Appellate Court Reverses Summary Judgment Where Battle of Experts Created a Jury Question

Erin Dunnavant | Property Insurance Coverage Law Blog | May 7, 2018

Generally, in Florida, when there is a difference of opinions between each party’s expert, the jury gets to decide who’s right, not the judge. But there has been a trend by insurance companies in the first-party property context of taking their expert’s report before the judge and arguing, in essence, “our expert’s right, the insured’s is wrong, so find in favor of the insurance company as a matter of law.”

These insurance companies and their experts have even convinced a few trial courts into believing this is the case. Fortunately for policyholders, Florida’s Second District Court of Appeal reminded those trial courts that battles of experts are to be hashed out before a jury.1

The Third District Court of Appeal recently followed the Second District in Garcia v. First Community Insurance Company,2 finding it was a fact question as to whose expert was correct.

On March 29, 2014, Rita Garcia (“Garcia”) noticed water damage to her home in Miami insured by a homeowner policy with First Community Insurance Company, (“First Community”). She reported her claim and it was ultimately investigated by an engineer, Ivette Acosta, (“Acosta”). First Community denied coverage based on Acosta’s engineering conclusions.

After being unable to resolve her claim on her own, Garcia hired attorneys and filed suit. In the complaint, Garcia claimed that on March 29, 2014, she and her husband discovered water damage at their home as a result of a roof leak, that the policy provided coverage for any direct physical loss that resulted from the roof leak, and that prior to suit they had provided First Community with an estimate for $22,986.66.

In response to the complaint, First Community filed an answer and affirmative defenses, where they claimed that the damages were caused by the “age and wear and tear of the roof.”

First Community filed a motion for summary judgment, arguing that the claimed damages were not covered under Garcia’s policy. To support its argument, First Community cited to the finding’s in Acosta’s expert report. It was Acosta’s opinion that the water intrusion through the roof resulted from “a combination of age-related deterioration, tree branch abrasions, and construction defects” and that “face nails observed on the shingles create a direct path for water to penetrate the structure…” which was also considered a construction defect.

Meanwhile, Garcia hired her own expert, Alfredo Brizuela (“Brizeula”) who inspected the home March 28, 2017, and reviewed Acosta’s engineering report, prepared on behalf of First Community. In response to First Community’s summary judgment motion, Garcia filed the affidavit and report of Brizuela who found, contrary to Acosta, that there was “insufficient evidence to rule out that the damages were caused by hail impact or wind uplift damage caused by a one-time occurrence.” He also found that ‘“no evidence to support any contention that the damages reported by the insured in this claim are age-related or long term in nature.” Brizuela further opined in his engineering report:

[T]he damages observed are systematic of high rain and/or wind events that occurred in the days leading up to and on the [date of loss]. The dynamic force of the winds caused an opening in the roofing system by uplifting and debonding the shingles (causing damage to the underlayment) through which rain water was able to enter, causing water damage to the interior of the building.

Despite the stark differences in Acosta and Bruzuela’s opinions, the trial court granted First Community’s motion for summary judgment. Garcia timely appealed.

In analyzing the evidence, the Third District Court of Appeal (“Third DCA”) recognized that under Florida law, the appellate court may not take the role of judging the credibility of witnesses or weighing the evidence. Apparently one of the key points that the trial court had relied upon in granting summary judgment against Garcia was that while First Community’s expert had inspected the property just months after the date of loss, Garcia’s expert did not observe the damage until three years later.

Ultimately, the Third DCA reversed the trial court’s finding and found:

The conclusions reached by the opposing engineers are clearly at odds. Given this conflict in the material evidence as to the cause of loss, the trial court erred in entering final judgment in favor of First Community…The consideration of the timing of Brizuela’s inspection [three years after the date of loss] in relation to that of First Community’s engineer…goes to the credibility and weight of Brizuela’s opinion regarding the cause of loss. It is well-established that issues of credibility and weight of the evidence are not appropriate in a summary judgment determination. Indeed, a “trial court may not determine factual issues nor consider either the weight of the conflicting evidence or the credibility of witnesses in determining whether a genuine issue of material fact exists in a summary judgment proceeding. Juno Indus., Inc. v. Heery Int’l, 646 So.2d 818, 822 (Fla. 5th DCA 1994).

