24 Fla. L. Weekly Fed. D367a
Insurance — Property — Coverage — Sinkhole loss —
Structural damage — 2011 Amendment to Chapter 627, Florida Statutes, which
adopted a definition of “structural damage” to be applied when interpreting
insurance policies providing coverage for sinkhole loss, does not apply
retroactively to insurance policy predating the amendment to the statute,
because the amendment is not merely procedural but substantive in nature, there
is no clear legislative intent to apply the statute retroactively, and
retroactive application of statute would substantially impair insured’s
contractual right to coverage under the policy — Consistent with numerous
courts that have decided this issue, the undefined phrase “structural damage” in
policy at issue is defined as “damage to the structure”
Structural damage — 2011 Amendment to Chapter 627, Florida Statutes, which
adopted a definition of “structural damage” to be applied when interpreting
insurance policies providing coverage for sinkhole loss, does not apply
retroactively to insurance policy predating the amendment to the statute,
because the amendment is not merely procedural but substantive in nature, there
is no clear legislative intent to apply the statute retroactively, and
retroactive application of statute would substantially impair insured’s
contractual right to coverage under the policy — Consistent with numerous
courts that have decided this issue, the undefined phrase “structural damage” in
policy at issue is defined as “damage to the structure”
JENNIFER CUNNINGHAM, and BARRY CUNNINGHAM, Plaintiffs, v. LIBERTY MUTUAL FIRE
INSURANCE COMPANY, Defendant. U.S. District Court, Middle District of Florida,
Tampa Division. Case No. 8:12-cv-1398-T35-TBM. May 29, 2013. Mary S. Scriven,
Judge.
INSURANCE COMPANY, Defendant. U.S. District Court, Middle District of Florida,
Tampa Division. Case No. 8:12-cv-1398-T35-TBM. May 29, 2013. Mary S. Scriven,
Judge.
ORDER
THIS CAUSE comes before the Court for consideration of Defendant’s Motion for
Summary Judgment (Dkt. 19), and Plaintiffs’ Dispositive Motion for Summary
Judgment (Dkt. 20). Upon consideration of all relevant filings, and case law,
and being otherwise fully advised, the Court GRANTS Plaintiffs’ motion for
summary judgment and DENIES Defendant’s motion for summary judgment, as
described herein.
Summary Judgment (Dkt. 19), and Plaintiffs’ Dispositive Motion for Summary
Judgment (Dkt. 20). Upon consideration of all relevant filings, and case law,
and being otherwise fully advised, the Court GRANTS Plaintiffs’ motion for
summary judgment and DENIES Defendant’s motion for summary judgment, as
described herein.
I. BACKGROUND
This is an action for breach of contract and declaratory judgment arising out
of an insurance policy issued by Defendant to Plaintiffs. Defendant issued
insurance policy number H32-251-492290-1091 (the “Policy”) to Plaintiffs for the
effective period of October 5, 2009 through October 5, 2010 for coverage on
property located in Lutz, Florida. (Dkt. 20-1, p. 1) The Policy provides
coverage for Sinkhole Loss as follows:
of an insurance policy issued by Defendant to Plaintiffs. Defendant issued
insurance policy number H32-251-492290-1091 (the “Policy”) to Plaintiffs for the
effective period of October 5, 2009 through October 5, 2010 for coverage on
property located in Lutz, Florida. (Dkt. 20-1, p. 1) The Policy provides
coverage for Sinkhole Loss as follows:
SECTION I — PERILS INSURED AGAINST
The following perils are added:
Sinkhole Loss
a. Sinkhole Loss means structural damage to the building, including
the foundation, caused by sinkhole activity. Contents coverage shall apply only
if there is structural damage to the building caused by sinkhole
activity.
(1) We will pay to stabilize the land and building and repair the
foundation in accordance with the recommendations of a professional engineer and
in consultation with you.
b. Sinkhole Activity means settlement or systematic weakening of the
earth supporting such property only when such settlement or systematic weakening
results from movement or raveling of soils, sediments, or rock materials into
subterranean voids created by the effect of water on limestone or similar rock
formation.
