Stankova v. Metropolitan Property & Casualty Insurance

This fire insurance case arises under Arizona law and involves issues of causation. In the summer of 2011, a wildfire swept through a large swath of Northern Arizona, burning acres of vegetation. Approximately one month after the fire was put out, flooding and mudslides in the area destroyed Plaintiffs’ house. Plaintiffs’ homeowner’s policy covered damage directly caused by fire, and excluded damages caused by flooding or earth movement. The district court granted summary judgment for the insurer, concluding that damage caused by mudslides a month after a fire could not, as a matter of law, be “directly” caused by fire as required under Arizona law. Arizona law, however, favors a broader interpretation of direct causation. We therefore reverse and remand for further proceedings to determine whether the fire directly caused Plaintiffs’ losses.

BACKGROUND

Plaintiffs-Appellants Magda Stankova and Victor Nikolaev (“Stankova”) owned a home and detached garage in Alpine, Arizona. When Stankova purchased the property in 1998, she alleges there were no disclosures or any evidence that the house had ever been damaged by flood or mudslides, nor was the home ever previously…