Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

Certain Underwriters v. B3, Inc., was a declaratory judgment action in state court, on whether the Total Pollution exclusion in an insurance policy issued by Lloyds applied to bar coverage for liability and damages.  The trial court found that there was no coverage, and the Court of Civil Appeals affirmed.  Since there was no coverage for the claim, there was no need to determine whether another party was a third party beneficiary of the policy and entitled to indemnification. 

The claim involved a damage claim by nearby landowners who said that their sewage from the defendants' wastewater treatment plant ended up on their property.  The court found that sewage was a pollutant (no kidding!) and was within the pollution exclusion of the policy.

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In Brown v. Oklahoma Farm Bureau, Brown was sued for negligently conducting a house inspection.  Although his policy was issued by AG Security, he sued both AG and Oklahoma Farm Bureau.  The court found that Oklahoma Farm Bureau was not liable on the claim because it did not issue the policy, even though it handled the claims for AG.  

The court found that Brown's alleged negligent inspection did not cause property damage, a requirement for coverage under the policy.  Further, even if it had, the professional services exclusion (the exclusion excluded coverage for property damage resulting from "rendering of or failure to render professional services in the performance of any claim, investigation, adjustment, engineering, inspection, appraisal, survey or audit services.") precluded coverage for the claim. 

There were coverage issues so that the bad faith claim was properly dismissed; further, the exclusion applied, so the contract claim was properly dismissed.

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In NAICo v. Gerlicher, the issue was whether an exclusion in a CGL for liability coverage for "damages that arise out of any work that you do, work that is done on your behalf or any other activity related to an "exterior insulation and finish system" (commonly called EIFS) was an appropriate basis for summary judgment.  The Court of Civil Appeals held that it was.  

First, the exclusion was clear and unambiguous and applied to the claims in the lawsuit.  Second, the efficient proximate cause doctrine did not turn the issue into a jury question because the policy contracted around the efficient proximate cause doctrine.  The efficient proximate cause doctrine applies when at least two identifiable causes combine to form a single property loss, and one is covered under the policy while the other one is excluded under the policy."If the cause which is determined to have set the chain of events in motion, the efficient proximate cause, is covered under the terms of the policy, the loss will likewise be covered."  While the issue of proximate cause in insurance coverage cases has generally been a fact question not suitable for summary judgment, the exclusion in this case contracts around the efficient proximate cause doctrine.  The policy exclusion applies regardless of whether whether the loss was caused by another possibly covered cause of loss.

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