## Facts

- Jack and Rita Garvey owned a home insured under an “all-risk” homeowners policy issued by State Farm.
- A room addition, deck, and garden wall had been constructed before the Garveys bought the home.
- The Garveys observed structural separation and cracking, including the addition pulling away from the main house.
- The policy covered “all risks of physical loss” subject to exclusions, including “earth movement” and “settling.”
- The parties treated negligent construction as a covered peril (not excluded by the policy).
- State Farm denied the claim, asserting the damage resulted from excluded earth movement/soil slippage.
- The Garveys claimed negligent construction was a substantial cause of the loss and that any soil movement acted in combination with the construction defects.
- The trial court directed a verdict for the Garveys on coverage based on a concurrent-causation theory and the jury awarded policy benefits, compensatory damages, and punitive damages.
- The court of appeal reversed, concluding the trier of fact should determine the efficient proximate cause of the loss.

## Issues

1. In a first-party “all-risk” property policy, when a loss has both a covered and an excluded proximate cause, is coverage governed by a concurrent-causation doctrine or by the efficient proximate cause test?
2. Must the trier of fact determine whether negligent construction (covered) or earth movement (excluded) was the efficient proximate cause of the Garveys’ damage?

## Decision

- The California Supreme Court held that efficient proximate cause analysis governs first-party property coverage disputes involving multiple causes.
- The Court rejected applying the concurrent-causation approach from a third-party liability context to override express property-policy exclusions.
- The Court reversed and remanded for the trier of fact to determine the efficient proximate cause of the loss.
- Coverage depends on whether the efficient proximate cause is a covered peril (coverage) or an excluded peril (no coverage).

## Legal Principles

- In first-party property insurance, when multiple perils contribute to a loss, coverage turns on the “efficient proximate cause,” meaning the predominating or most important cause that set other causes in motion.
- If the efficient proximate cause is a covered peril, the loss is covered even if excluded perils contributed; if it is an excluded peril, the loss is not covered even if a covered peril played a contributing role.
- A concurrent-causation approach developed for third-party liability policies does not control first-party property claims where it would nullify specific exclusions.
- Determining the efficient proximate cause is generally a factual question for the trier of fact rather than a matter for directed verdict when causation is disputed.

## Conclusion

The court required use of the efficient proximate cause test for first-party “all-risk” property losses with mixed causes and sent the case back for factfinding on whether negligent construction or earth movement predominated, which would determine coverage under the policy’s exclusions.


Garvey v. State Farm Fire & Cas. Co., 770 P.2d 704 (Cal. 1989)