Reilly et al v. Liberty Mutual Fire Insurance Company
Filing
33
ORDER denying 27 Motion for Summary Judgment. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 8/20/2013. (KAK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
JOSEPH REILLY and DORIS REILLY,
Plaintiffs,
v.
Case No. 8:12-cv-2604-T-33EAJ
LIBERTY MUTUAL FIRE INSURANCE
COMPANY,
Defendant.
______________________________/
ORDER
This matter comes before the Court pursuant to Defendant
Liberty Mutual Fire Insurance Company’s Motion for Summary
Judgment (Doc. # 27), which was filed on June 3, 2013.
Plaintiffs Joseph and Doris Reilly filed their Response in
Opposition to the Motion (Doc. # 30) on July 9, 2013.
For the
reasons that follow, the Motion is denied.
I.
Background
The Reillys purchased a homeowners’ insurance policy from
Liberty Mutual with an effective period of February 27, 2011,
through February 27, 2012, to cover their residence located in
Spring Hill, Florida. (Doc. # 1 at ¶¶ 2-3).
During the
effective period of the Policy, the Reillys discovered damage
to their residence, and they contend that the damage was
caused by sinkhole activity. (Id. at ¶ 7).
provides coverage for sinkhole loss as follows:
The Policy
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 limestone or similar
rock formation.
The SECTION 1 - Earth Movement exclusion does not
apply to this peril.
(Doc. # 1-1 at 38).
The Reillys filed a claim for insurance coverage with
Liberty Mutual, and Liberty Mutual denied the claim. The
Reillys accordingly filed an action for breach of their
insurance contract against Liberty Mutual on November 16,
2012. (Doc. # 1). The Reillys filed an Amended Complaint (Doc.
# 18) to clarify their jurisdictional allegations on January
24, 2013.
Liberty Mutual filed its Answer, Affirmative
Defenses, and Counterclaim for declaratory judgment on January
28, 2013. (Doc. # 20). The Reillys filed a reply (Doc. # 21)
on February 6, 2013.
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On June 3, 2013, Liberty Mutual filed its Motion for
Summary Judgment on its Counterclaim.
(Doc. # 27).
Therein,
Liberty Mutual requests that the Court apply the May 17, 2011,
Amendments to the Florida statutory scheme regulating sinkhole
insurance, which added a statutory definition of “structural
damage.”
Ostensibly, Liberty Mutual does not request summary
judgment on the merits of the Reillys’ Amended Complaint, nor
does
Liberty
coverage
is
Mutual
request
available
under
a
ruling
the
regarding
Policy.
whether
After
due
consideration, the Court determines that summary judgment is
not warranted on the narrow issue presented.
II.
Summary Judgment Standard
Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a).
An issue is genuine if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.
Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742
(11th Cir. 1996) (citing Hairston v. Gainesville Sun Publ’g
Co., 9 F.3d 913, 918 (11th Cir. 1993)).
A fact is material if
it may affect the outcome of the suit under the governing law.
3
Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.
1997).
The Court must draw all inferences from the evidence in
the light most favorable to the non-movant and resolve all
reasonable doubts in that party's favor.
461 F.3d 1315, 1320 (11th Cir. 2006).
See Porter v. Ray,
The moving party bears
the initial burden of showing the Court, by reference to
materials
on
file,
that
there
are
no
genuine
issues
material fact that should be decided at trial. Id.
of
When a
moving party has discharged its burden, the non-moving party
must then go beyond the pleadings, and by its own affidavits,
or by depositions, answers to interrogatories, and admissions
on file, designate specific facts showing there is a genuine
issue for trial. Id.
III. Analysis
In 1981, the Florida Legislature adopted a statutory
provision requiring insurers to offer coverage for sinkhole
losses.
As originally enacted, this statutory provision
provided:
(1)
Every insurer authorized to transact property
insurance in this state shall make available
coverage for insurable sinkhole losses on any
structure, including contents of personal
property contained therein, to the extent
provided in the form to which the sinkhole
coverage attaches.
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(2)
(3)
“Loss”
means
structural
damage
to
the
building. Contents coverage shall apply only
if there is structural damage to the building.
“Sinkhole loss” means actual physical damage
to the property covered arising out of or
caused by sudden settlement or collapse of the
earth supporting such property only when such
settlement
or
collapse
results
from
subterranean voids created by the action of
water on a limestone or similar rock
formation.
Fla. Stat. § 627.706(1981).
In 2005, the Florida Legislature redefined “sinkhole
loss” as “structural damage to the building, including the
foundation, caused by sinkhole activity.” Bay Farms Corp v.
Great Am. Alliance Ins. Co., 835 F. Supp. 2d 1227, 1230-33
(M.D. Fla. 2011).
The 2005 version of the statute included
new defined terms, but did not define “structural damage.”
Id.
In 2011, the Florida Legislature for the first time
defined “structural damage” to be applied when interpreting
insurance policies providing sinkhole insurance coverage.
That amendment went into effect on May 17, 2011.
As amended,
Fla. Stat. § 627.706 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.
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(k)
“Structural damage” means a covered building,
regardless of the date of its construction,
has experienced the following:
1.
