Stanford Law School - Robert Crown Law Library

Filed 5/5/05; reposted to correct file date; no change to opn. text

IN THE SUPREME COURT OF CALIFORNIA

FRANK JULIAN et al.,
Plaintiffs
and
Appellants,
S109735
v.
Ct.App. 2/7 B149088
HARTFORD UNDERWRITERS
INSURANCE COMPANY,
Los Angeles County
Super. Ct. No. LC047845
Defendant and Respondent.

California Insurance Code section 5301 provides that “[a]n insurer is liable
for a loss of which a peril insured against was the proximate cause, although a
peril not contemplated by the contract may have been a remote cause of the loss;
but he is not liable for a loss of which the peril insured against was only a remote
cause.” We have construed section 530 as incorporating into California law the
efficient proximate cause doctrine, an interpretive rule for first party insurance.
(Sabella v. Wisler (1963) 59 Cal.2d 21, 31-33 (Sabella).) Pursuant to the efficient
proximate cause doctrine, “When a loss is caused by a combination of a covered
and specifically excluded risks, the loss is covered if the covered risk was the
efficient proximate cause of the loss,” but “the loss is not covered if the covered
risk was only a remote cause of the loss, or the excluded risk was the efficient

1
All subsequent statutory references are to the Insurance Code unless
otherwise indicated.
1

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proximate, or predominate cause.” (State Farm Fire & Casualty Co. v. Von Der
Leith (1991) 54 Cal.3d 1123, 1131-1132.)
This case calls on us to decide whether an insurer may, consistent with
section 530 and the efficient proximate cause doctrine, deny coverage for a loss
resulting from a rain-induced landslide by invoking, among other exclusions
within a form policy, a provision that excludes coverage for losses caused by
weather conditions that “contribute in any way with” an excluded cause or event
such as a landslide. It is undisputed that losses proximately caused by weather
conditions that do not “contribute in any way with” another excluded cause or
event are covered under the policy.
Plaintiffs contend that section 530 and the efficient proximate cause
doctrine prohibit their insurer from invoking this exclusion where the weather
condition of rain causes a landslide. We reject this argument as an improper
conflation of the covered peril of weather conditions alone with the distinct,
excluded peril of a weather condition (rain) that induces a landslide, and hold that
the insurer may, consistent with section 530 and the efficient proximate cause
doctrine, rely on the exclusion to deny coverage for losses proximately caused by
the latter peril. Accordingly, we affirm the judgment in favor of the insurer.
FACTUAL AND PROCEDURAL BACKGROUND
On February 13, 1998, following heavy rains, a slope failed above the West
Hills, California home of Frank and Carole Julian. The slope failure led to a
landslide. This landslide caused a tree to crash into the Julians’ house. Soon
thereafter, the Julians presented a claim for the resulting damage to their insurer,
Hartford Underwriters Insurance Company (Hartford). The Julians had a standard
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form homeowners insurance policy with Hartford. This “open peril” policy2
provided in relevant part, “We [Hartford] insure against risks of direct physical
loss to property described in Coverage A [dwelling] and B [other structures]
unless the loss is: [¶] 1. excluded under Section I – Exclusions; or [¶] 2. caused
by” one of several specifically named perils. The policy also stated, “any ensuing
loss to property . . . not excluded or excepted in this policy is covered.” The
exclusions relevant to this appeal provided as follows:
“SECTION I – EXCLUSIONS
“1.
We do not insure against loss caused directly or indirectly by any of
the following. Such loss is excluded regardless of any other cause or event
contributing concurrently or in any sequence to the loss: . . . .
“b.
Earth Movement, meaning earthquake including land shock
waves or tremors before, during or after a volcanic eruption; landslide; mudflow;
earth sinking, rising or shifting . . . .
“c.
Water Damage . . . .
“2.
We do not insure against loss to property described in Coverages A
and B caused by any of the following. However, any ensuing loss to property
described in Coverages A and B not excluded or excepted in this policy is
covered.
“a.
Weather conditions. However, this exclusion only applies if
weather conditions contribute in any way with a cause or event excluded in
paragraph 1. above to produce the loss . . . .”

2
An “open peril” policy is analogous to an “all risk” policy, in that it
provides coverage for all losses not expressly excluded by the policy. (See Garvey
v. State Farm Fire & Casualty Co. (1989) 48 Cal.3d 395, 406 (Garvey); Abraham,
Peril and Fortuity in Property and Liability Insurance (2001) 36 Tort Ins. L.J.
777, 783-784.)
3

