Tag Archives: Sinkhole Claims

Florida’s Second DCA Enforces Residence Premises Defense in Homeowners Insurance Claim

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

We are all about getting results.  Read this article to find out about our one-of-a-kind successes with the “residence premises” defense.

Make sure to read all the way to the end to receive our free offer for a Litigation Report.


In a case where I was the attorney at the trial court level, Florida’s Second District Court of Appeals determined the insureds did not have homeowners insurance coverage for a sinkhole claim under an HO-3 policy because they did not reside at the property.

photo from http://i2.cdn.turner.com/money/2011/03/28/real_estate/us_housing_vacancy_rates/vacant_house.gi.top.jpg

If you are not familiar with the HO-3’s coverage requirement that the homeowners reside at the property, please review my analysis of the “residence premises” defense in this post.

Here is the Second DCA’s per curiam affirmed order:

Download (PDF, 273KB)

Although the decision is a PCA rather than a written order, I am excited to learn that this lengthy battle is (probably) over and that my client was able to enforce its policy’s requirements.  Insurers, insureds and their attorneys have been ignoring this “residence premises” issue for years.  Many thought that insurers lost the right to enforce the occupancy requirement when Florida courts construed the vacancy exclusion in the insureds’ favor.  By refocusing the attention to the definition of “residence premises,” the courts understood and appreciated that my client only agreed to insure this home if and when the insureds occupied it.

If you have any questions and want further information or documents, please contact us.

Takeaway:

I can bet you at least half of your attorneys have never heard of this defense, and another 25% aren’t checking for it because you aren’t asking them for it.

If you want guides, checklists, and templates for winning this “residence premises” defense, please message me.


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The Death of the Concurrent Cause Doctrine in Florida Homeowners Insurance Claims under Sebo v. American Home Assurance

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In a monumental September 18, 2013 holding, Florida’s Second DCA in Sebo v. American Home Assurance ruled that there should have never been a concurrent cause doctrine in Florida, and that the other DCAs have been mistaken for years.  Here is the full opinion:

Download (PDF, 58KB)

As background, many cases involve damage being caused by a combination of excluded and covered perils.  For years, when this occurred, courts would look at the facts and the policy to determine if the combination was dependent or independent of each other and whether the policy terms disposed of the concurrent cause doctrine.  If courts determined that the causes were independent and the policy did not “write out” the concurrent cause doctrine, then it wouldn’t matter if the excluded peril caused 99% of the damage, the damage was still covered so long as the covered peril caused at least 1%.  If the causes were dependent or if the policy had an anti-concurrent cause clause, then the question would be which peril was the efficient proximate cause of the damage – the excluded peril or the covered peril.  (I think I got that right … ).

This gave lawyers and drafters a lot to think about, but the Second DCA says that those exercises were a waste of time.  In any cases involving an excluded and covered peril causing damage together, the efficient proximate cause doctrine should apply.  This not only marks a major swing in the law; it is also at least a major swing in this case. The jury awarded Sebo roughly $7.7M.

Here is the verdict form from the trial court:

Download (PDF, 109KB)

Here is a photograph of this unbelievably amazing house:

 photo from http://www.naplesnews.com/photos/2007/jul/01/38552/

There’s something to think about this weekend.  I am going to think about what this means for sinkhole claims.  Feel free to email me your thoughts.  I hope you have a good weekend.

Takeaway:

This is such an important issue; however, I don’t think most insurers have implemented processes and procedures to take advantage of their rights under this holding.

The Sebo case calls for a whole new set of checklists and guides for handling cases in the Second DCA, and maybe even in Florida.  If you want to know more, please message me.


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Florida Homeowners Insurance Questions, the Loss Settlement Provision, and When is Alleged Underpayment Not a Breach of the Policy?

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Overview

The Loss Settlement provision is, without a doubt, the most overlooked homeowners insurance policy provision.  There are tens of thousands of lawsuits filed every year where the parties dispute what the homeowners insurer owes to the homeowner.

Do you want to know what neither side probably looked at?  The Loss Settlement provision – the provision that actually describes the homeowners insurer’s obligation to pay a claim.  Read this article to learn more about how this provision could decide your case.

Make sure to read until the end because we offer you a free Litigation Report analyzing the ways to improve your case outcomes while paying the least amount possible.


Florida Homeowners Insurance Claims and Litigation Handbook and Litigation Data Reports:

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

If you are in the Florida homeowners insurance claims industry and are looking for a guide with the key cases, strategies, laws, attorneys, and adjusters, or if you’re looking for Florida litigation data reports, please visit this page to learn more about our Florida Homeowners Insurance Claims and Litigation Handbook.

Questions?

