ORDER
(Motion for Summary Judgment — # 67; Countermotion for Summary Judgment — # 114)
This matter comes before the court on motions for summary judgment filed by both parties:
1. Defendant National Union Fire Insurance Company of Pittsburgh, PA’s Motion for Summary Judgment (# 67, filed February 4, 1994);
2. Plaintiff’s Countermotion for Partial Summary Judgment on Issue of Liability (# 114, filed March 25, 1994). 1
Defendant National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National Union”) filed one pleading (# 122) which was both a reply in support of its *1228 motion and an opposition to Pioneer’s countermotion. Plaintiff Pioneer Chlor Alkali Company, Inc., (“Pioneer”) then filed a reply (# 130) in support of its Countermotion.
INTRODUCTION
This action arises out of the May 6, 1991 chlorine gas leak which occurred at Pioneer’s plant in Henderson, Nevada. Pioneer has sued National Union for breach of contract under an “all risk” insurance policy (the “Policy”) which was in effect at the time of the gas leak. Pioneer seeks coverage for damage to its equipment, loss of the chlorine gas, and business interruption losses.
Pioneer manufacturers and sells liquid chlorine as well as some other chemicals. At Pioneer’s plant, chlorine gas travels through 780 small steel tubes. These tubes pass through a secondary liquefier. Brine is forced into the liquefier by hitting an impingement plate which disperses the brine around the 780 tubes. The brine is at temperature of - 10°F and cools the chlorine gas into its liquid state. The liquid chlorine then continues downline and empties into storage tanks.
The following are the relevant portions of the insurance Policy for purposes of these summary judgment motions.
This Policy covers property insured hereunder against all risks of direct physical loss or damage occurring during the period of this Policy from an external cause, except as hereinafter excluded.
(Ex. 1, Countermot. Summ.J., at 2.)
In the Perils Excluded, section, the Policy states,
This Policy does not insure against loss, damage or expense caused by or resulting from:
(Id. at 6.)
Among the paragraphs of exclusions is the following:
Gradual deterioration, depletion, inherent vice, latent defect, termites, moth, vermin, ordinary wear and tear, dampness or dryness of atmosphere, extremes or changes of temperature, smog, shrinkage, evaporation, loss of weight, rust, corrosion, erosion, wet or dry rot, change in flavor or color or texture or finish; unless such loss is caused directly by physical damage not otherwise excluded in this Policy to the property covered.
(Id. at 6.) (emphasis added).
National Union has moved for summary judgment arguing that Pioneer’s loss was not covered because it was caused by corrosion.
DISCUSSION
Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(e). The party moving for summary judgment has the initial burden of showing the absence of a genuine issue of material fact.
See Adickes v. S.H. Kress & Co.,
As both parties have moved for summary judgment, who bears which burdens discussed above depends on which summary judgment motion is being addressed.
I. NATIONAL UNION’S MOTION FOR SUMMARY JUDGMENT (# 67)
For purposes of bringing their Motion for Summary Judgment, National Union has as *1229 sumed Pioneer’s version of the chain of events leading to the gas leak. The facts according to Pioneer are as follows.
A. Facts
At some point (perhaps twenty five years ago when the plant was built, perhaps less), a rag became lodged in the secondary liquefier. The rag, located near the impingement plate, diverted the flow of the brine. Due to such diversion, brine concentrated on a few of the steel tubes. This concentration of brine resulted in four small holes in three of the 780 steel tubes. Brine then entered the three tubes through these holes. The brine and the chlorine mixed to form a highly corrosive acidic solution.
This acidic solution caused damage to some equipment downline from the liquefier. Additionally, within a matter of days of the tubes being perforated, this brine-chlorine solution ate through an elbow in the piping downline from the liquefier. Through this breached elbow, forty-two tons of chlorine gas escaped into the atmosphere.
According to Pioneer, a diagram of the facts would look like the following: presence of rag -> diversion of brine flow -* corrosion and penetration of chlorine tubes -> formation of hypochlorous/hydrochloric acid in chlorine tubes -> damage to downline equipment and elbow joint -» release of chlorine gas. (Pl.’s Reply at 14.)
Assuming these facts, National Union argues that it is entitled to judgment because the loss was caused by corrosion, a peril excluded from coverage.
The Court will first deal with a secondary argument by National Union concerning collateral estoppel.
B. Collateral Estoppel
National Union argues that Pioneer should be collaterally estopped from arguing that this loss was not caused by corrosion. The previous litigation which National Union points to as grounds for estoppel is
Pioneer Chlor Alkali Co. Inc. v. Royal Indent. Co.,
No. 91-041446 (Dist.Ct., Harris County, Tex. 1993) ,
rev’d,
When a federal court sits in diversity jurisdiction, collateral estoppel is controlled by the forum state’s substantive law.
