the loss might not have occurred but for the confluence of at least two causes. See Randall L. Smith & Fred A. Simpson, Causation in Insurance Law, 48 S. Tex. L.Rev. 305, 312 (2006) (“Perils A and B, independent of each other, join in causing the loss, both perils being necessary to cause the loss since neither peril alone is sufficient to do so.”).
“While the notion of causation is simple, the factual world to which it must be applied is not.” McDowell, 20 Conn. L.Rev. at 573. Complexity arises “in situations of concurrent causation because one cause of the loss may be covered by an insurance policy and another cause either not covered or specifically excluded from coverage.” Erik S. Knutsen, Confusion About Causation in Insurance: Solutions for Catastrophic Losses, 61 Ala. L.Rev. 957, 962 (2010) [hereinafter Knutsen]. This case presents a causation and coverage quandary: Water damage caused by accidental leakage is a “Specified Cause of Loss” under the policy, but losses “caused by rain” are excluded.
In concurrent causation scenarios, some jurisdictions utilize a “liberal approach” to coverage under which an entire loss is covered as long as it was caused in part by a covered occurrence. See id. at 976 & n. 56 (listing the “minority of states” that follow this rule). Under this approach, if two events combine to cause the loss — one covered and one excluded — coverage exists even though the excluded event was a
Another approach is the “efficient proximate cause” test under which the fact finder evaluates competing concurrent but-for causes to determine which was the primary cause of the loss. See Knutsen, 61 Ala. L.Rev. at 974-75 (explaining this approach). This test does require a decision about which of two competing causes was dominant. See Tento Int’l, Inc. v. State Farm Fire & Cas. Co.,
Finally, the “conservative approach” is a third analytical option. Under this approach, “if one cause in a causal chain is excluded from insurance coverage, the entire loss must be excluded from coverage, even if other causes may be covered by the policy.” Knutsen, 61 Ala. L.Rev. at 972.
Although we have not consistently applied any of these tests in Iowa, we have followed principles from both the liberal approach and the efficient proximate cause approach. See Grinnell Mut. Reins. Co.,
My research reveals no instance in which we have applied the approach styled as the “conservative approach.” This should not come as a surprise given our adoption of principles protecting insureds’ interests in litigation against their insurers. See Grinnell Mut. Reins. Co.,
In my view, this is a case involving concurrent causes of a loss. There is evidence in this record tending to prove the rain event was.not the singular cause of Amish Connection’s loss. The summary judgment record leaves room for the possibility that a fact finder could determine Amish Connection’s loss would not have occurred but for the pipe’s weakened condition and its failure. When faced with multiple-cause scenarios like this, some courts — including our own — have found coverage as a matter of law when one of the causal factors was covered by an insurance policy. Kinney v. Farmers’ Mut. Fire & Ins. Soc’y of Kiron,
In this case, however, we should not determine either coverage or exclusion as
Issues of causation are almost always questions of fact. Determining what perils were working and whether they were working together independently or in succession (and if so how), as well as identifying the type of damage following the operation of each peril, all fall to the fact finder.
5 New Appleman on Insurance Law § 44.06[1], at 44-45 (Jeffrey E. Thomas & Susan Randall eds., Library ed.2014). A case decided by the Washington Court of Appeals presents an apt illustration of this maxim. Sunbreaker Condo. Ass’n v. Travelers Ins. Co.,
Caselaw from other jurisdictions supports my view that summary judgment should not have been granted in this case. See Mahaska Pork, L.P. v. Travelers Indem. Co. of Am., 777 F.Supp.2d 1185, 1192 (S.D.Iowa 2011) (“The question of ... proximate cause of the collapse is one that must ultimately be determined by a jury, not by this Court on motion for summary judgment.”); see also, e.g., Fidelity Coop. Bank v. Nova. Cas. Co.,
Some court decisions holding a coverage question could not be resolved as a matter of law are not procedurally identical to this one, but they are nonetheless supportive of my view that summary judgment was inappropriate here. For example, we have concluded at least twice that the causation question in insurance coverage disputes was properly presented to a fact finder. Crozier v. Lenox Mut. Ins. Ass’n,
Courts in other jurisdictions have reached similar conclusions. See, e.g., Shinrone, Inc. v. Ins. Co. of N. Am.,
I acknowledge that some courts have granted summary judgment to the insurer in concurrent causation circumstances. When granted in those cases, summary judgment was typically founded on anti-concurrent-cause language in the particular insurance policy. See, e.g., TNT Speed & Sport Ctr., Inc. v. Am. States Ins. Co.,
The majority characterizes the “LOSSES INSURED” section of Amish Connection’s policy as a functional equivalent of anticoncurrent-cause language. The LOSSES INSURED section of the policy states, in its entirety:
We insure for accidental direct physical loss to property covered under this policy unless the loss is:
1. limited in the PROPERTY SUBJECT TO LIMITATIONS section; or
2. excluded in the LOSSES NOT IN- • SURED section that follows.