Have any questions about Florida’s homeowners insurers, policies, and claims, please feel free to contact us.


One of the most important questions in property insurance litigation is whether an insurer can obtain a summary judgment in a damages dispute. Stated otherwise, can an insurer prevail on a summary judgment motion when the insured alleges the insurer underpaid the claim? You might ask, “how is that possible?” How can an insurer and the Judge agree that even if the insurer allegedly underpaid the insured, the insurer did not breach the contract? If you can answer these questions, then you understand the difference between underpayment and breach.

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To understand the answers to these questions, you must examine the Florida cases discussing loss settlement provisions. Following are some examples:

 

1. Slayton v. Universal

Download (PDF, 13KB)

Slayton holds that even if an insured allegedly underpaid pursuant to the policy, the insurer could have simultaneously complied with its policy obligations as a matter of law. While Slayton is limited to the facts and statutes at issue in the case, its rationale may be applied to any insurance dispute.

Rather than promote litigation, judges should do what Slayton did and allow the insurer to rely on the insured to present a genuine policy dispute before bringing a lawsuit. In Slayton, the Court held that the insured should have used the benefits the insurer paid to the insurer to repair the home and then submit a supplemental claim to the insurer if the original payment was insufficient. Instead, the insured sued the insurer without attempting to conduct the repairs with the payments provided by the insurer. Ultimately, in Slayton, the Fifth DCA upheld the trial court’s finding that the insurer, by providing the payment to the insured, complied with the policy as a matter of law.

By enforcing the loss settlement provision’s requirements, the Fifth DCA in Slayton held that the insurer did not breach the contract, even if it arguably underpaid the claim.

 

2. Ceballo v. Citizens

Download (PDF, 46KB)

In Ceballo, the insureds alleged that they proved a total loss of Ordinance and Law coverage pursuant to the Valued Policy Law statute and argued the insurer should have paid the coverage. The insureds further claimed that the insurer’s failure to pay the coverage constituted a breach of the contract. The insurer responded that before the insureds could be entitled to this coverage, the policy required the insureds to incur Ordinance and Law damages. To put this into context, the policy and statute at issue in Ceballo provides that the insureds were not entitled to replacement cost coverage until they incurred the damages. Like the Fifth DCA in Slayton, Florida’s Supreme Court in Ceballo determined that the insurer did not breach the contract despite the insureds’ allegations that the insurer underpaid. Thus, the insureds could not present a damages dispute to the jury, and the insurer was therefore entitled to judgment in its favor on that issue.

 

3. Buckley Towers v. Citizens

Download (PDF, 96KB)

Likewise, the Eleventh Circuit in Buckley Towers considered the lower court’s finding that the insured was excused from incurring damages under the policy. Similar to the policy at issue in Ceballo, the policy at issue in Buckley Towers provided that if in insured wants replacement cost coverage, it must incur the damages. If the insured does not incur the damages, the insured can only obtain actual cash value. Despite this policy requirement, the lower court held that the insurer’s alleged underpayment excused the insured’s performance in that regard.

The Eleventh Circuit Court of Appeals reversed, determining that the insured could not use the prevention of performance doctrine to avoid a requirement that the damages be incurred. Unlike the lower court, the Eleventh Circuit refused to “rewrite the policy.” The Eleventh Circuit held that the insured was required to make the repairs before he or she would be entitled to the replacement cost coverage. In other words, until the repairs were complete, the insurer was correct in issuing only the coverage for actual cash value. The court found that by using the prevention of performance doctrine, the lower court impermissibly rewrote the policy that was freely negotiated between the parties. Even when facing allegations of underpayment, the Eleventh Circuit determined the insurer did not breach as a matter of law. In short, Buckley Towers, like Ceballo and Slayton, shows that courts must adhere to the loss settlement provisions in a policy.

So what do these cases tell you?

First and foremost, beware when relying heavily on the black letter law in these cases because the statutes and policy forms have changed. Instead of focusing on the holdings of these cases, focus on the courts’ interpretations of the loss settlement provisions. In each case, the court determined that the insureds were not entitled to a trial on damages until they demonstrated compliance with the loss settlement provisions. Second, you must scrutinize your loss settlement provisions, whether you are dealing with a sinkhole claim, water claim, or tile claim, before accepting the opposing party’s allegations as fact. Ultimately, the loss settlement provision may make alleged underpayment a question for the judge and not the jury.

 Takeaway:

You shouldn’t allow your attorneys to overlook this provision, and you should have systems in place to make sure it isn’t overlooked.  Your provision is the same in every case, but it needs to be read in light of the case law.

Don’t trust this type of issue to junior associates.  Get your best management and best attorneys together, create a system for ensuring compliance, and never think about it again.