The Section I — Earth Movement Exclusion does not apply to this peril. (Dkt.
20 at 5) The Policy does not define the term “structural damage.”
20 at 5) The Policy does not define the term “structural damage.”
As explained in Zawadzki v. Liberty Mutual Fire Ins. Co., 2012 WL
3656456, at *3 (M.D. Fla. 2012), from 1981 through 2004, Florida Statute §
627.706(1) required that insurers make coverage available for sinkhole loss.
During that time, the definition of “sinkhole loss” incorporated the definition
of “sinkhole.” Zawadzki, 2012 WL 3656456, at *3 (citations omitted).
Additionally, the statute contained a separate definition for the term “loss”
which it defined as “structural damage to the building.” Id. (citation
omitted). In 2005, the Florida Legislature redefined a “sinkhole loss” to mean
“structural damage to the building, including the foundation, caused by sinkhole
activity.” Id. (citation omitted). The 2005 definition incorporated the
previous definition of the term “loss” and that term was removed from the
statute. Id. (citation omitted). The 2005 version also added definitions
for other terms such as “sinkhole” and “sinkhole activity.” Id. (citation
omitted). A separate definition for the term “structural damage” was not
included. Id. (citation omitted).
3656456, at *3 (M.D. Fla. 2012), from 1981 through 2004, Florida Statute §
627.706(1) required that insurers make coverage available for sinkhole loss.
During that time, the definition of “sinkhole loss” incorporated the definition
of “sinkhole.” Zawadzki, 2012 WL 3656456, at *3 (citations omitted).
Additionally, the statute contained a separate definition for the term “loss”
which it defined as “structural damage to the building.” Id. (citation
omitted). In 2005, the Florida Legislature redefined a “sinkhole loss” to mean
“structural damage to the building, including the foundation, caused by sinkhole
activity.” Id. (citation omitted). The 2005 definition incorporated the
previous definition of the term “loss” and that term was removed from the
statute. Id. (citation omitted). The 2005 version also added definitions
for other terms such as “sinkhole” and “sinkhole activity.” Id. (citation
omitted). A separate definition for the term “structural damage” was not
included. Id. (citation omitted).
In 2011, the Florida Legislature, for the first time, adopted a definition of
“structural damage” to be applied when interpreting insurance policies providing
coverage for sinkhole losses. Id. (citation omitted). The 2011 Amendment
went into effect on May 17, 2011. As amended, the statute provides:
“structural damage” to be applied when interpreting insurance policies providing
coverage for sinkhole losses. Id. (citation omitted). The 2011 Amendment
went into effect on May 17, 2011. As amended, the statute provides:
(j) “Sinkhole loss” means structural damage to the covered building,
including the foundation, caused by sinkhole activity. Contents coverage and
additional living expenses apply only if there is structural damage to the
covered building caused by sinkhole activity.
(k) “Structural damage” means a covered building, regardless of the
date of its instruction, has experienced the following:
1. Interior floor displacement or deflection in excess of acceptable
variances as defined in ACI117-90 or the Florida Building Code, which results in
settlement-related damage to the interior such that the interior building
structure or members become unfit for service or represents a safety hazard as
defined within the Florida Building Code;
2. Foundation displacement or deflection in excess of acceptable
variances as defined in ACI 318-95 or the Florida Building Code, which results
in settlement-related damage to the primary structural members or those members
or systems from supporting the loads and forces they were designed to support to
the extent that stresses in those primary structural members or primary
structural systems exceeds one and one-third the nominal strength allowed under
the Florida Building Code for new buildings of similar structure, purpose, or
location;
3. Damage that results in listing, leaning, or buckling of the
exterior load-bearing walls or other vertical primary structural members to such
an extent that a plumb line passing through the center of gravity does not fall
inside the middle one-third of the base as defined with the Florida Building
Code;
4. Damage that results in the building, or any portion of the
building containing primary structural members or primary structural systems,
being significantly likely to imminently collapse because of the movement or
instability of the ground within the influence zone of the supporting ground
within the sheer plane necessary for the purpose of supporting such building as
defined within the Florida Building Code; or
5. Damage occurring on or after October 15, 2005, that qualifies as
“substantial structural damage” as defined in the Florida Building
Code.
