Tag Archives: Tampa

Florida Homeowners Insurance Claim for Long Term Water Leak Not Excluded as a Matter of Law

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

In Price v. Castle Key Indemnity Company, Florida’s Second DCA recently dealt a heavy hit to homeowners insurers’ arguments using the continuous/constant or repeated seepage defense.

Drop of water

 

Facts

The facts in Price were a prime example of a long term water damage insurance claim. The homeowners insurer gathered strong evidence, and was able to show that this leak continued for weeks and weeks without any stoppage. The insurer’s evidence was startling: over a period of more than 30 days, over 195,000 gallons of water escaped from a pipe going to the homeowner’s toilet.  Faced with this evidence, the trial court granted summary judgment for the insurer.

The Second DCA disagreed with the insurer and the trial court. The Second DCA’s reason: the terms “sudden” and “seepage” were “less than clear” when applied to these facts. Accordingly, the Second DCA determined that these words created a latent ambiguity.  The Second DCA instructed the trial court to allow a jury to determine coverage in this case, instead of a judge.

Disappointing Discussion

Although this is the most heavily litigated coverage issue in Florida homeowners insurance, the Second DCA did not take much time to explain its decision.

These long term water damage opinions don’t come often. Usually, claims do not have such egregiously long leaks, or they have some type of dispute on the duration … so they should be determined by a jury. When the rare case like this pops up, you would think the Second DCA would take the chance to explain what types of long term water damage should be covered as a matter of law under these policies; and what types shouldn’t be.

Unfortunately, the Second DCA did not take that opportunity. Moving forward, this leaves many unanswered questions, and a lot of room for interpretation for trial court judges. I wouldn’t be surprised if there were tens of thousands of pending claims with this issue. The parties and lawyers handling those cases don’t seem to have much to work with from that case, unless they are to assume every insurance policy is ambiguous.

Takeaway

In trial court hearings, this Price opinion will give homeowners’ attorneys stronger arguments, but only if the homeowners insurer tries to obtain summary judgment.  Most of these cases don’t go that route.

I would not be surprised to see other DCAs take a different approach than the Second DCA did in Price.  I doubt all courts will be willing to find that every insurance policy is ambiguous as to long term water losses. A case like this is the perfect example of a case where insurers could be granted summary judgment.

We will see how this changes the strategies. Hopefully, we will get some more opinions on this issue soon.


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Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

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

Before we go on, 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.


Here is a full copy of the order:

Download (PDF, 51KB)

 

New Florida Federal Court Decides Franqui re Florida Sinkhole Structural Damage Definition and Sinkhole Testing Requirements

Florida Homeowners Insurance Claims and Litigation Handbook

Are you up to date with the latest Florida Court rulings on homeowners insurance, sinkhole claims, and sinkhole activity?  If you aren’t sure, then make sure to check out this article!


Federal Judge James Whittemore recently joined Judges Radabaugh, Merryday and Lazzara in finding that “structural damage” caused by sinkhole activity must mean more than “damage to the structure caused by sinkhole activity”  This litigation involved an insurance policy that did not incorporate the Senate Bill 408 “structural damage” definition; therefore, the parties disputed whether coverage for sinkhole activity required more than just cracks caused by sinkhole activity.

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More specifically, the Court answered the following questions:

  • Does “structural damage” mean “damage to the structure” or does it mean something more, such as:
  • (1) the five part definition in Fla. Stat. 627.706 (2011);
  • (2) damage to the load bearing portions of the property; or
  • (3) damage that could cause the house to collapse?
  • Does an insurer with a pre-408 policy breach the policy when it does not conduct a full subsidence investigation in accordance with the pre-408 version of Fla. Stat. 627.707?

Structural Damage: The Court ruled “structural damage” in this insurance policy means “damage to the structural components of the building, excluding damage that is cosmetic in nature.”

Testing Requirements: Judge Whittemore also determined that Liberty Mutual did not breach the policy when it did not conduct a “full” subsidence investigation to eliminate sinkhole activity as a cause of the damage.

Analysis:

Here is the complete order:

Download (PDF, 829KB)

Again, we see trial courts construing the words “structural damage” to mean more than what we are used to seeing.  As you know, 20+ courts have determined “structural damage” simply meant “damage to the structure.”  This “lowered” standard resulted in any cracks triggering coverage for “sinkhole loss.”  With the newer interpretations, though, courts are now asking the homeowners’ expert to show that the sinkhole activity is causing substantial damage to important parts of the property.

