Allied World Assurance Company, Inc. v. Travelers Property Casualty Company of America

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-13489
Non-Argument Calendar
____________________
ALLIED WORLD ASSURANCE COMPANY, INC.,
as subrogee and assignee of Garney/Wharton
Smith joint venture committed to serving the NW
communities,
Plaintiff-Appellant,
versus
TRAVELERS PROPERTY CASUALTY COMPANY OF
AMERICA,
a Connecticut corporation,
Defendant-Appellee.
____________________
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2 Opinion of the Court 22-13489
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 1:20-cv-24470-KMW
____________________
Before R OSENBAUM , J ILL PRYOR , and ANDERSON, Circuit Judges.
PER CURIAM:
Allied World Assurance Co. (“Allied”) appeals the district
court’s grant of Travelers Property Casualty Company of Amer-
ica’s (“Travelers”) motion for summary judgment in this insurance
coverage case. On appeal Allied argues that the district court erred
by erroneously applying Florida’s concurrent cause doctrine.
The facts in this case are undisputed. Allied and Travelers
both provided insurance policies to Garney/Wharton Smith
(“GWS”), a construction company. GWS contracted with Hills-
borough County, Florida, to design and build an expansion of its
water reclamation facility. To that end, GWS designed and con-
structed concrete basins that were intended to hold water during
the treatment process. As part of that project, GWS was required
to perform leak tests (“Leak Test”) on the basins and when it did,
the water pressure damaged some of the basin’s wall panels and
waterstops. The parties concede that the basins were defectively
designed or constructed.
GWS sought coverage first from Travelers under its builders
risk insurance policy but Travelers denied the claim because the
policy excluded coverage for defective design or construction. By
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22-13489 Opinion of the Court 3
contrast, GWS’s claim with Allied on its professional and pollution
liability insurance policy was not rejected. Allied then, acting as
GWS’s subrogee, filed a declaratory judgment action, arguing that
the Leak Test was a covered cause of loss. Allied argued in the dis-
trict court, and argues on appeal, that there were two concurrent
causes of the loss—the excluded and undisputed design/construc-
tion defects and the Leak Test, which contributed to the damage
due to the water pressure. Thus, Allied argues the Leak Test is a
covered cause, which combined with the excluded cause, and, un-
der Florida’s concurrent cause doctrine, the district court should
have found coverage. The district court rejected Allied’s argu-
ments. The district court granted Traveler’s motion for summary
judgment, reasoning that the Leak Test was not independent from
defective design or construction and thus there was no coverage
under the concurrent cause doctrine.
Under the concurrent cause doctrine, “coverage may exist
where an insured risk constitutes a concurrent cause of the loss
even when it is not the prime or efficient cause.” Sebo v. Am. Home
Assurance Co., 208 So. 3d 694, 698 (Fla. 2016). It is available when
“neither peril could have created the loss alone but instead com-
bined to create the loss” so that one “could not identify the prime,
moving, or efficient cause in order to determine coverage.” Id. The
court concluded that “when independent perils converge and no
single cause can be considered the sole or proximate cause, it is ap-
propriate to apply the concurring cause doctrine.” Id. at 697. Flor-
ida cases have applied the doctrine in cases where covered causes
included storm damage (Sebo), sinkholes (Citizens Prop. Ins., Corp. v.
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4 Opinion of the Court 22-13489
Salkey, 260 So. 3d 371 (Fla. Dist. Ct. App. 2018)), hailstorm (Jones v.
Federated Nat'l Ins. Co., 235 So. 3d 936 (Fla. Dist. Ct. App. 2018)), and
failure to maintain property (Wallach v. Rosenberg, 527 So. 2d 1386
(Fla. 3d Dist. Ct. App. 1988)).
For several reasons, the district court did not err in rejecting
Allied’s reliance on the concurrent cause doctrine. First, as a matter
of common sense, the Leak Test cannot be considered a peril or a
risk that might have caused the loss; rather, it was a mere test (cal-
culated to imitate the normal expected use of the product) to de-
termine if the product met design specifications. In other words,
it cannot be deemed a cause of the loss: rather it merely was part
of the project’s implementation which was designed to, and did,
establish that there was in fact a design/construction defect. Stat-
ing this common sense proposition in the language of the Florida
Supreme Court, the concurrent cause doctrine is available when
“neither peril could have created the loss alone but instead com-
bined to create the loss.” Sebo, 208 So. 3d at 698. In the case before
us, it is obvious that the excluded risk or cause (design/construc-
tion defect) would have caused the loss by itself. That is, without
any Leak Test, it is obvious that the loss would have occurred in the
course of the normal use of the basin (i.e. filling with water to “its
normal level line,” see Allied’s Brief at 5). Similarly, Sebo says the
concurrent cause doctrine is appropriate when “when independent
perils converge and no single cause can be considered the sole or
proximate cause.” Id. at 697. In this case, the Leak test is not even
a peril, and, in any event, is not independent of the
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22-13489 Opinion of the Court 5
design/construction defect.1 The Leak Test was clearly intimately
related to and dependent upon the design/construction defect be-
cause the basin was designed to be filled with water and not leak.
The Leak Test was necessary to test the design and construction.
The Leak Test was part and parcel of the contractual obligation of
GWS to design and construct a basin free of design/construction
defects. The test was merely a contractual obligation to demon-
strate that GWS was delivering to the County a basin free of de-
sign/construction defects.
If the Leak Test here could serve to nullify the exclusion of
coverage for design/construction defects, the effect would be to
nullify all exclusions for design/construction defects. That is, if the
normal expected use of a product—when it reveals a design/con-
struction defect—were considered to be a concurring cause oper-
ating in combination with the excluded defect so as to nullify the
exclusion, every conceivable design/construction exclusion would
simply be nullified.
For the foregoing reasons, the judgment of the district court
is
1 Florida law applies the concurrent cause doctrine only when the two asserted
causes (one covered and one excluded) are independent. See Hrynkiw v. Allstate
Floridian Ins. Co., 844 So. 2d 739, 745 (Fla. Dist. Ct. App. 2003) (holding that
the Florida concurrent cause doctrine “only applies when the causes are not
related and dependent, but rather involve separate and distinct risks.”);
Transamerica Ins. Co. v. Snell, 627 So. 2d 1275, 1276 (Fla. Dist. Ct. App.
1993)(concurrent cause doctrine “is applicable only when the multiple causes
are not related and dependent, and involve a separate and distinct risk.”).
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6 Opinion of the Court 22-13489
AFFIRMED.
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