In my view, however, this is not an anti-concurrent-cause provision. Cases cited by the majority in this case illustrate the fact that anticoncurrent-cause provisions typically include the word “concurrent” — for example: “We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” TNT Speed & Sport Ctr.,
Amish Connection’s policy does include express anticoncurrent-cause provisions like those involved in TNT Speed and Corrigan. For example, paragraph 1 of the “LOSSES NOT INSURED” section reads:
1. We do not insure under any coverage for any loss which would not*250 have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss[.]
The “following excluded events” to which this provision refers are: enforcement of any ordinance or law; earth movement; volcanic eruption; water such as flood, surface water, waves, tides, mudslides, sewer backup, and seeping groundwater; seizure or destruction of property by order of governmental authority; nuclear hazard; failure of power to the premises; and war or military action.
Paragraph 3 of the LOSSES NOT INSURED section contains additional anti-concurrent-cause language:
We do not insure for any coverage for any loss consisting of one or more of the items below. Further, we do not insure for loss described in paragraphs 1. or 2. immediately above regardless of whether one or more of the following: (a) directly or indirectly cause, contribute to or aggravate the loss; or (b) occur before, at the same time, or after the loss or any other cause of the loss[.]
State Farm did not raise either of these provisions in its motion for summary judgment. Nor did it raise them in its resistance to Amish Connection’s motion for more specific ruling. Instead, State Farm relied exclusively on language from a different section: the LOSSES INSURED section. Notably, State Farm expressly argued the district court need not consider any language from the LOSSES NOT INSURED section. The district court agreed, and even when it denied Amish Connection’s motion for a more specific ruling, the court expressly relied only on the LOSSES INSURED section of the policy.
The majority concludes State Farm’s reliance on the LOSSES INSURED policy provision effectively raised any anticoncur-rent-cause provisions in the policy. I strongly disagree. Both anticoncurrent— cause provisions are in the LOSSES NOT INSURED section — and State Farm expressly asserted the district court should not even consider language from that section in making its summary judgment decision.
I acknowledge the maxim that “[t]he individual provisions of a policy must be read in conjunction with the policy as a whole.” Ferguson v. Allied Mut. Ins. Co.,
Amish Connection is not covered if its loss was “caused by rain,” as stated in the PROPERTY SUBJECT TO LIMITATIONS section, or if it is excluded in the LOSSES NOT INSURED section. I acknowledge that the word “or” is disjunctive in this context. But whether the loss was “caused by rain” — or by some other covered cause — is the fighting issue in this case. In my view, provisions in the LOSSES NOT INSURED section leave wide open the possibility that causes of loss other than rain are not excluded — even when concurrent causes are involved — and are therefore still in play here. A jury
I begin with paragraph 1 of the LOSSES NOT INSURED section. Paragraph 1 excludes any loss concurrently caused, even in part, by occurrences from a list of “excluded events.” These events are predominantly large-scale disasters — earthquakes, volcanic eruptions, nuclear meltdowns. Paragraph 1(d) includes “surface water” as an excluded event. However, because surface water is included in a list alongside flood, waves, tides, mudslides, and groundwater seepage, it is evident— using the canon of nosdtur a sodis — that surface water in paragraph 1(d) does not include the rainfall in this case. See Black’s Law Dictionary 1224 (10th ed.2014) (explaining that nosdtur a sociis means the definition of a word or phrase “should be determined by the words immediately surrounding it”). None of the other “excluded events” in paragraph 1 are remotely applicable to this case. Accordingly, paragraph 1 does not preclude the possibility that, if Amish Connection’s loss had multiple causes — one excluded and one covered — a jury could find the covered hazard was predominant and should afford Amish Connection coverage in this case.
I now turn to paragraph 3. This paragraph’s language must be unpacked carefully. The first sentence states: “We do not insure for any coverage for any loss consisting of one or more of the items below.” (Emphasis added.). The “items below” are subparts 3(a) and 3(b). 3(a) refers to “conduct, acts or decisions, including the failure to act or decide, of any person ..., whether intentional, wrongful, negligent or without fault” — essentially third-party negligence. 3(b) refers to “faulty, inadequate, unsound or defective” planning, design, construction, materials, and maintenance. But, as I have explained, Amish Connection’s loss does not consist of third-party negligence or faulty maintenance; if it did, the only costs for which Amish Connection would be seeking coverage would be the cost of repairing or replacing the failed pipe. Therefore, this first sentence of paragraph 3, standing alone, would not preclude coverage for a loss “caused by” — not “consisting of’— faulty maintenance.