See FLA. STAT. 627.706(j)-(k) (2011).
In this case, Plaintiffs allege they discovered damage to the subject
property at issue on June 10, 2010 and thereafter notified Defendant of
potential sinkhole loss to the property. (Dkt. 20 at 3) On December 20, 2011,
the Defendant retained the services of SDII Global Corporation (“SDII”) to
perform structural damage evaluation to determine if structural damage was
present at the property. (Id. at 6) On April 11, 2012, SDII produced a
report, opining that, “within a reasonable professional probability, structural
damage as defined by [Section] 627.706(2)(k) Florida Statutes does not exist at
the [Plaintiffs’] residence,” and that “the observed damage on the exterior and
interior of the structure is cosmetic and/or functional in nature, in that the
damage has not impaired the ability of the structure to support intended loads.”
(Dkt. 20-5) As part of its report, SDII utilized two different definitions of
structural damage. The first is the new definition added to the 2011 Amendment
of the statute. The second is a definition derived from “SDII’s review of
authoritative texts and discussions with other professionals in [the same]
practice area.” (Id.) This definition defines structural damage as
“[d]amage wherein a load-bearing member, component, or structural assembly of a
building or structure suffers a significant reduction in its capacity to support
or transmit the loads for which it was designed.” (Id.)
property at issue on June 10, 2010 and thereafter notified Defendant of
potential sinkhole loss to the property. (Dkt. 20 at 3) On December 20, 2011,
the Defendant retained the services of SDII Global Corporation (“SDII”) to
perform structural damage evaluation to determine if structural damage was
present at the property. (Id. at 6) On April 11, 2012, SDII produced a
report, opining that, “within a reasonable professional probability, structural
damage as defined by [Section] 627.706(2)(k) Florida Statutes does not exist at
the [Plaintiffs’] residence,” and that “the observed damage on the exterior and
interior of the structure is cosmetic and/or functional in nature, in that the
damage has not impaired the ability of the structure to support intended loads.”
(Dkt. 20-5) As part of its report, SDII utilized two different definitions of
structural damage. The first is the new definition added to the 2011 Amendment
of the statute. The second is a definition derived from “SDII’s review of
authoritative texts and discussions with other professionals in [the same]
practice area.” (Id.) This definition defines structural damage as
“[d]amage wherein a load-bearing member, component, or structural assembly of a
building or structure suffers a significant reduction in its capacity to support
or transmit the loads for which it was designed.” (Id.)
In response to SDII’s report, Defendant issued a denial letter to Plaintiffs
on the grounds that the damage observed at the residence was not structural
damage. (Dkt. 20 at 8) In response, Plaintiffs filed this action in state court
on May 18, 2012. The action was timely removed to this Court on June 25, 2012.
(Dkt. 1) Defendant filed its Answer, Affirmative Defenses, and Counterclaims on
the same date the action was removed. (Dkt. 3)
on the grounds that the damage observed at the residence was not structural
damage. (Dkt. 20 at 8) In response, Plaintiffs filed this action in state court
on May 18, 2012. The action was timely removed to this Court on June 25, 2012.
(Dkt. 1) Defendant filed its Answer, Affirmative Defenses, and Counterclaims on
the same date the action was removed. (Dkt. 3)
The parties now bring the instant motions for summary judgment requesting
that the Court decide: (1) whether the 2011 Amendment to the Florida statutory
scheme governing sinkhole insurance, which added a statutory definition of
“structural damage,” should be applied retroactively to the Policy at issue, and
(2) the definition of “structural damage” as it is used in the Policy.
that the Court decide: (1) whether the 2011 Amendment to the Florida statutory
scheme governing sinkhole insurance, which added a statutory definition of
“structural damage,” should be applied retroactively to the Policy at issue, and
(2) the definition of “structural damage” as it is used in the Policy.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate when the movant can show that there is no
genuine issue of material fact and that the movant is entitled to judgment as a
matter of law. Fennell
v. Gilstrap, 559 F.3d 1212, 1216 (11th Cir. 2009) [21 Fla. L. Weekly
Fed. C1571a] (citing Welding
Servs., Inc. v. Forman, 509 F.3d 1351, 1356 (11th Cir. 2007) [21 Fla. L.
