David T. McDonald, Respondents v. State Farm Fire and Casualty Company, Petitioner

Summary

The Washington Supreme Court held that State Farm's homeowners policy did not cover the McDonalds' foundation damage because the undisputed efficient proximate cause of the loss — faulty construction of the filled area using improper and defective fill materials — was itself an excluded peril, so the efficient proximate cause rule did not apply. The court found the policy's exclusions for faulty construction and materials, foundation cracking, and earth movement unambiguous, and held that the ensuing loss clause within the exclusions section preserves coverage only for ensuing losses that are otherwise covered; it is not a grant of coverage for the excluded events themselves. The court also held the trial court did not abuse its discretion in denying the McDonalds' motion to amend to add the January 1986 losses and Consumer Protection Act claims, because the policy's one-year contractual limitation period barred those claims and amendment would prejudice State Farm. The Court of Appeals was reversed and the trial court's summary judgment for State Farm was reinstated.