If you want checklists, guides, and legal document templates on the Loss Settlement provision, please message me.


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Florida Homeowners Insurance Claims Update: The Corporate Representative’s Deposition Bill of Rights (And Wrongs) via Carlton Fields

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Overview

This article is arguably the most popular article on the First Party Property Insurance Blog.

When a homeowner sues his homeowners insurer, his attorney often requests the insurer to have someone speak for the insurer on the record.  This is called the corporate representation deposition, and it could be the turning point in the case.  Read this article to learn the details.

If you read to the end, I will tell you about how to solve this issue.


Florida Homeowners Insurance Claims and Litigation Handbook and Litigation Data Reports:

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

If you are in the Florida homeowners insurance claims industry and are looking for a guide with the key cases, strategies, laws, attorneys, and adjusters, or if you’re looking for Florida litigation data reports, please visit this page to learn more about our Florida Homeowners Insurance Claims and Litigation Handbook.

Questions?

Have any questions about Florida’s homeowners insurers, policies, and claims, please feel free to contact us.



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I found a very interesting article today, and it gives me the opportunity to share my insight on the issues associated with corporate representative depositions of insurance companies.  I also want you to read all the way through the end of this article for my proposed solution to this issue.

http://www.carltonfields.com/the-corporate-representatives-deposition-bill-of-rights-and-wrongs-03-16-2012/

http://www.calbizlit.com/.a/6a00d83451e4e569e2017d3c23c8a4970c-800wi


For anyone who is involved in property insurance litigation, corporate representative depositions in breach of contract cases are a big hassle. Whether a sinkhole claim, long term water claim, or late notice claim, insured’s attorneys will eventually ask for this deposition. For the insured’s attorneys, they are a hassle because they want the deposition to happen as soon as they request it and on their terms; however, the insurer’s attorney will not allow it without limiting the deposition.The insured’s attorney wants someone to speak for the insurer so the attorney can ask why the insurer reached the conclusion it did.This sounds fair, right?

For the insurer’s attorney, however, the deposition is a burden because it requires the attorney to confer in good faith with the insured’s attorney to try to limit the scope of the deposition to what he or she believes is proper.What is proper is discussed in more detail below.In addition, the insurer’s attorney must file an objection and/or motion with the Court and argue it to have the Court understand that the deposition might cause irreparable harm by invading privileges.Further, the insurer’s attorney must go to great lengths to prepare the corporate representative for the hours of questioning that may ensue (see Testifying to the Facts of Someone Else’s Investigation).The insurer’s arguments: (a) the insured’s attorney already knows the answers to the questions asked and (b) if the insured’s attorney was so interested in discovering facts, then why didn’t he or she first ask for the depositions of those with personal knowledge, including the adjusters and experts?

The “Bill of Rights” article by Carlton Fields is great because it helps let us remember how burdensome the deposition is for the insurer.First, the insurer has to appoint an eloquent supervisor who has the general knowledge and experience to bind the corporation with his or her testimony.The representative must learn the entire claim file from its inception until the date of the deposition.This can involve review of hundreds to thousands of pages of EUO and deposition testimony, reports, photographs, estimates, and journal notes.In addition, the representative might be required to testify to facts as if the representative was the field adjuster, claim examiner, engineer, and contractor!There are at least two limits worth discussing at this point.Although the insured’s attorney might try to ask the corporate representative to “be a lawyer” and interpret policy provisions, the representative does not have to answer these types of questions. Corporate representatives also are not required to testify about coverage in general.

This article contains what the author dubs “the Corporate Representative’s Deposition Bill of Rights (and Wrongs).”As discussed by the author, this is not a very helpful set of rights for the insurer.Instead, it is more like a “Bill of Obligations.”The article is fantastic, however, because it cogently describes all of the effort that must go into the deposition.The “rights” are as follows:

1. You do not have the right to remain silent, meaning that you must know:

a. more than just the representative’s personal knowledge;

b. more than just one of the insurer’s department’s knowledge;

c. more than just the knowledge that the insurer has;

d. the knowledge of former employees;

e. information that arises from evidence in the case; and

f. information that takes an inordinate amount of time and effort to obtain information the insurer learned through its lawyers.

2. Anything you say can be held against you (or the corporation).

3. You have the right to an attorney.

4. You have the right to not be the person with the most knowledge of the claim.

5. You have the right to know the general scope of what will be asked at the deposition.

Wow!This does not sound like a “Bill of Rights” to me; however, it is a “Bill of Truth.”Regardless of how ominous this sounds, there are few limits on what an insured’s attorney can ask at a corporate representative’s deposition.