Weekly Fed. C246a]). Which facts are material depends on the substantive law
applicable to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). The moving party bears the burden of showing that no genuine issue
of material fact exists. Clark v. Coats & Clark, Inc., 929 F.2d 604,
608 (11th Cir. 1991). Evidence is reviewed in the light most favorable to the
non-moving party. Fennell, 559 F.3d at 1216 (citing Welding Servs.,
Inc., 509 F.3d at 1356)). A moving party discharges its burden on a motion
for summary judgment by showing or pointing out to the Court that there is an
absence of evidence to support the non-moving party’s case. Denney
v. City of Albany, 247 F.3d 1172, 1181 (11th Cir. 2001) [14 Fla. L.
Weekly Fed. C595a] (citation omitted).
genuine issue of material fact and that the movant is entitled to judgment as a
matter of law. Fennell
v. Gilstrap, 559 F.3d 1212, 1216 (11th Cir. 2009) [21 Fla. L. Weekly
Fed. C1571a] (citing Welding
Servs., Inc. v. Forman, 509 F.3d 1351, 1356 (11th Cir. 2007) [21 Fla. L.
Weekly Fed. C246a]). Which facts are material depends on the substantive law
applicable to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). The moving party bears the burden of showing that no genuine issue
of material fact exists. Clark v. Coats & Clark, Inc., 929 F.2d 604,
608 (11th Cir. 1991). Evidence is reviewed in the light most favorable to the
non-moving party. Fennell, 559 F.3d at 1216 (citing Welding Servs.,
Inc., 509 F.3d at 1356)). A moving party discharges its burden on a motion
for summary judgment by showing or pointing out to the Court that there is an
absence of evidence to support the non-moving party’s case. Denney
v. City of Albany, 247 F.3d 1172, 1181 (11th Cir. 2001) [14 Fla. L.
Weekly Fed. C595a] (citation omitted).
When a moving party has discharged its burden, the non-moving party must then
designate specific facts (by its own affidavits, depositions, answers to
interrogatories, or admissions on file) that demonstrate there is a genuine
issue for trial. Porter
v. Ray, 461 F.3d 1315, 1321 (11th Cir. 2006) [22 Fla. L. Weekly Fed.
C1918a] (citation omitted). The party opposing a motion for summary judgment
must rely on more than conclusory statements or allegations unsupported by
facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986 (11th Cir. 1985)
(“conclusory allegations without specific supporting facts have no probative
value.”) If material issues of fact exist that would not allow the Court to
resolve an issue as a matter of law, the Court must not decide them, but rather,
must deny the motion and proceed to trial. Herzog v. Castle Rock Entm’t,
193 F.3d 1241, 1246 (11th Cir. 1999).
designate specific facts (by its own affidavits, depositions, answers to
interrogatories, or admissions on file) that demonstrate there is a genuine
issue for trial. Porter
v. Ray, 461 F.3d 1315, 1321 (11th Cir. 2006) [22 Fla. L. Weekly Fed.
C1918a] (citation omitted). The party opposing a motion for summary judgment
must rely on more than conclusory statements or allegations unsupported by
facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986 (11th Cir. 1985)
(“conclusory allegations without specific supporting facts have no probative
value.”) If material issues of fact exist that would not allow the Court to
resolve an issue as a matter of law, the Court must not decide them, but rather,
must deny the motion and proceed to trial. Herzog v. Castle Rock Entm’t,
193 F.3d 1241, 1246 (11th Cir. 1999).
III. DISCUSSION
Both parties agree there are no disputed issues of material fact for purposes
of their summary judgment motions and that the issues presented are purely legal
issues. Plaintiffs argue that the term “structural damage” is not defined in the
Policy and was not defined in the statute at the time the Policy was issued.
