Supreme Court of Florida
____________
No. SC14-897
____________
JOHN ROBERT SEBO, etc.,
Petitioner,
vs.
AMERICAN HOME ASSURANCE COMPANY, INC.,
Respondent.
[December 1, 2016]
PERRY, J.
John Sebo seeks review of the decision of the Second District Court of
Appeal in American Home Assurance Co. v. Sebo, 141 So. 3d 195 (Fla. 2d DCA
2013), on the ground that it expressly and directly conflicts with a decision of the
Third District Court of Appeal in Wallach v. Rosenberg, 527 So. 2d 1386 (Fla. 3d
DCA 1988), on a question of law. We have jurisdiction. See art. V, § 3(b)(3), Fla.
Const. For the following reasons, we quash the decision in Sebo, and approve the
rationale of the Third District in Wallach.
FACTS
The facts of this case are taken from the Second District Court of Appeal’s
opinion:
[John] Sebo purchased [a Naples, Florida] home in April 2005,
when it was four years old. [American Home Assurance Company
(AHAC)] provided homeowners insurance as of the date of the
purchase. The policy, which insured against “all risks,” was issued
through a private client group and was referred to as a manuscript
policy. It was not a standard form but instead was created specifically
for the Sebo residence. The house and other permanent structures
were insured for over $8,000,000. The policy also provided
additional coverage for loss of use of the home.
Shortly after Sebo bought the residence, water began to intrude
during rainstorms. Major water leaks were reported to Sebo’s
property manager as early as May 31, 2005. She prepared a list of
problems: leaks in the main house at the foyer, the living room, dining
room, piano room, exercise room, master bathroom, and upstairs
bathroom. By June 22, 2005, the property manager advised Sebo of
these leaks in writing. It became clear that the house suffered from
major design and construction defects. After an August rain, paint
along the windows just fell off the wall. In October 2005, Hurricane
Wilma struck Naples and further damaged the Sebo residence.
Sebo did not report the water intrusion and other damages to
AHAC until December 30, 2005. AHAC investigated the claim, and
in April 2006 it denied coverage for most of the claimed losses. The
policy provided $50,000 in coverage for mold, and AHAC tendered
that amount to Sebo but stated that “the balance of the damages to the
house, including any window, door, and other repairs, is not covered.”
In May 2008, Sebo renewed his claim and sent more information
about the damages to AHAC, but AHAC again denied the claim
except for the $50,000 in mold damages.
The residence could not be repaired and was eventually
demolished. In January 2007, Sebo filed suit against a number of
defendants, including the sellers of the property, the architect who
designed the residence, and the construction company that built it. He
alleged that the home had been negligently designed and constructed
and that the sellers had fraudulently failed to disclose the defects in
-2-
the property. Sebo eventually amended his complaint in November
2009, adding AHAC as a defendant and seeking a declaration that the
policy provided coverage for his damages. After Sebo settled his
claims against a majority of all other defendants, the trial proceeded
only on his declaratory action against AHAC. The jurors found in
favor of Sebo, and the court eventually entered judgment against
AHAC.
Sebo, 141 So. 3d at 196-97.
On appeal, the Second District found that “[t]here is no dispute in this case
that there was more than one cause of the loss, including defective construction,
rain, and wind.” Id. at 197. However, the court disagreed with the trial court’s
application of Wallach, 527 So. 2d 1386, and, in fact, disagreed with the Third
District’s “determination that the concurrent causation doctrine should be applied
in a case involving multiple perils and a first-party insurance policy.” Sebo, 141
So. 3d at 198. The court reversed and remanded for a new trial, “in which the
causation of Sebo’s loss is examined under the efficient proximate cause theory.”
Id. at 201.
Standard of Review
The issue presented is whether coverage exists under Sebo’s all-risk policy
when multiple perils combined to create a loss and at least one of the perils is
excluded by the terms of the policy. To answer this question, this Court must
determine the proper theory of recovery to apply, which is a pure question of law.
