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A Beaver County, Pa., judge has ruled that a homeowner’s insurance policy, excluding coverage for mold damage, may encompass such a loss when a covered claim was the proximate cause of the mold. Therefore, the plaintiffs in this case of first impression may recover for mold damage under an ensuing loss provision in their homeowner’s policy, as long as they can prove that a covered claim — in this case, a leaky roof — was the proximate cause of the loss. Writing for the court in Tatalovich v. Pennsylvania National Mutual Casualty Insurance Co., PICS Case No. 03-1692 (C.P. Beaver Oct. 10, 2003) Kunselman, P.J., Beaver County President Judge Robert E. Kunselman said that Pennsylvania courts have invoked the efficient proximate cause rule in a variety of insurance cases but this is the first to apply the rule to mold damage. The rule mandates coverage for a loss caused by a covered risk, even if other excluded perils contributed to the overall damage. In the policy in this case, issued by the Pennsylvania National Mutual Casualty Insurance Co., an ensuing loss clause provided plaintiffs Wayne and Kelly Tatalovich with coverage for any ensuing loss not specifically excluded by the policy. The insurer argued that because of this proviso, the plaintiffs could not invoke the ensuing loss clause to cover mold damage. But Kunselman sided with the plaintiffs’ argument, holding that the efficient proximate cause rule would allow them to recover if they prove that water damage, a covered claim, caused the mold damage. To hold otherwise “would completely emasculate the ensuing loss clause,” the judge said. “At best, the language in the ensuing loss clause is reasonably susceptible to more than one meaning and reasonably intelligent persons could differ as to whether mold can be an ensuing loss,” Kunselman wrote. “Therefore, the clause is ambiguous and must be construed against the Defendant and in favor of the Plaintiffs.” Kunselman cited two Superior Court cases to guide his reasoning. First, in Marks v. Lumbermen’s Insurance Co. of Philadelphia, 49 A.2d 855 (Pa. 1946), the court held that an insurer owed coverage when an insured risk was the proximate cause of loss, even if an excluded peril contributed to the damage. The policy in that case, intended to protect the plaintiff from windstorms, cyclones and tornadoes, excluded coverage for damages caused “directly or indirectly” by tidal waves, high water or overflow, even if the excluded water calamity was precipitated by wind. The court concluded that the burden was on the plaintiff to show that wind was the proximate cause of his loss, even if water contributed to the damage, Kunselman said. “While the peril insured against must be the proximate cause of the loss, the court held that it need not be the sole cause,” Kunselman explained. “The court further reasoned that it was not enough for the plaintiff to show that his loss was due to one or more causes and that at least one of those causes was covered. Instead, the plaintiff needed to individuate the cause [for which] the insurer would be held liable.” Similarly, in DiFabio v. Centaur Insurance Co., 531 A.2d 1141 (Pa. Super. 1987), the court held that an insurer was obligated to pay the cost of damages incurred from frozen pipes at a Laundromat, even though loss from frost was not a covered claim. Kunselman said the court concluded that coverage was necessary because wind, a covered claim, caused the pipes to freeze. “The court reasoned that the strength and velocity of the winds allowed the cold air to enter an otherwise secure building,” Kunselman wrote. “Further, since there was an ambiguity in the terms of the insurance policy because there was a cold air exclusion provision and a covered wind damage provision, the court resolved the ambiguity in favor of the plaintiff.” Applying the lessons of these Superior Court cases to Tatalovich, Kunselman said that the plaintiffs would have to show that water leaking from their roof caused mold to develop in their bathroom in order to recover from the insurer. Accordingly, Kunselman denied summary judgment to both the plaintiffs and the defendant, noting that while coverage may be available, a factual dispute over the cause of the mold required this case to go to a jury. In denying the defendant’s motion, Kunselman said the fact that no other state court has applied the efficient proximate cause rule to mold cases does not prevent him from doing so in this case. “It is irrelevant that our courts have never addressed the application of the efficient proximate cause rule to mold cases,” Kunselman wrote. “If the water damage (a covered claim) caused the mold (a non-covered claim) to develop, then the Defendant would be required to pay under the terms of the policy through the ensuing loss provision.” Charles Bowers Jr. of Bowers Ross & Fawcett in Ambridge, counsel for the plaintiffs, said the ruling does not represent any new law, even if it is the first example of the efficient proximate cause rule being applied to mold cases in Pennsylvania. “We’re very happy with the judge’s opinion,” he said. “We think it’s correct.” He declined further comment, noting the case is still in the pretrial stages. While the defense has considered seeking certification of the interlocutory order for appeal, counsel Mitch Zemel of Weber Gallagher Simpson Stapleton Fires & Newby in Pittsburgh said no decision has been made at this point. Zemel said he disagreed with the judge’s ruling, noting that in his brief he asserted every other court that has considered this issue has determined that under an ensuing loss provision, coverage is not available for such a loss, if it is specifically excluded by the policy. He declined further comment, as the case is ongoing.

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