Allied World Assurance Company, Inc. v. Travelers Property Casualty Company of America ( 2023 )


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  • USCA11 Case: 22-13489   Document: 31-1     Date Filed: 06/07/2023   Page: 1 of 6
    [DO NOT PUBLISH]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.
    ____________________
    USCA11 Case: 22-13489     Document: 31-1     Date Filed: 06/07/2023    Page: 2 of 6
    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 ROSENBAUM, JILL 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
    USCA11 Case: 22-13489      Document: 31-1     Date Filed: 06/07/2023     Page: 3 of 6
    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.
    USCA11 Case: 22-13489       Document: 31-1      Date Filed: 06/07/2023      Page: 4 of 6
    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
    USCA11 Case: 22-13489         Document: 31-1        Date Filed: 06/07/2023         Page: 5 of 6
    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.”).
    USCA11 Case: 22-13489   Document: 31-1   Date Filed: 06/07/2023   Page: 6 of 6
    6                  Opinion of the Court              22-13489
    AFFIRMED.