Insurance — Homeowners — Sinkhole claim — Claim for breach of contract
against insurer that refused to pay claim after its expert engineer determined
that there was no sinkhole activity and no structural damage to property —
Trial court erred in allocating the burden of proof by finding that insured had
burden of proof to show that damage to home was caused by sinkhole activity
during policy period — In the case of all risks policy with sinkhole
endorsement, insured had burden of proving that insured property suffered a loss
while policy was in effect, and burden then shifted to insurer to prove that the
loss was excluded from coverage — Evidence — Impeachment — Error to exclude
impeachment evidence of the amount insurer had paid to firm that employed
insurer’s engineer expert during previous three years

ALFREDO MEJIA, Appellant, v. CITIZENS PROPERTY INSURANCE CORP., Appellee. 2nd
District. Case No. 2D13-2248. Opinion filed November 26, 2014. Appeal from the
Circuit Court for Pasco County; Linda Babb, Judge. Counsel: Raymond T. Elligett,
Jr., of Buell & Elligett, P.A., Tampa; Michael Laurato and Laura Datz of
Austin & Laurato, P.A., Tampa; and Thomas W. Thompson, Jr., and A. Lee Smith
of The Thompson Trial Group, P.A., Tampa, for Appellant. Kara Berard Rockenbach
of Methe & Rockenbach, P.A., West Palm Beach, for Appellee.

(NORTHCUTT, Judge.) Alfredo Mejia appeals a final judgment in favor of
Citizens Property Insurance Corp. following a jury trial on his insurance claim
for damages to his home allegedly caused by sinkhole activity. The trial court
erred in allocating the burden of proof between the parties, and it erred in
excluding evidence that tended to impeach the credibility of an expert witness
who testified for Citizens. Accordingly, we reverse and remand for a new trial.

Mejia owned a home that was insured under a policy issued by
Citizens.1 The standard policy insured
against risk of direct physical loss to the property. It excluded, among other
things, coverage for loss caused by earth movement and settlement and loss
caused by sinkholes. Mejia, however, had paid an additional premium for a
Sinkhole Loss Coverage endorsement.2 This
endorsement added sinkhole loss as a covered peril, and it stated that the earth
movement and sinkhole exclusions did not apply.

During the policy term, Mejia reported a claim for damage to his home.
Citizens retained BCI, an engineering firm, to evaluate the property for
sinkhole activity. BCI investigated and concluded that the damage was not caused
by sinkhole activity, and Citizens denied Mejia’s claim. At trial on Mejia’s
breach-of-contract claim, Citizens relied on testimony from experts, including
an engineer from BCI, to argue that there was no sinkhole activity and no
structural damage to the property. Mejia presented his own expert evidence that
his home had suffered structural damage due to sinkhole activity.

Prior to trial, the court ruled that Mejia had the burden of showing that the
damage was caused by sinkhole activity during the policy period. This was
contrary to the jury instructions requested by Mejia, which required him to show
only that his home was damaged while the insurance policy was in force and then
shifted to Citizens the burden to show that the cause of the damage was not
covered by the policy. Instructed otherwise pursuant to the pretrial ruling, the
jury found that Mejia had not established by the greater weight of the evidence
that his home had suffered physical damage caused by a sinkhole. Final judgment
was thereafter entered in favor of Citizens, and this appeal followed.

Mejia argues on appeal, and we agree, that the trial court erred in
allocating the burden of proof. In litigation involving an insurance claim, the
burden of proof is assigned according to the nature of the policy. Without
dispute, the insurance policy at issue here is an “all risks” policy. An
all-risks policy provides coverage for “all losses not resulting from misconduct
or fraud unless the policy contains a specific provision expressly excluding the
loss from coverage.” Hudson v. Prudential Prop. & Cas. Ins. Co., 450
So. 2d 565, 568 (Fla. 2d DCA 1984) (contrasting an all-risks policy from a
specific peril policy which insures only against named risks). Consistent with
the jury instruction requested by Mejia in this case, an insured claiming under
an all-risks policy has the burden of proving that the insured property suffered
a loss while the policy was in effect. The burden then shifts to the insurer to
prove that the cause of the loss was excluded from coverage under the policy’s
terms. Id.

