Anti-Concurrent Causation (ACC) Clause Barred Recovery

Commercial Property	Weight of Snow
Cause of Loss	Wear and Tear Exclusion

The City of Salida owned and operated a hot springs swimming pool in an enclosed building. The roof of the building constructed in 1981 was supported by wooden trusses. In May 2001, the building's roof collapsed after a significant snowstorm. The building was insured through Colorado Intergovernmental Risk Sharing Agency (CIRSA), Northfield Insurance Company (Northfield) and Transamerica Insurance Group (TIG) on a tiered arrangement. CIRSA was responsible for handling the claims and the first $250,000, Northfield for the next $750,000, and TIG for everything over $1,000,000.

After the collapse, CIRSA paid Salida $1,000,000 to repair the roof, but Northfield denied the claim. CIRSA sued Northfield to recover $750,000, citing breach of contract. Northfield contended that decay of some of the wood trusses, produced by the damp environment, caused the loss. It argued that it was not responsible because its policy specifically excluded damage caused by wear and tear, rust, corrosion, fungus, decay, deterioration, hidden or latent defect, dampness or dryness of atmosphere, changes in or extremes of temperature, marring or scratching. CIRSA claimed that the weight of the snow caused the roof to collapse. Northfield contended that, even if a combination of factors caused the collapse, it was not liable because of the Anti-Concurrent Causation (ACC) Clause. That clause stated that Northfield would not pay for loss or damage caused directly or indirectly by these exclusions, regardless of any other cause or event that contributed concurrently or in any sequence to the loss. Northfield reasoned that since the weight of snow was covered, but decay of trusses was explicitly excluded, the ACC relieved it of its obligations.

The trial court agreed that the policy language was clear and unambiguous. Northfield was not liable for the portion of the loss the jury attributed to decay but rejected its argument that the ACC relieved it of its responsibility to pay the portion of the loss the jury attributed to the weight of snow. Instead, it interpreted the ACC to allow for apportionment between covered and excluded losses. Based on this approach, the jury apportionment amounted to $675,000 for Northfield's breach of contract, based on allocating 90% of the roof collapse to weight of snow, and 10% due to decay of wooden trusses that supported the roof. Northfield appealed, contending that the ACC bars CIRSA's recovery.

The Colorado Court of Appeals determined that Northfield consistently argued in the trial court that the ACC relieved it of any payment obligation if the collapse was caused by both covered and excluded events because these causes were either concurrent or sequential. In addition, and based on the clear language of the trial jury's verdict, the appellate court concluded that by apportioning the cause or causes of the claimed property damage, the jury found that both causes contributed to the collapse and did not find that the roof's collapse was caused either by one cause or by the other.

The Appeals Court concluded that the trial court erred in awarding damages against Northfield, reversed its judgment and remanded the case back to the trial court to enter judgment for Northfield.

Colorado Court of Appeals, DIV. II. Colorado Intergovernmental Risk Sharing Agency, Plaintiff-Appellee, v. Northfield Insurance Company, Defendant-Appellant. No. 07CA0058. July 24, 2008. Rehearing denied Oct. 16, 2008. 2008 WL 2837517 (Colo.App)