As you know, this issue only remains relevant to those claims and cases arising under policies without a definition of “structural damage.”  Since late 2012, many of the insurers added a definition and removed all doubt on this issue.  Nevertheless, thousands of cases remain with these pre-408 policies, so these rulings could continue to build substantial momentum for insurers.

Conclusion:

I think the most amazing thing about this line of decisions is that this issue is still relevant in 2014.  Why is the “structural damage” issue still relevant?  If insurers had innovative services in 2006 using the same arguments they had now, they would be done paying the millions it continues to cost to litigate these issues, and the “structural damage” issue would have been irrelevant (one way or the other) 8 years ago.


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A Rare Win Win in Property Insurance as Citizens Settles Portion of Confirmed Sinkhole Claims

Citizens Property Insurance Corporation

What happens when Florida’s Citizens Property Insurance Corporation and a group of Plaintiffs’/Policyholders’ attorneys decide that the litigation just doesn’t make business sense anymore? Read this first of a series on Citizens’s multimillion dollar settlements with plaintiffs’ attorneys to resolve hundreds of sinkhole cases.


Quick Update:

After this article was posted, Citizens settled an additional 300 cases with Thompson Trial Group and 600 cases with Marshall Thomas Burnett.  Make sure to read those articles after you finish this one.

Correction: The Tampa Bay Times is reporting that Citizens may have reported the settlement without having confirmed that the policyholders agreed to it.  For more information on this and other issues relating to Citizens’s legal defenses, see this March 18, 2013 article.

Nevertheless, because it appears the policyholders’ attorneys in this settlement agree this is a good outcome for their clients, there is a good chance that many of these cases will get resolved.  If new information arises, I will update this article.

On March 12, 2014, Citizens announced it will settle 300 policyholders’ confirmed sinkhole claims.  The terms of the settlement include:

  • Citizens agrees to pay for the repairs and stand by the repairs
  • Citizens agrees to allow policyholders to choose their contractors from a pre-approved list
  • Citizens will pay the policyholders’ law firms $2M – $5,000.00 per nonlitigated cases, $10,000.00 per litigated cases

Here is the press release:

Download (PDF, 66KB)

Citizens’ press release applauded coordinating counsel for the settlement.  In the press release, Citizens states that this settlement will save it $30M in legal fees.

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In my opinion, this appears to be a win-win for both parties.  No one can be sure without reviewing the terms of the releases; however, what is clear is that (1) the policyholders will obtain repaired homes and (2) Citizens will be spending its money repairing homes, instead of litigating these issues.  That means the parties achieved what they set out to do.

Although you might argue that this result could have happened sooner, both sides had significant victories over the past year or so, and this allowed each side to modify their position towards the middle.  This settlement shows that both sides had a mutual respect for each other and put Florida’s and the policyholders’ interests ahead of their own. Congratulations to all involved.

This is also a win for litigation project management. Innovative services like THIS are the only way to effectively handle property insurance litigation.  These cases were not that complicated when you approach them categorically.  For insurers with more than 5-10 law firms handling their cases, panel counsel need a coordinating counsel or a software tool that performs the same tasks and oversight. Panel counsel simply do not have the tools or the incentives to make these types of decisions.

Applying litigation project management principles, coordinating counsel and/or equivalent software needs to direct panel counsel by (1) identifying the insurers’ goals with the client, (2) breaking down each stage of litigation, and (3) determining how to optimize the process at each stage (and not waste money).

Coordinating counsel must also identify and automate the routine tasks, and insurers can purchase customized software for litigating property insurance claims in Florida to automate the routine tasks. Otherwise, all the time and money goes towards attorneys and adjuster laboring over routine tasks all day, and there is no time for critical thinking.

As you can see from the Citizens example, when insurers set up the structure to make intelligent results happen, intelligent results happen. Companies that make these tough, innovative decisions will be rewarded.  Companies that punt these tasks to their attorneys without a top-down strategy will waste millions of dollar and hours to achieve less favorable results.

Takeaway:

Citizens did a phenomenal job of embracing litigation project management.  If they would have added the key component of software to the mix, they could have really gained power and control over these cases from the lawyers.  If you want checklists and guides to help you reach results even better than this without spending a fraction of what Citizens spent, please message me.


