Hegel v. The First Liberty Insurance Corporation

Facts

Ps had a homeowner's insurance policy with D. It insured against 'Sinkhole Loss' as an exception to the policy's exclusion for damage caused by earth movement. 'Sinkhole Loss means structural damage to the building, including the foundation, caused by sinkhole activity.' The version of the Florida statute governing sinkhole insurance that was in effect in 2010 contained the same definition of 'sinkhole loss' as the policy did, but similarly failed to define the term 'structural damage.' The Florida Building Code (2004), defined 'structural' as it relates to buildings: For purposes of this code, 'structural' shall mean 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. Ps discovered damage to their home and submitted a claim. D retained Structural Engineering and Inspections, Inc. (SEI) to investigate. SEI concluded that Ps' residence 'DOES NOT MEET the criteria for Structural Damage as defined by Florida Statutes. Ps requested a neutral evaluation by a public adjuster. Kevin Scott, the neutral evaluator, issued a report that if the sinkhole claim was made under a policy with an effective date before May 17, 2011, then the 2011 definition of 'structural damage' set forth in Florida Statutes § 627.706 would not apply. Scott recommended subsurface grouting, at an estimated cost of $105,075, to remediate the sinkhole activity. He did not apply any particular definition of 'structural damage' to his evaluation, finding only that '[t]here was physical damage that resulted from settlement.' Ps hired Central Florida Testing Laboratories, Inc. (CFTL) to review the findings and to conduct additional testing. CFTL determined that sinkhole activity was a contributing cause of the damage. It estimated the total cost at $145,775. Ps retained Champion Foundation Repair to prepare a bid based on CFTL's recommended remediation plan, with the bid coming in at $141,180. Ps filed suit against D for breach of contract. D filed a counterclaim for a declaratory judgment that Ps' claimed damage falls outside the scope of the homeowner's insurance policy. Both parties moved for summary judgment and the court ruled for Ps. The court held that the term 'structural damage' should be interpreted to mean any 'damage to the structure.' D appealed. D contends that (1) the plain meaning of 'structural damage' cannot be any 'damage to the structure' in the context of the contractual phrase 'structural damage to the building'; and (2) the insurance policy incorporates the definitions of 'structural' under the Florida Building Code (2004) and 'structural damage' as 'clarified' by the 2011 amendment to Florida Statutes § 627.706, such that the term 'structural damage' must mean more than any 'damage to the structure.'

Issues

Rule of Law

Holding and Decision

Legal Analysis

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