39 Fla. L. Weekly D2257a
against insurer which denied sinkhole claim after its expert determined that
sinkhole was not the cause of damage to insureds’ home — Trial court erred in
entering summary judgment for insurer in insureds’ breach of contract action on
ground that insureds breached concealment provision of policy by withholding
report of insureds’ expert, which determined that sinkhole activity caused
damage to home, until after insureds filed suit — Policy did not require
insureds to give report to insurer unless they had the report at the time of the
claim but before insurer denied it — “Duties After Loss” provision of policy
did not obligate insureds to produce documents to insurer unsolicited
INSURANCE COMPANY, Appellee. 2nd District. Case No. 2D13-2402. Opinion filed
October 29, 2014. Appeal from the Circuit Court for Pasco County; W. Lowell
Bray, Jr., Judge. Counsel: Timothy W. Weber and Joseph P. Kenny of Weber, Crabb
& Wein, P.A., St. Petersburg, for Appellants. Carol M. Rooney and Jared M.
Krukar of Butler Pappas Weihmuller Katz Craig, LLP, Tampa, for Appellee.
entered in favor of Tower Hill Select Insurance Company in their lawsuit for
sinkhole damage to their home. We review de novo the trial court’s
interpretation of an insurance contract and statutes and its ruling on a motion
for summary judgment. Volusia Cnty. v. Aberdeen at Ormond Beach, L.P.,
760 So. 2d 126, 130 (Fla. 2000); Tower Hill Select Ins. Co. v. McKee, 39
Fla. L. Weekly D1756, 1756 (Fla. 2d DCA Aug. 20, 2014).
their homeowner’s insurer. Tower Hill retained Madrid Engineering Group “to
conduct testing [and] . . . to determine the cause of the loss within a
reasonable professional probability and issue a report.” See §
627.707(2), Fla. Stat. (2010). The insurer must pay the claim if the engineer
concludes that sinkhole activity caused damage. § 627.707(5)(a).
Apparently, the damages resulted from “[n]ormal shrinkage of masonry materials,
[d]ifferential contraction of mortar and concrete, [t]hermal
expansion-contraction, [and] [s]mall variations in soil types.” As a result,
Tower Hill denied the claim, advising the Herreras, in writing, “Your policy
specifically excludes damages caused by settlement and earth movement, except in
the event of a sinkhole. . . . Since your policy of insurance does not provide
coverage for the loss, Tower Hill . . . is not able to extend coverage for your
claim.” Tower Hill also advised them that they could participate in neutral
evaluation pursuant to section 627.7074. That section provides, in pertinent
part, as follows:
627.7074 Alternative procedure for resolution of disputed sinkhole
insurance claims. —
. . . .
(3) Following the receipt of the report provided under s. 627.7073
or the denial of a claim for a sinkhole loss, the insurer shall notify the
policyholder of his or her right to participate in the neutral evaluation
program under this section. . . .
. . . .
(4) Neutral evaluation is nonbinding, but mandatory if requested by
SINKHOLE LOSS COVERAGE
C. LOSS SETTLEMENT
. . . .
Following receipt of a sinkhole report or denial of a sinkhole loss
claim, “you” may participate in the alternative dispute resolution or
neutral evaluation for disputed sinkhole insurance claims provided by F.S.
additional testing, Tower Hill would continue its investigation subject to a
reservation of rights pending a determination of sinkhole activity. The Herreras
did not notify Tower Hill of any objection they had to Madrid’s report nor did
they demand neutral evaluation or additional testing. Tower Hill assumed the
matter was closed.
Inc., to review Madrid’s report and to investigate further the damage to their
home. Geohazards performed additional testing and concluded that sinkhole
activity caused the damage. The Herreras then sued Tower Hill for breach of
contract. In opposition to Tower Hill’s motion for summary judgment, the
Herreras filed the Geohazards report with the trial court. This was Tower Hill’s
first notice of the report.
first argued that the policy excluded the claimed damages. The second argued
that, at the time the Herreras filed suit, the policy did not require Tower Hill
to pay the claim.1 The third motion
claimed that section 627.707 allowed Tower Hill to deny the claim based on
Madrid’s report.2 Finally, in its fourth
motion for summary judgment, Tower Hill claimed that the Herreras, by
withholding the Geohazards report until after they filed suit, breached the
concealment provision of the policy:
SECTIONS I AND II- CONDITIONS
. . . .
2. Concealment or Fraud.
a. Under Section I – Property Coverages, with respect to all
“insureds” covered under this policy, we provide no coverage for loss under
Section I – Property Coverages if, whether before or after a loss, one or more
(1) Intentionally concealed or misrepresented any material fact or
circumstance . . . .
written explanation. The Herreras challenge the trial court’s order granting the
fourth motion for summary judgment. Tower Hill did not cross-appeal the trial
court’s denial of its other motions. Consequently, the only issue before us is
whether the trial court erred in ruling that the Herrera’s failure to disclose
the Geohazards report to Tower Hill before filing suit constituted concealment
long as they continue to demand payment under the policy. Tower Hill directs us
to the policy’s “Duties After Loss” conditions:
SECTION I – CONDITIONS
2. Duties After Loss.
In case of a loss to covered property, you must see that the
following are done:
. . . .
e. Cooperate with us in the investigation of a claim;
. . . .
g. As often as we reasonably require:
. . . .
(2) Provide us with records and documents we request and permit us
to make copies . . . .
liability but disputes the recovery amount. See Tower Hill Select Ins.
Co. v. McKee, 39 Fla. L. Weekly D1756, at *1. The policy did not require the
Herreras to give the Geohazards report to Tower Hill unless they had the report
at the time of the claim, but before Tower Hill denied it. See Surrett
v. First Liberty Ins. Co., No. 8:11-cv-60-T-23MAP, 2011 WL 3879515, at *2
(M.D. Fla. Sept. 2, 2011).
to requests; it did not obligate them to produce documents to Tower Hill
unsolicited. See Cook v. First Liberty Ins. Corp. . No.
8:10-CV-02636-EAK-MAP, 2011 WL 5834743, at *3 (M.D. Fla. Nov. 21, 2011) (ruling
that absent a request for competing expert reports, the insureds are not
required to produce them; denial letter closing paragraph, “If you have any
questions or have other information which we might use to reconsider our
coverage decision, please call me,” did not trigger document demand requirement
under “Duties After Loss” provision).
Hill Select Ins. Co. v. McKee, 39 Fla. L. Weekly D1756, 1756 (Fla. 2d DCA
Aug. 20, 2014) (“When Tower Hill denied coverage a valid dispute as to the
existence of a covered loss under the insurance policy arose.”).
Liberty Insurance Co., No. 8:11-cv-60-T-23MAP, 2011 WL 3879515 (M.D. Fla.
Sept. 2, 2011), raised this argument. The court ruled that “the [s]ection
627.707(c) presumption in favor of the insurer’s engineer’s report neither
alters the fact of sinkhole damage nor forecloses litigation that attempts to
discover the fact of sinkhole damage.” Id. at *2; accord Cook
v. First Liberty Ins. Corp., No. 8:10-CV-02636-EAK-MAP, 2011 WL 5834743, at
*2 (M.D. Fla. Nov. 21, 2011).
* * *