Because a genuine issue of material fact exists as to the cause of the loss to the property, entry of final summary judgment in favor of First Community was improper. Accordingly, we reverse the final summary judgment entered in favor of First Community and remand the cause to the trial court for further proceedings.

This case is important because it helps keep policyholders on equal footing with their insurance companies. First Community’s expert may not be right—a jury in Miami will eventually let us know. This case also emphasizes the importance of proving up your case if you represent policyholders as either an attorney or public adjuster. It is very important to make sure that you have retained the appropriate professionals to evaluate the insurance company’s findings and render reports and affidavits, especially in the face of a summary judgment motion.
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1 See Roker v. Tower Hill Preferred Ins. Co., 164 So.3d 690 (Fla. 2d DCA 2015)(Jury question as to which expert was correct regarding sinkhole repair method); see alsoSanchez v. Royal Palm Ins. Co., 166 So.3d 212 (Fla. 2d DCA 2015)(same), Estrada v. Tower Hill Select Ins. Co., 179 So.3d 348 (Fla. 2d DCA 2015)(same); Case v. Tower Hill Prime Ins. Co., 191 So. 3d 526, 527 (Fla. 2d DCA 2016)(same).
2 Garcia v. First Cmty. Ins. Co., No. 3D17-968, 2018 WL 1513153 (Fla. 3d DCA Mar. 28, 2018).

Disputed Facts on Cause of Collapse Results in Denied Cross-Motions for Summary Judgment

Tred R. Eyerly | Insurance Law Hawaii | January 22, 2018

Although the court concluded that the policy covered a loss caused by the weight of snow, disputed facts as to the cause of the collapse led to the denial of cross-motions for summary judgment. Freeway Drive Inv., LLC v Employers Mut. Cas. Co., 2017 U.S Dist. LEXIS 207165 (E.D Mich. Dec. 18, 2017).

Freeway Drive owned a single story commercial building insured by Employers Mutual Casualty Company (EMCC). The building sustained damage when trusses within the roof shifted and dropped, causing visible sagging. EMCC denied Freeway Drive’s claim.

Freeway Drive hired structural engineer Abdul Brinjikji to inspect the damage. He visited the building three times. On the first visit, he saw snow on the roof but could not estimate how much. Nevertheless, he opined that the collapse was caused by an overload of snow. He developed a plan to shore up the roof and repairs commenced.

After repairs were completed, Brinjikji visited the property a second time. He sill opined that the collapse was caused by snow load. His opinion did not change after this third visit.

EMCC retained an engineer, Richard Hamann, who also investigated the cause of the collapse. After the inspection, EMCC stated in a letter to Freeway Drive that the damage to the roof trusses was a result of fire retardant applied to the roofing structure when it was built. Over time, the fire retardant, along with moisture in the attic, resulted in structural failure of the trusses. EMCC concluded that the loss did not fall within the policy’s collapse coverage, that the damage was not caused by a “specified cause of loss” as defined by the policy, and that the loss was subject to the policy’s collapse exclusion.

After receiving EMCC’s denial letter, Freeway Drive tested a sample of the truss lumber for the presence of fire retardant. The test indicated the presence of small amounts of Boron, which was one of three major fire retardant tracer elements. But the amount of total fire retardant that permeated into the wood was minimal. Brinjikji later testified that Boron did not affect wood like earlier used fire retardants in older buildings did.

Freeway Drive sued EMCC and cross-motions for summary judgment were filed. The court first determined that the policy was “all-risk,” meaning the loss was covered unless the particular damage was specifically excluded.