-3-
Therefore, the review is de novo. Fayad v. Clarendon Nat’l Ins. Co., 899 So. 2d
1082, 1085 (Fla. 2005).
Additionally, the policy at issue in this case is an all-risk policy. We have
stated that “[a]lthough the term ‘all-risk’ is afforded a broad, comprehensive
meaning, an ‘all-risk’ policy is not an ‘all loss’ policy, and this does not extend
coverage for every conceivable loss.” Id. at 1086 (citation omitted). Insurance
contracts are construed in accordance with the plain language of the policy. Id.
(citing Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 33 (Fla. 2000)).
However, if the language is susceptible to more than one reasonable interpretation
and is therefore ambiguous, the policy will be strictly construed against the insurer
and in favor of the insured. Id. “[A]mbiguous ‘exclusionary clauses are construed
even more strictly against the insurer than coverage clauses.’ ” Id. (quoting
Anderson, 756 So. 2d at 34). In short, in all-risk policies such as the one held by
Sebo, construction is governed by the language of the exclusionary provisions.
DISCUSSION
We are confronted with determining the appropriate theory of recovery to
apply when two or more perils converge to cause a loss and at least one of the
perils is excluded from an insurance policy. When addressing this question, courts
have developed competing theories on how to determine coverage: the efficient
proximate cause and concurring cause doctrines. To begin our analysis, we first
-4-
explain these doctrines. Then we discuss the Second District’s decision below.
We conclude that when independent perils converge and no single cause can be
considered the sole or proximate cause, it is appropriate to apply the concurring
cause doctrine. Accordingly, we quash the decision below.
Efficient Proximate Cause (EPC)
The EPC provides that where there is a concurrence of different perils, the
efficient cause—the one that set the other in motion—is the cause to which the loss
is attributable. Sabella v. Nat’l Union Fire Ins. Co., 377 P.2d 889, 892 (Cal. 1963);
Fire Ass’n of Phila. v. Evansville Brewing Ass’n, 75 So. 196 (Fla. 1917).
We applied the EPC in Evansville Brewing, where the coverage at issue
provided under an all-loss fire policy excluded loss caused by an explosion. We
explained, “[w]hile the insurer is not liable for a loss caused by an explosion which
was not produced by a preceding fire, yet if the explosion is caused by fire during
its progress in the building, the fire is the proximate cause of the loss, the explosion
being a mere incident of the fire, and the insurer is liable.” Evansville Brewing, 75
So. at 198. In Evansville Brewing, we contemplated a chain of events where one
peril directly led to a subsequent peril. In finding that coverage existed under the
policy, we drew the distinction between a covered peril setting into motion an
uncovered peril and an uncovered peril setting into motion a covered peril.
Coverage exists for the former but not the latter.
-5-
The EPC was explained by the California Supreme Court1 in Sabella, where
it reasoned, “ ‘in determining whether a loss is within an exception in a policy,
where there is a concurrence of different causes, the efficient cause—the one that
sets others in motion—is the cause to which the loss is to be attributed, though the
other causes may follow it, and operate more immediately in producing the
disaster.’ ” Sabella, 377 P.2d at 895 (quoting 6 George J. Couch, Cyclopedia of
Insurance Law § 1466, at 5303-04 (1930)). The California Supreme Court thus
reasoned that a covered peril that convenes with an uncovered peril may still
provide for coverage under a policy when the covered peril triggered the events
that eventually led to the loss.
Concurrent Cause Doctrine (CCD)
The CCD provides that coverage may exist where an insured risk constitutes
a concurrent cause of the loss even when it is not the prime or efficient cause. See
Wallach, 527 So. 2d 1386; State Farm Mut. Auto. Ins. Co. v. Partridge, 514 P.2d
123, 133 (Cal. 1973).
The CCD originated with the California Supreme Court’s decision in
Partridge, where the court was presented with “a somewhat novel question of
insurance coverage: when two negligent acts of an insured—one auto-related and
1. We mention California caselaw because Florida courts have looked to
California decisions on insurance matters involving the EPC.
