Argued and Submitted, San Francisco, California April 15, 2015.
Appeal from the United States District Court for the District of Arizona. D.C. No. 3:12-cv-08016-PGR. Paul G. Rosenblatt, Senior District Judge, Presiding.
The panel reversed the district court's summary judgment in favor of an insurer, and held that under Arizona law there was a triable issue as to whether a fire directly caused the destruction of the insured's home.
Approximately one month after a wildfire swept through part of Northern Arizona, flooding and mudslides in the area destroyed the plaintiffs' house. Plaintiffs' homeowners' policy covered damage directly caused by fire, and excluded damages caused by flooding or earth movement.
The panel held that because the Arizona standard fire policy was based on New York's standard fire policy, the panel could look to New York law and treatises for guidance in order to ascertain what " direct" causation meant in the context of a fire insurance policy. The panel concluded that the damage at issue could have been directly and proximately caused by the wildfire, and remanded for trial or further proceedings.
Randy L. Sassaman (argued) and Michael J. Raymond, Raymond, Greer & Sassaman, P.C., Phoenix, Arizona, for Plaintiffs-Appellants.
Christopher M. Hanlon (argued) and James A. Robles, Carnahan, Perry, Hanlon, Hudson, PLC., Phoenix, Arizona for Defendant-Appellee.
Before: Mary M. Schroeder and N. Randy Smith, Circuit Judges and Sharon L. Gleason,[*] District Judge.
This fire insurance case arises under Arizona law and involves issues of causation. In the summer of 2011, a wildfire swept through a large swath of Northern Arizona, burning acres of vegetation. Approximately one month after the fire was put out, flooding and mudslides in the area destroyed Plaintiffs' house. Plaintiffs' homeowner's policy covered damage directly caused by fire, and excluded damages caused by flooding or earth movement. The district court granted summary judgment for the insurer, concluding that damage caused by mudslides a month after a fire could not, as a matter of law, be " directly" caused by fire as required under Arizona law. Arizona law, however, favors a broader interpretation of direct causation. We therefore reverse and remand for further proceedings to determine whether the fire directly caused Plaintiffs' losses.
Plaintiffs-Appellants Magda Stankova and Victor Nikolaev (" Stankova" ) owned a home and detached garage in Alpine, Arizona. When Stankova purchased the property in 1998, she alleges there were no disclosures or any evidence that the house had ever been damaged by flood or mudslides, nor was the home ever previously damaged by flood or mudslides during the time that Stankova owned it. The home and its garage were insured under a homeowner's insurance policy issued by Metropolitan Property and Casualty Insurance Company (" Metropolitan" ).
In 2011, there was a massive wildfire, the " Wallow Fire," in the area near the Stankova house. The fire began on May 29, 2011 and was not contained until July 8, 2011. The fire itself consumed Stankova's detached garage on June 13, but did not reach the house. The wildfire also destroyed all the vegetation on a nearby hillside. On August 6, 2011, a month after the wildfire was put out, there was a mudslide on the hillside. The mudslide and runoff water destroyed the Stankova house.
Stankova had a homeowner's policy with Defendant-Appellee Metropolitan which covered direct loss caused by fire but excluded coverage for loss caused by either water damage or earth movement, including mudslides. The policy provided coverage for " sudden and accidental direct physical loss or damage" to Stankova's property if the loss was caused by the losses in " Section I - Broad Named ...