Monday, May 4, 2009

Unambiguous Mold Exclusion Language Precluded Application of Efficient Proximate Cause Doctrine

Applying Florida law, in Empire Indemnity Insurance Co. v. Ashley Winsett (08-12359) the Eleventh Circuit held the unambiguous policy language precluded the application of the efficient proximate cause doctrine and, therefore, the insurer did not have a duty to defend.

The underlying dispute was described by the court as follows:

The Preserve at San Luis, LLC and The Housing Trust Group of Florida, LLC (“Preserve”) were sued by Ashley Winsett and fifty-five other tenants (“Renters”) who rented apartments at The Preserves in Tallahassee, Florida. The Renters alleged, among other things, that the Preserve’s failure to build a vapor barrier was both the direct and proximate cause of their mold-related damages and injuries. That lawsuit has been settled. What has not been settled, however, is the insurance coverage dispute between Preserve and its insurance provider, Empire Indemnity Insurance Company (“Empire”).
The dispute as framed by the appellant was:
Empire argues that the district court erred twice, first, by applying Florida’s efficient proximate cause doctrine to the policy and, second, by disregarding the policy’s plain language against applying the doctrine and rendering the mold exclusion meaningless. Preserve responds that the doctrine applies.
According to the court:

The efficient proximate cause is “the one that sets others in motion.” Hartford Accident & Indem. Co. v. Phelps, 294 So. 2d 362, 364 (Fla. 1st Dist. Ct. App. 1974). If the efficient proximate cause is covered, then the claim for damages will be covered even if the other causes are not covered. See id. But “the efficient cause doctrine cannot be incorporated into an insurance policy if doing so would render part of the policy meaningless.” Arawak Aviation, Inc. v. Indem. Ins. Co. of N. Am., 285 F.3d 954, 958 (11th Cir. 2002).

The district court, however, overlooked the policy’s unambiguous language against applying the efficient proximate cause doctrine to mold claims. Preserve denies that the language is unambiguous because the mold exclusion does not expressly prohibit coverage when damage is the result of causes dependent on each other. We disagree with Preserve. The policy plainly excludes coverage for mold “regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury or damage.” (Dist. Ct. Doc. 54-2 at 30). By the plain language “in any sequence,” the policy was written to exclude applying the efficient proximate cause doctrine. Overlooking that plain language, the district court erroneously concluded that the efficient proximate cause doctrine applies and triggers Empire’s duty to defend and indemnify Preserve. Accordingly, we reverse the district court’s grant of summary judgment.

Disclaimer: Cortney Kaiserman, now of GrayRobinson, P.A., was involved in this appeal.


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