An insurer’s corporate representative’s deposition in a breach of contract case, however, is different from any other corporate representative’s deposition for a variety of reasons.With the proper preparation and, frankly, hard work, an insurer’s attorney can ensure that the corporate representative does not testify to what it should not testify to.In short, these limits are:

1. privileged information regarding claims handling;

2. privileged information regarding company-wide policies and procedures;

3. privileged communication between the insurer and its attorneys; and

4. legal interpretation of the insurance policy.

As much hard work is required to limit the deposition, the insurer’s attorney has to expend equally enough effort to prepare the corporate representative by promptly and thoroughly educating the representative about information known to the field adjuster, claim examiner, any engineers, any contractors, and, believe it or not, the lawyer.This sounds like a lot of effort, and it is.Nevertheless, if the insurer can conquer the corporate representative deposition, then the insurer will have shown the insured and, potentially, the jury, why the insurer reached the conclusion it did. As the voice of the insurer, the corporate representative has the opportunity to solidify the insurer’s defenses.

Takeaway:

Corporate representative depositions should not be handled by emails and Word documents.  Stop it now.

Corporate representative depositions need to trigger a system of events to ensure homeowners insurers are protected.  The system should include “check the box” and “fill in the blank” tasks that homeowners and their attorneys determine to be necessary.  This shouldn’t be up for discussion, as all time should be focused on preparation, not evaluating what to do for the 1,000th time.

Corporate representative depositions should also trigger a set of automated legal documents to save clients thousands of dollars in legal fees.  This is a simple system.

If you are interested in learning more about our checklists and guides for handling corporate representative depositions, please message me.


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Testifying to the Facts of Someone Else’s Investigation

Florida Homeowners Insurance Claims and Litigation Handbook

A very informative article on Examinations Under Oath (“EUOs”) appears in the summer 2013 edition of Litigation Management. The article, written by Tower Hill’s Lincoln LeVarge and Butler Pappas’s Gerald Albrecht, can be accessed here:

http://www.litigationmanagementmagazine.com/litigationmanagementmagazine/summer_2013#pg1

The most interesting takeaway from the article that I want to emphasize is that insurers may have to submit representatives to testify about facts that attorneys obtain through the EUO process, especially if the insurer relies on those facts to issue a coverage determination.

This consequence of the EUO process is often overlooked. As you know, an insurer often retains an attorney to conduct to an EUO and relies on the information obtained during the EUO. If the case proceeds to litigation, the insured’s attorney will typically request that the insurer produce representatives to testify regarding how the EUOs led to coverage determinations, regardless of the insurers’ representatives’ level of involvement in the EUOs and without providing privileged information. A representative who can demonstrate active involvement in the coverage determination, as well as a strong grasp of the EUO results, will present well during the deposition and to a jury.

A similar situation is when insurers retain experts to investigate claims during the coverage stage. Often, expert reports are so detailed that claim examiners do not confirm the findings with the expert. If the case proceeds to litigation, however, an insured’s attorney will try to determine to what extent the insurer relied on the expert. Indeed, when an insured’s attorney conducts the deposition of the claims examiner, the attorney will typically ask about every fact surrounding the coverage process, including whether the representative called the expert to inquire about the report. Like the EUO process, if a claims examiner can testify that he or she spoke with the expert about the report, then the insurer’s reliance on the expert will be more credible. This is true for long term water claims, sinkhole claims, and, most importantly, late notice cases.

These are simple but helpful points to think about. Of course, insurers are entitled to a variety of privileges against disclosure of certain aspects of the coverage process, and I will discuss that in great detail in future posts. Privileges aside, all parties involved in a coverage investigation should still be aware that someone may ultimately have to testify testify to the facts supporting the defenses. If those facts involve an insurer’s reliance on his or her attorney and expert, then a claims representative should try to be able to testify why such reliance was reasonable.


Florida Homeowners Insurance Claims and Litigation Handbook and Litigation Data Reports:

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

If you are in the Florida homeowners insurance claims industry and are looking for a guide with the key cases, strategies, laws, attorneys, and adjusters, or if you’re looking for Florida litigation data reports, please visit this page to learn more about our Florida Homeowners Insurance Claims and Litigation Handbook.

Questions?

Have any questions about Florida’s homeowners insurers, policies, and claims, please feel free to contact us.

 

Florida Homeowners Insurance Litigation Update: Tampa Sinkhole Insurance Claims: Verdict Forms in Sinkhole Trials

Overview:

Check out one of the most popular articles on homeowners insurance litigation there is.  Thousands of people make a living on homeowners insurance claims, but only a small percentage of them understand why homeowners were so successful at litigating these claims.  Although these claims are dwindling, many lessons can be learned for the next wave of insurance claims.