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We will refer to the last clause excerpted above as the “weather conditions
clause.” Other provisions within the Julians’ policy and its amendatory
endorsement excluded coverage for losses caused by, among other perils, certain
types of freezing, wear and tear, neglect, and acts, errors or omissions in design or
construction.
Hartford investigated the Julians’ claim. An engineer retained by Hartford
concluded that a landslide, triggered by heavy rainfall, brought about the damage
to the Julians’ house. The engineer surmised that “[w]ater is always the catalyst
that causes these types of [slope] failures.” Hartford also allowed for the
possibility that third party negligence may have played a part in the Julians’ loss.
Hartford denied coverage for all but a minor part of the damage suffered by the
Julians, pointing to the exclusions in the Julians’ policy for acts, errors or
omissions in design and construction, earth movement, and weather conditions
that “contribute in any way with” another excluded cause or event, in this case a
landslide, to produce a loss. Regarding the weather conditions clause, the letter
Hartford sent to the Julians advising them that coverage had been denied stated,
“If it were determined that the damage to your house was caused mainly by
prolonged heavy rains – that is, the ‘cumulative effect of the recent storms’ cited
in the engineer’s report – the ‘weather conditions’ exclusion would apply . . . .”
The Julians brought suit against Hartford, charging the insurer with breach
of contract, breach of the covenant of good faith and fair dealing, and intentional
infliction of emotional distress. The Julians alleged that the efficient proximate
cause of their loss had been third party negligence, weather conditions alone
“consisting of sustained rainfall,” or collapse not due to flood, and that the policy
did not effectively exclude any of these risks. Hartford subsequently moved for
summary judgment on the ground that the Julians’ policy excluded each of the
perils that Hartford identified as the possible efficient proximate causes of the loss
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– earth movement, third party negligence, and weather conditions that “contribute
in any way with” another excluded cause or event, in this case a landslide. In
support of its motion for summary judgment, Hartford supplied a declaration from
its engineer opining that “the proximate cause of the damage to the Julians’
residence and property was a landslide, brought on by heavy rainfall associated
with El Nino [sic] conditions. The total water necessary for the failure to occur
was a result of the cumulative effects of the storms generated by El Nino [sic].” In
opposing Hartford’s motion, the Julians pointed to the engineer’s opinion that rain
had induced the landslide, and proffered a declaration from a geologist who
opined that negligent lot design and construction, a risk that the Julians claimed
was not properly excluded under the policy, had “contributed to” the Julians’ loss.
The Julians offered no evidence that weather conditions had caused their loss in
any way apart from rain’s role in triggering the landslide that caused the tree to
fall onto their home.
The trial court agreed with Hartford that the policy excluded each of the
possible efficient proximate causes of the loss, and granted Hartford summary
judgment. Upon the Julians’ appeal, the Court of Appeal affirmed. In addition to
rejecting the Julians’ argument that the policy did not properly exclude the peril of
third party negligence, an issue we do not address, the Court of Appeal determined
that the weather conditions clause did not violate section 530 or the efficient
proximate cause doctrine because, in the Court of Appeal’s view, the clause
plainly excluded weather conditions, and the limited grant of coverage for losses
caused by weather conditions that did not “contribute in any way with” another
excluded cause or event did not render the clause invalid or turn it into a coverage
provision for all losses caused by weather conditions. In so holding, the Court of
Appeal parted ways with another division of the same appellate district, which a
year earlier in Palub v. Hartford Underwriters Ins. Co. (2001) 92 Cal.App.4th
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645, 648 (Palub)3 had determined that the weather conditions clause violated
section 530 and the efficient proximate cause doctrine. We granted review to
resolve this dispute over the validity of the weather conditions clause.
DISCUSSION
The efficient proximate cause doctrine “is neither a California invention nor
novel.” (Wuerfel & Koop, “Efficient Proximate Causation” in the Context of
Property Insurance Claims (1998) 65 Def. Couns. J. 400, 401.) In Sabella, supra,
59 Cal.2d 21, we held that section 530 incorporated the doctrine into California
law as the preferred method for resolving first party insurance disputes involving
losses caused by multiple risks or perils, at least one of which is covered by
insurance and one of which is not. (59 Cal.2d at pp. 31-33.) The plaintiffs in
Sabella had procured an “all-risk” homeowners policy endorsement that excluded
coverage for loss by settling, cracking, or shrinkage of the foundation. (Id. at
p. 26.) A sewer pipe located above inadequately compacted fill material broke
and leaked, causing the plaintiffs’ house to settle unevenly and the foundation and
walls to crack. (Ibid.) The insurer claimed that the exclusion for settling applied
to defeat coverage. (Id. at p. 31.) Reversing a judgment in favor of the insurer, we
accepted the rule that “ ‘[i]n determining whether a loss is within an exception in a
policy, where there is a concurrence of different causes, the efficient cause . . . is
the cause to which the loss is to be attributed . . . .’ ” (Sabella, supra, 59 Cal.2d at
p. 31.)

