Case: Sebo v. American Home
Assurance Co., Inc.
Florida Supreme Court
No. SC14-897, 2016 Fla. LEXIS 2596 (Dec. 1, 2016)
In a long-awaited decision, the Florida Supreme Court in Sebo v. American Home Assurance Co., Inc., resolved a conflict among Florida courts of appeal by applying the concurrent cause doctrine to determine that coverage may be afforded under an all-risk property insurance policy where independent perils converge, and no single cause can be considered the sole or proximate cause.
Sebo involved a multimillion dollar residence in Naples, Florida, which sustained water intrusion during rainstorms as a result of major design and construction defects. The property was further damaged as a result of Hurricane Wilma in October 2005. After the insurer refused to cover the water intrusion damages based on the policy's exclusion for faulty, inadequate, or defective planning, the insured homeowner filed suit against various entities involved in the sale and construction of the property, and added the insurer as a defendant in order to obtain a declaration that coverage was available under its all-risk property insurance policy. Siding with the insured, the trial court relied on the concurrent cause doctrine previously adopted in Wallach v. Rosenberg, 527 So. 2d 1386 (Fla. 3d DCA 1988), to find that coverage was available because one of the concurrent causes of the loss, i.e., damage resulting from rainwater and hurricane winds, was covered under the policy. On appeal, however, the Second District Court of Appeal reversed and remanded for a new trial, asserting that the trial court should have instead applied the efficient proximate cause theory pursuant to which coverage may be denied where the "efficient" or primary cause that sets the other concurrent causes in motion, i.e., faulty construction, is itself excluded. See American Home Assurance Co. v. Sebo, 141 So. 3d 195 (Fla. 2d DCA 2013).
Determining that the concurrent cause doctrine—rather than efficient proximate cause—provided the appropriate method by which to evaluate the insured's claim, the Florida Supreme Court in Sebo quashed the appeals court decision and effectively ended the ongoing dispute between Florida's Second and Third District Courts of Appeal in favor of the latter. The Court summarized that where covered rainwater and hurricane winds combined with non-covered defective construction to cause damage and "there is no reasonable way to distinguish the proximate cause of . . . property loss. . . . it would not be feasible to apply the [efficient proximate cause] doctrine because no efficient cause can be determined." Sebo, 2016 Fla. LEXIS 2596, at *14.
Although Sebo will certainly inject some needed clarity into the determination of whether coverage is available for property damage resulting from multiple concurrent causes, it should be emphasized that this decision reinforces the pre-2013 status quo under Wallach, pursuant to which coverage may exist where an insured risk constitutes a concurrent cause of loss, even when it is not the prime or efficient cause.
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