Make sure to read to the end of this article so you can apply for our free Litigation Report.  By giving us that moment of your time, you will receive a free comprehensive analysis and sets of solutions to bring you power and control over your homeowners insurance litigation cases.


Getting Started

New to the First Party Property Insurance Blog? Take five minutes to find the answers to your insurance questions by clicking here.


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Good morning. I recently spoke with mediator, Robert Daisley, about the current state of sinkhole litigation. Rob is one of the most well respected mediators in Tampa. He is a great mediator because he emphasizes the uncertainties for the parties.

Rob has a strong grasp on the issues and uncertainties in sinkhole cases. Even when the insurer has done everything right in terms of payment and timeliness, Rob is not sure that the insurer will prevail. Why? Because there has been no direct appellate mandate on the proper jury instructions and verdict forms in sinkhole cases. Experienced trial lawyers start their evaluation of a case by crafting their jury instructions. As Rob suggested and as anyone who has handled sinkhole cases should know, judges are far from uniform in agreeing to jury instructions.

While there is plenty of appellate guidance on the issue, that guidance has been twisted and turned into a wide range of jury instructions and verdict forms. Thus, according to Rob, unless a party is prepared to pay its attorneys to litigate at the trial and appellate level, then that party is better off settling the case. The bottom line: knowing how many variations of jury instructions and verdict forms have been issued by the courts, you must be committed to both the trial and appeal to make sure that the court used the right verdict form.

The most critical variation at this time is the burden of proof in a denied sinkhole case. Some judges place the burden of proof on the homeowners to prove sinkhole activity caused the damage, while other judges require the insurers to prove the exclusions caused the damage. This issue is on appeal right now, however, we are months away from a ruling. Rob’s point here is unless you are committed to appealing a problematic verdict form, then trying the case might not be for you.

Another variation in the jury instructions is determining if the verdict form should be limited solely to whether the claim was allegedly underpaid. Some believe the verdict form should consider an insurer’s compliance with the policy and statutes. Others believe the verdict form should should only ask whether the claim was underpaid.

Rob believes that if a party is not committed to trying and appealing these issues, then the party runs the risk of trying the case with unfavorable jury instructions. The following set of verdict forms (check the variations) support his position:

Download (PDF, 102KB)

Download (PDF, 96KB)

Download (PDF, 31KB)

Download (PDF, 87KB)

Download (PDF, 94KB)

Download (PDF, 131KB)

Download (PDF, 84KB)

Download (PDF, 73KB)

Download (PDF, 72KB)

Download (PDF, 137KB)

Download (PDF, 131KB)

Download (PDF, 414KB)

Download (PDF, 35KB)

Download (PDF, 12KB)

The inconsistencies in these forms are glaring, and insurers and homeowners alike should hope that the Second DCA narrows the issues in an effort to eliminate these inconsistencies. While many lawyers seem to believe they can prevail despite the verdict form, properly framed questions for the jury to answer are crucial. Kudos to Rob Daisley for stressing how these issues should impact insurers’ and homeowners’ outlooks on trying the cases.

So what went wrong here?  

There’s only one way to find out, by contacting me and subscribing to First Party Property Insurance Blog.

Takeaway:

If you want the legal forms and checklists to make your desired jury forms a reality, please message me.


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Does a Defense Based on an Insured’s Failure to Submit to an Examination Under Oath Require the Insurer to Show Prejudice?

Florida Homeowners Insurance Claims and Litigation Handbook

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*April 30, 2014 Update: I want you to read this article because it has the best explanation of the hotly debated condition precedent vs. condition subsequent issue on this site; however, when you are finished, you need to read this article to learn about the latest developments from courts evaluating what type of condition the EUO provision is.*

If an EUO does not happen, can the insurer move for summary judgment and get an order by simply showing that the insurer requested the EUO and it did not happen? In other words, can an insurer obtain a summary judgment on that issue without pleading and proving prejudice? Yes and no, depending on where in Florida you live.

picture from http://www.florida-lawblog.com/2010/05/examination-under-oath-euo.html

The Fifth DCA is the DCA making some waves. While old news, the Fifth DCA in State Farm Ins. Co. v. Curran held that a failure to appear at a compulsory medical examination was a breach, but maybe not a material breach because the insurer did not plead and prove prejudice. 83 So. 3d 793 (Fla. 5th DCA 2011). Following that decision, the Fifth DCA issued another opinion denying an insurer summary judgment based on an insured’s alleged failure to submit to an EUO. Whistler’s Park, Inc. v. FIGA, 90 So. 3d 841 (Fla. 5th DCA 2012). In Whistler’s Park, Inc., the Fifth DCA considered the insured’s arguments that it responded to the insurer’s EUO request by naming a corporate representative to testify at the EUO and promising to produce the documents. The insurer had previously asked the insured to call the insurer to schedule the EUO. Leading up to the summary judgment hearing, the insured continued to offer to submit to the EUO, but did not call to schedule. The Fifth DCA once again held that the insurer’s failure to plead and prove prejudice thwarted its ability to obtain summary judgment on the EUO provision, which they called a condition subsequent. The Fifth DCA said that to show a breach of a condition subsequent was material, the insurer needs to plead and prove prejudice. So we know where the Fifth DCA stands: an insurer must plead and prove prejudice.

