February 22, 2017 Practice Points

Supreme Court of Florida Weighs in on Concurrent Causation Versus Efficient Proximate Cause

The Supreme Court of Florida concluded 2016 with an important first-party property decision, holding that where multiple independent perils combine to cause a loss, there is coverage so long as one of the perils is insured

by Gregory D. Podolak

The Supreme Court of Florida concluded 2016 with an important first-party property decision, holding that where multiple independent perils combine to cause a loss, there is coverage so long as one of the perils is insured. The decision, Sebo v. American Home Assurance Company, Inc. , No. SC14-897, 2016 WL 7013859 (Fla. Dec. 1, 2016), has added significance because it involves a common fact pattern—where faulty work and natural elements combine to cause a property loss.

In Sebo, a Florida homeowner identified substantial water leaks in a recently purchased home stemming from design and construction defects. Hurricane Wilma followed shortly after and exacerbated the damage. American Home Assurance Company (AHAC) insured the home for weather-related perils and excluded coverage for defective construction. Since the home suffered losses from both perils, AHAC denied coverage based on the contributing role of defective construction.

Leading up to Sebo, appellate-level authority in Florida was seemingly divided on the proper analytical framework in this scenario. Certain of the appellate districts applied a concurrent causation analysis (finding coverage so long as one of the involved perils was covered), while others used an efficient proximate cause test (finding coverage only where the most substantial cause is covered). Reconciliation of the differing legal analyses seemed to hinge on the fact pattern in each case: concurrent causation was appropriate for situations involving multiple independently occurring perils; efficient proximate cause appropriate for sequential losses.

Against this backdrop, the procedural history of Sebo resembles a table tennis match. The trial court ruled in favor of Sebo. On appeal, the Second District reversed and ruled for AHAC. The Florida Supreme Court flipped it back.

The Supreme Court clarified that which had not been fully articulated in the preceding intermediate appellate court decisions— that the facts matter. The court did not dismiss either legal theory out of hand, but instead recognized that either can be appropriate depending on the events causing the harm. Ultimately, the court was swayed that, in Sebo, there was no clear efficient proximate cause. Therefore, the concurrent cause doctrine applied. Because one of the perils—weather—was covered, Sebo had coverage.

As commercial first party insurance products are often similarly structured to homeowners insurance (e.g., commercial property, builders risk), the significance of the case extends well beyond the homeowner context. Commercial clients and their insurers should reasonably expect the decision to be a relevant consideration during program placement and claim adjustment.

Gregory D. Podolak is with Saxe Doernberger & Vita, P.C., Naples, Florida.

Keywords: insurance, coverage, litigation, Florida, faulty, property, design, construction, defect, weather, peril, commercial, homeowner, placement, claim, policyholder


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