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Florida Fourth DCA remands for new trial in homeowners' insurance coverage dispute, finding that trial court gave wrong jury instructions on coverage doctrine and burden of proof

On January 17, 2018, in Jones v. Federated National Insurance Company, No. 4D16-2579, the Florida Fourth DCA reversed a final judgment in favor of the defendant insurance company in a first party homeowner’s coverage dispute after concluding that the trial court gave the wrong jury instructions on coverage doctrine and burden of proof. The underlying issue was the disputed cause of the damage to the plaintiffs’ home. The plaintiffs argued that the damage was caused by a hailstorm. The insurance company argued that the damage pre-existed the hailstorm. At trial, the court instructed the jury that the plaintiffs were required to prove that the hailstorm was the most substantial or responsible cause of damage to the roof. The trial court thereby was applying the efficient proximate cause doctrine, which 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. See American Home Assurance Co. v. Sebo, 141 So. 3d 195 (Fla. 2d DCA 2013) (Sebo I). However, after the trial was concluded, the Florida Supreme Court ruled in Sebo v. Am. Home Assurance Co., 208 So. 3d 694 (Fla. 2016) (Sebo II) that the efficient proximate cause doctrine was inapplicable when multiple perils converged to cause a loss to the insured property, and at least one of those perils was excluded under the contract, and one of those perils was covered by the contract. The Florida Supreme Court concluded that under such circumstances, the “concurrent cause doctrine” should apply, which 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.

Applying Sebo II, the Florida Fourth DCA concluded that the proper allocation of the shifting burden of proof in a case of this type, involving an all-risk insurance contract where more than one potential cause of damage was raised by the parties, is as follows: (1) the insured has the initial burden of proof to establish that the damage at issue occurred during a period in which the damaged property had insurance coverage and if the insured fails to meet this burden, judgment shall be entered in favor of the insurer; (2) if the insured’s initial burden is met, the burden of proof shifts to the insurer to establish that (a) there was a sole cause of the loss, or (b) in cases where there was more than one cause, there was an “efficient proximate cause” of the loss; (3) if the insurer meets the burden of proof under either 2(a) or 2(b), it must then establish that this sole or efficient proximate cause was excluded from coverage by the terms of the insurance policy, and if the insurer does so, then judgment shall be entered in its favor, but if the insurer establishes that there was a sole or efficient proximate cause, but fails to prove that this cause was excluded by the all-risk insurance policy, then judgment shall be entered in favor of the insured; and (4) if the insurer fails to establish either a sole or efficient proximate cause, and there are no applicable anti-concurrent cause provisions, then the concurrent cause doctrine must be utilized and applying the concurrent cause doctrine, the insurer has the initial burden of production to present evidence that an excluded risk was a contributing cause of the damage, and if it fails to satisfy this burden of production, judgment shall be entered in favor of the insured; (5) if the insurer does produce evidence that an excluded risk was a concurrent cause of the loss, then the burden of production shifts to the insured to present evidence that an allegedly covered risk was a concurrent cause of the loss at issue and if the insured fails to satisfy this burden of production, judgment shall be entered in favor of the insurer; and (6) if the insured produces evidence of a covered concurrent cause, the insurer bears the burden of proof to establish that the insured’s purported concurrent cause was either (a) not a concurrent cause (i.e., it had no (or a de minimis) causal role in the loss), or (b) excluded from coverage by the insurance policy, and if the insurer fails to satisfy this burden of proof, judgment shall be entered in favor of the insured.

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