Plaintiffs argue the 2011 Amendment to Chapter 627 Florida Statues cannot be
applied retroactively to the Policy. Plaintiffs also argue that contrary to the
“technical” definition used by SDII, this Court should define the term
“structural damage” to mean “damage to the structure” as numerous previous
courts have done. Defendant, for its part, contends that the Florida Legislature
intended the 2011 Amendment to be remedial and procedural in nature as opposed
to substantive. Thus, Defendant contends, the Amendment should apply
retroactively. Defendant also contends that the term “structural damage” as it
is used in the Policy does not mean “damage to the structure” as Plaintiffs
argue because this would not be a reasonable interpretation of the term.
Defendant contends, rather, the only reasonable definition to the term
“structural damage” should be “damage to that part of a building that affects
the safety of such building and/or which supports any dead or designed live load
and the removal of which part, material or assembly, could cause a portion of
the building to collapse or fail.” (Dkt. 19, p. 24) Defendant contends this
definition is consistent with Florida Building Code § 202 which defines the term
“structural” as “any part, material or assembly of a building or structure which
affects the safety of such building or structure and/or which supports any dead
or designed live load and the removal of which part, material or assembly could
cause, or be expected to cause, all or any portion to collapse or fail.”
of their summary judgment motions and that the issues presented are purely legal
issues. Plaintiffs argue that the term “structural damage” is not defined in the
Policy and was not defined in the statute at the time the Policy was issued.
Plaintiffs argue the 2011 Amendment to Chapter 627 Florida Statues cannot be
applied retroactively to the Policy. Plaintiffs also argue that contrary to the
“technical” definition used by SDII, this Court should define the term
“structural damage” to mean “damage to the structure” as numerous previous
courts have done. Defendant, for its part, contends that the Florida Legislature
intended the 2011 Amendment to be remedial and procedural in nature as opposed
to substantive. Thus, Defendant contends, the Amendment should apply
retroactively. Defendant also contends that the term “structural damage” as it
is used in the Policy does not mean “damage to the structure” as Plaintiffs
argue because this would not be a reasonable interpretation of the term.
Defendant contends, rather, the only reasonable definition to the term
“structural damage” should be “damage to that part of a building that affects
the safety of such building and/or which supports any dead or designed live load
and the removal of which part, material or assembly, could cause a portion of
the building to collapse or fail.” (Dkt. 19, p. 24) Defendant contends this
definition is consistent with Florida Building Code § 202 which defines the term
“structural” as “any part, material or assembly of a building or structure which
affects the safety of such building or structure and/or which supports any dead
or designed live load and the removal of which part, material or assembly could
cause, or be expected to cause, all or any portion to collapse or fail.”
In urging the Court to accept its position, Defendant is requesting that this
Court ignore numerous decisions from this District that have addressed the exact
same legal issues raised in this case. See Bay Farms Corp. v. Great
American Alliance Ins. Co., 835 F.Supp.2d 1227,1235-1243 (M.D. Fla. 2011)
(2011 amendment to Chapter 627 Florida Statutes which added new definition of
“structural damage” was substantive in nature and could not be applied
retroactively to insurance policy predating the amendment because there was no
clear evidence of legislative intent in favor of retroactive application of the
2011 Amendment, and because, in any event, retroactive application of the
statute would substantially impair Plaintiff’s contractual right to coverage
under the policy); Ayres v. USAA Casualty Ins. Co., 2012 WL 1094321 (M.D.
Fla. 2012) (undefined phrase “structural damage” in insurance policy means
“damage to the structure”); Zawadzki v. Liberty Mutual Fire Ins. Co.,
2012 WL 3656456 (M.D. Fla. 2012) (holding that the 2011 Amendment to Florida
Statute § 627.706 cannot be applied retroactively to insurance policies that
predate the enactment of the 2011 Amendment and that, as defined in Ayres,
the undefined term “structural damage” means “damage to the structure”);
Leon v. The First Liberty Ins. Corp., 2012 WL 5417294 (M.D. Fla. 2012)
(holding that the 2011 Amendment does not retroactively apply to insurance
policies that predate its enactment and that the phrase “structural damage”
should be read according to its plain meaning to mean “damage to the
structure”); Garcia v. First Liberty Ins. Corp., 2012 WL 5328660 (M.D.