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Florida’s 5th DCA Enforces Homeowners Insurance Sinkhole Stabilization Contract for Repair Requirement

Florida Homeowners Insurance Claims and Litigation Handbook

The Fifth DCA, in State Farm v. Fred & Carol Phillips, held that the homeowners had to enter into a contract to obtain coverage for sinkhole stabilization repairs determined by the appraisal process.

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The full order is here:

Download (PDF, 72KB)

http://static6.businessinsider.com/image/4fa29707eab8eaf23d000005/sinkhole.jpg

This is a positive order for the insurance industry; however, it may not be broad enough to provide certainty in the trial courts on the main issues being litigated.  Policyholders’ attorneys will argue that this order is limited to appraisal awards where no other breaches exist. They will say that this case does not apply when an insurer chooses its own engineer, refuses the repairs recommended by the insureds’ engineer, and does not resolve damages in the appraisal process.  This is a much more common scenario than the situation in Phillips.

Insurers’ attorneys may argue this is the authority they have been looking for to support a multitude of arguments they have been urging the trial courts to enforce.  To support any statutory sinkhole argument, insurers’ attorneys will urge the trial courts to conduct the same analysis the Fifth DCA did in Phillips on the legislative intent of the sinkhole statutes.  Insurers’ attorneys may also argue that this order shows they could never breach the policy in a sinkhole insurance claim until the insureds entered into a contract for repairs and the insurers refused to pay in accordance with that contract.

From a practical standpoint, the important question is whether this order creates any legal issues that help the parties avoid trying sinkhole cases.  In other words, does this order create any summary judgment potential that was not already present? Probably not.

Ultimately, this case is not broad enough to provide any specific guidance on these issues; however, insurers do have authority to ask the trial courts to genuinely assess the legislative intent of the sinkhole statutes.  Moving forward, it is important to note insurers do have many important sinkhole issues currently pending with the Second DCA, so we should not have to wait too much longer to get answers on the most litigated questions in Sinkhole Alley.

Takeaway:

I have all of the forms and strategies you need to make results like these a reality in any case.  If you are interested in seeing templates, checklists, and guides to assist you with your sinkhole case, please message me.


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Florida’s Second DCA Finds Sinkhole Insurance Claim Neutral Evaluation is Mandatory … All the Time

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

Want to read about the definitive appellate decision on sinkhole coverage and neutral evaluation? You have come to the right place.


In Trapeo v. Citizens, the Second DCA recently reminded us that neutral evaluation for sinkhole claims is mandatory regardless of when requested. 

Here is a copy of the order:

Download (PDF, 63KB)

In 2009, Citizens issued the insurance policy at issue to the Plaintiff, Gary Trapeo.  In 2010, he reported a sinkhole claim.  In 2012, he filed a lawsuit against Citizens alleging its repair recommendation was not sufficient to stabilize the property.  In December of 2012 and after the parties engaged in discovery, Citizens requested neutral evaluation.  In addition, Citizens filed a “Notice of Automatic Stay” with the trial court requesting the case be stayed until after the parties participated in neutral evaluation.  Mr. Trapeo objected to the Notice and argued that Citizens, by participating in the litigation for approximately 10 months, waived its right to stay the case and demand neutral evaluation.  The trial court agreed with him and denied Citizens the opportunity to submit the claim to neutral evaluation.

ins c

The Second DCA first addressed whether the 2009 or 2011 version of Fla. Stat. 627.7074 (the neutral evaluation statute) applied by the trial court.  The main difference between the two statutes is that the 2011 version mandates stay of the case and participation in the neutral evaluation process “regardless of when noticed.”  The Second DCA determined the stay portion of the 2011 statute was “procedural” rather than “substantive;” therefore, the 2011 statute must be applied to a lawsuit filed after its effective date.

