Cites "efficient proximate cause doctrine."
In a recent and as-yet officially unpublished opinion, a panel of Florida's Second District Court of Appeal apparently reached a correct result for the wrong reasons. The panel said that "[b]ecause the [policyholders] failed to establish below that their loss was covered by a peril caused by their [all-risk] insurance policy, we affirm." Peek v. American Integrity Insurance Co. of Florida, No. 2D14-780, 2015 WL 5616294, *1 (Fla. 2d DCA September 25, 2015)(stated not released for publication in permanent law reports and subject to revision or withdrawal). Actually, the record quoted by the panel establishes both that the policyholders in this case met their all-risks burden of proof and that the insurance carrier also met its burden to prove that an exclusion applied to bar coverage for claimed loss resulting from Chinese Drywall.
"At trial, the [policyholders] established through their own testimony and that of a representative of [the insurance carrier] that they suffered a loss to their property within the insurance policy period." Peek v. American Integrity Insurance Co. of Florida, 2D14-780, 2015 WL 5616294, *1 (Fla. 2d DCA September 25, 2015). A policyholder claiming coverage under an all-risks policy has the burden of proof on the initial issues of coverage that the policyholder's property suffered a loss during the policy period, as the panel recognized. Peek v. American Integrity Insurance Co. of Florida, 2D14-780, 2015 WL 5616294, *3 (Fla. 2d DCA September 25, 2015). Therefore, as the panel opinion confirms, in this case the record establishes that the policyholders met their initial burden of proving coverage. Simply put, an all-risk insurance policy basically covers all risks unless specifically excluded.
In this case the record also clearly establishes that the insurance carrier also met its own burden, which was to prove the applicability of one or more exclusions. The carrier denied coverage on the bases of "policy exclusions for latent defects, corrosion, pollutants, and faulty, inadequate, or defective construction materials and contended that the Chinese drywall fit the definitions of all of these exclusions." It introduced the testimony of an expert botanist that the Chinese Drywall used in the construction of the policyholders' home, and damages resulting from it for which the policyholders claimed coverage here, "that it was a faulty, inadequate, or defective construction material." He further testified that the Chinese Drywall emitted gases which caused the corrosion damage complained of by the policyholders here, and "that the Chinese drywall itself was a pollutant due to its emission of noxious and destructive gases." The policyholders did not put on any evidence to rebut this testimony. Peek v. American Integrity Insurance Co. of Florida, 2D14-780, 2015 WL 5616294, *1-*2 (Fla. 2d DCA September 25, 2015).
On this record, the trial court granted the carrier's motion for directed verdict and entered judgment that the carrier did not breach the all-risks insurance contract. The Second District panel affirmed. Despite some regrettably loose language, the panel clearly affirmed on the basis that the carrier had proven that the exclusions on which it relied to deny coverage, applied to the policyholders' claimed loss in this particular case as a matter of applying the all-risks contract language to the record evidence -- and regardless of any confusion about the "efficient proximate cause doctrine" here. In reaching its contract conclusion, the Florida appellate court panel joined the majority of U.S. Courts which have addressed the question.
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