3
The Julians have requested that we take judicial notice of a November 2001
letter submitted to this court by the Attorney General on behalf of the Department
of Insurance in connection with the Palub proceedings. We grant this request to
notice material found in court files. (Evid. Code, § 452, subd. (d).)
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In
Garvey, supra, 48 Cal.3d 395, we explained that in adopting this
principle Sabella “impliedly recognized that coverage would not exist if the
covered risk was simply a remote cause of the loss, or if an excluded risk was the
efficient proximate (meaning predominant) cause of the loss. On the other hand,
the fact that an excluded risk contributed to the loss would not preclude coverage
if such a risk was a remote cause of the loss.” (Id. at pp. 402-403.) Garvey
clarified that the “efficient proximate cause” of a loss is the predominant, or most
important cause of a loss. (Id. at p. 403.) By focusing the causal inquiry on the
most important cause of a loss, the efficient proximate cause doctrine creates a
“workable rule of coverage that provides a fair result within the reasonable
expectations of both the insured and the insurer.” (Id. at p. 404.)
Policy exclusions are unenforceable to the extent that they conflict with
section 530 and the efficient proximate cause doctrine. (See Civ. Code, § 1667,
subd. (2); Howell v. State Farm Fire & Casualty Co. (1990) 218 Cal.App.3d 1446,
1452, 1454 (Howell); Gillis v. Sun Ins. Office, Ltd. (1965) 238 Cal.App.2d 408,
423; Sauer v. General Ins. Co. (1964) 225 Cal.App.2d 275, 279-280.) In Garvey,
supra, 48 Cal.3d 395, we reaffirmed that an insurer may not preclude application
of efficient proximate cause analysis through inconsistent policy language.
Garvey addressed an all-risk homeowners insurance policy that purported to
exclude losses “ ‘caused by, resulting from, contributed to or aggravated by any
earth movement . . . .’ ” (Id. at p. 399.) Application of this language would have
defeated coverage if earth movement made even a minor contribution to a loss.
An addition to the house owned by the Garvey plaintiffs pulled away from the
main structure. (Id. at p. 400.) Pointing to the earth movement exclusion, the
insurer denied coverage for the loss. (Ibid.) The plaintiffs countered that the
efficient proximate cause was third party negligence, implicitly a covered peril
because it was not specifically excluded in their all-risk policy. (Ibid.) After
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addressing the inapplicability of certain third party insurance principles to the first
party insurance context and the resulting need to remand the action for further
proceedings (id. at pp. 410-412), Garvey held that notwithstanding the insurer’s
attempt to defeat coverage whenever earth movement played any part in a loss, on
remand application of efficient proximate cause analysis would determine
whether the policy provided coverage for the loss (id. at pp. 412-413). Garvey
stated, “If the earth movement was the efficient proximate cause of the loss, then
coverage would be denied under Sabella [citation]. On the other hand, if
negligence was the efficient proximate cause of the loss, then coverage exists
under Sabella.” (Ibid.) We would not have given these instructions, which
referred exclusively to the possible efficient proximate causes of the loss, had we
deferred to the insurer’s attempt to exclude losses that may have been caused
efficiently by negligence, but which were contributed to or aggravated by earth
movement.
Howell, supra, 218 Cal.App.3d 1446, also rejected an insurer’s attempt to
contract around the efficient proximate cause doctrine. In Howell, as here, the
plaintiff suffered property damage following a landslide and sought to recover
under her “all-risk” homeowners insurance policy. (Id. at p. 1449.) The landslide
came after heavy rains had weakened a slope already denuded by fire. (Ibid.)
The policy provided, “ ‘We do not insure under any coverage for loss (including
collapse of an insured building or part of a building) which would not 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 policy then listed
‘Earth Movement’ and ‘Water Damage’ as specific perils excluded under this
section.” (Id. at pp. 1449-1450.) Relying on this language, the insurer moved for
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and received summary judgment (id. at p. 1451) even though the plaintiff
presented a declaration from a geotechnical expert attesting that if the fire had not
occurred, the slope probably would not have failed (id. at p. 1459).
The Court of Appeal reversed. (Howell, supra, 218 Cal.App.3d at p. 1461.)
The majority opinion framed and resolved the issue as follows: “Stated simply,
the important question presented by this case is whether a property insurer may
contractually exclude coverage when a covered peril is the efficient proximate
cause of the loss, but an excluded peril has contributed to or was necessary to the
loss. We conclude that a property insurer may not limit its liability in this manner,
since the statutory and judicial law of this state make the insurer liable whenever a
covered peril is the ‘efficient proximate cause’ of the loss, regardless of other
contributing causes. Consequently, the policy exclusions at issue in this case are
not enforceable to the extent they conflict with California law.” (Id. at p. 1452
(maj. opn. of White, P.J.), fn. omitted.) Howell reasoned that “if we were to give
full effect to the . . . policy language excluding coverage whenever an excluded
peril is a contributing or aggravating factor in the loss, we would be giving
insurance companies carte blanche to deny coverage in nearly all cases. . . . [¶] . . .
Since, in most instances, an insurer can point to some arguably excluded
contributing factor, this rule would effectively transform an ‘all-risk’ policy into a
‘no-risk’ policy.” (Id. at pp. 1456-1457, fn. 6.)
In a concurring opinion in Howell, Justice Barry-Deal concluded that “the
rule in Sabella is based on the related ideas that, first, a reasonable insured expects
that a loss will be covered if it is proximately caused by a covered peril, even
though other remote and excluded causes may concur in producing the loss, and
second, to construe the policy to defeat that expectation would be contrary to the
purpose of the insurance itself, i.e., provision against economic loss from certain
classes of perils.” (Howell, supra, 218 Cal.App.3d at p. 1466.) The concurring
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opinion also concluded that “an insurer may not defeat coverage by discovering a
remote and excluded cause somewhere in the chain of causation, even where the
policy contains clear language that would support the insurer’s interpretation.
That finding is based on two related principles applicable to all insurance
contracts: first, that ‘the policy or its endorsements cannot be so interpreted as to
become meaningless, or to withhold coverage which the [layperson] would
normally expect from it . . . ,’ and second, that ‘ “. . . [t]he courts will not sanction
a construction of the insurer’s language that will defeat the very purpose or object
of the insurance. [Citations.] . . . .” ’ [Citation.]” (Id. at pp. 1467-1468.) “At
bottom, the rule applied . . . is a recognition that an exclusion based on remote
causation, if given routine effect, could render a policy valueless almost at
random.” (Id. at p. 1475 (conc. opn. of Barry-Deal, J.).)
Garvey, supra, 48 Cal.3d 395 and Howell, supra, 218 Cal.App.3d 1446
thus rejected insurers’ attempts to contract around the proximate cause doctrine
through sweeping language that would have rendered the policies’ coverage terms
virtually illusory. In both cases, enforcement of the broad prefatory language
introducing the excluded peril of earth movement would have allowed the insurer
to deny coverage for a loss proximately caused by a covered peril. Consistent
with prior case law and section 530, Garvey implicitly and Howell explicitly held
that section 530 and the efficient proximate cause doctrine announce a rule that
reasonable insureds consider themselves insured against losses proximately caused
by perils covered under a first party insurance policy, regardless of contrary
language employed in connection with excluded perils. (Garvey, supra, 48 Cal.3d
at pp. 412-413; Howell, supra, 218 Cal.App.3d 1452, 1454, 1459.)
Although Garvey and Howell declined to give effect to the overbroad terms
in the exclusions before them, both enforced the exclusions to the extent that they
applied to losses proximately caused by the peril explicitly named therein, earth
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movement. (Garvey, supra, 48 Cal.3d at pp. 412-413; Howell, supra, 218
Cal.App.3d at pp. 1452, 1458, 1459.) By enforcing the exclusions to the extent
that the specifically identified peril of earth movement was the proximate cause of
the plaintiffs’ losses, Garvey and Howell brought about “a fair result within the
reasonable expectations of both the insured and the insurer” (Garvey, supra, 48
Cal.3d at p. 404) consistent with our statutory mandate to interpret contracts in
such a manner as will make them “lawful, operative, definite, reasonable, and
capable of being carried into effect, if it can be done without violating the
intention of the parties” (Civ. Code, § 1643) and to “give effect to every part” of a
contract (id., § 1641; Sutton v. Farmers Ins. Exchange (1995) 35 Cal.App.4th
1800, 1804; Barrett v. Farmers Ins. Group (1985) 174 Cal.App.3d 747, 750-751).
Returning to the weather conditions clause, we note that this is not the first
time insurers and insureds have disputed whether the clause is consistent with the
efficient proximate cause rule. In Findlay v. United Pacific Ins. Co. (1996) 129
Wn.2d 368 [917 P.2d 116] (Findlay) the Washington Supreme Court determined
that the weather conditions clause did not violate the doctrine. Washington, like
California, has adopted the efficient proximate cause rule for first party insurance
and applied the doctrine to override contrary policy language. (See Safeco Ins.
Co. of Amer. v. Hirschmann (1989) 112 Wn.2d 621, 625-629 [773 P.2d 413];
Villella v. Public Employees Mut. Ins. Co. (1986) 106 Wn.2d 806, 814-819 [725
P.2d 957]; Graham v. Public Employees Mut. Ins. Co. (1983) 98 Wn.2d 533, 538
[656 P.2d 1077].) Findlay, like this case, involved a landslide caused by weather.
(Findlay, supra, 129 Wn.2d at p. 370.) The insurer denied coverage, invoking a
weather conditions clause substantively identical to the one involved here. (Id. at
p. 371.) Findlay affirmed the trial court’s grant of summary judgment in favor of
the insurer. (Id. at p. 372.) Findlay distinguished earlier decisions finding
overbroad policy language to be inconsistent with the efficient proximate cause
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doctrine, holding, “This is not a case where the efficient proximate cause rule is
being circumvented by disallowing coverage any time an excluded event occurs in
the chain of causation, even when the triggering cause of the loss is a covered risk.
In this case, the proximate cause of the loss was a named, excluded peril. Weather
conditions are specifically excluded whenever they combine with earth movement