No other DCA has expressly taken this position. The Third DCA, however, has denied an insurer’s motion for summary judgment on the issue when counsel for the insurer asked improper questions to an insured that the insured refused to answer. De Leon v. Great American Assur. Co., 78 So. 3d 585 (Fla. 3d DCA 2011).

The Fourth, Fifth, and Second DCAs all have opinions suggesting there is no need to plead and prove prejudice. The Fourth DCA’s decision in Goldman v. State Farm suggests that an insurer does not need to plead prejudice to obtain summary judgment in that jurisdiction. 660 So. 2d 300 (Fla. 4th DCA 1995). However, the Fifth DCA in Curran suggested that a portion of the Goldman decision considered the prejudice issue when it discussed how remanding the case to proceed with the EUO would be fruitless because two years had passed since commencement of the suit. Insurers often point to two other decisions suggesting that prejudice does not need to be pled and proven to obtain summary judgment in the Second and Fifth DCAs. See Amica Mutual Ins. Co. v. Drummond, 970 So. 2d 456 (Fla. 2d DCA 2007); Starling v. Allstate Floridian Ins. Co., 956 So. 2d 511 (Fla. 5th DCA 2007).

So the answer to the question posed is, once again, that it appears to depend on the jurisdiction. In November of 2012, the Florida Supreme Court heard oral arguments in Curran. I am not sure when to expect the Florida Supreme Court to issue the order but hopefully it will shed some light on whether the Fifth DCA is right, or whether the issue will return to a bright line rule. Until the Supreme Court issues its opinion, it might be best to plead and prove prejudice just to be safe.

Florida Homeowners Insurance Claims and Litigation Handbook and Litigation Data Reports:

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

If you are in the Florida homeowners insurance claims industry and are looking for a guide with the key cases, strategies, laws, attorneys, and adjusters, or if you’re looking for Florida litigation data reports, please visit this page to learn more about our Florida Homeowners Insurance Claims and Litigation Handbook.

Questions?

Have any questions about Florida’s homeowners insurers, policies, and claims, please feel free to contact us.

What the New Daubert Expert Witness Standard Means to You


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As everybody knows by now, Florida recently passed House Bill 7015. How does this new Daubert standard impact us now?

This bill changes the standard for the admissibility of expert testimony from the Frye standard to the Daubert standard. The pertinent part of the standard now codified in Fla. Stat. 90.02 is that an expert can only testify if the court determines:

(a) The testimony is based upon sufficient facts or data;

(b) The testimony is the product of reliable principles and methods; and

(c) The witness has applied the principles and methods reliably to the facts of the case.

The statute also goes on to say that it incorporates all of the prior law arising out of Daubert; therefore, the complete Daubert standard generally includes a court’s evaluation of the following factors:

(a) Whether the theory or technique is falsifiable, refutable, and/or testable;

(b) Whether it has been subjected to peer review and publication;

(c) The known or potential error rate;

(d) The standards and controls concerning its operation; and

(e) Whether the theory and technique is generally accepted by a relevant scientific community.

This a procedural statute so, from what I gather, it applies NOW. Glover v. State, 474 So. 2d 886, 891 (Fla. 1st DCA 1985).

I know that there will be a lot of Daubert challenges now in property insurance cases, and I expect them to get going very quickly in sinkhole cases. If a hurricane were to hit, I could see these challenges happening in the wind vs. rain dispute. I will have to think about how this could apply in cause and origin or duration studies for other types of water damage claims. It will be interesting to see if experts change the way they do things to try to increase their chances of passing the Daubert test. They know that, if one of the courts makes a finding that an expert cannot testify, then they will see that order come up again and again in other cases.

One might ask whether this will make any difference. Based on some preliminary research, it appears there is statistical evidence that the Daubert standard has made a HUGE difference in federal courts.

The only article I found with statistics suggested there were some incredible results from attacking experts’ science under Daubert. Here is an excerpt:

According to a PricewaterhouseCooper study, which looked at Daubert challenges post Kumho, the number of Daubert challenges to all expert witness types increased dramatically in the first decade of 2000. The study looked at federal courts and state courts utilizing Daubert and revealed that Daubert challenges to all types of experts have exploded – in the year 2000 the study noted 253 Daubert challenges, and that figure jumps to 879 in the year 2010 – amounting to an almost 250% increase. In fact, 2010 marked the year with the most Daubert challenges ever.