Next, the court noted that “weight of snow” was a specified cause of loss” under the policy. While EMCC did not dispute that damage caused by weight of snow was covered under the policy, it contended that the plain language of the “Collapse Exclusion” barred coverage for collapse due only to the weight of snow. EMCC said that coverage could only be extended if a snow-load collapse occurred after construction, remodeling, or renovation was complete, and because of the use of defective materials or methods.

The court disagreed with EMCC’s attempt to limit the analysis to the “Additional Coverage – Collapse” provision of the policy. Although collapse was excluded from the policy, the exclusion did not apply if coverage was provided under the Additional Coverage-Collapse provision or if the collapse was caused by a “specified cause of loss.”

EMCC argued that the collapse exclusion exception had to be read in harmony with the Additional Coverage – Collapse provision. Interpreting the policy to provide collapse coverage for collapse solely due to a specified cause of loss rendered as surplusage the unambiguous language of the Additional Coverage-Collapse provision.

Freeway Drive argued that the plain language provided that collapse coverage was restored under the exclusion when the collapse was due to the weight of snow. The Additional Coverage – Collapse clause and the “specified causes of loss” provision were distinct exceptions to the collapse exclusion that had to be applied separately.

The court agreed with Freeway Drive. The policy provided coverage for collapse due only to a “specified cause of loss,” i.e., the weight of snow, regardless of the Additional Coverage – Collapse provision.

Nevertheless, the experts disagreed on the cause of the loss, creating a factual dispute as to whether the weight of snow, or deterioration due to fire retardant, caused the collapse. Hamann said that further testing was needed on the roof trusses. In the first test, traces of fire retardant were found. Brinjikji could not say for certain that the conditions in which the retardant could have affected the trusses did not occur. Neither party could demonstrate the absence of a dispute of material fact that either the weight of snow, degradation, or both, caused the loss. Therefore, summary judgment could not be granted to either party.

Louisiana Appellate Court Affirms Summary Judgment For Insurer Where Damage Manifested After Policy Period

Phelps Dunbar LLP | January 30, 2018

A Louisiana court of appeal affirmed a grant of summary judgment in favor of an insurer where the alleged damage did not manifest during the policy periods. Crosstex Energy Servs., LP v. Texas Brine Co., LLC, 2017-0863 (La. App. 1 Cir. 12/21/17).

The insured, operator of an underground salt dome, had CGL policies for multiple policy periods that provided coverage for property damage, defined as “physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it….” Years after the last policy expired, a sinkhole appeared near the salt dome. The plaintiffs in the underlying litigation, who own and operate a gas pipeline that traverses the edge of a salt dome, sued the insured alleging that the sinkhole was caused by its operations. The insured filed a declaratory judgment demanding defense and indemnity from various insurers under certain liability policies pre-dating the sinkhole. The insurers moved for summary judgment claiming they had no duty to defend or indemnify because the alleged damage did not occur during the policy periods. The district court granted the motion and the insured appealed, arguing that the policies do not limit coverage to property damage that manifests itself during the policy period and should be interpreted to cover possible hidden property damage that may have resulted from earth movement that may have occurred during the policy periods.

The court of appeal affirmed, finding that the underlying petition did not allege damage prior to the appearance of the sinkhole, and dismissed the insured’s argument that genuine issues of material fact existed as to whether hidden damage occurred before the appearance of the sinkhole due to subsidence and other invisible underground damage in the prior years.

1st Circuit Pending Appeal – Construction Contract Defenses & Miller Act

Katherine E. Kohm | The Dispute Resolver | September 26, 2017

In Endicott Constructors Corp. v. E. Amanti & Sons, Inc., No. 1:14-CV-12807-LTS, 2017 WL 3028877 (D. Mass. July 14, 2017), the plaintiff-subcontractor Endicott Constructors Corp. (“Plaintiff”) filed a lawsuit claiming breach of contract and quantum meruit against the defendant-general contractor E. Amanti & Sons, Inc. (“Defendant Contractor”) on a construction renovation project at a Veterans Affairs building in Bedford, Massachusetts. Plaintiff also brought a claim against Safeco Insurance of America (“Defendant Surety”) pursuant to the Miller Act, 40 U.S.C. § 3133.  The two Defendants moved for summary judgment against Plaintiff’s claims. The District of Massachusetts granted the motions. Plaintiff is now appealing the decision to the First Circuit.

