28 Fla. L. Weekly Supp. 6a
Online Reference: FLWSUPP 2801TAMI
Insurance — Automobile — All-risk policy — Coverage — Mechanical failure — Coverage for engine damage caused by contaminated diesel fuel was precluded by all-risk policy’s exclusion for mechanical breakdown or failure
TAMIAMI ELECTRICAL, INC., a Florida corporation, Appellant, v. INFINITY ASSURANCE INSURANCE COMPANY, Appellee, a Florida corporation. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No. 2019-156-AP-01. L.T. Case No. 2018-25676 CC25. February 21, 2020. An Appeal from the County Court for Miami-Dade County, Robert T. Watson, Judge. Counsel: Sergio R. Casiano, Jr., MKRS Law, P.L., for Appellant. Joshua D. Lerner, Rumberger, Kirk, & Caldwell, P.A., for Appellee.
Second-tier Cert. DENIED;
(Before DARYL E. TRAWICK, LISA S. WALSH, THOMAS J. REBULL, JJ.)
(PER CURIAM.) We affirm based upon the binding precedent of Little Judy, Indus., Inc., v. Fed. Ins., Co., 280 So.2d 14 (Fla. 3d DCA 1973). See Pardo v. State, 596 So.2d 665, 666 (Fla. 1992) (the circuit courts of this State are required to follow the holdings of District Courts of Appeal). However, we respectfully submit that for the reasons discussed below it may be time to revisit this forty-seven-year-old precedent.
In Little Judy, the court considered whether engine damage caused by negligent maintenance was covered by an all-risk insurance policy similar to the one at issue here.1 The Court found that even though the damage to the engine was traceable to the improper repair, coverage was still precluded as a mechanical failure.2 Similarly in this case, it is alleged that contaminated diesel fuel led to engine damage. The insurance policy excluded any loss “[r]esulting from or caused by any of the following, unless caused by other loss that is covered by this insurance policy: (e) Mechanical or electrical breakdown or failure.” As the trial judge correctly pointed out in his opinion, the critical language of Little Judy could be modified to insert the external event at issue here: “the fact that the failure . . . was traceable to contaminated fuel did not make it other than a mechanical failure.”
The Appellant asks this Court to reject the Little Judy rational, arguing that it was improperly decided. They ask us instead to adopt the reasoning in Associated Aviation Underwriters, v. George Koch Sons, Inc., 712 N.E.2d 1071 (Ind. Ct. App. 1999) (“AAU”) and other courts which have considered a similar issue in a number of jurisdictions. In AAU, aircraft engines were damaged due to the negligent installation of a “high turbine seal ring.” The issue presented in that case was quite similar to the one here — whether damage caused by the negligence of a third-party during maintenance brought the claim within the scope of the insurance policy exclusion which precluded a claim for mechanical or electrical breakdown. The court used a proximate cause analysis, stating that “where an insured risk sets into operation a chain of causation in which the last step may have been an excepted risk, the excepted risk will not defeat recovery.” Id. at 1075. In other words, the negligence was the cause of the loss while the mechanical breakdown was the effect of the loss. Thus, the covered peril was the negligence of the mechanic. The court cited numerous jurisdictions in accord with this analysis, including Rust Tractor Company v. Consolidated Constructors, Inc., 86 N.M. 658, 526 P.2d 800 (N.M. Ct. App. 1974); Connie’s Const. Co. Inc. v. Continental Western Ins. Co., 227 N.W. 2d 204 (Iowa 1975); Villella v. Public Employees Mut. Ins. Co., 106 Wash.2d 806, 725 P.2d 957, 962 (1986); Jussim v. Massachusetts Bay Ins., Co., 415 Mass. 24, 610 N.E.2d 954, 955 (1993) citing Standard Elec. Supply Co. v. Norfolk & Dedham Mut. Fire Ins. Co., 1 Mass. App. Ct. 762, 307 N.E.2d 11 (1975); Berry v. Commercial Union Ins. Co. 87 F.3d 387, 389 (9th Cir. 1996)(applying California law); Cavalier Group v. Strescon Industries, Inc., 782 F. Supp. 946 (D. Del. 1992)(interpreting and apply Delaware law). The AAU court also cited other legal authorities to support their position, including 5 Appleman, Insurance Law and Practice §3083 (1970) and 18 George J. Couch, Couch on Insurance §74:709-711 at 1018-22 (2d Rev. Ed. 1983).3 AAU expressly rejected the reasoning of the Little Judy case, indicating that it represents the minority view on this issue. AAU, 712 N.E.2d at 1076 n. 3. As noted in AAU, to accept the Little Judy rational would result in the exclusion of many obvious losses that would otherwise be covered by the policy. Id. at 1076. The court also found that the mechanical breakdown exclusion, viewed in the context of the entire policy, was not meant to apply “regardless of any possible negligent antecedent occurrence which in turn causes the engine to sustain mechanical breakdown or abnormal wear and tear.” The court found this interpretation to be consistent with the principal that exclusions from coverage should be strictly construed, and that if there are any ambiguities they should be resolved against the insurer and in favor of the insured. Id.
We believe the AAU reasoning is persuasive. We also agree that there is more than one reasonable interpretation of the policy at issue, and that any ambiguity should be construed in favor of the insured. However, the Little Judy precedent prevents us from applying any of the above described analysis to this case. Therefore, the decision of the trial court is AFFIRMED. (TRAWICK, WALSH and REBULL, JJ., concur.)
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1The policy in Little Judy excluded “damage which is due and confined to wear and tear, deterioration, freezing, mechanical, structural or electrical breakdown or failure, unless such damage resulted from other damage covered by this policy.”
2Appellee also cites the case of Arawak Aviation, Inc. v. Indemnity Ins. Co. of North America, 285 F.3d 954 (11th Cir. 1992) which adopted the rational of Little Judy. Arawak is not binding on this Court. However, while Arawak did apply Little Judy, the decisive exclusions both related to wear and tear rather than a mechanical breakdown exclusion. Id. at 956.
3Appellant cited to yet other legal authorities supporting this rational, including Nat’l Investors Fire & Cas. Co. v. Preddy, 451 S.W.2d 457 (Ark. 1970); Standard Structural Steel Co. v. Bethlehem Steel Corp., 597 F. Supp. 164, 196-97 (D. Conn. 1984); Caldwell v. Transp. Ins. Co., 364 S.E.2d 1, 3 (Va. 1988); Amber S. Finch, C. Dennis Hughes, Exclusions from Coverage for Wear and Tear, Deterioration, Inherent Vice, Latent Defect, and Mechanical Breakdown, 50 Tort Trial & Ins. Prac. L.J. 49, 77-78 (2014); and 11 Couch on Ins. §156.77: “An exception is commonly made of damage resulting from mechanical breakdown or failure. The fact that there is a mechanical breakdown as an incident to the occurrence of a covered peril does not exclude coverage, for the breakdown is in this situation not the cause of the harm but merely a consequence of the realization of the covered peril.”