As we held in Hudson, it makes no difference that the sinkhole
coverage at issue was provided in an endorsement to the underlying policy. In
Hudson, as here, the homeowner had an all-risks policy with a sinkhole
endorsement. This court held that the “endorsement did not change the ‘all
risks’ nature of the underlying policy; it merely narrowed the earth sinking
exclusion.” Id. at 568. And in that case, as here, the jury instructions
“had the effect of improperly placing the burden on the Hudsons to prove that
their home was damaged by a sinkhole.” Id. Based on that error, we
reversed and remanded for a new trial.

Neither does it matter that the sinkhole endorsement in Hudson was
obtained under an earlier version of the applicable insurance statute. In
Hudson, the statute provided that every property insurer in Florida
“shall make available coverage for insurable sinkhole losses on any structure.”
§ 627.706(1), Fla. Stat. (1981). The version of the statute applicable to
Mejia’s policy was substantially identical save for specifying that every
property insurer in Florida “shall make available, for an appropriate
additional premium, coverage for sinkhole losses.” § 627.706(1), Fla. Stat.
(2009) (emphasis added). Significantly, in both versions of the statute the
insurer was required to make available coverage for sinkhole losses “to the
extent provided” in the form to which the sinkhole coverage attaches.
Compare § 627.706(1), Fla. Stat. (1981), with § 627.706(1), Fla.
Stat. (2009). In both cases, the form to which the endorsement was attached was
an all-risks insurance policy.

The trial court erred in allocating the burden of proof between Mejia and
Citizens. We reverse and remand for a new trial in which the jury must be
properly instructed on the burden of proof consistent with the foregoing.

Because we are remanding for retrial, we must also address an evidentiary
issue. Mejia argues that the trial court erred by excluding evidence that over
the previous three years Citizens had paid approximately $9.5 million in fees to
BCI, the engineering firm that employed Citizens’ expert witnesses. Mejia argued
that the evidence was relevant to show bias, while Citizens argued that it was
not relevant. We conclude that the evidence was relevant and admissible.

In Allstate Insurance Co. v. Boecher, 733 So. 2d 993, 997 (Fla. 1999),
the supreme court held that a plaintiff was allowed to discover the amount of
fees paid, over the preceding three years, by his uninsured motorist carrier to
its expert in accident reconstruction and injury causation. The court stated
that “[t]he more extensive the financial relationship between a party and a
witness, the more it is likely that the witness has a vested interest in that
financially beneficial relationship continuing.” Id.

Citizens maintains that Boecher addressed only the discovery of
such information and not its admission at trial and that the opinion is mere
dicta outside the context of discovery. Although it is true that Boecher
involved a discovery dispute, this argument misses the mark. Even though
Boecher addressed discovery rather than admissibility at trial, we have
previously observed that “dictum of the highest court of this State, in the
absence of a contrary decision by that court, should be given persuasive weight
in this court.” Milligan v. State, 177 So. 2d 75, 76 (Fla. 2d DCA 1965).

In Boecher, the supreme court observed that the information sought
from Allstate “does not just lead to the discovery of admissible information.
The information requested is directly relevant to a party’s efforts to
demonstrate to the jury the witness’s bias.” 733 So. 2d at 997 (emphasis added).

Id. at 997-98 (emphasis added). The supreme court echoed the Fourth
District’s assessment that the “information would be ‘indisputably relevant and
meaningful.’ ” Id. at 998 (quoting Allstate Ins. Co. v. Boecher,
705 So. 2d 106, 107 (Fla. 4th DCA 1998), approved, 733 So. 2d 993).