to cause a loss. The policy is unambiguous as to what was covered and what was
excluded from coverage.” (Id. at pp. 375-376.)
Palub, supra, 92 Cal.App.4th 645, disagreed with Findlay, criticizing that
decision as having elevated “form over substance.” (Id. at p. 651.) Palub also
involved damage resulting from a landslide. The insurer denied coverage, citing
the weather conditions clause. (Id. at p. 648.) The trial court agreed that the
policy excluded each of the relevant perils. (Ibid.) The Court of Appeal in Palub
reversed, finding that “the policy covers loss caused by weather conditions and
that the policy provision which seeks to exclude loss caused by weather in
combination with an uncovered cause of loss violates Insurance Code section
530.” (Ibid.) Palub held: “On a careful reading of this clause, it is apparent that
despite the title of the section, weather conditions are not an excluded cause of
loss. To the contrary, under the terms of the purported exclusion, loss caused by
weather conditions is covered, so that Hartford would be clearly obligated to pay if
appellants’ house had been damaged by rain or wind. What the ‘exclusion’ seeks
to do is to exclude loss caused by a combination of weather conditions and an
excluded cause of loss such as earth movement. To the extent that the ‘exclusion’
would exclude loss proximately caused by weather conditions, it violates
Insurance Code section 530 and the long-standing principle that a property insurer
is liable whenever a covered risk is the proximate cause of a loss, and is
unenforceable.” (92 Cal.App.4th at p. 650.)
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Finally, the Court of Appeal below took issue with Palub’s reasoning and
result. The Court of Appeal perceived the weather conditions clause as an
exclusion (for all loses caused by weather conditions) containing an exception
(restoring coverage for losses caused by weather conditions as to which a cross-
referenced peril did not “contribute in any way”). The Court of Appeal held that
“[t]he fact that the exclusion contained an exception did not transform it into a
coverage provision” for all losses caused by weather conditions. It continued,
“We believe Palub gives insufficient weight to the rule that a provision in the
exclusions section of a policy does not create coverage, and an exception to an
exclusion merely restores coverage where it would otherwise not exist.
[Citations.] Moreover, characterizing the weather conditions provision as an
exclusion does not provide an insurer the means to deny a claim because some
excluded peril contributed to a loss in a small way, the problem the efficient
proximate cause doctrine is designed to forestall. [Citation.]”
The Julians and supporting amici curiae argue that the weather conditions
clause has exactly the effect disclaimed by the Court of Appeal. Specifically, they
observe that because this is an “open peril” policy, all perils not expressly
excluded by the policy are covered. (See Garvey, supra, 48 Cal.3d at p. 406;
Travelers Casualty & Surety Co. v. Superior Court (1998) 63 Cal.App.4th 1440,
1454; Strubble v. United Services Auto. Assn. (1973) 35 Cal.App.3d 498, 504.)
The policy purports to exclude losses caused by weather conditions, but only
where weather conditions “contribute in any way with” earth movement (e.g.,
landslide), water damage (e.g., flood), or another cross-referenced, excluded peril.
Under the plain terms of the policy, losses caused by weather conditions that do
not “contribute in any way with” earth movement, water damage, etc. are covered.
Thus the coverage inquiry turns on whether earth movement, water damage, or the
like “contribute[d] in any way with” weather conditions to create a loss. This
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“contribute[s] in any way” language, they posit, has the same sweeping and
pernicious effect as the policy terms involved in Howell and Garvey had, in that it
allows the insurer to defeat coverage for a loss proximately caused by weather
conditions merely by finding a remote peril somewhere – no matter how distant,
minor, or independent from the weather conditions – in the causal background.
Hartford, meanwhile, argues that the weather conditions clause properly excludes
a specific peril, and that neither section 530 nor the efficient proximate cause
doctrine prohibits it from defining excluded perils as it chooses.
The threshold question, as we see it, is whether section 530 and the
efficient proximate cause doctrine inflexibly prohibit an insurer from insuring
against some manifestations of weather conditions, but not others. The Julians
argue that Hartford cannot draft policy provisions having such an effect. They
contend, and Palub agreed, that because the Julians’ policy provides coverage for
losses caused by weather conditions under some conditions, it must cover losses
caused by weather conditions under all circumstances or else run afoul of the
efficient proximate cause doctrine. We disagree.
“[A]n insurance company can limit the coverage of a policy issued by it as
long as such limitation conforms to the law and is not contrary to public policy.”
(Lumberman’s Mut. Cas. Co. v. Wyman (1976) 64 Cal.App.3d 252, 259.) “An
insurance policy may exclude coverage for particular injuries or damages in
certain specified circumstances while providing coverage in other circumstances.”
(Frank and Freedus v. Allstate Ins. Co. (1996) 45 Cal.App.4th 461, 471.) It
follows that an insurer is not absolutely prohibited from drafting and enforcing
policy provisions that provide or leave intact coverage for some, but not all,
manifestations of a particular peril. This is, in fact, an everyday practice that
normally raises no questions regarding section 530 or the efficient proximate
cause doctrine. For example, a policy might exclude losses caused by freezing to
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plumbing, but provide coverage for other types of freezing, or vice versa. The fact
that the exclusion does not apply to all types of freezing does not, by itself, render
it invalid. Likewise, an insurance policy can provide coverage for weather
conditions generally, but exclude coverage for specific weather conditions such as
hail, wind, or rain. The fact that hail, wind, and rain are types of weather
conditions does not bind the insurer to insure against all weather conditions, or
none at all. A reasonable insured would readily understand from the policy
language which perils are covered and which are not. Similar logic applies where
the limitations of our language require an insurer to describe a specific peril in
terms of a relationship between two otherwise distinct perils (e.g., rain and
landslide) in order to plainly and precisely communicate an excluded risk. In such
a case, the fact that a policy provides coverage for some, but not all,
manifestations of each constituent peril does not necessarily render the clause
naming and excluding the “combined” peril invalid pursuant to section 530 and
the efficient proximate cause doctrine.
The Julians and supporting amici curiae nevertheless contend that the
weather conditions clause is invalid because the existence of the excluded “peril”
identified in the clause, and therefore application of the exclusion, turns on even
the most minor contribution of a remote, excluded peril such as earth movement.
Amicus curiae United Policyholders argues that as written, the weather conditions
clause allows Hartford to deny coverage when a loss is caused 99 percent by
weather conditions and 1 percent by earth movement. For example, coverage for a
loss by all appearances caused by a windstorm could be denied where the damage
also could be linked in some manner to modest earth movement or water damage
that occurred long before the storm.
We agree with United Policyholders that application of the policy language
in situations like the one described above would raise troubling questions
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regarding the clause’s consistency with the efficient proximate cause doctrine.
Denial of coverage for such a loss would suggest the provision of illusory
insurance against weather conditions, raising concerns similar to those implicated
in Howell. (Howell, supra, 218 Cal.App.3d at pp. 1467-1468, 1475 (conc. opn. of
Barry-Deal, J.).) Indeed, the phrase “contribute in any way with” that links
weather conditions with earth movement in the present cause seems particularly
designed to circumvent the efficient proximate cause doctrine. For like reasons,
we disagree with Hartford’s implicit argument that an insurer’s ability to combine
otherwise separate perils into a single peril will invariably render section 530 and
the efficient proximate cause doctrine irrelevant. This mechanistic approach
toward avoiding efficient proximate cause analysis would have us endorse
excluded “perils” regardless of how they mingle or concatenate distinct risks, and
whether or not they provide “a fair result within the reasonable expectations of
both the insured and the insurer.” (Garvey, supra, 48 Cal.3d at p. 404.)
Here, however, we address only the application of the weather conditions
clause to a loss occasioned by a rain-induced landslide. The peril of rain inducing
a landslide is a genuine one, not a mere drafting fiction. Rain inducing a landslide
is a commonly understood risk of loss and the frequent and direct causal
relationship between rain and landslide is widely and easily understood.
The Hartford engineer’s report attested that the type of slope failure involved in
this case was “always” caused by water. The landslide here was not an
independent causal agent in the Julians’ loss; by all accounts it was dependent on
the weather condition of heavy rains. And a reasonable insured would readily
grasp the difference between a loss caused by weather conditions alone and a loss
caused by weather conditions that induce a landslide, undermining the threat of
illusory insurance. Accordingly, to the extent the weather conditions clause
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excludes the specific peril of rain inducing a landslide, there is no violation of
section 530 or the efficient proximate cause doctrine.
The remaining task is to determine whether the weather conditions clause
does, in fact, exclude the peril of rain inducing a landslide. If it does, we will
enforce the exclusion to the extent that this peril is the efficient proximate cause of
the loss. (See Garvey, supra, 48 Cal.3d at pp. 412-413; Howell, supra, 218
Cal.App.3d at pp. 1452, 1458, 1459.) Upon review of the weather conditions
clause in the context of the policy as a whole, we agree with Findlay, supra, 129
Wn.2d at pages 375-376 that the policy excludes this peril. The weather
conditions clause purports to exclude coverage for a loss caused by weather
conditions that “contribute[d] in any way with” earth movement, including a
landslide. Particularly given the direct and well-known relationship between rain
and landslide, a reasonable insured would understand that the words “contribute in
any way with” connote an intention to exclude rain that induces a landslide.
Significantly, the Julians have never supplied an alternative interpretation of the
clause.4 Applying the exclusion to the facts of this case, therefore, brings about “a