As if those figures aren’t daunting enough, 2010 showed a 49% success rate of Daubert challenges to expert witnesses of all types, either in whole or part. The good news, if there is any, is that the percentage of successful challenges remained fairly stable over the first decade of 2000.

The increase in Daubert challenges has occurred despite the fact that the number of filings, at least in federal court, has remained consistent over the same time period. For example, using information obtained from a website maintained by the Administrative Office of the U.S. Courts which tracked a 12 month period ending March 31, the year 2001 saw 254,523 total civil cases filed in U.S. District Courts, compared to 282,307 cases filed in 2010. Although a slight increase in filings from 2001 to 2010 is noted, it is hardly in keeping with the almost 250% increase in Daubert challenges measured using roughly the same time frame. U.S. Court of Appeals filings for that same time period were also fairly stable – in 2001 there were 56,067 cases filed as compared to 56,790 in 2010.

So for those of you who were getting sick and tired of experts seemingly being able to say just about anything, maybe this will be the saving grace. As more developments occur, I will make sure to share what I find.


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The End of Chipped Tile Claims for Florida Homeowners Insurance? Maybe – Ergas v. Universal


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*April 30, 2014 Update: the marring exclusion has now been applied by three Florida appellate courts.  Read this article to get the most recent analysis of the issue here in Florida.*

For anyone that missed it, Florida’s Fourth DCA recently issued an order in Ergas v. Universal Property & Casualty finding that the “marring” exclusion barred coverage for tile damage caused by a dropped object. Depending on your background, you may or may not know that these types of claims – one crack or chip in a tile – can cost in excess of $30,000.00 per claim. You may (or may not) also be surprised to find out that there are at least hundreds, if not thousands, of these claims per year in Florida. This is a big segment of claims in South Florida, and you would be shocked at how much of an impact a decision like Ergas could have.
People familiar with this type of case know the storyline: the insured allegedly accidentally dropped something on a single tile and it cracked or dented the tile. The major problem here arises when the tile is continuous throughout the whole or most of the house, and the insureds do not have any replacement tiles. Under those facts, some insureds, public adjusters, and insureds’ attorneys would argue they were entitled to have the tile floor in their entire home replaced. Until this Ergas case, there was not any persuasive appellate court authority on the issue. Thus, insureds would request a complete replacement of the tile (well into the five figures) as a result of that single, small tile crack/dent.
The Fourth DCA in Ergas looked at several proposed definitions for the term “mar,” including “to injure, spoil, damage, ruin, detract from,” “to inflict damage,” “blemish” and “to cause harm to, spoil, or impair.” The Court found that a dropped object on tile fit any of the definitions; however, there are some important things to note. First, the footnote on page 4 suggests that the insureds did not argue that the term was ambiguous because it was over-inclusive. The Court suggested that the term could not be enforced if the Court were asked to apply it to reach an absurd result. The Court noted that Universal tried to draw the line at superficial versus substantial damage – superficial damage fell within the “marring” exclusion while substantial would not. I don’t think the Court discussed whether there was support for that argument, but this distinction certainly makes perfect sense. Overall, the Court appears to leave the door open to some new arguments, but the Court does not hint as to how it would rule if those arguments were made.
Here’s the link to the full opinion:
So, in summary, there’s no doubt that the damage fit within the exclusion, because the exclusion’s definitions show you how many types of perils it could encompass. The insureds’ attorney in Ergas argued that, because the term “marring” was placed in the policy next to the terms “wear and tear” and “deterioration,” it did not make sense to give it a definition that would encompass a peril that was allegedly sudden and accidental. In other words, they argued someone reading the policy would have thought that all of those terms referred to long term losses, whereas the insurer wants the “marring” portion of the exclusion to apply to a sudden and accidental loss. The insureds did not provide an alternative definition for the Fifth DCA to consider and, accordingly, lost.
Nevertheless, this first appellate examination of the exclusion already has policyholders’ attorneys arguing the case was wrongly decided:
It will be interesting to see how this plays out in other jurisdictions. I am aware of at least two other DCAs with the issue pending on their dockets, so we will see if the Ergas ruling makes its way around the state. It will also be interesting to see how insurers and insureds’ attorneys refine their arguments (if they preserved them) after the Ergas decision.

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Florida Homeowners Insurance Sinkhole Claims Analysis: Sinkholes and MSJs on the Stabilization Repairs (Pre-408 Policies)

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*April 30, 2014: as a result in the decline in sinkhole claims, there have not been many developments on the contract for repair requirement since I first won this issue over a year ago.  

