Concurrent Causation Doctrine: A brief primer on the seminal Texas cases defining the doctrine and arguments by insures and insurers
It is universally recognized within the Texas insurance realm that an insured party can only recover for damages falling under the scope of their insurance policy, and it is the burden of the insured to substantiate such coverage. However, what does one do when multiple causes contribute to the insured's loss, encompassing both covered and uncovered elements?
In the world of insurance law, courts have typically employed two primary doctrines to determine coverage when multiple causes contribute to an insured's property damage. The majority of states adhere to the “efficient proximate cause doctrine”. This doctrine dictates that when both covered and non-covered perils contribute to a loss, the peril that initiates the sequence of events leading to the loss, or the "predominating cause," is deemed the efficient proximate cause or legal cause of the loss.
In contrast, a select few states, including Texas, follow the “concurrent causation doctrine”. JAW The Pointe, LLC v. Lexington Ins. Co., 460 S.W.3d 597, 608 (Tex. 2015) (citations omitted). The Fifth Circuit held that under that doctrine, “when covered and non-covered perils combine to create a loss, the insured is entitled to recover that portion of the damage caused solely by the covered peril.” Advanced Indicator & Mfg., Inc. v. Acadia Ins. Co., 50 F.4th 469, 476–77 (5th Cir. 2022) (quoting Dallas Nat'l Ins. Co. v. Calitex Corp., 458 S.W.3d 210, 222 (Tex. App. Ct. 2015)).
Two Definitions of “Concurrent Causation” in Jaw The Pointe and Wallis Line of Cases
In JAW The Pointe, LLC v. Lexington Ins. Co., 460 S.W.3d 597, 608 (Tex. 2015), the Texas Supreme Court held the following with regard to the concurrent causation doctrine:
[W]hen “excluded and covered events combine to cause” a loss and “the two causes cannot be separated,” concurrent causation exists and “the exclusion is triggered” such that the insurer has no duty to provide the requested coverage. But when a covered event and an excluded event “each independently cause” the loss, “separate and independent causation exists, “and the insurer must provide coverage despite the exclusion.”
JAW The Pointe advises that parties should focus on whether the actual causes of loss would have separately and independently caused the damage or whether the causes are interlinked and concurrent.
In Texas jurisprudence, two distinct definitions of concurrent causation have emerged, notably articulated by the Texas Supreme Court in JAW The Pointe and the San Antonio Court of Appeals in Wallis v. United Servs. Auto. Ass’n, 2 S.W.3d 300 (Tex. App.—San Antonio 1999, pet. denied). The Wallis court, along with numerous subsequent courts, defines concurrent causation as occurring when "covered and non-covered perils combine to create a loss, entitling the insured to recover solely for the portion of damage caused by the covered perils.” The definition outlined in JAW The Pointe centers on the potential separability of the two causes of loss, stipulating that if the causes of damage, one of which is not covered, are inseparable, no coverage is required.
Notably, the fundamental principle of the concurrent causation doctrine simply dictates that insured parties are entitled only to recover damages covered under their policy—those for which they have paid premiums. An insured's recovery under an insurance policy is confined to covered damage.
Insureds often argue that the concurrent causation doctrine places an unfair burden of proof on the insured to counteract an insurer's exclusion. These arguments encompass a range of issues, from redefining the concept of “cause of loss” as a “peril” to various sequential causes of the same loss and attempting to attribute all claimed damage to a specific event, irrespective of factual evidence. However, the Wallis court, along with subsequent courts adopting its reasoning, dismissed this contention, clarifying that the concurrent causation doctrine is not an affirmative defense or an avoidance issue. Both the Wallis line of cases and JAW The Pointe recognize that when two causes of loss cannot be distinguished, the exclusion comes into effect. Significantly, Wallis and its progeny acknowledges that if damage can be apportioned between the non-covered and covered causes, and the insured can provide adequate evidence for such allocation, coverage for the portion attributed to the covered cause is not precluded by the exclusion.
