John Robert Sebo v. American Home Assurance Company, Inc., 208 So. 3d 694

Background

John Sebo bought a custom (manuscript) Naples home in 2005 insured by an all‑risk policy issued by American Home Assurance Co. (AHAC).
Shortly after purchase, recurrent water intrusion and design/construction defects produced major damage; Hurricane Wilma later worsened harms and the house was ultimately demolished.
Sebo reported the loss late in December 2005; AHAC paid $50,000 for mold but denied coverage for the bulk of property damage citing policy exclusions for defective design/construction.
Sebo sued multiple parties; after settling most claims, he amended to add AHAC and pursued a declaratory judgment that the policy covered his loss; a jury found for Sebo and judgment entered against AHAC.
The Second District reversed, applying the efficient proximate cause (EPC) theory and directing a new trial; Sebo petitioned to resolve conflict with the Third District’s concurrent cause doctrine (CCD) in Wallach.
The Florida Supreme Court quashed the Second District, approved Wallach’s concurrent cause approach for independent, combined perils, and remanded (also addressing admissibility of settlements for offset post‑judgment).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an all‑risk policy covers loss caused by multiple independent perils when at least one peril is excluded	Sebo: CCD applies — when independent insured and excluded perils combine to cause loss, coverage may exist because no single efficient cause can be identified	AHAC: EPC should apply — identify the efficient/proximate cause; if an excluded peril is the efficient cause, no coverage; CCD would nullify exclusions	Court: Where independent perils combine and no single efficient cause can be identified, CCD applies; Wallach approved and Second District reversed/quashed
Whether policy language explicitly negates application of CCD	Sebo: Policy does not explicitly preclude CCD; exclusions govern coverage and ambiguity construes against insurer	AHAC: (argued below but did not preserve) EPC should supplant CCD or policy language forecloses CCD	Court: Policy here did not explicitly exclude CCD; thus CCD applies absent clear contrary language
Admissibility of prior settlements at trial on liability or for offset	AHAC: Settlement amounts should be considered (for offset)	Sebo: Trial court excluded settlements under Saleeby as inadmissible on liability	Court: Saleeby bars disclosure of settlements to jury on liability; but settlements may be considered for post‑judgment offset — remanded to reconsider offset question
Whether Second District properly reached abrogation of CCD	AHAC: (not preserved) argued EPC should replace CCD	Trial/Second Dist.: addressed EPC v. CCD	Court: EPC abrogation was not raised/preserved; Second District improperly decided an unpreserved issue; Supreme Court nonetheless resolved conflict in favor of CCD in these circumstances

Key Cases Cited

Wallach v. Rosenberg, 527 So.2d 1386 (Fla. 3d DCA 1988) (adopts concurrent cause doctrine where independent perils combine to produce loss)
State Farm Mut. Auto. Ins. Co. v. Partridge, 10 Cal.3d 94 (Cal. 1973) (formulation and adoption of concurrent‑cause reasoning in insurance context)
Sabella v. Nat’l Union Fire Ins. Co., 59 Cal.2d 21 (Cal. 1963) (exposition of efficient proximate cause doctrine)
Fire Ass’n of Phila. v. Evansville Brewing Ass’n, 73 Fla. 904 (Fla. 1917) (Florida application of EPC in chain‑of‑events loss scenarios)
Garvey v. State Farm Fire & Cas. Co., 48 Cal.3d 395 (Cal. 1989) (clarifies limits of CCD and EPC interplay; relied on by Second District)
Fayad v. Clarendon Nat’l Ins. Co., 899 So.2d 1082 (Fla. 2005) (rules on construction of all‑risk policies and treatment of ambiguities)
Auto‑Owners Ins. Co. v. Anderson, 756 So.2d 29 (Fla. 2000) (principles on construing insurance contract language and exclusions)
Saleeby v. Rocky Elson Construction, Inc., 3 So.3d 1078 (Fla. 2009) (settlement evidence barred from jury on liability; settlements may be considered for post‑judgment offset)