Most insurance coverage protection disputes contain acquainted perils reminiscent of fireplace, wind, and water intrusion. Not often does a court docket wrestle with whether or not a large aquarium inside an orthodontic workplace qualifies as “lined tools” underneath a businessowners coverage with tools breakdown protection. But that’s exactly the bizarre backdrop of Kawa Orthodontics, LLP v. Depositors Insurance coverage Firm.
On the trial court docket degree, the details have been easy however unusual. Kawa Orthodontics displayed an enormous aquarium system consisting of acrylic tanks linked by an overhead bridge by means of which fish might swim and sufferers might gaze. A crack appeared within the acrylic bridge. To deal with it, Kawa drained the tanks, relocated the fish, and employed Erisa Enhancements to take away the cracked bridge.
Through the elimination work, two extra cracks shaped within the wall of one of many tanks, captured on surveillance video. Kawa submitted a declare for the harm. Depositors denied it, writing in its denial letter that “the loss was as a result of negligent work of Erisa Enhancements,” invoking the coverage exclusion for “defective, insufficient or faulty…design, specs, workmanship, work strategies, restore, building, renovation, reworking, grading, compaction, [or] failure to guard the property.”
Depositors filed for abstract judgment in federal court docket, arguing that a number of provisions within the coverage barred protection. It pointed to the exclusion for “put on and tear; rust or different corrosion, decay, deterioration, hidden or latent defect…[and] settling, cracking, shrinking or growth,” in addition to the exclusion for “mechanical breakdown.” The insurer additionally insisted that the Tools Breakdown protection couldn’t apply as a result of the aquarium was not “lined tools,” which the coverage outlined as “Lined Property…that generates, transmits or makes use of vitality…or which, throughout regular utilization, operates underneath vacuum or strain, aside from the burden of its contents.” In Depositors’ view, the acrylic tanks have been merely containers reasonably than equipment.
Kawa responded with its personal movement for abstract judgment, pointing to the coverage’s Further Protection for Tools Breakdown, which promised: “We can pay for direct bodily lack of or harm to Lined Property brought on by or ensuing from an ‘accident’ to ‘lined tools.’ If an preliminary ‘accident’ causes different ‘accidents,’ all might be thought-about one ‘accident.’”
Underneath that language, Kawa argued, the primary crack within the bridge was an “accident” within the type of a rupture from mechanical breakdown, and the later tank cracks have been merely a part of the identical occasion. It emphasised that each its skilled and Depositors’ personal skilled admitted there was no industry-approved methodology to restore acrylic aquariums, making it not possible to carry Erisa negligent underneath any identifiable normal of care.
The district court docket agreed with Kawa and entered judgment in its favor. 1 Decide Rodney Smith held that the aquarium was lined tools as a result of it operated “underneath vacuum or strain” through a submersible pump that circulated water. He discovered the cracking was a “rupture” that certified as a mechanical breakdown.
The court docket rejected the negligence exclusion, reasoning that since “there isn’t any identifiable normal of care relevant to the restore work on this occasion,” Erisa couldn’t be deemed negligent. Deciphering ambiguous coverage language in favor of the insured, the court docket utilized the rule of the final antecedent to construe “mechanical breakdown, together with rupture or bursting brought on by centrifugal power” in order that “brought on by centrifugal power” modified solely “bursting,” which means a rupture alone was sufficient. The court docket entered remaining judgment in favor of Kawa within the quantity of $326,004.33, the precise money worth of the loss.
On enchantment, Depositors pressed a number of arguments. It claimed the district court docket improperly thought-about the preliminary bridge crack as a result of Kawa had not pled it as a part of its declare. It argued the court docket erred to find no negligence, citing Florida precedent that the absence of {industry} requirements doesn’t negate the responsibility to behave with affordable care. It renewed its place that the aquarium was not “lined tools,” that no “accident” as outlined by the coverage had occurred, and that exclusions for put on and tear and latent defect utilized. Kawa countered in its appellate temporary that the aquarium system functioned as one unit, that the cracks have been accidents inside the coverage’s definition, and that the negligence exclusion couldn’t apply within the absence of a longtime responsibility.
The Eleventh Circuit reversed and remanded. 2 The panel emphasised that the trial court docket had gone too far in eradicating negligence from the case. It held that “though {industry} requirements are proof of the suitable normal of care, the existence of {industry} requirements isn’t dispositive,” and that underneath Florida legislation “the usual of care is a query of truth for the jury.” Viewing the proof in Depositors’ favor, a jury might moderately conclude the cracks have been brought on by Erisa’s improper use of the aquarium partitions as a scaffold and by putting weight on the acrylic.
The appellate court docket additionally famous {that a} jury might discover the preliminary crack didn’t essentially trigger a “whole lack of all the aquarium system,” as Depositors’ skilled testified there have been doable short-term fixes. As a result of factual disputes existed on negligence and causation, the appellate court docket didn’t attain the insurer’s different protection defenses, leaving these arguments alive on remand.
At this stage, Kawa not holds a judgment in its favor; as an alternative, the case will proceed with a jury to resolve whether or not the aquarium cracks have been the results of negligent repairs or a lined accident underneath the coverage’s Tools Breakdown protection. This uncommon battle over a fish tank reveals how insurance coverage legislation usually activates definitions, exclusions, and the exact wording of protection provisions.
I’ll proceed to watch this matter and report again because it unfolds. I recommend that readers on this protection learn an article written by lawyer Iris Kuhn, Small Enterprise Producers Ought to Buy Tools Breakdown Protection, and an article I wrote, Electrical Arcing Versus Fireplace Injury Claims—What’s Lined and Why Tools Breakdown Protection Ought to Be Offered With Each Industrial Coverage.
Thought For The Day:
“The distinction between the fitting phrase and the virtually proper phrase is the distinction between lightning and a lightning bug.”
—Mark Twain
1 Kawa Orthodontics v. Depositors Ins. Co., No. 21-CV-81884 (S.D. Fla. Sept. 23, 2023).
2 Kawa Orthodontics v. Depositors Ins. Co., No. 23-13662, 2025 WL 2718235 (11th Cir. Sept. 24, 2025).