The Court explained why Citizens could not waive its right to request neutral evaluation:

Citizens correctly argues that neutral evaluation, once requested, is mandatory. The trial court’s determination that neutral evaluation was waived conflicts with the express language of the statute. “Neutral evaluation is available to either party,” “supersedes the alternative dispute resolution process under s. 627.7015,” and is “mandatory if requested by either party.” § 627.7074(2), (3), (4). The statute’s language is compulsory; it repeatedly and almost exclusively directs that acts “shall” occur. There is no waiver provision and no timeframe for requesting neutral evaluation.2 It is an optional but statutorily guaranteed process. That is, once the request for neutral evaluation has been filed with the Department, participation in neutral evaluation is mandatory and guaranteed. See § 627.7074(4); cf.Williams, 62 So. 3d at 1135-36. Certiorari relief is appropriate because the trial court’s order purports to deprive Citizens of a statutory process to which it is entitled resulting in material harm. Cf.Williams, 62 So. 3d at 1136-37. This conclusion is supported by language of the statute applicable at the time the lawsuit was filed. The 2012 statute specifically provides, “Regardless of when noticed, any court proceeding related to the subject matter of the neutral evaluation shall be stayed pending completion of the neutral evaluation and for 5 days after the filing of the neutral evaluator’s report with the court.” § 627.7074(10) (emphasis added); cf. Cruz, 76 So. 3d at 398 n.1 (“We also note that section 627.7074 does not impose a waiver or other penalty when a neutral evaluation is not completed within forty-five days. Its proviso that ‘[n]eutral evaluation shall be conducted as an informal process in which formal rules of evidence and procedure need not be observed,’ § 627.7074(5), suggests that the legislature intended no sanction for failure to strictly adhere to the time period.”). The statute provides neutral evaluation as both a potential precursor to litigation and as a parallel, contemporaneous process. It is not an “either or” or “opt out of litigation” procedure, unlike contractual arbitration provisions. Cf. ch. 682, Fla. Stat. (2011) (applying to those instances where the parties have an arbitration agreement). It is also not a process that occurs as part of a civil proceeding, unlike court-ordered mediation, nor is it a presuit requirement.

In addition, the Second DCA held “the circuit court does not have authority over the neutral evaluation process.  The Department [of Financial Services] does.”  Accordingly, the court determined that only the Department has the power to decide whether a party has waived its right to neutral evaluation.

In addition, the court determined that Citizens correctly invoked the process simply by filing the Notice of Automatic Stay.

In a footnote, the court acknowledged the trial court’s concern that this ruling allows a party to request neutral evaluation on the eve of trial; however, the court responded that “the current language of the statute is clear.”

Thankfully, this issue is now resolved.  By my count, this is now the third time the Second DCA has ruled in an insurer’s favor requiring the parties to participate in neutral evaluation.  I would assume this will be the last.  To summarize, when a party requests neutral evaluation, the case is stayed and the parties must attend neutral evaluation.  There do not appear to be any exceptions.  In addition, if a party thinks there may be an exception, the trial court is not the forum, the Department of Financial Services is.

For more information on sinkhole claims and insurance litigation, feel free to contact me at (813) 513-5440 or email me at [email protected] You can also find several articles addressing the legal issues arising from sinkhole claims here.

Takeaway:

Here is one of the few occasions when plaintiffs’ attorneys failed to properly use litigation project management.  Although they might argue that they had an obligation to fight this issue, the statutes were pretty clear (and the majority of plaintiffs’ attorneys agreed) that neutral evaluation is required when requested.  Plaintiffs’ attorneys are usually the best at making efficient and effective decisions using project management; however, they failed here.

If you want to know more about the remarkable things that are being done to control homeowners insurance litigation, including checklists and guides for sinkhole claims, please message me.


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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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Florida Homeowners Insurance Claims for Water Leaks and Damage, and the Constant or Repeated Seepage Exclusion

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

What happens when a homeowners insurance company denies a claim for constant or repeated seepage or leakage?

Generally, homeowners insurers’ personnel will look at the damage and, based on (1) experience or (2) an expert opinion, the insurer will determine that it is long term damage that is not covered.

If a person has a roof leak, pipe break, supply line burst, or something else that she thought happened quickly, then she might think the constant or repeated seepage exclusion is unfair.  Depending on (1) the way that the exclusion is written in the policy and (2) the investigation the homeowners insurer conducted, the homeowner might be right.

In this article, you will see what homeowners insurers need to prove that a water leak and its damage are excluded using the constant or repeated seepage exclusion for long term water damage.

So don’t forget to read all the way to the end, contact me, and subscribe.


Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

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

Before we go on, 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.


Do you think you need to understand this subject? I’d say you should be an expert on it.  

The most common dispute in the Florida homeowners insurance industry is whether water damage is covered or excluded by homeowners insurance.  Florida is a rainy and humid place, so there is plenty of water damage.  The question is whether the damage is sudden or long-term.  You better know the difference.

