The Sebo concurrent causation coverage case made significant Florida insurance law. It is now headed for trial on its first-party civil remedy case in Collier County.

The Sebo coverage case has been discussed in this blog several times. We noted the impact of its holding in The Florida Supreme Court Clarifies What Rule to Apply When There Are Multiple Causes of Loss Under an All-Risk Policy:

The Florida Supreme Court then discussed concurrent causation’s application to Wallach. In Wallach, the Rosenbergs suffered a loss after Wallach’s sea wall collapsed, causing a portion of the Rosenburgs’ sea wall to crumble. The Rosenburgs’ claim was denied because their policy contained an exclusion for loss resulting from earth movement or water damage. The Rosenburgs’ insurer 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.’ The Third District sided with the Rosenburgs and found in favor of coverage. The Wallach court explained, ‘where 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.’

Looking at the facts of Sebo, the home was destroyed due to the combination of construction defects, rainwater and hurricane winds. While Sebo’s policy specifically excluded damage due to construction defects, rainwater and wind damage was covered. Therefore, the Court found that because the ‘rain and construction defects acted in concert to create the destruction of Sebo’s home … it would not be feasible to apply the efficient proximate cause doctrine.’ And, since none of the provisions of Sebo’s policy prevented application of the concurrent cause doctrine, the Court found that the plain language of the policy did not preclude recovery.

This rule helps to restore what it means to have an all-risk policy. If you purchase an all-risks policy and suffer a covered loss, you may be able to recover, even where a considerable amount of the damage resulted from an excluded cause.

Insurance companies generally try to hide claims file documents and other internal materials showing how a claim was handled. Further, internal documents showing the company’s claims directives and culture are often not turned over without court intervention. The Sebo claims practice lawsuit was slowed by such non-disclosure and resulted in a reported appellate decision last year.1

The Florida Second District Court of Appeal, quoting prior Florida Supreme Court precedent, raised this fundamental question:

[H]ow is one to ever determine whether an insurance company has processed, analyzed, or litigated a claim in a fair, forthright, and good faith manner if access is totally denied to the underlying file materials that reflect how the matter was processed and contain the direct evidence of whether the claim was processed in ‘good’ or ‘bad’ faith?

The appellate court noted that underlying claims documents need to be turned over even if there are objections based on the “work product” privilege from the underlying litigation:

The Ruiz court noted that section 624.155, Florida Statutes (2005), is a ‘statutory remedy [that] essentially extended the duty of an insurer to act in good faith and deal fairly in those instances where an insured seeks first-party coverage or benefits under a policy of insurance.’. . . Therefore, ‘work product protection that may otherwise be afforded to documents prepared in anticipation of litigation of the underlying coverage dispute does not automatically operate to protect such documents from discovery in the ensuing, or accompanying, bad faith action.’ …The supreme court held

‘that in connection with evaluating the obligation to process claims in good faith . . . , all materials, including documents, memoranda, and letters, contained in the underlying claim and related litigation file material that was created up to and including the date of resolution of the underlying disputed matter and pertain in any way to coverage, benefits, liability, or damages, should also be produced in a first-party bad faith action.’

. . . the general magistrate correctly determined that the requested documents were not shielded by the work product doctrine, because the claims materials are needed to determine whether AHAC acted in bad faith.

As we obtain more information regarding the Sebo claims practice case, we will certainly pass it on to our readers.

Thought For The Day

The principle of acting in good faith is at the heart of decent work.
—Richard Eyre
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1 Am. Home Assur. Co. v. Sebo, 324 So.3d 977 (Fla. 2d DCA 2021).