Berry v. Commercial Union Ins. Co.

• Decision Date: 14 June 1996
• Docket Number: No. 95-15380,95-15380
• Citation: 87 F.3d 387
• Parties: 96 Cal. Daily Op. Serv. 4752, 96 Daily Journal D.A.R. 7676 Seneva BERRY, A sole partnership, d/b/a Sunny Farms, Plaintiff-Appellant, v. COMMERCIAL UNION INSURANCE COMPANY, a Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 387

87 F.3d 387

96 Cal. Daily Op. Serv. 4752, 96 Daily Journal

D.A.R. 7676

Seneva BERRY, A sole partnership, d/b/a Sunny Farms Plaintiff-Appellant, v. COMMERCIAL UNION INSURANCE COMPANY, a Corporation, Defendant-Appellee.

No. 95-15380.

United States Court of Appeals Ninth Circuit.

Submitted June 14, 1996. ^*

Decided June 27, 1996.

Lanny T. Winberry, Sacramento, California, for plaintiff-appellant.

Gerard A. Lafond, Jr., Los Angeles, California, for defendant-appellee.

Appeal from the United States District Court for the Eastern District of California, Robert E. Coyle, District Judge, Presiding. D.C. No. CV-94-05161-REC(DLB).

Before: REINHARDT and HALL, Circuit Judges, and MERHIGE, District Judge. ^**

CYNTHIA HOLCOMB HALL, Circuit Judge:

Seneva Berry appeals the district court's summary judgment in favor of Commercial Union Insurance Company, her insurer, after it refused to cover damage to her portable aluminum irrigation pipes which had chemically disintegrated once she flushed copper hydroxide based fungicides through them. We have jurisdiction pursuant to 28 U.S.C. § 1291 and reverse.

I.

Seneva Berry owns and operates Sunny Farms, a commercial farming operation outside Bakersfield, California. In early 1990, Berry noticed that her crops were suffering from potato and carrot blight. To combat this problem, she decided to flush liquid fungicides through the extensive system of portable aluminum pipes on her farm. ¹ From March 28, 1990 through October 3, 1990, and from March 13, 1991 through May 28, 1991, Berry used a copper hydroxide based fungicide called "Champ." From February 26, 1992 through October 5, 1992, she used a different copper hydroxide based fungicide called "Kocide 606."

In October 1992, Berry first discovered that her irrigation pipes were damaged. Further investigation revealed that "the copper in the copper hydroxide based fungicides Champ and Kocide created a cathodic reaction with the aluminum in the irrigation pipe, which damaged that pipe." Neither fungicide's label warned that it would be unsuitable for use in aluminum piping.

Berry filed a claim for the damage with her insurance company, Commercial Union Insurance Company. Commercial Union denied her claim on the ground that her pipes were damaged by "deterioration," a peril specifically excluded by her policy.

Berry then sued Commercial Union in District Court. The parties filed a Stipulation of Facts to Be Deemed Established, and each moved for summary judgment. In its amended February 6, 1995 order, the District Court denied Berry's motion and granted Commercial Union's. See Berry v. Commercial Union Ins. Cos., 876 F.Supp. 1148 (E.D.Cal.1995). ² Berry's timely appeal followed.

II.

Berry initially contends that the District Court erred in concluding that "deterioration" was the only cause of damage to her pipes. ³ She claims that the fungicide manufacturers failed to warn her that their products would disintegrate her aluminum pipes and that this failure to warn constituted a second, independent cause without which there would have been no damage. In such cases of multiple causation, Berry notes, a court must examine which cause was the "proximate efficient cause" of the damage and determine whether that cause is covered or excluded by the policy. See Garvey v. State Farm Fire & Cas. Co., 48 Cal.3d 395, 257 Cal.Rptr. 292, 296, 770 P.2d 704, 708 (1989); Sabella v. Wisler, 59 Cal.2d 21, 27 Cal.Rptr. 689, 695, 377 P.2d 889, 895 (1963). Berry argues that the manufacturer's negligence was the "proximate efficient cause" of the damage to her pipes, and that such negligence is not excluded by Commercial Union's policy.

In response, Commercial Union asserts that the District Court was correct to find that "deterioration" was the only cause of the damage to Berry's pipes. Even if the district court erred on this point, Commercial Union urges us to affirm the lower court on the ground that the "proximate efficient cause" of the damage in this case was the excluded peril of "deterioration." And even if it were not, Commercial Union concludes, manufacturer negligence is an excluded peril under the "defective maintenance" exclusion of the policy.

We review de novo the District Court's grant of summary judgment. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995), cert. denied, 516 U.S. 1171, 116 S.Ct. 1261, 134 L.Ed.2d 209 (1996). To do so in this case, we must resolve three issues: (1) whether this is a case of single or multiple causation; (2) if this is a case of multiple causation, whether the "proximate efficient cause" of damage to Berry's pipes was the fungicide manufacturers' negligent failure to warn or the deterioration of the pipes; and (3) if the "proximate efficient cause" was manufacturer negligence, whether that is covered or excluded by Commercial Union's policy. In resolving this issues, we look to California law. Allstate Ins. Co. v. Smith, 929 F.2d 447, 449 (9th Cir.1991).