4
The Julians did not contend in their opening brief that the weather
conditions clause was ambiguous as applied here. (See E.M.M.I., Inc. v. Zurich
American Ins. Co. (2004) 32 Cal.4th 465, 471 [to be enforced, an exclusion must
unambiguously apply to a particular loss and be conspicuous, plain and clear].)
Although they cursorily suggested an ambiguity in their reply brief, they never
offered a reasonable alternative interpretation of the policy language. (Id. at p.
470 [to be ambiguous, a policy provision must be susceptible to at least two
reasonable constructions].) We decline to advance an argument that the Julians
neither timely nor fully made. (See Shade Foods, Inc. v. Innovative Products
Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 895, fn. 10 [“ ‘ “points raised
in the reply brief for the first time will not be considered, unless good reason is
shown for failure to present them before. . . .” ’ [Citations.]”)
17

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fair result within the reasonable expectations of both the insured and the insurer.”
(Garvey, supra, 48 Cal.3d at p. 404.)
We hold, in sum, that the weather conditions clause excludes the peril of
rain inducing a landslide and that as applied here the clause does not violate
section 530 or the efficient proximate cause doctrine. Because the policy
effectively excludes the perils of earth movement, third party negligence, and rain
inducing a landslide, and the Julians produced no evidence that a different peril
was the efficient proximate cause of their loss, we agree with the Court of Appeal
that the trial court did not err in granting Hartford summary judgment.
DISPOSITION
The judgment of the Court of Appeal is affirmed.
MORENO, J.