Priest v. American Smelting & Refining Co.,
The present issue, whether this loss was caused by corrosion, was not actually litigated nor necessarily decided in the Texas proceedings. The defendant Royal Indemnity Co. had issued a boiler & machinery policy to Pioneer covering.“accidents.” The Royal policy expressly stated that certain items do not constitute an accident, among these, corrosion. The issue before the Texas court was whether the loss occurred from an accident. The cause of the accident, whether corrosion, the rag, or something else, was immaterial. Since the present issue was not decided at all, let alone necessarily decided by the Texas courts, collateral estoppel is not applicable. 2
*1230 C. The Cause of Pioneer’s Loss
A majority of jurisdictions use the efficient proximate cause doctrine in adjudicating all risk insurance policies where a covered and a noncovered peril contribute to a loss.
Villella v. Public Employees Mut Ins. Co.,
The efficient proximate cause is “the one that sets others in motion.”
Garvey,
The efficient proximate cause doctrine does not focus on a temporal place in the chain of events. For the last link (most immediate to the loss) may itself have been a natural or inevitable effect of the predominant cause, and therefore not the efficient proximate cause.
See Garvey,
Nevada has not explicitly adopted the majority rule of efficient proximate cause. Generally where a state’s highest court has not addressed an issue, a federal court having diversity jurisdiction involving such issue must predict how the state’s highest court would decide the issue.
Schroeder,
This Court need not labor long over whether Nevada would adopt the efficient proximate cause doctrine. For if this Court rejected the efficient proximate cause doctrine, it would apply ordinary proximate cause, and ordinary proximate cause differs little, if at all, from efficient proximate cause. 5
Generally for an insured to recover, an insured peril must be the proximate cause of the loss.
Standard Oil Co. of New Jersey v. United States,
“A cause is proximate when it sets in motion a chain of events which results in the loss without interruption of any new or independent source.” 18 Couch, supra, § 74:709. A cause which is remote is not proximate. Id. § 74:706. Thus, proximate cause is similar, if not the same, as efficient proximate cause.
As further evidence that proximate cause and efficient proximate cause are riot different, courts do not seem to distinguish the two doctrines. In discussing efficient proximate cause, courts use a variety of terms including “efficient cause,” “moving cause,” “proximate cause,” and combinations of these adjectives.
See Garvey,
Regardless of the name of the doctrine or number of adjectives within it, the law requires a decision as to what event will be held accountable as the cause of the loss. The legal cause of a loss is contrasted with a “cause” which is merely an antecedent, contributing circumstance. The legal cause of a loss is also contrasted with a cause which is an inevitable, intermediate cause within the natural chain of events set into motion by the true cause. Given the weight of authority, the similarity if not identicalness of efficient proximate cause to proximate cause, and no indication to the contrary from Nevada case law, the Court finds that the predominating cause of the loss is the appropriate standard. 6
Based on the foregoing, if the efficient proximate cause of ..the loss was corrosion, .or if.the rag is a remote cause, then National Union is entitled to summary judgment. .
Neither of these propositions have been established as a matter of law. Like proximate cause in general (tort of insurance), the determination of what was the efficient proximate cause is a question for the trier of fact.
State Farm Fire & Casualty Co. v. Von Der Lieth,
The many cases reviewed do not support the position that the last immediate event (here corrosion) is the efficient proximate cause as a matter of law.
See e.g., Smith,
The Court wishes to stress that the problem here is not over the term “corrosion.” The parties argue extensively over whether the perforations in the three tubes and the hole downline at the elbow are corrosion. As will be explained in the section concerning Pioneer’s Countermotion infra, the Court feels confident that corrosion was involved in the loss. However, involvement is not enough. Case law does not establish that the insurer prevails if an excluded peril (here corrosion) is involved anywhere in the chain of causation or if an excluded peril is the last link in the chain of causation. Therefore, establishing that the perforations and the hole at the elbow were corrosion does not entitle National Union to summary judgment.
For purposes of National Union’s Motion, the Court must assume that the rag was also involved in the loss, i.e., the rag diverted the brine flow causing the perforations. Pioneer’s case turns not on the term “corrosion,” but on the terms “caused by or resulting from.” A jury could find that the efficient proximate cause of Pioneer’s loss was corrosion. However, it is also possible that a jury could find that the rag was the efficient proximate cause. Because a jury could find either way, the Court must deny National Union’s Motion for Summary Judgment. 9
D. Opting Out of the Efficient Proximate Cause Doctrine
National Union argues that even if efficient proximate cause is otherwise the appropriate legal standard, the language of the contract forecloses use of that doctrine.
