Insurance — Homeowners — Property damage — Sinkhole — Subsurface repairs
— Error to order insurer to pay for subsurface repairs before homeowner entered
into contract for these repairs where insurance policy contained loss settlement
provision which authorized withholding of payment until homeowners entered into
contract for repairs

TOWER HILL SELECT INSURANCE COMPANY, Appellant, v. ANDREW MCKEE, Appellee.
2nd District. Case No. 2D13-2076. Opinion filed August 20, 2014. Appeal from the
Circuit Court for Polk County; Mark H. Hofstad, Judge. Counsel: Carol M. Rooney
and Ezequiel Lugo of Butler Pappas Weihmuller Katz Craig LLP, Tampa, for
Appellant. Robert E. Biasotti and Annette Marie Lang of Biasotti and Associates,
St. Petersburg, for Appellee.

(SLEET, Judge.) Tower Hill Select Insurance Company appeals the final summary
judgment awarding $181,317.26, including interest in the amount of $22,429.08,
in favor of Andrew McKee for sinkhole damages to his property. We review the
trial court’s ruling on a motion for summary judgment and interpretation of an
insurance contract and statutes de novo. See Volusia Cnty. v. Aberdeen
at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000); State Farm Fla.
Ins. Co. v. Phillips, 134 So. 3d 505, 507 (Fla. 5th DCA 2014).

This appeal involves a coverage dispute between McKee and Tower Hill
concerning sinkhole damage to McKee’s home. In March 2010, McKee timely filed a
claim for property damage to his home related to a sinkhole. In July 2010, Tower
Hill’s designated engineer concluded there was no evidence of a sinkhole and
Tower Hill denied coverage. In early 2011, McKee hired a private engineer who
concluded that the damage was caused by a sinkhole. McKee provided the report to
Tower Hill. Tower Hill did not respond, and McKee filed an action for breach of
contract.

Many of Tower Hill’s issues on appeal depend on its underlying assertion that
McKee preemptively filed suit because no cause of action existed at the time he
filed his complaint. This argument is without merit. When Tower Hill denied
coverage a valid dispute as to the existence of a covered loss under the
insurance policy arose. See, e.g. Warfel v. Universal Ins. Co. of N.
Am., 36 So. 3d 136 (Fla. 2d DCA 2010) (considering a dispute as to whether a
covered loss had occurred under the insured’s policy), approved, 82 So.
3d 47 (Fla. 2012). Accordingly, McKee’s complaint properly sought a
determination as to whether Tower Hill breached the insurance contract by
denying coverage of a covered loss. See id. The policy provisions
containing conditions precedent to suit that Tower Hill relies on in its
appellate briefs were only relevant to a situation where Tower Hill admitted
liability and a dispute as to the amount of recovery arose. Accordingly, they
could not act to bar McKee from filing suit when Tower Hill denied his insurance
claim entirely.

However, we agree that it was error for the trial court to order Tower Hill
to pay for subsurface repairs before McKee entered into a contract for those
repairs. Because the insurance policy contained a loss settlement provision
tracking the language of section 627.707(5)(b), Florida Statutes (2010), Tower
Hill had the authority to withhold payment for subsurface repairs until McKee
entered into a contract for those repairs. See Phillips, 134 So.
3d at 508.

McKee’s failure to enter into a contract for subsurface repairs was a factor
outside Tower Hill’s control that reasonably prevented payment. Section
627.70131(5)(a), Florida Statutes (2013), authorizes an award of prejudgment
interest on “[a]ny payment of an initial or supplemental claim or portion of
such claim made 90 days after the insurer receives notice of the claim, or made
more than 15 days after there are no longer factors beyond the control of the
insurer which reasonably prevented such payment, whichever is later.”
(Emphasis added). Therefore, the trial court’s award of prejudgment interest on
the subsurface damage award was premature.

Accordingly, we reverse the portions of the final judgment requiring Tower
Hill to pay for subsurface repairs before McKee contracted for those repairs and
awarding prejudgment interest as to the subsurface damage award. We affirm the
remaining portions of the final judgment without further comment.

Affirmed in part, reversed in part, and remanded. (KELLY and KHOUZAM, JJ.,
Concur.)