Low, Ball & Lynch’s

WEEKLY LAW RESUME

May 12, 2005 Issue      By: Ray Coates

Property Coverage - Efficient Proximate Cause

Frank Julian v. Hartford Underwriters Insurance Company

California Supreme Court

(May 5, 2026)

Under the efficient proximate cause doctrine, causation for a loss in a first party property context is determined by ascertaining the most important cause of the loss, even though other losses may have contributed to the damage.  In this case, the Supreme Court considered whether this doctrine prohibited invoking an exclusion for a rain-caused landslide.

Following heavy rains, a slope failed above the home of Frank and Carol Julian.  This led to a landslide.  A claim was presented to Hartford Underwriters Insurance Company, their property insurer.  Hartford insured them under a standard form homeowners policy and excluded earth movement, water damage and weather conditions.  However, under the weather conditions exclusion, it stated the exclusion applied only if the weather conditions contributed with another cause excluded by the policy.

After investigation, Hartford denied the claim.  The denial was based upon negligent construction and design of the home, earth movement and weather conditions.  The Julians sued Hartford for breach of contract and breach of the covenant of good faith and fair dealing.  Hartford moved for summary judgment.  The trial court granted the motion.  The Julians appealed to the Court of Appeal, which affirmed the trial court.  The Julians petitioned the Supreme Court, which granted review.

The California Supreme Court affirmed the trial court.  The Court noted that the rule in California for determining causation in first party property cases is the efficient proximate cause doctrine.  This doctrine requires the trier of fact to determine the most important reason the loss occurred and then to determine whether that cause is covered or excluded.  Other causes of the loss are not considered in determining coverage.

With respect to the weather conditions clause, the Court observed the exclusion excluded losses caused by weather conditions, but only when they contributed in any way with another excluded peril.  The Court stated this did not violate the efficient proximate cause rationale.

The Court stated an insurer is free to insure against some manifestations of weather conditions, but not others.  This does not violate the efficient proximate cause doctrine.  The Court felt the application of the weather conditions clause to a loss occasioned by rain-induced landslide did not violate the efficient proximate cause rationale.

Here, that clause clearly excluded the peril of rain inducing a landslide.  Given the particularly well-known relationship between rain and a landslide, the Court felt the exclusion corresponded with the reasonable expectation of an insured.  The Court therefore agreed with the Court of Appeal that the trial court did not err in granting Hartford's summary judgment motion.

Justice Brown, in a concurring opinion, felt the majority opinion was too narrow, being limited to the facts of this case.  She would have supported a holding that gave insurers the right to exclude any loss if done so unambiguously, absent a violation of fundamental public policy.

COMMENT

This Supreme Court decision left open the door to arguments that exclusions eliminating coverage where a covered peril and an uncovered peril concur, without an analysis of the efficient proximate cause, would probably not withstand scrutiny by the Court.  Many current property policies attempt to do this, and their validity is questionable given this opinion.

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