Sebo v. American Home Assurance Co.

Before May of 2005, John Sebo (Sebo) (plaintiff) bought a Florida home, and also bought an all-risk homeowners insurance contract that provided coverage of more than $8,000,000 for the home. American Home Assurance Co. (AHAC) (defendant) was the insurance company on the contract. The contract excluded coverage for losses that resulted from defective design or construction. From May through August 2005, there was significant damage to the home from water leakage. The water leakage was caused by design and construction defects in the home. Then, in October 2005, Hurricane Wilma caused further damage to the home. In December 2005, Sebo submitted an insurance claim to AHAC. AHAC proffered coverage for $50,000 in mold damage but declined any other coverage because of the exclusion for defective design and construction. Sebo ultimately had to demolish the home. Sebo sued various entities, including the home architect and the builder. In the same suit, Sebo sought declaratory judgment on the issue of AHAC’s insurance coverage. Sebo settled his claims against the other entities, and the case went to a jury trial on the declaratory-judgment claim. The jury returned a verdict in favor of Sebo. The trial court entered judgment on the verdict. AHAC appealed. The Florida Court of Appeals for the Second District reversed the trial court’s judgment upon concluding that the trial court had applied an incorrect theory of causation. The appellate court remanded for a new trial. Sebo appealed.