“The burden of segregating the damage attributable solely to the covered event is a coverage issue for which the insured carries the burden of proof.” Wallis, 2 S.W.3d at 303. In addition to showing that some damage was caused by a covered peril, the insured also has the burden of demonstrating that: (1) damage was caused to the insured’s property during the policy period and such damage was a covered cause of loss ; and (2) there is evidence to establish that covered cause damaged the property and a jury has a reasonable basis on which to allocate the damage if the issue of concurrent causation is tried. See e.g. Hamilton Props. v. Am. Ins. Co., Civil Action No. 3:12-CV5046-B, 2014 WL 3055801, at *4 (N.D. Tex. July 7, 2014), aff’d, 643 F. App’x 437 (5th Cir. April 14, 2016) (per curiam); U.S. Fire Ins. Co. v. Matchoolian, 583 S.W.2d 692, 694 (Tex. Civ. App.—Houston [14th Dist.] 1979, writ ref’d n.r.e.) (where the court reversed and rendered a take-nothing judgment where the insured did not attempt to segregate damage caused by the covered peril from the uncovered peril); Wallis, 2 S.W.3d at 304 (evidence was not legally sufficient to support the jury’s finding on the amount of damages caused solely by the covered peril).
Recent Case Law Analyzing Concurrent Causation
The Fifth Circuit addressed the issue of concurrent causation doctrine in Advanced Indicator & Manufacturing Inc. v. Acadia Insurance Company, 50 F.4th 469, 472 (5th Cir. 2022). In this case, the insured, Advanced Indicator argued that the property damage it experienced was the result of Hurricane Harvey and its insurer, Acadia Insurance Company, denied coverage arguing that the claimed damages were the result of pre-existing conditions to the roof, which were excluded by the policy language. On appeal, the Fifth Circuit answered several questions. First, did the insured submit sufficient summary judgment evidence to create a disputed issue of material fact regarding whether the damage to the building resulted from a covered cause? The Fifth Circuit determined it did.
Then, did the concurrent causation doctrine bar the insured’s claims because it could not segregate covered losses from non-covered losses? The Court held that [an] “insured may carry its burden by putting forth evidence demonstrating that the loss came solely from a covered cause or by putting forth evidence by which a jury may reasonably segregate covered and non-covered losses.” Id. at 477. Because the insured’s expert and a public adjuster testified that Hurricane Harvey was the sole cause of the damage, and thus a jury might find that all the damage stems from a covered cause, the concurrent causation doctrine did not bar recovery.
Nonetheless, Texas federal district courts have taken contrary positions, both grating and denying summary judgment on the basis of the concurrent causation doctrine. See e.g., Hilltop Church of Nazarene v. Church Mut. Ins. Co., No. 6:21-CV-00322, 2022 WL 17823931, at 4 (E.D. Tex. Dec. 20, 2022); Shree Rama, LLC v. Mt. Hawley Ins. Co., No. 1:21CV-91, 2022 WL 18456616, at 1 (S.D. Tex. Dec. 6, 2022), report and recommendation adopted, No. 1:21-CV-00091, 2023 WL 375358 (S.D. Tex. Jan. 24, 2023); Bagheri v. State Farm Lloyds, No. 3:21-CV-1269-D, 2022 WL 16964753, at 4 (N.D. Tex. Nov. 15, 2022); Smiley Team II, Inc. v. Gen. Star Ins. Co., No. 3:21-CV-103, 2022 WL 18909496, at 5 (S.D. Tex. Oct. 28, 2022); Marina Club Condo. Ass’n v. Philadelphia Indem. Ins. Co., No. 1:21-CV-429-DAE, 2022 WL 18046475, at *1 (W.D. Tex. Nov. 7, 2022).
Also see Majestic Oil, Inc. v. Certain Underwriters at Lloyd's, London Subscribing to Policy Number W1B527170201, No. 21-20542 (5th Cir. Mar. 17, 2023), which provides insight in insurance coverage cases where parties must offer new or supplemental expert opinions after the expert report deadline (for example, here where Majestic Oil’s expert identified a previously unconsidered weather report during his deposition and authored a second report six months following the expert disclosure deadline). Id. Further, Majestic Oil provides insight into how a recent articulation of Texas’ concurrent causation doctrine could affect insurance cases where the cause of damage is at issue.
Conclusion
In short, Texas courts have consistently affirmed the concurrent causation doctrine which provides that if there is evidence that both covered and non-covered causes contributed to the insured's claimed loss, and these causes cannot be distinguished, then concurrent causation is deemed applicable. In such cases, the insured is required to furnish adequate evidence to segregate the loss to pursue recovery on their claim.