ACCs and EPC: Ninth Circuit Certifies Question of Whether Policy Provision Can Circumvent Efficient Proximate Cause Doctrine

By: Daniel B. Heidtke

Earlier this month, the United States Court of Appeals for the Ninth Circuit certified the following questions to the Montana Supreme Court: “Whether an anti-concurrent cause (‘ACC’) clause in an insurance policy applies to defeat insurance coverage despite Montana’s recognition of the efficient proximate cause (‘EPC’) doctrine” and, if so, whether the relevant language in the policy at issue was an ACC clause that effectively circumvented the EPC doctrine.

In Ward v. Safeco Insurance Co. of America, Case No. 21-35757, the Court first analyzed Montana’s EPC doctrine, which provides: “where covered and noncovered perils contribute to a loss, the peril that set in motion the chain of events leading to the loss or the predominating cause is deemed the efficient proximate cause or legal cause of loss.”

Safeco argued that the ACC clause in its policy “overrides the normal operation of the EPC doctrine, such that there is no coverage where any excluded peril caused the loss to any extent (even if a covered peril was the efficient proximate cause of the loss).”  Further, the Court noted that, in certain instances, the Montana Supreme Court had allowed parties to an insurance contract to agree to exclusions that are not statutorily prohibited.  The Court also noted that, other courts, such as the United States Court of Appeals for the Eighth Circuit, “have found that parties are free to contract around” the application of the EPC.  TNT Speed & Sport Ctr. v. American States Ins. Co., 114 F.3d 731, 733 (8th Cir. 1997) (collecting cases).

It remains to be seen whether the Montana Supreme Court will answer the call.  Other courts that have considered the issue, such as Nevada, have noted that “[t]he efficient proximate cause doctrine is a default rule which gives way to the language of the contract.”  Pioneer Chlor Alkali Co. v. National Union, 863 F. Supp. 1226, 1232 (D. Nev. 1994); see also, e.g., Garmany of Red Bank, Inc. v. Harleysville Ins. Co., 2021 U.S. Dist. LEXIS 50985, at *13 (D.N.J. Mar. 18, 2021); Moody v. Hartford Fin. Grp., Inc., 513 F. Supp. 3d 496, 510 (E.D. Pa. 2021).

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