Garcia et al v. First Liberty Insurance Corporation

Filing 15

ORDER denying 13 Defendant's Motion for Summary Judgment. Signed by Judge James S. Moody, Jr on 10/29/2012. (LN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

ADOLPH GARCIA, et al.,
Plaintiffs,
v.

Case No. 8:12-cv-771-T-30TGW

FIRST LIBERTY INSURANCE
CORPORATION,
Defendant.
_____________________________________/

ORDER
THIS CAUSE comes before the Court upon Defendant’s Motion for Summary
Judgment and Supporting Memorandum of Law (Dkt. 13) and Plaintiffs’ Response in
Opposition to Defendant’s Motion for Summary Judgment and Supporting Memorandum of
Law (Dkt. 14). The Court, having reviewed the motion, response, and being otherwise
advised of the premises, concludes that the motion should be denied.
This is an action for damages arising out of an insurance policy Defendant First
Liberty Insurance Corporation issued to Plaintiffs Adolph and Melissa Garcia. Plaintiffs
contend that their property suffered damages consistent with sinkhole activity; a covered
cause of loss. The issue before the Court on First Liberty’s summary judgment motion on
its counter claim is whether a 2011 amendment to the Florida statutory scheme governing
sinkhole insurance that added a statutory definition of “structural damage” should be applied
retroactively to the insurance policy at issue. As this Court has recently held in a nearly

identical case, Zawadzki v. Liberty Mutual Fire Ins. Co., 2012 WL 365645 (M.D. Fla. Aug.
23, 2012), the summary judgment motion should be denied because retroactive application
of the 2011 statutory definition of “structural damage” would impair the Garcias’ vested
contractual rights under the policy. See Bay Farms Corp. v. Great American Alliance Ins.
Co., 835 F. Supp. 2d 1227 (M.D. Fla. 2011).
At all material times, the Garcias owned the property located at 7370 West Price
Boulevard, North Port, Florida (the “subject property”). First Liberty insured the property
under policy number H36-258-510462-1004 (the “subject policy”), with effective dates of
December 6, 2010 through December 6, 2011. The subject policy provides coverage for
Sinkhole Loss as follows:
SECTION 1 - 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 a limestone or similar rock
formation.

The SECTION I - Earth Movement exclusion does not apply to this peril.
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On May 17, 2011, while the policy was in effect, the Garcias made a claim with First
Liberty for damage to the subject property that was consistent with sinkhole activity. First
Liberty retained Rimkus Consulting Group to conduct a structural evaluation of the subject
property. Rimkus produced a report, opining that the subject property did not exhibit
structural damage “as defined in current Florida Statute 627.706.” Rimkus also concluded
that “the majority of the observed distress in the concrete flatwork was due to shrinkage of
the concrete as it cured, as well as thermal related expansion and contraction, and was
potentially exacerbated by differential movement of the slabs due to non-uniform soil
support.”
On August 23, 2011, First Liberty sent the Garcias a letter denying coverage for the
subject damage based on Rimkus’ findings. The Garcias then filed suit in state court for an
alleged breach of the subject policy. The state court action was removed to this Court on
April 10, 2012.
In addition to its answer and affirmative defenses, First Liberty filed a counterclaim
for declaratory judgment. First Liberty’s counterclaim asserts that the language of the
subject policy provides no coverage for the damages claimed by the Garcias unless that loss
includes “structural damage.” Notably, the subject policy does not define the term “structural
damage.” Moreover, the subject policy does not purport to incorporate by reference any
existing statutory definitions, nor does it include language expressly making changes to
statutory definitions retroactively applicable to claims arising under the subject policy.
However, First Liberty urges the Court to accept the 2011 amendment to the Florida statutory
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scheme governing sinkhole insurance that added a statutory definition of “structural
damage.”
As noted above, this Court recently denied an identical summary judgment motion by
Liberty Fire Insurance Company (8:12-c-v-950-JSM-MAP, Dkt. 17). For all the reasons
discussed in that opinion, Zawadzki, 2012 WL 3656456, the Court reaffirms that the 2011
amendment does not retroactively apply to insurance policies that predate its enactment.
Additionally, the Court again concludes that the phrase “structural damage” should be read
according to its plain meaning as the court recently held in Ayres v. USAA Casualty
Insurance Company, 2012 WL 1094321 (M.D. Fla. April 2, 2012). Therefore, “‘structural
damage’ is defined as damage to the structure.” Zawadzki, 2012 WL 365645, at *6.
It is therefore ORDERED AND ADJUDGED that Defendant’s Motion for Summary
Judgment (Dkt. 13) is DENIED.
DONE and ORDERED in Tampa, Florida on October 29, 2012.

Copies furnished to:
Counsel/Parties of Record
S:\Odd\2012\12-cv-771.sumjud.frm

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