Interior floor displacement or deflection
in excess of acceptable variances as
defined in ACI 117-90 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 primary structural systems that
prevents 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
within 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 moving or instability of the ground
within
the
influence
zone
of
the
supporting ground within the sheer plane
necessary for the purpose of supporting
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5.
such building as defined within the
Florida Building Code; or
Damage occurring on or after October 15,
2005, that qualifies as “substantial
structural damage” as defined in the
Florida Building Code.
Fla. Stat. § 627.706(2)(k)(2011).
Here, Liberty Mutual requests that the Court apply the
2011 statutory language defining “structural damage” to this
case, even though the Policy’s issuance date (February 27,
2011) predates the effective date of the Amendment (May 17,
2011).
The same argument has been advanced by Liberty Mutual
and other insurers in a host of cases that are factually and
procedurally similar to the instant case.
In each such case,
the court declined to apply the definition of “structural
damage” retroactively to an insurance policy issued prior to
May 17, 2011. See, e.g., Bay Farms Corp., 835 F. Supp. 2d at
1242-43 (“Bay Farms had a vested contractual right to coverage
for ‘sinkhole loss’ as that term was understood when the
Policy
was
issued
.
.
.
.
Thus,
the
constitutional
prohibitions against retroactive application of legislation
impairing vested and contractual rights precludes the Court
from applying the newly adopted definition of ‘structural
damage’ to effectively extinguish Bay Farms’ rights under the
Policy.”); Garcia v. First Liberty Ins. Corp., No. 8:12-cv-
7
771-T-30TGW, 2012 U.S. Dist. LEXIS 154775, at *2 (M.D. Fla.
Oct. 29, 2012)(“[T]he 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.”); Leon v. First
Liberty Ins. Corp., No. 8:12-cv-1613-T-30MAP, 2012 U.S. Dist.
LEXIS 158952, at *5 (M.D. Fla. Nov. 6, 2012)(“[T]he Court
reaffirms that the 2011 amendment does not retroactively apply
to insurance policies that predate its enactment.”); Sohl v.
Liberty Mut. Fire Ins. Co., No. 8:13-cv-200-T-17-AEP, 2013
U.S. Dist. LEXIS 95451, at *10 (M.D. Fla. July 9, 2013)(“[T]he
definition of ‘structural damage’ introduced in the 2011
Amendments does not apply to the Sohl’s policy [issued in
2010]; instead, the plain meaning of the phrase, ‘damage to
the structure’ shall apply.”); Zawadzki v. Liberty Mut. Fire
Ins. Co., No. 8:12-cv-950-T-30MAP, 2012 U.S. Dist. LEXIS
119600 (M.D. Fla. Aug. 23, 2012)(declining to apply 2011
Amendments to an insurance policy issued on November 13, 2010
and “conclud[ing] that the phrase ‘structural damage’ should
be read according to its plain meaning . . . ‘damage to the
structure.’”)(citations omitted).
The Court echoes the reasoning of the courts above and
declines to apply the 2011 statutory definition of “structural
8
damage” to the Reillys’ Policy.
As explained in Bay Farms,
“the 2011 Amendment does more than just clarify a statutory
definition – it adds a new definition of ‘structural damage’
that
would
substantially
limit
an
insurance
company’s
liability for damage resulting from sinkholes by narrowing the
definition of a covered ‘sinkhole loss.’” 835 F. Supp. 2d at
1237.
As the Bay Farms court found, there is no “clear
evidence
of
legislative
intent”
to
apply
the
statute
retroactively, and even if such legislative intent existed,
applying
the
2011
Amendments
constitutional rights.
would
violate
Id. at 1241-42.
the
parties’
Thus, this Court
joins the other judges of this district who have declined to
apply the 2011 Amendments retroactively.
Furthermore,
the
Court
determines
that
the
phrase
“structural damage” should be read according to its plain
meaning, which is “damage to the structure.” See, e.g., Ayres
v. USAA Casualty Insurance Co., No. 8:11-cv-816-T-24TGW, 2012
U.S.
Dist.
LEXIS
45932,
at
*10
(M.D.
Fla.
Apr.
2,
2012)(“[T]his Court concludes, as a matter of law, that the
undefined phrase, ‘structural damage,’ within the sinkhole
loss endorsement means ‘damage to the structure.’”); Bonitch
v. Liberty Mut. Fire Ins. Co., No. 8:12-cv-770-T-26TBM (M.D.
Fla. Nov. 9, 2012)(“When allotting a plain meaning to a policy
9
term, courts are required to apply the plain and unambiguous
meaning as understood by the ‘man-on-the-street.’
The judges
of this Court have repeatedly found that the plain meaning of
the term ‘structural damage’ in pre-May 17, 2011, sinkhole
policies which leave the term undefined, is ‘damage to the
structure.’”)(citations omitted); Garcia, 2012 U.S. Dist.
LEXIS 154775, at *2 (“The Court again concludes that the
phrase ‘structural damage’ should be read according to its
plain meaning . . . . Therefore, ‘structural damage’ is
defined as damage to the structure.”)(citations omitted).
Thus,
as
explained
above,
the
Court
denies
Liberty
Mutual’s Motion for Summary Judgment.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
Defendant Liberty Mutual Fire Insurance Company’s Motion
for Summary Judgment (Doc. # 27) is DENIED.
DONE and ORDERED in Chambers, in Tampa, Florida, this
20th day of August, 2013.
Copies: All Counsel of Record
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