How do you find out the difference? Read this article to find out how homeowners insurers must prove that damage was excluded by the constant or repeated seepage exclusion.

The Policy

The exclusion has many variations; however, in general, it excludes long term water damage. With respect to the variations, some of these exclusions expressly provide that the seepage must come from within a plumbing, heating, or air system. Others contain language that excludes the leakage “whether hidden or not.” In addition, some describe the exclude time period as “weeks” or “months” whereas others specifically exclude damage that occurs over a period of more than 14 days.

Hoey v. State Farm

The main case on the issue is the Fourth DCA’s 2008 decision in Hoey v. State Farm, 988 So. 2d 99 (Fla. 4th DCA 2008). In Hoey, the Fourth DCA determined that the evidence in the record was enough to show that the insurer was entitled to a judgment that the damage was long term and, therefore, excluded from insurance coverage. By analyzing the steady increase in the water bills for roughly three months, the insurer was able to show that there was a failure in the nylon of the toilet supply line. Contrary to many of the litigated cases on this provision, this case had enough evidence in the insurer’s favor to allow the trial court to determine the insurance company clearly did not cover the damage.

Key Evidence

In cases where summary judgment is not appropriate, juries must decide whether the evidence shows that the leakage occurred for an excluded time period. Naturally, insureds’ and insurers’ attorneys should pay attention to the following factors to assess what the jury will think of the damage:

1. The Photographs

The photographs tell the story and are typically the most important evidence. Do they show staining and warping? For an insurer, it is going to be hard to convince a jury that the water loss was long term if there is no staining or warping of particle board cabinets. For an insured, if the particle board has rings and rings of deep brown stains and appears to be falling apart, then how can he or she convince a jury that the damage happened from a single leak?

The most important photographs will come from the field adjuster and, if the insurer promptly hired an engineer who quickly visited the property, then the engineer should have good photographs. Because these losses often occur in obscure areas of the property (kitchen cabinets, wall space), an insured generally does not have prior photographs of the damaged areas. Ultimately, the photographs will be the most critical evidence in the case.

2. The Water Bills

The water bills also can help guide the parties’ understanding of what happened. If there was a sudden and extreme toilet leak or pipe burst, then, depending on where the burst was, there may be a huge surge in the water bills. If the bills constantly crept up for a few months, however, that might suggest there was a pinhole leak that allowed water to seep out over a long period of time. According to the Fourth DCA, the water bills in Hoey were sufficient to allow the trial court’s finding that the damage was excluded.

3. The Experts

The experts in this field are very skilled and can provide the parties with highly detailed evaluations of an infinite amount of different types of water losses. Many of the experts I deal with rely on the studies done by Dr. Ralph Moon from HSA Engineers.I have worked with Dr. Moon a great deal. He has published volumes of studies showing what each housing material looks like after it has been exposed to water for days or months. The studies are very intricate and detailed, and, in some cases, can even tell you what temperature the water was in your case. There are several other outstanding experts that rely on Mr. Moon’s studies. I find that a lot of these experts are very good at explaining why a particular type of damage had to have been caused by long term seepage.

Despite having handled well over 100 of these types of cases, I have not had the chance to meet any experts in this area that are hired by insureds and their attorneys. I would like to hear their counterarguments to the very well reasoned theories laid out in the water duration studies I mentioned above.

If you would like a copy of any of Dr. Moon’s articles or the names of any of the other highly qualified experts, please feel free to email me. If you handle these types of cases, I highly recommend reading Dr. Moon’s articles and sharing them with your team as soon as possible. As you know, the experts will be responsible for explaining the issue to the jury.

4. The Nature of the Source

To determine whether the damage was long term, the parties have to understand the nature of the event. Was the leak coming from the roof? If so (and so long as there was not a wind event), the only seepage that could have entered must have been rain and other moisture over a period of time. If a slight “leak” caused a substantial amount of damage, that is a strong example of a long term water loss. Was the leak coming from a deficiency in the shower stall or tub surround? One might logically expect that the damage occurred each time the person showered or took a bath. Understanding the exact source of each portion of the loss is crucial to determining whether the source, by its nature, is something that would happen over time or all at once.