A.

The California Supreme Court first set down its "proximate efficient cause" analysis in Sabella v. Wisler:

[I]n determining whether a loss is within an exception in a policy, where there is a concurrence of different causes, the efficient cause-the one that sets others in motion-is the cause to which the loss is to be attributed, though the other causes may follow it, and operate more immediately in producing the disaster.

Sabella, 27 Cal.Rptr. at 695, 377 P.2d at 895 (emphasis added). Use of this analysis is limited to situations where "there exists a causal or dependent relationship between covered and excluded perils," Garvey, 257 Cal.Rptr. at 296, 770 P.2d at 708, such that "two or more distinct actions, events, or forces combined to create the damage," Chadwick v. Fire Ins. Exchange, 17 Cal.App.4th 1112, 21 Cal.Rptr.2d 871, 874 (1993) (citations omitted). ⁴ While these multiple "actions, events, or forces" are "concurrent" in the sense that they must all occur before there is any damage, use of the Sabella analysis is not confined to situations where they occur simultaneously or "concurrently" in time; a Sabella analysis is also appropriate where the damage is precipitated by a chain of "actions, events, or forces" occurring in a linear or serial manner over time. See Sabella, 27 Cal.Rptr. at 695, 377 P.2d at 895 (applying Sabella test where damage to insured's house by mudslide resulted from negligent construction of insured's house and from heavy rains); Premier Ins. Co. v. Welch, 140 Cal.App.3d 720, 189 Cal.Rptr. 657, 660 (1983) (applying Sabella where damage to insured's house was caused by builder's negligent damaging of underground sewer line and by heavy rains); Garvey, 257 Cal.Rptr. at 295, 770 P.2d at 707 (applying Sabella where damage to foundation of insured's home was caused by negligent construction of house and by broken sewer line); Brodkin, 265 Cal.Rptr. at 713 (finding that cracks in foundation of insured's house resulted from the builder's negligence in failing to remove acidic soil and from the corrosive qualities of the acidic soil itself); Howell v. State Farm Fire & Cas. Co., 218 Cal.App.3d 1446, 267 Cal.Rptr. 708, 714-16 (1990) (remanding for Sabella analysis where mudslide damaging insured's home was caused by earlier fire that killed all vegetation on the insured's land and by heavy rains that washed the barren land away); State Farm v. Von Der Lieth, 54 Cal.3d 1123, 2 Cal. Rptr.2d 183, 189-90, 820 P.2d 285, 291-92 (1991) (applying Sabella because cracks in foundation of insured's house were caused by the developer's negligence in approving housing project and by a landslide); Brian Chuchua's Jeep, Inc. v. Farmers Ins. Group, 10 Cal.App.4th 1579, 13 Cal.Rptr.2d 444, 446 (1992) (applying Sabella where pollution damage resulted from a leaking gasoline storage tank and from an earthquake). However, "when ... the evidence shows the loss was in fact occasioned by only a single cause ... the efficient proximate cause analysis has no application." Chadwick, 21 Cal.Rptr. 2d at 874 (rejecting Sabella analysis where cracks in the walls of insured's house were caused solely by builder negligence); Finn v. Continental Ins. Co., 267 Cal.Rptr. at 24 (rejecting insured's argument that a break in the sewer pipe was a distinct cause of damage from the subsequent seepage of the pipe, and thus finding only one cause of damage); Employers Cas. Co., 52 Cal.Rptr.2d at 25-26 (rejecting Sabella analysis where sole cause of pollution damage was negligence). ⁵

We believe that "two or more distinct actions, events, or forces combined to create" the damage to Berry's irrigation pipes. Had the fungicide manufacturers properly labeled their products, ⁶ Berry would not have flushed them through the pipes and the pipes would not have been damaged. By the same token, had the fungicides not reacted with the pipes in the way that they did, there would have been no damage. ⁷ It is only the combination of these events that damaged Berry's pipes.

Commercial Union responds that the damage to Berry's pipes was caused by deterioration and that any prior reasons for inserting the fungicide into the pipes are too remote and are therefore irrelevant. Commercial Union is effectively asking us to examine only the last event in the chain of causation. This we are not permitted to do. See, e.g., Howell, 267 Cal.Rptr. at 716 (finding that previous season's fires were a contributing cause to a mudslide, even though heavy rains were the most immediate cause); Von Der Lieth, 54 Cal.3d 1123, 2 Cal.Rptr.2d 183, 820 P.2d 285 (1991) (finding that prior negligence in approving a housing development was a contributing cause to landslide, even though earth movement was the most immediate cause). We therefore conclude that this is a case of multiple causation.

B.

We must now determine whether the deterioration or the fungicide manufacturers' failure to warn is the "proximate efficient cause" of the damage to Berry's irrigation pipes. In Sabella,...