Insurance — Wind and hail — Where policy issued to condominium complex was for named perils of wind and hail, insured had burden of showing that damage to roofs of condominium buildings was caused by the named peril of wind — Trial court erred by granting directed verdict for insured without allowing insurer to present evidence of non-wind related causes of damage — Insurer was not required to plead the existing damage exclusion as an affirmative defense

CITIZENS PROPERTY INSURANCE CORPORATION, Appellant, v. KINGS CREEK SOUTH CONDO, INC., Appellee. 3rd District. Case No. 3D18-661. L.T. Case No. 11-11478. March 18, 2020. An Appeal from the Circuit Court for Miami-Dade County, David C. Miller, Judge. Counsel: Quintairos, Prieto, Wood & Boyer, P.A., and Asika K. Patel; Link & Rockenbach, P.A., Kara Rockenbach Link, David A. Noel and Daniel M. Schwarz (West Palm Beach), for appellant. Alvarez, Feltman & Da Silva, PL, and Paul B. Feltman, for appellee.

(Before FERNANDEZ, LOGUE ¹ , and LINDSEY, JJ.)

(FERNANDEZ, J.) Citizens Property Insurance Corporation (“Citizens”) appeals the trial court’s order granting a directed verdict in favor of the insureds, Kings Creek South Condo, Inc. (“Kings Creek”). Upon review of the record, we reverse the directed verdict and order a new trial to allow Citizens an opportunity to challenge Kings Creek on the issue of causation. Kings Creek bore the burden to prove causation by a named peril, and Citizens was entitled to defend by presenting non-wind related causes of damage. We affirm as to all other issues.

I. BACKGROUND

Citizens issued Kings Creek an insurance policy for the named perils of wind and hail for Kings Creek’s condominium property. The policy was in effect from September 27, 2005 through September 27, 2006. On October 24, 2005, Hurricane Wilma hit South Florida. Kings Creek’s property consists of fifteen buildings, with nine of those buildings having separate roofs. These roofs consist of three roof systems overlaid atop of one another consisting of the original roof, a second roof installed after Hurricane Andrew, and a third roof installed just before Hurricane Wilma. Kings Creek did not initially report any wind-related roof damage after Hurricane Wilma, as Kings Creek asserts that damage to the roofs was not immediately evident. In November 2008, thirty-seven months after Hurricane Wilma, Kings Creek notified Citizens of the alleged covered loss. At that time, Kings Creek claimed that only one building had been damaged by Hurricane Wilma. However, by the time it filed suit in April 2011, Kings Creek expanded its claim to require replacement of all nine roofs, at a replacement cost of $3,913,318.90.

Citizens hired engineer John Carroll to inspect the roofs. Carroll found no evidence of wind-related damage from Hurricane Wilma and attributed the damages to installation of the three-layered roof system, ongoing water intrusion, wear and tear, and improper system maintenance. On July 17, 2009, Citizens submitted a letter expressly denying the claim for the combined reasons that: Kings Creek had not sustained a covered loss, based on Mr. Carroll’s report; Kings Creek had failed to properly complete a Sworn Proof of Loss or submit estimates regarding all buildings; and Citizens was prejudiced by the extensive delay between Hurricane Wilma and receiving notice of loss. As a result, Kings Creek filed suit.

In its Amended Answer, Citizens stated its intent to defend by challenging Kings Creek’s claims and introducing evidence of non-wind related causes. Citizens’s only affirmative defense was that Kings Creek failed to comply with post-loss obligations by failing to provide prompt notice of loss, to keep a record of repair expenses, and to preserve the damaged property for examination.

As to Citizens’s causation defense, the trial court initially ruled that Citizens could contest causation on at least the basis of improper installation and maintenance of the roof systems as a challenge to Kings Creek’s evidence of wind-related damage. However, during Citizens’s direct examination of engineer John Carroll, Kings Creek objected to testimony regarding the installation of the roof systems as a non-wind related cause, arguing that the installation occurred prior to the policy, and therefore, the Existing Damage Exclusion in the policy governed. Without providing any support for its argument, Kings Creek reasoned that this pre-existing cause could not be admitted because Citizens failed to plead the Exclusion as an affirmative defense. After much back and forth, the trial judge was convinced by Kings Creek’s argument and found that Citizens’s non-wind related cause of installation of the roofing system was subsumed by the Existing Damage Exclusion. The trial court granted a directed verdict on liability in favor of Kings Creek on the basis that Citizens had not pleaded its Exclusion as an affirmative defense.

The jury returned a damages-only award in favor of Kings Creek for $3.6 million, and the trial court entered final judgment for $4,889,843.80 ($2,691,972.00 in insurance proceeds and $2,197,871.80 in prejudgment interest). Citizens motion for a new trial was denied by the trial court, and this appeal followed.

II. ANALYSIS

We review the directed verdict de novo. We must view the evidence and inferences in the light most favorable to Citizens, the non-moving party. Banco Espirito Santo Int’l, Ltd. v. BDO Int’l, B.V., 979 So. 2d 1030, 1032 (Fla. 3d DCA 2008).