-6-
the other non-auto-related—constitute concurrent causes of an accident, is the
insured covered under both his homeowner’s policy and his automobile liability
policy, or is coverage limited to the automobile policy?” Id. at 124-25. The
insured, Wayne Partridge, owned a .357 Magnum pistol and had filed the trigger
mechanism to create “hair trigger action.” Id. at 125. Partridge was driving two
friends, Vanida Neilson and Ray Albertson, in his insured Ford Bronco when he
spotted a jack rabbit. In pursuit of the rabbit, he drove the Bronco off the road and
hit a bump, causing the pistol to discharge. A bullet entered Neilson’s arm,
penetrated her spinal cord, and left her paralyzed. Id. Neilson filed an action
against Partridge and entered into settlement discussions with State Farm. This
dispute arose because the parties did not agree whether recovery was available
from both the homeowner’s and automobile policies. The homeowner’s policy
contained an exclusion for bodily injury arising out of the use of any motor
vehicle. Id. at 126. State Farm relied on this exclusionary language to argue that
only the automobile policy provided coverage for the injuries. Specifically, State
Farm argued that the language of the policies was intended to be mutually
exclusive and not provide for overlapping coverage. Id. at 128.
The California Supreme Court disagreed. First, the court noted that
exclusionary clauses are more strictly construed than coverage clauses. Next, the
court reasoned that an insured risk combined with an excluded risk to produce the
-7-
ultimate injury and determined “that coverage under a liability insurance policy is
equally available to an insured whenever an insured risk constitutes simply a
concurrent proximate cause of the injuries.” Id. at 130 (applying the rationale of
Brooks v. Metro. Life Ins. Co., 163 P.2d 689 (Cal. 1945)). Thus, because neither
peril could have created the loss alone but instead combined to create the loss, the
California Supreme Court could not identify the prime, moving, or efficient cause
in order to determine coverage, and pronounced a new doctrine.
The CCD was first applied in Florida in Wallach, where the Third District
considered the coverage available to the Rosenbergs after Wallach’s sea wall
collapsed and led to a portion of the Rosenbergs’ sea wall crumbling. 527 So. 2d
1386. The Rosenbergs filed suit against Wallach, claiming that he had breached
his duty to maintain his premises. They also filed a claim under their all-risk
homeowner’s policy, which was denied because the policy contained an exclusion
for loss resulting from earth movement or water damage. Id. at 1387. On appeal,
the insurance company argued “that where concurrent causes join to produce a loss
and one of the causes is a risk excluded under the policy, then no coverage is
available to the insured.” Id. The Third District rejected that theory and adopted
“what we think is a better view—that the jury may find coverage where an insured
risk constitutes a concurrent cause of the loss even where ‘the insured risk [is]
not . . . the prime or efficient cause of the accident.’ ” Id. at 1387 (quoting 11
-8-
Ronald A. Anderson, Couch on Insurance 2d § 44:268, at 417 (rev. ed. 1982)).
Further, the Third District noted that the California Supreme Court found the
efficient cause language of Sabella “to be of little assistance in cases where both
causes of the harm are independent of each other.” Id. at 1388 (“We agree with the
California court that the efficient cause language set forth in Sabella and cited by
[Phelps] offers little analytical support where it can be said that but for the joinder
of two independent causes the loss would not have occurred.” (citing Partridge,
514 P.2d at 130 n.10)). Accordingly, the Third District held that “[w]here weather
perils combine with human negligence to cause a loss, it seems logical and
reasonable to find the loss covered by an all-risk policy even if one of the causes is
excluded from coverage.” Id. (citing Safeco Ins. Co. v. Guyton, 692 F.2d 551 (9th
Cir. 1982)). Wallach has continued to be applied in Florida courts until the Second
District’s decision in Sebo. We accepted jurisdiction based on the conflict between
Wallach and Sebo.