Insurance Policy

Insurance Policy

In a sinkhole case, can an insurer win a summary judgment that the insured is not entitled to coverage for subsurface repairs, even though that insured has entered into a contract for stabilization repairs in accordance with recommendations of the engineer the insured retained? Yes, even if the policy did not incorporate the statutory amendments from Senate Bill 408.

I previously obtained a summary judgment (and at least one other Judge in Hillsborough county has adopted the same position) in a Hillsborough county case where the Court ruled that:

if the insured wanted coverage for the cost of stabilization repairs, the policy and applicable statutes required the insured to enter into a contract for stabilization repairs that was in accordance with the recommendations of the engineer selected or approved by the engineer retained by the insurer.

The Court determined that, although the insured had entered into a contract for repair in accordance with her engineer’s recommendations, she still was not entitled to any coverage for stabilization repairs.

The Court cited five reasons:

1. Fla. Stat. 627.707 (5) (a) (2005) requires the coverage to be the cost of repairs recommended by the insurer’s engineer:

“if a sinkhole loss is verified, the insurer shall pay to stabilize the land and building and repair the foundation in accordance with the recommendations of the professional engineer as provided under s. 627.7073, and in consultation with the policyholder, subject to the coverage and terms of the policy.”

The engineer provided under Fla. Stat. 627.7073 is (usually) the engineer retained by the insurer; therefore, Fla. Stat. 627.707 (5) (a) requires the insurer to provide coverage in accordance with its engineer’s specifications.

2. Fla. Stat 627.7073 (1) (c) (2006) provides a presumption of correctness for purposes of relying on the insurer’s retained engineer’s recommendations:

“The respective findings, opinions, and recommendations of the professional engineer or professional geologist as to the cause of distress to the property and the findings, opinions, and recommendations of the professional engineer as to land and building stabilization and foundation repair shall be presumed correct.”

The Court understood that this was not a presumption in evidence terms; however, it was a presumption that made sense in combination with Fla. Stat. 627.707 (5) (2005) and the policy form.

3. The first half of Fla. Stat. 627.707 (5) (b) (2005) limits coverage for stabilization repairs until the insured enters into the contract for stabilization repairs covered by the insurer:

“The insurer may limit its payment to the actual cash value of the sinkhole loss, not including underpinning or grouting or any other repair technique performed below the existing foundation of the building, until the policyholder enters into a contract for the performance of building stabilization or foundation repairs. After the policyholder enters into the contract, the insurer shall pay the amounts necessary to begin and perform such repairs as the work is performed and the expenses are incurred. … “

4. The second half of Fla. Stat. 627.707 (5) (b) (2005) provides insureds with recourse in the event the stabilization repairs recommended by the insurer’s engineer are not sufficient:

“If repair covered by a personal lines residential property insurance policy has begun and the professional engineer selected or approved by the insurer determines that the repair cannot be completed within the policy limits, the insurer must either complete the professional engineer’s recommended repair or tender the policy limits to the policyholder without a reduction for the repair expenses incurred.”

5. The policy properly incorporated these provisions.

Other Notes

The Court had actually ruled against this same argument weeks before this hearing; however, when presented with a complete understanding of the statutory framework, the Court agreed that the statutes and policy require an insured to enter into a contract in accordance with the insurer’s retained engineer’s stabilization repair plan if he or she wants that coverage.

We also argue that the following two cases suggest that an insurer should be entitled to summary judgment on the cosmetic repairs when an insured has not entered into a compliant contract for stabilization repairs:

Ceballo v. Citizens, 967 So. 2d 811 (Fla. 2007) and

Slayton v. Universal Property and Casualty Ins. Co., 103 So. 3d 934 (Fla. 5th DCA 2013).

We read these cases as supporting the proposition that, without the subsurface repairs, any dispute on the estimated cosmetic damages is simply premature. The insured should be giving the insurer the opportunity to coordinate performance of the stabilization repairs, then inspect the property after those repairs are complete, and then issue any supplemental payment for additional damages that might be necessary. Although the provisions at issue in Slayton and Ceballo are not identical to the sinkhole loss provisions, the sinkhole loss settlement provisions also indicate that additional damages may occur after the repairs and there may be more coverage available.

I’d be happy to provide you with copies of the orders or anything else you might need in regards to these issues.

Sinkhole Formation

Sinkhole Formation

 

Takeaway:

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Did this Article Answer Your Homeowners Insurance Question?

If not, then go to our Getting Started page by clicking here, where we have a guide with easy-to-find links to the laws, cases, and articles that will answer your question, or contact me.

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