Under a named perils insurance policy, Kings Creek bore the burden to prove that wind, as a covered cause of loss under the policy, caused the damage to the buildings. Rodrigo v. State Farm Fla. Ins. Co., 144 So. 3d 690, 693 (Fla. 4th DCA 2014). Citizens attempted to defend its denial of coverage by arguing that the damages were caused by a non-wind related peril, specifically the improper installation and maintenance of the three roofs placed on top of one other. Upon finding that the roof system was installed prior to the policy period and the Existing Damage Exclusion was not pleaded as an affirmative defense, the trial court granted a directed verdict in favor of Kings Creek. We disagree and reverse for a new trial. Due to the nature of a named perils policy, Citizens was entitled to defend by presenting evidence of non-wind related causes.

In Citizens’s Amended Answer, Citizens states its intention to defend causation at trial and to provide evidence of other non-wind related causes, not covered under the policy:

Defendant pleads only limited affirmative defenses and will also defend by challenging the Plaintiff’s ability to prove the essential elements of the Plaintiff’s claim. In other words, [Defendant] is saying it did not do anything wrong and the Plaintiff here cannot meet its burden of proving each of the allegations of the Complaint. Defendant will cross examine the Plaintiff’s witnesses and call its own witnesses to both challenge the Plaintiff’s allegations and to introduce or elicit testimony and evidence of causes other than the named peril.

(Emphasis added). Due to this clear statement of intention provided before trial, we do not think it prudent for Kings Creek to claim surprise. Moreover, this is a named perils policy, with wind being the covered cause of loss. After the insured presents evidence of wind related damage, the insurer has the right to challenge that evidence with evidence of non-wind related causes. See Citizens Prop. Ins. Corp. v. Munoz, 158 So. 3d 671, 673 n.1 (Fla. 2d DCA 2014) (“An ‘all risks’ policy protects against all direct losses except those explicitly excluded from the policy; conversely, a ‘named perils’ policy only protects against perils explicitly named as included in the policy.”); see also Nicole Fluet, Cracks in the Structure: Recent Changes in the Sinkhole Litigation Realm, Trial Advoc. Q., Fall 2015, at 28, 32 (“Under a named-peril burden, the insured has the burden to prove that [wind damage] occurred within the applicable policy period. Under an all-risk burden, the insured is required to prove that damage occurred within the policy period, but it is then the insurer’s burden to prove that that the damage is excluded from coverage under the policy.”). Kings Creek should have been aware of its burden to prove a wind-related cause and of Citizens right to challenge the evidence.

Nevertheless, Kings Creek argues for the general proposition that a policy exclusion must be pleaded as an affirmative defense, relying on St. Paul Mercury Insurance Company v. Coucher, 837 So. 2d 483, 487 (Fla. 5th DCA 2002); Florida Farm Bureau General Insurance Company v. Insurance Company of North America, 763 So. 2d 429, 432 (Fla. 5th DCA 2000); and Peninsular Life Insurance Company v. Hanratty, 281 So. 2d 609, 611 (Fla. 3d DCA 1973). Technically, Kings Creek is correct in its recitation of the case law.² However, these cases stand for the proposition that a party is required to plead a policy exclusion as an affirmative defense only when the policy exclusion is the basis for the defense. Because this is a named perils policy, if Kings Creek fails to prove that the damage resulted from a named peril, the damage is simply not covered. Thus, Citizens is not required to prove a policy exclusion as the basis for its defense. “An affirmative defense does not concern itself with the elements of the [claim] at all; it concedes them but asserts a good excuse or reason.” Wright v. State, 920 So. 2d 21, 24 (Fla. 4th DCA 2005) (citation omitted) (emphasis added); see also State v. Cohen, 568 So. 2d 49, 51 (Fla. 1990) (“An ‘affirmative defense’ is any defense that assumes the complaint or charges to be correct but raises other facts that, if true, would establish a valid excuse or justification or a right to engage in the conduct in question.”). As is evidenced by the record, Citizens is not presenting evidence of the faulty roof installation as an avoidance or as an excuse not to pay when otherwise it would be required to pay under the policy. Citizens is simply presenting evidence of a non-wind related cause to challenge King Creek’s evidence of wind-related damage. In other words, Citizens at no point concedes the correctness of the allegation; therefore, an affirmative defense as to this issue is not required.

Additionally, the trial court incorrectly found that evidence of the faulty roof installation, occurring prior to the policy, was subsumed by the Existing Damage Exclusion. Whether the faulty installations occurred prior to or during the policy period is irrelevant for purposes of challenging causation in a wind-only policy. Technically, the Exclusion would bar coverage of any prior damage from causes pre-dating the policy like the roof installation, but this is secondary to the fact that a faulty roof installation is a non-wind related cause that does not fall under the named peril of wind. In its Answer, Citizens stated that it does not claim any wrong and, at trial, will challenge the evidence and provide other possible causes. Citizen did not base its defense on the Exclusion, and therefore, an affirmative defense as to this point need not be pleaded. Though, to be clear, if at any time Citizens was to concede that Kings Creek is entitled to payment under the policy, but for the Exclusion, then Citizens would have waived this defense by failing to plead the Exclusion as an affirmative defense. See Wright, 920 So. 2d at 24.

Accordingly, we reverse the directed verdict in favor of Kings Creek and order a new trial.

Reversed and remanded for a new trial.

__________________

¹Did not participate in oral argument.

²These cases do not involve named perils home insurance policies.