We have previously cited Boecher to support our conclusion that
evidence of a doctor’s financial interest in a case, by way of a letter of
protection, was properly admitted to attack the doctor’s credibility as a
witness. Carnival Corp. v. Jimenez, 112 So. 3d 513, 520 (Fla. 2d DCA
2013) (analyzing admissibility of evidence to determine propriety of closing
argument). We reject Citizens’ attempt to limit Carnival Corp. to an
inquiry into the witness’s financial interest only in the present case.
See Flores v. Miami-Dade Cnty., 787 So. 2d 955, 959 (Fla. 3d DCA
2001) (“The inquiry extends not just to the compensation arrangements for the
current case but also allows inquiry into the expert’s work in other cases.”
(citations omitted)).

Similarly, the Fourth District relied on Boecher when affirming an
order permitting the plaintiff to ask defense experts about sums paid to them in
the previous three years by the defendants’ insurer, the twist in that case
being that the insurance company was not identified as such. Herrera v.
Moustafa, 96 So. 3d 1020, 1021 (Fla. 4th DCA 2012). Here, we conclude that
the trial court abused its discretion by precluding Mejia from cross-examining
Citizens’ expert witnesses about the $9.5 million their company had been paid by
Citizens over the previous three years.

Reversed and remanded for a new trial. (SLEET, J., Concurs. ALTENBERND, J.,
Concurs with opinion.)

__________________

1The form of insurance was CIT HO-3 07 08.

2Form CIT 23 94 07 08.

__________________

(ALTENBERND, Judge, Concurring.) I concur in this opinion, but I would do so
even if the policy were not treated as an “all risks” policy. It is likely that
the HO-3 insurance policy issued by Prudential Property and Casualty Insurance
Company to the Hudsons insuring their home in 1981 was significantly different
from the policy issued by Citizens in 2011 to Mr. Mejia. See Hudson v.
Prudential Prop. & Cas. Ins. Co., 450 So. 2d 565 (Fla. 2d DCA 1984).
When that standard policy was introduced by the Insurance Services Office in the
early 1970s, it was a relatively simple policy that insured the dwelling on an
all-risks basis and personal property on a named peril basis.

Over time, for reasons that are not important to this case, the policy
evolved into a “special form” policy. At least to this judge, the policy is
oddly structured because the “Section I — Perils Insured Against” begins with
an all-risks type insuring agreement for the dwelling. That all-risks language
is immediately followed by a statement that “we do not insure, however, for
loss: . . .” This “however” clause is followed by a long list of excluded risks.
Several pages later, the policy in more traditional fashion provides
“Exclusions” to the Section I coverage. In other words, the policy essentially
adds exclusions in both the insuring agreement and in the standard section for
exclusions.

The HO-policy may never have been an “all risks” policy if one defines “all
risks” literally. But with the addition of the named excluded perils within the
insuring agreement, it has become an amalgam that is neither an all risks nor a
named peril form.

In the case of sinkhole risks in Florida, the statutorily authorized sinkhole
endorsement is intended to eliminate the sinkhole exclusion from the policy. It
is written, however, in language that appears to be coverage for an added named
peril and not merely an elimination of the authorized exclusion. But when
litigated, the homeowner maintains that damage has occurred to the home that
falls within the sinkhole coverage. The insurance company maintains that the
damage is not caused by a sinkhole and is actually damage that is excluded under
the main policy’s exclusion for earth movement and settlement.

There is no controversy that an insurance company has the burden of proof as
to an exclusion like the earth movement and settlement exclusion. Given the
overall complexity of these claims, where sinkhole damage is excluded in the
main policy, revived in the endorsement, and then litigated as a matter that is
either covered sinkhole damage or excluded earth movement damage, it seems to me
that the only practical solution as to the specific issues raised in sinkhole
litigation is to place the burden of proof on the insurance company once the
insured has established the requisite physical damage to the insured dwelling
during the term of the policy.