The next sentence of paragraph 3 provides:
[W]e do not insure for loss described in paragraphs 1. and 2. immediately above' regardless of whether [the causes described in 3(a) and 3(b) ]: (a) directly or indirectly cause, contribute to or aggravate the loss; or (b) occur before, at the same time, or after the loss or any other cause of the loss[.]
As I have explained, paragraph 1 immediately above this language contains “excluded events” that are all inapplicable to the factual circumstances of this case. Paragraph 2 “immediately above” describes sixteen types of loss, in subparts 2(a) through 2(p). Only two of these could possibly be relevant here. Paragraph 2(k) — in, conjunction with paragraph 3 — excludes coverage for loss caused by “continuous or repeated seepage or leakage of water that occurs over a period of time” when that seepage combines with third-party negligence or faulty maintenance. However, the loss (water-soaked and ruined inventory) claimed in this case by Amish Connection was not due to continued or repeated seepage or leakage; it was due to a onetime.event — the .burst pipe.
Paragraph 2(d) is the only other subpart of paragraph 2 that could possibly be relevant here. It excludes loss caused by— not merely consisting of — rust, corrosion, and deterioration. Combined with paragraph 3, paragraph 2(d) could, at first blush, reasonably be read to exclude coverage if faulty maintenance caused the pipe
My colleagues in the majority stress the fact that, according to State Farm, the policy was never intended to cover faulty maintenance. Whatever State Farm’s intent, -however, the actual policy language belies that assumption. The final clause of paragraph 8 states: “But if accidental direct physical loss results from items 3.a. and 3.b., we will pay for that resulting loss unless the resulting loss is itself one of the losses not insured in this section.” Item 3(b) is faulty maintenance. Thus, this express policy language indicates State Farm will pay for loss resulting from faulty maintenance unless the resulting loss is not insured in the LOSSES NOT INSURED section. Crucially, the rain limitation is not found in the LOSSES NOT INSURED section. In sum, even if State Farm and the district court had relied on the LOSSES NOT INSURED section of the policy — and here they clearly did not— summary judgment would not have been appropriate in this case.
Although the majority attempts to distinguish it, the Ninth Circuit’s decision in Tentó International is actually quite analogous to this case. See Tento Int’l,
Further, the court examined the “inexact wording in the resulting-loss provision.” Id. It determined Tentó had coverage as a matter of law:
The resulting-loss provision states that, “if accidental direct physical loss results from items 3.a. and 3.b. [i.e., the contractor’s third-party negligence], we will pay for that resulting loss unless the resulting loss is itself one of the losses not insured in this section.” (emphasis added). The question becomes whether the resulting loss — damage to Tento’s goods by rain — is “one of the losses not insured in this section.” (emphasis added). The words “in this section” appear in numbered paragraph 3 of the LOSSES NOT INSURED section of the policy. Logically, then, the words “in this section” refer to the LOSSES NOT INSURED section and that section does not preclude coverage for rain damage.
We recognize it is arguable that the scope of the “in this section” phrase could refer to the entire basic coverage of Section I, which includes the LOSSES INSURED as well as the LOSSES NOT*253 INSURED sections. The LOSSES INSURED section incorporates by reference the earlier PROPERTY SUBJECT TO LIMITATIONS section, and that section includes the rain-damage limitation. Under this reading, the policy would not provide coverage for Tento’s rain-damaged goods. We reject this reading, however, because it is illogical, and defies a common-sense reading of the policy. Moreover, we note that when the policy refers to the entire “Section I,” it uses an upper case “S” to signal this broader reference.
Id. at 663. Amish Connection’s policy also uses an uppercase S when referring to the entire Section I. Applying the Tentó analysis to the facts of this case, Amish Connection might have coverage as a matter of law — although its loss might fit more squarely under the paragraph 8(b) faulty maintenance provision than under the paragraph 3(a) third-party negligence provision.
But I do not advocate we go that far on this record. Rather, I conclude the summary judgment should be reversed and the case remanded for trial. The evidence will establish whether Amish Connection’s loss was due to the mail’s faulty maintenance, or rust, decay, or some other cause or combination of causes. Although coverage is excluded if the loss was caused by rain, it could also have been caused by something else, or by a combination of other causes for which coverage exists.
When reviewing summary judgment rulings, we must make all factual inferences supported by the record in the nonmov-ant’s favor. See, e.g., Hagenow v. Am. Fam. Mut Ins. Co.,
Wiggins and appel, jj., join this dissent.