The efficient proximate cause doctrine is a default rule which gives way to the language of the contract.
See Schroeder v. State Farm Fire and Casualty Co.,
We do not insure for such loss [from an excluded peril] regardless of: (a) the cause of the excluded event; or (b) other causes *1233 of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss.
Schroeder,
National Union argues that the parties opted out of the efficient proximate cause analysis because the Policy contains the words “resulting from.”
“Resulting from” actually confirms use of the efficient proximate cause doctrine. A “loss caused by or resulting from” means a risk which is proximate as distinguished from remote.
Griffith v. Continental Casualty Co.,
Additionally, the terms of an insurance policy are to be interpreted according to their plain, ordinary, and popular sense.
Siggelkow v. Phoenix Ins. Co.,
Furthermore, to the extent “resulting from” could mean either efficient proximate cause or the cause nearest the loss, the court must construe this ambiguity in favor of Pioneer. For where a term in an insurance policy is “subject to more than one interpretation, doubts must be resolved in favor of the insured.”
Keener v. California State Auto. Ass’n Inter-Ins. Bureau,
Thus, the parties have not contracted out of the efficient proximate cause doctrine. Under that doctrine, a jury must determine the efficient proximate cause of Pioneer’s loss.
Accordingly, the Court must deny National Union’s Motion for Summary Judgment.
II. PIONEER’S COUNTERMOTION FOR SUMMARY JUDGMENT (#114)
The discussion above regarding the efficient proximate cause being a question for the jury is sufficient to deny Pioneer’s Countermotion for Summary Judgment. However, the Court has some other items to ad *1234 dress with respect to Pioneer’s Countermotion.'
A. Pioneer Has Not Demonstrated the Absence of a Genuine Issue as to All Material Facts.
Pioneer believes that the Court should trace the chain of events back to the rag, assume the rag was in the liquefier due to negligence, and hold that negligence was the efficient proximate cause of Pioneer’s loss. There is no evidence of negligence other than the rag itself. It seems as possible that the rag could have been in the liquefier due to maintenance, an excluded peril, or several other possibilities, e.g., vandalism, sabotage. Since maintenance is an excluded peril, it may not be enough to find that negligence caused the rag to be in the liquefier. The jury may need to know what kind of negligence was involved, i.e., if negligent maintenance was the cause, the Policy’s maintenance exclusion would likely be applicable. Pioneer has not shown as a matter of law that a covered peril was the proximate cause of the loss. 11
Moreover, Pioneer’s version of the facts of the loss, i.e., the rag diverting the flow of brine causing holes, etc., was assumed by National Union only for purposes of National Union’s summary judgment motion. That is, National Union was arguing that assuming the facts are as Pioneer states them to be, National Union is entitled to judgment under the Policy’s corrosion exclusion. National Union has not assumed this version of facts for Pioneer’s motion, and Pioneer has not established such version of the facts. Indeed, National Union has evidence that there was external corrosion at the elbow where the gas leaked, i.e., there was corrosion independent of that within the assumed chain of causation.
As another example, the Court does not feel that Pioneer has established indisputably that the rag accelerated a stream of brine onto the four spots where the perforations were formed and thus abraded the' pipes. The brine apparently hits an impingement plate and disperses around the chlorine pipes. The impingement plate is made of the same metal as the chlorine tubes. Although the impingement plate bears the full force and of the brine hitting it, the impingement plate was not worn through. The Court does not understand how a rag obstructing this diversion of brine (which has already lost energy from hitting the impingement plate) can accelerate the stream so as to abrade the pipes.
Additionally, a photograph of the liquefier showed that there were several portions of cloth (the rag) at different places touching different chlorine tubes. Why were the four perforations grouped near one of the portions of the rag and no perforations near another similarly sized portion of rag?
Pioneer has not established the absence of genuine issues of material fact.
B. Pioneer is Not Entitled to Judgment as a Matter of Law.
'
In the discussion of National Union’s Motion for Summary Judgment, the Court cited some cases where the last link in the chain of causation was held not to be the efficient proximate cause.
12
From those cases, it may have looked like Pioneer should be entitled to judgment. As' already shown there are genuine issues of fact, and the efficient proximate cause is a question for the trier of fact. Additionally, there are cases supportive of National Union.