WE CONCUR: GEORGE, C. J.
KENNARD,
J.
WERDEGAR,
J.
CHIN,
J.
18

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CONCURRING OPINION BY BROWN, J.

I concur with the majority’s judgment affirming the Court of Appeal.
However, I write separately because I agree with that court’s determination that
the efficient proximate cause doctrine, codified in Insurance Code section 530, is
not implicated.
The majority parrots the argument set forth by amicus curiae United
Policyholders that the weather conditions clause at issue allows the insurer to deny
coverage when the loss is caused by 1 percent earth movement and 99 percent
weather conditions. (Maj. opn., ante, at p. 15.) The majority states:
“[A]pplication of the policy language in situations like the one described above
would raise troubling questions regarding the clause’s consistency with the
efficient proximate cause doctrine” and denying coverage for a loss such as that
described above suggests “the provision of illusory insurance against weather
conditions . . . . [Citation.]” (Id. at pp. 15-16.) The focus of the majority’s
concern is the phrase “contribute in any way.” These words, according to the
majority, seem “particularly designed to circumvent the efficient proximate cause
doctrine.” (Id. at p. 16.) Of course, that is true only if the efficient proximate
cause doctrine was designed to nullify policy language and force insurers to pay
for a loss when an excluded risk is the efficient proximate or predominant cause.
As a general rule, however, the insurer owes policy benefits to the insured if the
efficient proximate cause of the loss is a covered peril, even when other
specifically excluded perils contribute to the loss; but the insurer does not owe
1

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benefits when an excluded peril is the efficient proximate cause of the loss. (State
Farm Fire & Casualty Co. v. Von Der Lieth (1991) 54 Cal.3d 1123, 1131-1132
[“[T]he scope of coverage under an all-risk homeowner’s policy includes all risks
except those specifically excluded by the policy. When a loss is caused by a
combination of . . . covered and specifically excluded risks, the loss is covered if
the covered risk was the efficient proximate cause of the loss. [Citation.] [T]he
loss is not covered if the covered risk was only a remote cause of the loss, or the
excluded risk was the efficient proximate, or predominate cause”].) Thus, the
description in a policy of an unambiguous excluded peril does not circumvent the
efficient proximate cause doctrine. If the loss is proximately caused by an
excluded peril, the doctrine is not applicable. The majority nevertheless rejects
“Hartford’s implicit argument that an insurer’s ability to combine otherwise
separate perils into a single peril will invariably render section 530 and the
efficient proximate cause doctrine irrelevant.” (Maj. opn., ante, at p. 16.) The
majority describes this approach as “mechanistic” and believes it is an end run
around the efficient proximate cause doctrine that would provide results outside
“ ‘the reasonable expectations of both the insured and the insurer.’ [Citation.]”
(Ibid.)
Unlike the majority, I do not believe United Policyholders’ argument raises
“troubling questions” (maj. opn., ante, at p. 15) with respect to the efficient
proximate cause doctrine. First, Hartford’s approach does not go against the
“ ‘reasonable expectations of both the insured and the insurer.’ ” (Id. at p. 16.)
The reasonable expectations of the parties are found in the clear terms of the
insurance contract—terms the Julians do not claim are ambiguous and that this
state’s Department of Insurance approved. (Garvey v. State Farm Fire & Casualty
Co. (1989) 48 Cal.3d 395, 408 [“[T]he reasonable expectations of the insurer and
the insured . . .—as manifested in the distribution of risks, the proportionate
premiums charged and the coverage for all risks except those specifically
excluded—cannot reasonably include an expectation of coverage in property loss
2

---

cases in which the efficient proximate cause of the loss is an activity expressly
excluded under the policy”].)
I find the Court of Appeal’s well-reasoned opinion in this case expresses
the better view: “According to Hartford, it is free to exclude a category of peril
from its policy and then restore coverage in certain circumstances without
transforming an exclusion into a coverage provision. We agree with Hartford. [¶]
A property insurer may exclude a category of peril from coverage under its policy.
‘In the property insurance context, the insurer and the insured can tailor the policy
according to the selection of insured and excluded risks and, in the process,
determine the corresponding premium to meet the economic needs of the insured.’
[Citation.] . . . [¶] Moreover, an insurer can exclude a specific category of peril
and then restore a certain amount of coverage through an exception to the
exclusion. [Citation.] In such circumstances the exclusion does not operate as a
grant of coverage. The exception to the exclusion merely ‘serves to “reinstate
coverage” where it would not otherwise exist.’ [Citations.] [¶] Based on these
principles, the weather conditions provision in the Julians’ policy is properly
characterized as an exclusion, not as a coverage provision. Hartford was free to
deem weather conditions a category of peril excluded by the policy. It made its
decision to do so clear and unambiguous by listing weather conditions as an
excluded peril in the exclusions section of its policy. Indeed, the Julians do not
suggest Hartford is precluded from writing its insurance policy to exclude weather
conditions under all circumstances. Hartford also was free to restore a certain
amount of coverage to the insured when the circumstances under the exception to
the weather conditions exclusion were satisfied. The fact that the exclusion
contained an exception did not transform it into a coverage provision. As an
exclusion, the weather conditions provision cannot serve as a grant of coverage
permitting the Julians to recover on their claim under the efficient proximate cause
doctrine. [Citation.]”
3

