A Break in the Chain—The Development of the Concurrent Cause Doctrine in Florida
In Sebo v. American Home Assurance Company, Inc., Case No. SC14-897, __ Fla. L. Weekly __, (Fla. Dec. 1, 2016), the Supreme Court of Florida issued a landmark ruling which will have broad-ranging impact on insurers, policyholders, and practitioners across the state. The Court took jurisdiction of a 2013 decision of the Second District Court of Appeal, American Home Assurance Company, Inc. v. Sebo, 141 So. 3d 195 (Fla. 2d DCA 2013), which expressly and directly conflicted with the Third District Court of Appeal’s decision in Wallach v. Rosenberg, 527 So. 2d 1386 (Fla. 3d DCA 1988) on the issue of what is called the Concurrent Cause Doctrine (“CCD”). The operative facts are that Sebo’s home was destroyed due to the combined result of defective construction as well as rainwater and hurricane winds.
In Wallach, the Third District brought the so-called Concurrent Cause Doctrine from California to Florida. The CCD applies in situations where multiple perils combine to cause a loss but where the prime or efficient (triggering) causes are not able to be determined. The rule pronounced in Wallach was 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.” The alternative theory, Efficient Proximate Cause, provides coverage for a loss caused by an uncovered peril which occurred as a direct result (i.e., a chain reaction) of a covered loss.
In deciding Sebo, the Second District disagreed with the Third District’s rationale in Wallach and observed 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.” Therefore, the Second District reversed for a new trial to occur under the Efficient Proximate Cause theory.
In Sebo, the Supreme Court took issue with the Second District’s analysis, observing that it would not be feasible under these facts to apply the Efficient Proximate Cause test. The Court also noted that the insurer’s policy specifically excluded CCD coverage in other areas but not in the “defective work exclusion.” Accordingly, the Court quashed the Second District’s opinion, approved the rationale in Wallach, and definitively proclaimed the Concurrent Cause Doctrine to be alive and well in Florida.
Going forward, the drafting and interpretation of exclusionary clauses will remain hugely important, but the theory of the case as tried to the jury—and supported by in-depth factual investigation—will be of equal or greater importance.