As we have written about before on this blog, the water damage caused by Hurricane Sandy in October 2012 gave rise to important questions concerning the applicability of so-called “anti-concurrent causation” clauses. Such was the case in the recently-decided matter of Carevel, LLC v. Aspen American Ins. Co., 2016 U.S. Dist. LEXIS 157919 (D.N.J. Nov. 15, 2016).
In Carevel, the insured’s building in Jersey City, New Jersey suffered interior water damage during Hurricane Sandy. The relevant insurance policy excluded damage caused by flood. The flood exclusion included an anti-concurrent causation preamble with the familiar language excluding flood damage “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” Importantly for the legal issues raised in this case, the policy did cover, via endorsement, damage caused by water that backed up through sewers or drains. Following an investigation into the loss, Aspen obtained a report indicating that the interior water damage was caused by street-level flooding that had infiltrated the building during the storm. Aspen denied the claim based on the flood exclusion. The insured filed suit, claiming that the damage was caused by water that had entered the building through the basement’s sewers or drains.
On Aspen’s summary judgment motion, the Court agreed that the policy did not provide coverage for the claimed damage. The Court first noted that the language of the policy – i.e., the flood exclusion and the sewer backup endorsement – were “not ambiguous.” “The Policy does not cover any damages which would not have occurred in the absence of one or more of the excluded events,” the Court reasoned, meaning that “if Plaintiff’s damages were concurrently caused by both flooding and overflow water from the premises’ drainage system, Plaintiff is not covered for that damage.” Rather, the Court continued, to establish covered damage, the insured had to “demonstrate that the back-up flow directly, and solely, caused the damages.” In other words, the insured was required to prove that flood did not contribute to the claimed damages in any way.
In addressing whether the insured had met its burden in opposing summary judgment, the Court found that the insured had failed to demonstrate a genuine issue of material fact that the claimed property damage was covered. While the insurer had provided a report stating that the damage was caused by street-level flooding of nearby waterways, the insured had failed to point to any evidence as to the cause of loss besides non-specific invoices and proofs of payment for repair work. Summary judgment on the breach of contract claim was therefore appropriate. The Court also granted Aspen’s summary judgment on the insured’s bad faith cause of action, finding that there was no evidence that Aspen lacked a reasonable basis for denying the claim.
In addition to re-affirming the application of anti-concurrent causation language, Carevel provides a useful reminder as to the obligations of a party opposing summary judgment. It is not enough for an insured to vaguely allude to the possible existence of disputed material facts.
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