This Case
After determining that there was “no dispute in this case that there was more
than one cause of the loss, including defective construction, rain, and wind,” the
Second District noted below that the parties had filed cross-motions for summary
judgment, in which Sebo had asserted that AHAC was required to cover all losses
under the concurrent cause doctrine. Sebo, 141 So. 3d at 197. Then, the court
-9-
expressed its disagreement with Wallach’s application to cases involving multiple
perils and a first-party insurance policy.2 Id. at 198. Relying on the California
Supreme Court’s clarification in Garvey v. State Farm Fire & Cas. Co., 770 P.2d
704 (Cal. 1989), the Second District reasoned that “a covered peril can usually be
found somewhere in the chain of causation, and to apply the concurrent causation
analysis would effectively nullify all exclusions in an all-risk policy.” Sebo, 141
So. 3d at 201 (citing Garvey, 770 P. 2d at 705). Accordingly, the Second District
reversed and remanded the case for a new trial. Id.
To determine whether coverage exists under Sebo’s policy, we begin with
the language of the policy. It is undisputed that Sebo’s all-risk policy included the
following exclusion:
The following exclusions apply to the Part II-PROPERTY
section of your policy
....
8. Faulty, Inadequate or Defective Planning
We do not cover any loss caused by faulty, inadequate or defective:
2. We note that the abrogation of the CCD was not properly before the
Second District to consider. AHAC never specifically argued that the CCD should
be abrogated and replaced with the EPC in Florida trial or in its brief on appeal to
the Second District. In its order granting partial summary judgment for Sebo, the
trial court found that “Florida recognizes the Doctrine of Concurrent Causation”
and that the doctrine “applies to all-risk policies.” The trial court further found that
the causes of loss “are not ‘dependent’ as that term is understood under” the
doctrine. After this adverse ruling, it does not appear that AHAC raised the issue
again. Likewise, the focus of AHAC’s argument on appeal to the Second District
was the improper application of the CCD based on the dependent nature of the
perils. Accordingly, the argument was not preserved, and the Second District
improperly decided an issue that was not raised.
- 10 -
a. Planning, zoning, development, surveying, siting;
b. Design, specifications, workmanship, repair, construction,
renovation, remodeling, grading, compaction;
c. Materials used in repair, construction, renovation or
remodeling; or
d. Maintenance;
of part or all of any property whether on or off the residence.
Policy, Part II – Property, D. Exclusions, 8., Page 8.
Also not in dispute is that the rainwater and hurricane winds combined with
the defective construction to cause the damage to Sebo’s property. As in Partridge,
there is no reasonable way to distinguish the proximate cause of Sebo’s property
loss—the rain and construction defects acted in concert to create the destruction of
Sebo’s home. As such, it would not be feasible to apply the EPC doctrine because
no efficient cause can be determined. As stated in Wallach, “[w]here weather
perils combine with human negligence to cause a loss, it seems logical and
reasonable to find the loss covered by an all-risk policy even if one of the causes is
excluded from coverage.” Wallach, 527 So. 2d at 1388. Furthermore, we disagree
with the Second District’s statement that the CCD nullifies all exclusionary
language and note that AHAC explicitly wrote other sections of Sebo’s policy to
avoid applying the CCD. Because AHAC did not explicitly avoid applying the
CCD, we find that the plain language of the policy does not preclude recovery in
this case.
- 11 -
Last, AHAC argues that the trial court erred by prohibiting the introduction
of the amount of the settlements Sebo received in connection with this case. The
trial court excluded evidence of the settlements based on this Court’s decision in
Saleeby v. Rocky Elson Construction, Inc., 3 So. 3d 1078 (Fla. 2009). The Second
District did not rule on this issue because “it is not completely clear whether this is
a valued policy law case.” Sebo, 141 So. 3d at 203. The court therefore left this
question to be resolved at retrial, noting that the 2005 version of the statute
applied. Id. We disagree with the trial court’s determination that Saleeby
precluded AHAC from presenting the settlement amounts to offset the judgment.