5. The Policy

To evaluate the claim, insurers and insureds must also go to the heart of the issue – the insurance policy. Interestingly, and as mentioned above, these policies have many variations. Not only are the excluded durations different, but the sources of the loss can often be different. For example, some policies’ constant or repeated seepage exclusions may exclude long term seepage coming only from within a plumbing, heating, or air conditioning system. If the loss was long term but not from one of those systems (for example, through the roof), then insureds and insurers might need to reevaluate whether the loss was “sudden” or not, which is also required by virtually every homeowners insurance policy. As also noted above, some policies contain language that excludes the damage “whether hidden or not.” This is arguably the first place to look when evaluating one of these claims.

If you are an insured, a claims handler, or an attorney in this field, then you certainly need to understand the significance of these issues. This exclusion is as litigated as any other exclusion in any type of insurance policy. Although this was not meant to be an exhaustive review of the issues, I hope that it helped you in some way. As noted above, if you want any of the materials from Dr. Moon or you want to discuss any of the other experts in the field, please email me.

Takeaway:

At least 60% of your claims and lawsuits are probably water damage claims. It’s time to approach these on a more global level.

  • What if I told you that you could use a system to search your old claims and cases to determine how much the next case will settle for?
  • What if I told you that you could pay for the legal documents for these claims only once?

Well, its no longer 2001, and these systems are freely available.  If you want to know more about the systems we use, or you want free checklists and guides for handling water damage claims, please message me.


Questions?

If you have any questions about this article or anything else Florida homeowners insurance-related, please contact us.

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.

Waiver and Estoppel in Florida Homeowners Insurance Claims

Florida Homeowners Insurance Claims and Litigation Handbook
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Overview:

Why is it that homeowners insurers have to wait until its too late until they find out that the homeowners have evidence to show there may be a defense for waiver and estoppel?  First, read this article to understand what waiver and estoppel is and how it is used in Florida homeowners insurance litigation.  Second, scroll to the bottom of this article to set up a free meeting with our professionals to provide you with a free Litigation Analysis that will explain how and why routine issues like these should never be noticed too late again.


Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

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

Before we go on, 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.


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Update: this is one of the most important articles on this blog to read, especially for newer attorneys and adjusters. I have helped many carriers implement protocols for ensuring that everyone knows about waiver and estoppel and to help create tools to automate the process avoiding one of these costly mistakes. You have got to understand all of these cases if you are going to litigate these cases.

Make sure to read all the way to the end of this post to learn how I propose making sure carriers cheaply guarantee they avoid waiving and being estopped from litigation defenses.*

In my experience, when I am confronted with insureds’ attorneys’ argument that the insurer was waived or estopped from asserting a defense, I know I have a good defense. For anyone who does not know, insureds’ attorneys almost always argue that some act by an insurer constituted a waiver of a particular defense. Knowing exactly what will be argued and how to respond can be the difference between winning and losing, as there are great cases that outline exactly how to respond to these arguments.

The Basics

To have waiver, you have to have (1) the existence at the time of the alleged waiver of a right; (2) the actual or constructive knowledge of that right; and (3) the intention to relinquish that right. See Leonardo v. State Farm Fire & Cas. Co., 675 So. 2d 17, 178 (Fla. 4th DCA 1996). Other than promissory estoppel, there is no creation of coverage by estoppel in Florida. See Doe v. Allstate Ins. Co., 653 So. 2d 371 (Fla. 1995). To have estoppel you must have (1) a representation as to a material fact that is contradicted by a later asserted position; (2) reliance on that representation; and (3) a change in position detrimental to the party relying on the representation and caused by the representation. See Lloyds Underwriters at London v. Keystone Equip. Fin. Corp., 25 So. 3d 89, 93 (Fla. 4th DCA 2009).

As noted below, unless you have a legal defense based on the nature of the defense provision being asserted, pay close attention to whether the party claiming the estoppel or waiver has actually presented evidence to support each of these elements.