Fla. 2012) (holding the 2011 Amendment does not retroactively apply to insurance
policies that predate its enactment and that the phrase “structural damage” is
defined as “damage to the structure”); Shelton v. Liberty Mutual Ins. Co.,
2013 1663290 (M.D. Fla. 2013) (“with respect to the undefined phrase
“structural damage,” numerous Florida trial courts and courts within this
district, including this Court, have already held that the phrase should be read
according to its plain meaning . . . the phrase “structural damage” is defined
as “damage to the structure”).
Court ignore numerous decisions from this District that have addressed the exact
same legal issues raised in this case. See Bay Farms Corp. v. Great
American Alliance Ins. Co., 835 F.Supp.2d 1227,1235-1243 (M.D. Fla. 2011)
(2011 amendment to Chapter 627 Florida Statutes which added new definition of
“structural damage” was substantive in nature and could not be applied
retroactively to insurance policy predating the amendment because there was no
clear evidence of legislative intent in favor of retroactive application of the
2011 Amendment, and because, in any event, retroactive application of the
statute would substantially impair Plaintiff’s contractual right to coverage
under the policy); Ayres v. USAA Casualty Ins. Co., 2012 WL 1094321 (M.D.
Fla. 2012) (undefined phrase “structural damage” in insurance policy means
“damage to the structure”); Zawadzki v. Liberty Mutual Fire Ins. Co.,
2012 WL 3656456 (M.D. Fla. 2012) (holding that the 2011 Amendment to Florida
Statute § 627.706 cannot be applied retroactively to insurance policies that
predate the enactment of the 2011 Amendment and that, as defined in Ayres,
the undefined term “structural damage” means “damage to the structure”);
Leon v. The First Liberty Ins. Corp., 2012 WL 5417294 (M.D. Fla. 2012)
(holding that the 2011 Amendment does not retroactively apply to insurance
policies that predate its enactment and that the phrase “structural damage”
should be read according to its plain meaning to mean “damage to the
structure”); Garcia v. First Liberty Ins. Corp., 2012 WL 5328660 (M.D.
Fla. 2012) (holding the 2011 Amendment does not retroactively apply to insurance
policies that predate its enactment and that the phrase “structural damage” is
defined as “damage to the structure”); Shelton v. Liberty Mutual Ins. Co.,
2013 1663290 (M.D. Fla. 2013) (“with respect to the undefined phrase
“structural damage,” numerous Florida trial courts and courts within this
district, including this Court, have already held that the phrase should be read
according to its plain meaning . . . the phrase “structural damage” is defined
as “damage to the structure”).
The Court sees no reason to depart from these rulings. They are well-reasoned
and supported by bedrock principles of contract construction and retroactivity.
Accordingly, the Court holds that the 2011 Amendment to the statute does not
apply retroactively to the Policy in this case as the Policy predates the
amendment to the statute, the amendment is not merely procedural but substantive
in nature, there is no clear legislative intent to apply the statute
retroactively, and retroactive application of the statute would substantially
impair Plaintiff’s contractual right to coverage under the Policy. The Court
further holds that, consistent with the numerous courts that have decided this
issue, the undefined phrase “structural damage” in the Policy at issue is
defined as “damage to the structure.” Accordingly, Defendant’s motion for
summary judgment is DENIED, and Plaintiffs’ motion for summary judgment is
GRANTED.
and supported by bedrock principles of contract construction and retroactivity.
Accordingly, the Court holds that the 2011 Amendment to the statute does not
apply retroactively to the Policy in this case as the Policy predates the
amendment to the statute, the amendment is not merely procedural but substantive
in nature, there is no clear legislative intent to apply the statute
retroactively, and retroactive application of the statute would substantially
impair Plaintiff’s contractual right to coverage under the Policy. The Court
further holds that, consistent with the numerous courts that have decided this
issue, the undefined phrase “structural damage” in the Policy at issue is
defined as “damage to the structure.” Accordingly, Defendant’s motion for
summary judgment is DENIED, and Plaintiffs’ motion for summary judgment is
GRANTED.
* * *