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Like the Court of Appeal, I believe an insured and insurer “can tailor [a]
policy according to the selection of insured and excluded risks” and—absent a
violation of a fundamental public policy—courts should be loathe to step in and
rewrite their terms. As the Supreme Court in Washington stated when reviewing a
virtually identical weather conditions provision, “If the efficient proximate cause
. . . is a specifically named, unambiguous excluded peril in the policy, we will not
mandate coverage. We will not, under the guise of public policy, rewrite a clear
contract between the parties.” (Findlay v. United Pacific Ins. Co. (Wash. 1996)
917 P.2d 116, 122.) Although holding that the efficient proximate cause doctrine
is not applicable in this case, I believe the majority’s approach leaves the door
open for courts to step in and rewrite insurance contracts, in derogation of the
parties’ reasonable expectations as set forth in the contracts.
For the reasons stated above, I would affirm the Court of Appeal and
overrule Palub v. Hartford Underwriters Ins. Co. (2001) 92 Cal.App.4th 645.
BROWN, J.
I CONCUR:
BAXTER,
J.
4

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See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Julian v. Hartford Underwriters Insurance Company
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted XXX 100 Cal.App.4th 811
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S109735
Date Filed: May 5, 2005
__________________________________________________________________________________

Court:

Superior
County: Los Angeles
Judge: Stephen D. Petersen

__________________________________________________________________________________

Attorneys for Appellant:

The Law Offices of Kim H. Pearman, Pearman Law Corporation, Kim H. Pearman, Robert L. Pearman and
Kenneth R. Nahigian for Plaintiffs and Appellants.

Chipman Miles & Associates, Chipman Miles, Brian B. Miles, Joel M. Westbrook; and Amy Bach for
United Policyholders as Amicus Curiae on behalf of Plaintiffs and Appellants.

Gary M. Cohen, Jerry L. Whitfield and Risa Salat-Kolm for California Department of Insurance as Amicus
Curiae on behalf of Plaintiffs and Appellants.

__________________________________________________________________________________

Attorneys for Respondent:

Ropers, Majeski, Kohn & Bentley, Todd A. Roberts, Kevin G. McCurdy and Crystal N. Thomas for
Defendant and Respondent.

Willoughby, Stuart & Bening, Ronald J. Cook and Bruce M. MacLeod for California State Automobile
Association Inter-Insurance Bureau as Amicus Curiae on behalf of Defendant and Respondent.

Capman, Popik & White and Susan M. Popik for Personal Insurance Federation of California as Amicus
Curiae on behalf of Defendant and Respondent.

---

Counsel who argued in Supreme Court (not intended for publication with opinion):

Kim H. Pearman
Pearman Law Corporation
14550 Friar Street
Van Nuys, CA 91411
(818) 787-6500

Chipman Miles
Chipman Miles & Associates
1407 Oakland Blvd., Suite 107
Walnut Creek, CA 94596
(925) 938-4500

Risa Salat-Kolm
California Department of Insurance
45 Fremont Street
San Francisco, CA 94105
(415) 538-4127

Todd A. Roberts
Ropers, Majeski, Kohn & Bentley
1001 Marshall Street, Third Floor
Redwood City, CA 94063
(650) 364-8200