Some Defenses Simply Cannot be Waived

An insurer can allegedly waive or be estopped from asserting a defense to an otherwise covered claim, but an insured cannot gain through estoppel or waiver a coverage that it never had. See generally Unijax, Inc. v. Factory Ass’n, 328 So. 2d 448, 455 (Fla. 1st DCA 1976). The Fourth DCA in Lloyds Underwriters at London v. Keystone Equip. Fin. Corp. provided one of the more detailed outlines of the distinction between what can and cannot be waived. 25 So. 3d 89, 93 (Fla. 4th DCA 2009). The Keystone decisions suggests that if a claim is specifically covered but was not covered for some other reason, then the insurer must timely assert that other reason when it becomes aware of its existence. In that case, you would not be re-writing the policy to provide coverage; instead, you would be rewriting the policy to avoid forfeiture. An example of something that cannot be waived is the policy limit. Nationwide Mut. Fire Ins. Co. v. Voigt, 971 So. 2d 239, 242 (Fla. 2d DCA 2008). Another example of something that cannot be waived is additional coverage provided by an endorsement that was not issued. See AIU Ins. Co. v. Block Marina Investment, Inc., 544 So. 2d 998 (Fla. 1989). Further, a policy period is not something that can be waived. U.S. Fidelity and Guar. Co. v. American Fire and Indem. Co., 511 So. 2d 624 (1987).

In sum, I think of it as follows: if deleting the provision with the defense at issue would leave a blank page without any coverage (policy period, policy limit, and I would argue, the structure covered), then it cannot be waived. If deleting the provision with the defense at issue would still leave provisions that provided coverage, then there is at least an argument that it can be waived, unless that provision is an essential part of how the coverage is distributed.

The Evidence of Waiver or Estoppel Must Be More Than an Inference

It is important to point out for the Court if the insureds’ attorney is only suggesting that there was waiver, rather than showing evidence of waiver and specific reliance on a specific position that later changed. Otherwise, an insured simply alleging that the reliance was reasonable without evidence of the same should not overcome a summary judgment on waiver or estoppel grounds See generally Reliance Mut. Life Ins. Co. of Ill. v. Booher, 166 So. 2d 222 (Fla. 2d DCA 1964); Blue Cross and Blue Shield of Florida, Inc. v. Ming, 579 So. 2d 771 (Fla. 5th DCA 1991); Carneiro Da Cunha v. Standard Fire Ins. Company/Aetna Flood Ins. Program, 129 Fl. 3d 581 (11th Cir. 1997); Unijax, Inc., 328 So. 2d at 455.

Timing to Assert the Defense

Attorneys representing insureds also will argue that the insurer waited too long to assert the defense. One example is Johnson v. Life Insur. Co. of Georgia, where the Florida Supreme Court imputed an agent’s knowledge to the insurer to prohibit the insurer from later asserting a defense based on misrepresentation in the application. 52 So. 2d (Fla. 1951). The counterargument for an insurer can be that the insurer did not have knowledge of the misrepresentation or defense until more recently, and then it acted promptly on the defense at that time. See United Services Automobile Association v. Clarke, 957 So. 2d 554 (Fla. 4th DCA 2000).

The following link from the Butler Pappas website has some great cases regarding when late might not be too late to assert a coverage defense: http://www.butlerpappas.com/512.

Conclusion

Ultimately, the case law suggests that insureds, insurers, and their attorneys should all be armed with the information they need to make sure that all bases are covered. For every argument, there is a counterargument. Without a comprehensive understanding of these issues (and the vast array of waiver and estoppel issues not addressed in this post), it could be easy to get tripped up in a hearing on these issues. The best you can do is learn the nuances, or ask someone who already has.

*April 30, 2014 Update: How does Todd Legal, P.A. prevent these mistakes from becoming too costly*

How can you make sure that every adjuster and every attorney past, present, and future check to see if there were actions or omissions that may constitute waiver and estoppel of an otherwise solid defense? Will an email work?  No. New adjusters and attorneys will never get it. Will a note to the file work?  Come on, give me a break.

But guess what will work?  If you shift your communication and case strategies from out of emails and Word documents and into a web-based project management portal.  Then, you can make sure every adjuster and every attorney on every case is asked whether there may be a waiver or estoppel issue, and you have to go no further than two clicks online to find the answer for your specific case.  What does this do?  Saves you a ton of money.  Instead of finding that out after your summary judgment or trial, Todd Legal, P.A. automatically embeds this question into every case to limit the surprises and reduce the costs resulting from a coverage decision error.

I offer innovative services and software that can automatically implement the strategy changes to be consistent with the information in this article.  If you want to know more about how I can help your company or firm ensure that your strategies are up-to-date and complied with by all of your colleagues and vendors, then contact me.  Furthermore, if you want a litigation project manager with a powerful software tool that allows your attorneys to draft top-down approved legal documents in every case with the click of a button, then read more about my services here.

The more you automate these routine tasks, the more time you will have to proactively manage your claims and cases.