E.g., Home Ins. Co. v. American Ins. Co.,
The cases do not establish that either party here is entitled to judgment as a matter of law. 13
C. Corrosion Is Not an Ambiguous Term.
Pioneer argues that the term corrosion is ambiguous; that ambiguities should be construed in favor of the insured; and that therefore Pioneer should recover under the Policy. This Court has already addressed the issue of construing ambiguities in favor of the insured. See supra note 10. In any event, the Court believes that “corrosion” is not an ambiguous term.
The terms of an insurance policy are to be read according to their “plain, ordinary, and popular sense,” and ambiguities are to be construed in favor of the insured.
Keener v. California State Auto. Ass’n Inter-Ins. Bureau,
The Court feels that an ordinary person coming across the term “corrosion” would not find it to be ambiguous. Corrosion means “the action, process, or effect of corroding.” Webster’s Third New International Dictionary (unabridged 1986) at 512 (hereinafter “Webster’s”). Corrode means “to eat away by degrees as if by gnawing ... wear away or diminish by gradually separating, or destroying small particles or converting into an easily disintegrated substance; esp: to eat away or diminish by acid or alkali reaction or by chemical alteration.” Id. Webster’s provides this sample sentence: “the caustic substance corroded the material so that it fell apart in the hands.” Id.
The perforations and the hole downline at the elbow were due to the brine and brineehlorine mixture eating away at the metal pipes. The pipes were eaten away or diminished “by acid or alkali reaction or by chemical alteration.” Webster’s at 512. The pipes and elbow were corroded.
Pioneer asserts that corrosion must be gradual in the sense that corrosion takes a “long time.” 14 Gradual does not mean a long time (assuming “a long time” could be defined). Gradual means “proceeding by steps or degrees.” Id. at 985. One of the definitions of “corrode” is “to eat away by degrees.” Id. at 512 (emphasis added). These definitions contain no element of time. Something need not take a certain number of years to be gradual. If something is gradual, it proceeds step by step; it proceeds in regular increments. For example, a stretch of highway may have a gradual incline. There is nothing about “a long time” implicit in such a sentence.
The perforations in the chlorine tubes may have taken twenty or more years to form. This however is not gradual for Pioneer. 15 *1236 At the hearing, the Court asked Pioneer if the perforations would be gradual and due to corrosion if they had taken 100 years to form. Pioneer maintained that-the corrosion exclusion would still not be applicable. Since Pioneer believes that its pipes should have lasted 414 years, apparently any corrosion damage to the pipes short of such time is not gradual and is not corrosion within the meaning of the Policy.
Not every metal corrodes in every solution at the same rate of speed. One solution may corrode steel much more quickly than another solution 2. A chemist would not say that the chemical reaction involving the first solution was not corrosion because it occurred more quickly than the chemical reaction involving the second solution. This case provides the perfect example. Pioneer believes that brine alone would take 414 years to corrode its metal pipes. However, after the pipes had been breached, the brine-chlorine mixture (a more caustic and acidic solution) took only a few days to corrode the steel elbow. How fast corrosion occurs depends on the solution and the metal involved.
As would any reasonable person assessing the facts, Pioneer knows that corrosion was involved. Pioneer’s pleadings in Texas and in the present case discuss the perforations and the elbow damage as corrosion. ' Pioneer’s experts use the terms “corrosion” in discussing the damage to the pipes and use the phrase “highly corrosive solution” in referring to the brine-chlorine mixture. (Exs. D, C, Def.’s Mot.Sum. J.) Pioneer also used the term corrosion at the hearing on this summary judgment. Pioneer’s real position is that this eating away of the pipes (corrosion to everyone else) is not “corrosion” as used in the Policy. Such a position is contrary to the rule that policy terms are read according to their ordinary meaning.
Pioneer also argues that it did not anticipate, nor could it have discovered and prevented, this loss. The terms of the Policy do not insure against “unexpected” losses. The Policy insures losses which are not excluded, and losses caused by or resulting from corrosion are excluded. The definition of corrosion contains nothing about expectations.
Just as with Pioneer’s argument about ambiguities, this expectation argument leads to the conclusion that an insured should always win regardless of the facts or the policy. By arguing that Pioneer should win because it did not expect the loss, Pioneer implicitly argues that an insurer should win only when there is an expected loss. But would an insured ever suffer an expected loss? No, if the insured expected the loss, the insured would take steps to prevent the loss.
The chemical reaction which caused the perforations and the chemical reaction which caused the hole at the elbow were corrosion. Whether corrosion takes a matter of days, twenty-five years, or 100 years does not change the fact that it is corrosion. See
Arkwright-Boston Mfr. Mut. Ins. Co. v. Wausau Paper Mills Co.,
Pioneer has not demonstrated the absence of any genuine issue of material fact or that Pioneer is entitled to judgment as a matter of law.