---

Opinion Information

Date:	Docket Number:
Thu, 05/05/2005	S109735A

Disposition
May 5 2005	Opinion: Affirmed

Dockets
Sep 5 2002	Petition for review filed   appellants Frank Julian, etal
Sep 13 2002	Record requested
Sep 13 2002	Received Court of Appeal record   1 doghouse
Sep 26 2002	Answer to petition for review filed   By counsel for Respondent {Hartford Underwriters Insurance Company}. / 40(K),
Oct 30 2002	Petition for review granted; issues limited (civil case)   The issue to be briefed and argued shall be limited to whether the weather provision in an all-risk policy, which states that loss caused by weather conditions is excluded only if weather conditions contribute to another excluded peril, violates Insurance Code section 530 and the principle of the efficient proximate cause of loss. Votes: George, CJ., Kennard, Baxter, Werdegar, Chin, Brown and Moreno, JJ.
Nov 14 2002	Certification of interested entities or persons filed   By counsel for Respondent.
Nov 15 2002	Certification of interested entities or persons filed   appellants Frank Julian, etal
Nov 26 2002	Opening brief on the merits filed   appellants Frank Julian and Carole Julian
Dec 17 2002	Request for extension of time filed   By Respondent {Hartford Underwriters Insurance Company} asking until February 24, 2003 to file respondent's answer brief on the merits.
Jan 6 2003	Extension of time granted   Pursuant to California Rules of Court, rule 29.3(a), the parties' stipulation extending the time for filing Respondent's Brief is denied. On its own motion, the court extends the time for filing for filing Respondent's Brief by thirty days, to and including January 24, 2003. (California Rules of Court, rule 45(c).) Any further extensions will only be granted upon the required showing of good cause. (See California Rules of Court, rule 45.5).
Jan 16 2003	Request for extension of time filed   By counsel for Respondent {Hartford Underwriters Insurance Company} asking for a 21 day extension (February 14, 2003).
Jan 21 2003	Extension of time granted   To February 14, 2003 to file Respondent's Answer Brief on the Merits.
Feb 10 2003	Request for extension of time filed   By Respondent asking until February 24, 2003 to file Respondent's Answer Brief on the Merits.
Feb 14 2003	Extension of time granted   To February 24, 2003 to file Respondent's Answer Brief on the Merits. No further extensions will be granted.
Feb 25 2003	Answer brief on the merits filed   By Respondent {Hartford Underwriters Insurance Company} / 40(K).
Mar 14 2003	Reply brief filed (case fully briefed)   by appellants Frank Julian, et al.
Mar 26 2003	Received application to file Amicus Curiae Brief   By California State Automobile Association Inter-Insurance Bureau in support of Respondent {Hartford Underwriters Insurance Company}.
Apr 8 2003	Permission to file amicus curiae brief granted   California State Automobile Association Inter-Insurance Bureau in support of Respondent. Answer is due within twenty days.
Apr 8 2003	Amicus Curiae Brief filed by:   California State Automobile Association Inter-Insurance Bureau in support of Respondent. Answer is due within twenty days.
Apr 8 2003	Request for extension of time filed   By Amicus Curiae Personal Insurance Fedration of California asking until April 28, 2003 to file Application and Amicus Curiae Brief.
Apr 10 2003	Extension of time granted   On application of amicus curiae Personal Insurance Federation of California and good cause appearing, it is ordered that the time to serve and file its application and amicus curiae brief in support of respondent herein is extended to and including April 28, 2003.
Apr 25 2003	Request for extension of time filed   By Amicus Curaie Personal Insurance Federation of California asking for a one week extension to file Application and Amicus Curiae Brief .
Apr 28 2003	Response to amicus curiae brief filed   appellants Frank Julian and Carole Julian
May 2 2003	Extension of time granted   To May 5, 2003 to file Application and AC Brief of Personal Insurance Federation of California in support of Respondent.
May 5 2003	Received application to file Amicus Curiae Brief   Personal Insurance Federation of California in support of Respondent.
May 13 2003	Permission to file amicus curiae brief granted   Personal Insurance Federation of California.
May 13 2003	Amicus Curiae Brief filed by:   The application of Personal Insurance Federation of California for permission to file an amicus curiae brief in support of Respondend is hereby granted. Answer due by any party within 20 days.
May 27 2003	Response to amicus curiae brief filed   to ac brief of Personal Insurance Federation of Calif >>appellants Frank and Carole Julian
Jul 9 2003	Received application to file Amicus Curiae Brief   and application to file a late AC Brief Of United Policyholder's in support of Appellants {Frank Julian and Carole Julian}.
Jul 22 2003	Permission to file amicus curiae brief granted   United Policyholders in support of appellants.
Jul 22 2003	Amicus Curiae Brief filed by:   United Policyholders in support of appellants. Answer is due within twenty days.
Jul 23 2003	Received:   Respondent's objection to AC United Policyholder's application to file AC Brief.
Aug 4 2003	Request for extension of time filed   by respondents for a 30-day e.o.t., to and including 9/24/2003, to file the answer to United Policyholders' amicus brief
Aug 7 2003	Request for judicial notice filed (in non-AA proceeding)   appellants Frank Julian and Carole Julian
Aug 7 2003	Extension of time granted   On application of respondent and good cause appearing, it is ordered that the time to serve and file Respondent's Answer to the Amicus Curiae Brief filed by United Policyholders in support of Appellants is extended to and including September 24, 2003.
Sep 3 2003	Received:   Respondent's Opposition to Request for Judicial Notice. (Late).
Sep 4 2003	Opposition filed   By Respondent to Request for Judicial Notice. Filed with permission.
Sep 24 2003	Response to amicus curiae brief filed   By Respondent {Hartford UNderwriters Insurance Company} to AC brief filed by United Policyholders.
Sep 25 2003	Received:   Certificate of Word Count.
Mar 11 2004	Received application to file Amicus Curiae Brief   of The California Department of Insurance in support of Appellants.
Mar 16 2004	Permission to file amicus curiae brief granted   The California Department of Insurance in support of appellant.
Mar 16 2004	Amicus curiae brief filed   The California Department of Insurance in support of Appellant. Answer is due within thirty days.
Apr 9 2004	Request for extension of time filed   By Respondent {Hartford Underwriters Insurance Company} requesting a 15-day extension to and including April 30, 2004 to file respondents' response to AC brief filed by California Dept. of Insurance.
Apr 13 2004	Extension of time granted   To April 30, 2004 to file Respondent's Answer to AC Brief filed by the California Department of Insurance.
May 3 2004	Response to amicus curiae brief filed   By Respondent {Hartford Underwriters Insurance Company} to AC brief filed by California Department of Insurance. / 40(K).
Jul 12 2004	Received:   Letter from counsel for Plaintiff/Appellants re notice of Unavailability from October 8, 2004 through October 29, 2004.
Jan 12 2005	Case ordered on calendar   2/8/05 @ 2pm - Sacramento
Jan 21 2005	Filed:   Request of appellant {Frank Julian et al} to divide oral argument.
Jan 31 2005	Order filed   The request of counsel for appellants to allow two counsel to argue on behalf of appellants at oral arguments is hereby granted.
Jan 31 2005	Order filed   The request of counsels to allocate to amicus curiae United Policy Holders 10 minutes and Department of Insurance 10 minutes of appellants 30-minute allotted time for oral argument is granted.
Feb 8 2005	Cause argued and submitted
May 5 2005	Opinion filed: Judgment affirmed in full   Majority Opinion by Moreno, J. ----- Joined by George, CJ., Kennard, Werdegar and Chin, JJ. Concurring Opinion by Brown, J. ---- Joined by Baxter, J.
Jun 8 2005	Remittitur issued (civil case)
Jun 15 2005	Received:   Receipt for remittitur.

Briefs
Nov 26 2002	Opening brief on the merits filed
Feb 25 2003	Answer brief on the merits filed
Mar 14 2003	Reply brief filed (case fully briefed)
Apr 8 2003	Amicus Curiae Brief filed by:
Apr 28 2003	Response to amicus curiae brief filed
May 13 2003	Amicus Curiae Brief filed by:
May 27 2003	Response to amicus curiae brief filed
Jul 22 2003	Amicus Curiae Brief filed by:
Sep 24 2003	Response to amicus curiae brief filed
Mar 16 2004	Amicus curiae brief filed
May 3 2004	Response to amicus curiae brief filed

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