Takeaway:

We have actually made these issues a “fill-in-the-blank” and “check-the-box” evaluation on our web-based software, CaseGlide.  You should, too.  Message me if you need any help turning the waiver and estoppel evaluation into a structured system to save costs and obtain better results.


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The “Residence Premises” Defense in Florida Homeowners Insurance Litigation

Overview:

Do you want to know about a defense that Todd Legal, P.A. has helped create – the residence premises defense?  Do you want to know what steps you need to take to evaluate whether a homeowner must reside at the property to have coverage for a homeowners insurance claim?  Read this article, and make sure to read to the end to take advantage of our free Litigation Report offer.

First Party Property Insurance Blog is Proud to Announce our New E-Book: the Florida Homeowners Insurance Claims and Litigation Handbook.

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

We’re so confident in this E-Book that we offer you a money-back guarantee if it does not have the information you and your insurance claims business needed to improve. Click the image of the E-Book now to buy it for your friends and clients today.


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*April 30, 2014 Update: this has been one of the most popular posts on the blog and for good reason.  I have heard about many carriers having success with this defense, and a case I handled resulted in a complete defense result in the Second DCA.  

Make sure to read all the way to the end of this post to learn how I propose making sure carriers efficiently guarantee they do not fail to use this defense in any case they have.*

For HO-3 policies, insureds must reside at their property to have coverage for damage to their home; however, I am surprised to find out that not everyone knows about this coverage defense. The defense stems from the typical HO-3 policy’s definition of “residence premises,” and the clause in the building coverages portion of the policy that explains what the insurer covers.

For a property to be a “residence premises,” it must be the property where the insured resides and the property shown in the declarations pages. See Harrington v. Citizens Property Ins. Corp., 54 So. 3d 999 (Fla. 4th DCA 2010). Although the Fourth DCA in Harrington focused on the impact of the definition of an “insured location,” the Court undoubtedly held that the definition of “residence premises” requires the insured to reside at the property. Since 1983, Georgia courts have held that the defense bars coverage for property damage. See Georgia Farm Bureau Mut. Ins. Co. v. Kephart, 439 S.E. 2d 682. New York’s courts have also enforced the defense. See Marshall v. Tower Ins. C. of New York, 44 A.D. 3d 1014 (2007). Further, the Michigan Supreme Court has upheld the use of the defense. Heniser v. Frankenmuth Mut. Ins. Co., 534 S.W. 2d 502 (Mich. 1995).

Although I have not seen any Florida appellate courts rule on the exact issue of the “residence premises” definition precluding coverage for property damage to a rental or unoccupied property, the Harrington case suggests the Florida DCAs would enforce the defense. In fact, every trial court I am aware of has ruled in favor of the insurer when presented with the issue. In addition, it is important to note that insurers have strong arguments that, because the property description is an essential part of the policy’s coverage grants, this is not a defense that an insurer can waive.

Reacting to the Florida appellate authority unfavorable to insurers on the vacancy exclusion, many insurers backed off from evaluating whether insureds needed to reside at a property for there to be coverage. With the trial court momentum in the insurers’ favor, the defense is certainly worth considering and evaluating as early as possible.

*April 30, 2014 Update: Want to Guarantee You Never Miss this Defense Again? Hire Todd Legal, P.A.*

How can you make sure that every adjuster and every attorney past, present, and future check to see if the insured resided at the property? Will an email work?  No. New adjusters and attorneys will never get it. Will a note to the file work?  Come on, give me a break.

But guess what will work?  If you shift your communication and case strategies from out of emails and Word documents and into a web-based project management portal.  Then, you can make sure every adjuster and every attorney on every case is asked whether the plaintiff resided at the property, and you have to go no further than two clicks online to find the answer for your specific case.  I offer innovative services and software that can automatically implement the strategy changes to be consistent with the information in this article.  If you want to know more about how I can help your company or firm ensure that your strategies are up-to-date and complied with by all of your colleagues and vendors, then contact me.  Furthermore, if you want a litigation project manager with a powerful software tool that allows your attorneys to draft top-down approved legal documents in every case with the click of a button, then read more about my services here.

The more you automate these routine tasks, the more time you will have to proactively manage your claims and cases.

Takeaway:

If you want legal forms, templates, guides, and checklists to ensure you “check the box” on properly handling a resident premises claim (and save money along the way), please message me.

If this article did not answer your Florida homeowners insurance claims question, contact us now.

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