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Nevada Adopts The Doctrine Of Efficient Proximate Cause Denies Coverage Nevertheless Finding The Doctrine Inapplicable

Fourth St. Place hired Roofing contractors to replace the roof on its building. The contractors removed the old roofing and planned to return the next week to complete the job.  That is when the rain started.  The roofers came back and laid out tarps.  However, some damage had already been done.   To make matters worse, the tarps blew away resulting in more damage.  Travelers denied the claim.  A declaratory relief action ensued.  The trial court granted the Plaintiff’s Motion for Summary Judgment and denied Fourth St.’s countermotion.

Fourth St. Place, LLC v. The Traveler’s Indemnity Co., Nevada Coverage Law, Nevada Bad Faith Law, Mills & Associates Nevada Insurance and Coverage Lawyers, Las Vegas Insurance and Coverage Lawyers 702-240-6060In Fourth St. Place, LLC v. The Traveler’s Indemnity Co., 127 Nev. Adv. Op. No. 86, 270 P.3d 1235 (2011), the Nevada Supreme Court sustained the trial court’s grant of Summary Judgment on both the declaratory relief action and bad faith.  The policy said that rain damage could be covered but only if wind caused damage to the structure.  Therefore the rain damages was not a “Covered Cause of Loss” under the policy.  The court also found even if this were a “Covered Cause of Loss” that the “faulty workmanship” exclusion would preclude coverage.

Finally, the court considered the property owner’s argument that the doctrine of efficient proximate cause should apply.  The court adopted the doctrine.  Even so, the court pointed out that for the doctrine to apply there had to be two causes, one covered and one not.  A jury would then be left to decide which of the two was the predominating factor.  If the covered loss were found to be the predominating cause, there would be coverage.

However, the court’s decision precluded the application of the doctrine.  Neither the rain nor the faulty workmanship of the contractor were covered losses.  Therefore, the doctrine did not apply.

Mills & Associates Nevada Coverage and Bad Faith Lawyers 702-240-6060