Homeowners’ Insurance — sinkhole claim — Federal Court — Middle District of Florida clarifies meaning of “structural damage”

Insurance — Homeowners — Sinkhole claim — Claim by insurer that insured
building did not suffer “structural damage” as defined by statute — Where
policy did contain a definition of “structural damage” or refer to the statutory
definition, “structural damage” should be given its plain meaning as “damage to
the structure”

VIJAY KITTUSAMY and PAPPATHI KITTUSAMY, Plaintiffs, v. FIRST LIBERTY
INSURANCE CORPORATION, Defendant. U.S. District Court, Middle District of
Florida, Tampa Division. Case No. 8:12-cv-02018-EAK-TBM. June 12, 2013.
Elizabeth A. Kovachevich, Judge.

This cause is before the Court on Defendant’s Second Amended Motion for
Summary Judgment (Doc. 20) and Plaintiff’s Response in Opposition, (Doc. 34).
For the reasons set forth below, Defendant’s motion is DENIED.

Plaintiffs, Vijay and Pappathi Kittusamy (“Kittusamy”), initially filed their
Complaint (Doc. 2) in the Circuit Court for the Thirteenth Judicial Circuit in
and for Hillsborough County, Florida. Defendant, First Liberty Ins. Corp.
(“First Liberty”), removed this case to the Middle District of Florida and filed
its Answer and Affirmative Defenses (Doc. 3) on Sept. 6, 2012. Defendant seeks a
declaratory judgment as to the rights and responsibilities of the parties under
the insurance policy in dispute. Defendant filed its Second Amended Motion for
Summary Judgment (Doc. 20) on Dec. 3, 2012. Plaintiff filed its Response in
Opposition (Doc. 34) on Mar. 14, 2013. Plaintiff filed its Notice of
Supplemental Authority (Doc. 39) regarding Defendant’s Motion for Summary
Judgment on Apr. 24, 2013.

The following facts are submitted by the parties in support and/or opposition
to Defendant’s Motion for Summary Judgment. The Court recognizes these as
“facts” only in regard to the resolution of the pending motion.

At all material times, Plaintiffs owned the dwelling (“the structures”) and
property (“the insured property”) located at 17712 Fallowfield Drive, Lutz,
Florida. First Liberty provided property insurance to Plaintiffs under policy
number H36-258-825228-7013 (“the policy”), with effective dates of Aug. 23, 2011
through Aug. 23, 2012. On or about Feb. 1, 2012 Plaintiffs claim the structures
suffered damage due to sinkhole activity. The policy provides:

(Doc. No. 2-1, p. 41).

After sending SDII Global Corporation (“SDII”) to investigate, First Liberty
denied Plaintiffs’ claim based on SDII’s conclusion that the insured property
did not experience “structural damage” as defined by Fla. Stat. § 627.706
(2011). After First Liberty denied Plaintiffs’ claim, Plaintiffs hired Bay Area
Sinkhole Investigation and Civil Engineering (BASIC). BASIC concluded sinkhole
activity was a cause of the structural damage at Plaintiffs’ residence.

In its Second Amended Motion for Summary Judgment, Defendant asserts that the
2011 amendments to Chapter 627 of the Florida Statutes apply to Plaintiffs’
claim because the amendments became effective prior to the policy’s inception.
The policy does not define “structural damage” or refer to the statutory
definition. First Liberty argues that, in the absence of a definition of
“structural damage” within the policy, the five-part definition contained in the
amendments to § 627.706(2)(k) governs as a matter of law.

Federal Rule of Civil Procedure 56 provides that a “court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed, R. Civ. P.
56(a). The moving party bears the initial burden of stating the basis for its
motion for summary judgment and “identifying those portions of [the record]
which it believes demonstrates the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party
meets its burden if it demonstrates “an absence of evidence to suport the
nonmoving party’s case.” Id. at 325. The burden then shifts to the
nonmoving party to identify specific facts that demonstrate a genuine issue of
material fact in order to avoid summary judgment. Id. at 324.

An issue of fact is “genuine” only if a reasonable jury, after considering
the evidence presented, could return a verdict for the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). A
factual issue is “material” if it might affect the outcome of the trial under
the governing substantive law. Id. at 248; Hickson
Corp. v. Northern Crossarm Co., 357 F.3d 1256, 1259-60 (11th Cir. 2004)
[17 Fla. L. Weekly Fed. C195a]. When ruling on a motion for summary judgment,
the Court must view all inferences to be taken from the facts in the light most
favorable to the nonmoving party. U.S. v. Diebold, 369 U.S. 654, 655
(1962). The weighing of evidence, the determination of credibility, and the
drawing of reasonable inferences from the facts are all functions of the jury,
not the judge. Anderson, 477 U.S. at 255. Therefore, if determination of
the case rests on deciding which competing version of the facts and events is
true, then summary judgment is inappropriate and the case should be submitted to
the jury. Rollins v. TechSouth, Inc., 833 F.2d 1525, 1531 (11th Cir.
1987).

The issue before the Court on Defendant’s summary judgment motion is whether
a 2011 amendment to the Florida statutory scheme governing sinkhole insurance
that added a definition of “structural damage” should be applied to the policy.
Notably, the policy did not define “structural damage” or make reference to the
statutory definition. First Liberty urges the Court to apply the statutory
definition of “structural damage” delineated in Fla. Stat. § 627.706(2)(k)
(2011) to the policy. However, numerous court decisions hold the term
“structural damage” has a plain meaning of “damage to the structure.”

This issue was most recently addressed in Shelton v. Liberty Mut.
Fire Ins. Co., No. 8:12-cv-2064-T-30AEP, 2013 WL 1663290 (M.D. Fla. Apr. 17,
2013). In Shelton, this Court reaffirmed that the plain meaning of
“structural damage” governs, holding it to be the case even when the amendments
came into effect prior to the inception of the policy. Ordinary rules of
construction require the court to first consider the plain meaning of policy
language. Dahl-Elmers v. Mut. Of Omaha Life Ins. Co., 986 F.2d
1379 (11th Cir. 1993). Furthermore, “[t]he insurer cannot, by failing to define
the terms . . . or to include any additional qualifying or exclusionary
language, insist upon a narrow, restrictive interpretation of the coverage
provided.” Id. at 1382 (quoting Nat’l Merch. Co. v. United States
Auto. Assoc., 400 So. 2d 526, 530 (Fla. 1st DCA 1981)). Prior to Shelton,
this Court has held the plain meaning of “structural damage” should govern
in Leon v. First Liberty Ins. Corp., No. 8:12-cv-1613-T-30MAP,
Garcia v. First Liberty Ins. Corp., No. 8:12-cv-771-T-30TGW,
Zawadzki v. Liberty Mut. Ins, Co., No. 8:12-cv-950-T-30MAP, and
Ayres v. USAA Cas. Ins. Co., No. 8:11-cv-816-T-24TGW. The Court
sees no reason to depart from these rulings.

The Court concludes that Defendant’s Motion for Summary Judgment should be
denied because “structural damage” should be given its plain meaning as “damage
to the structure.”

ORDERED that Defendant’s Motion for Summary Judgment is DENIED.