Saleeby held that section 768.041, Florida Statutes, which bars disclosure to
the jury of settlement or dismissal of a joint tortfeasor, and section 90.408, which
bars the disclosure of evidence of an offer to compromise to prove liability, are
clear and unambiguous. We held that “[n]o evidence of settlement is admissible at
trial on the issue of liability.” Saleeby, 3 So. 3d at 1083. Nothing in our decision
affects the ability of a trial court to consider the amount of settlements as a post-
judgment offset. We remand for reconsideration of this issue.
For the foregoing reasons, we quash the Second District’s opinion below and
remand for further proceedings consistent with this opinion.
It is so ordered.
- 12 -
LABARGA, C.J., and PARIENTE, LEWIS, and QUINCE, JJ., concur.
CANADY, J., concurs in result.
POLSTON, J., dissents with an opinion.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
POLSTON, J., dissenting.
As the majority explains in footnote 2, the issue decided by the Second
District and then by this Court, whether to apply the efficient proximate cause
doctrine instead of the concurring cause doctrine, was not raised by the parties
before the trial court or the Second District. Accordingly, the Second District
should not have decided this issue. See Pagan v. State, 29 So. 3d 938, 957 (Fla.
2009) (stating that the “purpose of an appellate brief is to present arguments in
support of the points on appeal” and failing to do so will mean that such claims are
“deemed to have been waived” (quoting Duest v. Dugger, 555 So. 2d 849, 852
(Fla.1990))); City of Miami v. Steckloff, 111 So. 2d 446, 447 (Fla. 1959) (“An
assigned error will be deemed to have been abandoned when it is completely
omitted from the [appellate] briefs.”); see also Robertson v. State, 829 So. 2d 901,
906 (Fla. 2002) (“[G]enerally, if a claim is not raised in the trial court, it will not
be considered on appeal.” (quoting Dade Cty. Sch. Bd. v. Radio Station WQBA,
731 So. 2d 638, 644 (Fla. 1999))). Therefore, I would quash and remand for the
Second District to consider the issue raised by the parties, and I would not reach
the merits of the issue decided by this Court.
- 13 -
I respectfully dissent.
Application for Review of the Decision of the District Court of Appeal – Direct
Conflict of Decisions
Second District - Case No. 2D11-4063
(Collier County)
Edward K. Cheffy, David Allan Zulian, and Debbie Sines Crockett of Cheffy
Passidomo, P.A., Naples, Florida; and Mark Andrew Boyle, Geoffrey Henry
Gentile, Michael Wade Leonard, Amanda Kaye Anderson, Molly Ann Chafe
Brockmeyer, Justin Michael Thomas, and Thomas Patrick Rechtin of Boyle,
Gentile & Leonard, P.A., Fort Myers, Florida,
for Petitioner
Anthony J. Russo, Scott J. Frank, Christopher M. Ramey, and Ezequiel Lugo of
Butler Weihmuller Katz Craig LLP, Tampa, Florida; Janet L. Brown and Susan B.
Harwood of Boehm, Brown, Harwood, P.A., Maitland, Florida; and Raoul G.
Cantero, III, David P. Draigh, and Ryan Andrew Ulloa of White & Case LLP,
Miami, Florida,
for Respondent
Richard Hugh Lumpkin and Benjamin C. Hassebrock of Ver Ploeg & Lumpkin,
P.A., Miami, Florida; and George Alexander Vaka and Nancy Ann Lauten of Vaka
Law Group, P.L., Tampa, Florida,
for Amicus Curiae United Policyholders
Michael Jerome Higer and Colleen Alexis Maranges of Higer Lichter & Givner,
LLP, Aventura, Florida,
for Amicus Curiae The Florida Association of Public Insurance Adjusters
James Andrew McKee, Thomas Joseph Maida, and Benjamin James Grossman of
Foley & Lardner LLP, Tallahassee, Florida,
- 14 -
for Amici Curiae Florida Insurance Council, Property Casualty Insurance
Association of America, National Association of Mutual Insurance
Companies, and American Insurance Association
- 15 -
John Robert Sebo v. American Home Assurance Company, Inc.
Combined Opinion