Accordingly,
IT IS HEREBY ORDERED that the following motions are DENIED:
1. Defendant National Union Fire Insurance Company of Pittsburgh, PA’s Motion for Summary Judgment (#67);
2. Plaintiffs Countermotion for Partial Summary Judgment on Issue of Liability (# 114).
Notes
. Pioneer combined its opposition to Defendant’s Motion and its own countermotion in this one pleading.
. During summary judgment proceedings and the appellate proceedings in Texas, Pioneer had argued that an accident caused by corrosion was still an accident. It is these statements by Pioneer that National Union points to as grounds for estoppel or a party admission. The relevant doctrine is judicial estoppel which bars a party from taking inconsistent positions in the same or connected litigation.
Yanez v. United States,
. The applicable sections of the insurance treatises by Couch and Appleman are cited frequently by courts dealing with causation of loss issues.
. Schroeder involved the efficient proximate cause doctrine. However, the court there did not hold whether it was adopting the doctrine or whether it believed that Nevada would adopt the doctrine. The court stated that applying the doctrine did not change a result it had already reached. It is also worth noting that in Schroeder's dicta concerning efficient proximate cause, it cited no authority when providing a definition of efficient proximate cause. Schroeder’s unsupported explanation of efficient proximate cause as looking to the "first” cause is not accurate in light of the many cases reviewed by this Court. The predominant cause is the efficient proximate cause.
. Proximate cause in the insurance context is essentially the same as proximate cause in the negligence context,
Griffith v. Continental Casualty Co.,
. Although perhaps containing an unnecessary adjective, and not at all making the doctrine more clear,, the Court will use the majority term "efficient proximate cause.” To invent a new term would only add to the confusion in this legal nebula where case precedents filled with the legal jargon of efficient proximate cause offer little guidance in the doctrine’s application and result.
. In the negligence context, Nevada has stated that "proximate cause is almost always an issue of fact rather than one of law."
Price v. Sinnott,
. Incidentally, this author feels the Smith case to be incorrect in so far as the court found the failure to cover the roof to be the efficient proximate cause. I do not see how failing to cover a roof sets into motion a chain of events whose natural result is rain damage. Unlike a chain of causation where a cause brings about an effect (which in turn is a cause that brings about another effect), failing to cover a roof does not cause rain to occur. Rather than the efficient proximate cause, failing to cover the roof seems much more like an antecedent circumstance which set the stage to make the loss possible.
. The efficient proximate cause doctrine could also affect the applicability of the Policy’s exception to the corrosion exclusion. For a jury could find that even if corrosion was the cause of the loss, the corrosion was "caused directly by physical damage not otherwise excluded,” i.e., the four perforations in the chlorine tubes were physical damage caused by the rag and resulted in corrosion and the loss. See supra p. 1228 (Policy's corrosion exclusion).
. This is all that construing in favor of an insured means. Pioneer seems to think if there is an ambiguity anywhere in the Policy, Pioneer wins the case because the ambiguity is construed in favor of Pioneer. Contra proferentem is not so strong a weapon for the insured; indeed, the doctrine is not a weapon at all, but a method of construction. Since "resulting from” could ordinarily and reasonably refer to either the proximate cause or the cause most immediate to the loss, the court construes in favor of Pioneer and holds that "resulting from” refers to the proximate cause. As already stated, the efficient proximate cause doctrine is a question for the jury. So construing in favor of an insured does not mandate judgment for Pioneer. Contra proferentem merely precludes National Union frojn receiving judgment based on the argument that "resulting from" forecloses use of the efficient proximate cause doctrine and limits the inquiry to the cause immediate to the loss.
. Indeed, National Union was not far off when it stated that Pioneer’s Countermotion was simply a negative restatement of National Union's Motion than a true summary judgment.
. See Smith, Von Der Lieth, supra p. 1232.
. Because this Court has found that a jury could decide corrosion or the rag (or something else) was the efficient proximate cause, it should go without saying that nothing in this Order expresses an opinion by the Court as to what was the efficient proximate cause of Pioneer’s loss.
. Thus, for Pioneer, it is redundant to say "the metal corroded slowly,” and it is.an oxymoron to say "the metal corroded quickly.”
. Pioneer discusses its expectations when buying the Policy and what it thought corrosion meant. However, only when an ambiguity exists, should a court go beyond the language of the policy and consider the parties’ intent and expectations.
Farmers Ins. Exchange,