Though factually detailed, the decision serves as a review of numerous key concepts in construction law including the requirement of strict performance to recover on a contract breach, requirement of substantial performance to recover under quantum meruit, cardinal change, necessity of expert testimony, contractual notice provisions, and tolling applicable to the Miller Act statute of limitations.

  • The Court held that Plaintiff could not, as a matter of law, show “complete and strict performance of all its terms” because Plaintiff walked off the project with 1/3 of the subcontract to complete, and therefore could not recover on the contract itself.
  • Moreover, in addition to walking off the job, Plaintiff acknowledged, inter alia, that it performed defective work and did not pay federally-required wages.  Accordingly, the Court concluded that the Plaintiff, as a matter of law, “did not substantially perform its contract obligations” which extinguished its claim for “quantum meruit” as well.
  • To avoid this harsh result on its contract-based claims, Plaintiff argued that a “cardinal change” had occurred excusing its performance.  The Court hesitated to confirm that Massachusetts has adopted this doctrine, but in any event, held that the elements of a cardinal change were not present. The Court observed that there must be “alteration in the work [effected by the government] so drastic that it effectively requires the contractor to perform duties materially different from those originally bargained for.”  Here, because Plaintiff only pointed to the government adding supervisory personnel to its payroll and a large number of change orders, the Court was not persuaded that Plaintiff’s scope was “drastically altered.” Indeed that court emphasized that, In re Boston Shipyard Corp., 886 F.2d 451, 456 (1st Cir. 1989) the court had held that even 86 change orders was not sufficient to show a cardinal change to construction contract.
  • With respect to Plaintiff’s extended time claim, the Court, in dicta, questioned whether an expert is required to prove such a delay claim, but also noted that Plaintiff’s failure to do so may be at its peril as it had not presented a “coherent analysis” to allow a factfinder to could find in its favor.
  • Adding to Plaintiff’s challenges, it failed to present evidence that it had given notice of its claims within 7 days as required by the contract. The Court, without delving into whether the defendant was prejudiced by the delay, succinctly held that failure to comply with the contractual provision “will generally preclude all relief.”
  • With respect to the Miller Act action that Plaintiff filed on the bond provided by Defendant Surety, the Court was not persuaded that presence of Plaintiff’s trailers on the construction site would extend limitations period.  The Miller Act requires that any action on the bond must be brought within one year of the “last of the labor was performed or material was supplied” by the contractor or supplier bringing the action.
If the First Circuit has an opportunity to weigh in, the law in these areas, as recounted above, may be further honed by its decision. If so, we will update this blog.

Homeowner’s Claim for Collapse Survives Summary Judgment

Tred Eyerly | Insurance Law Hawaii | September 18, 2017

The insurer failed to present adequate evidence on summary judgment that damage caused by the collapse of a swimming pool was not covered. Klein v. State Farm Ins. Co., 2017 N.Y. Misc. LEXIS 3030 (Sup. Ct. N.Y. July 11, 2017).

Klein notified State Farm that his in-ground pool collapsed on February 5, 2014, with a side wall falling into the pool, causing damage to brick, borders and the patio around the pool. Upon inspection, State Farm’s agent found that the cover of the pool had partially fallen into the pool, and that the vinyl pool liner had a tear. State Farm covered the damage to the pool liner, but denied coverage for the in-ground swimming pool walls, the brick border and the patio surrounding the pool. State Farm maintained that the loss was due to a “collapse,” which was excluded under the homeowner’s policy.

The policy covered “the direct physical loss to covered property involving the sudden entire collapse of a building or any part of a building” caused by listed perils. The policy contained exclusions for wear and tear, faulty construction, earth movement and water damage.

Klein informed State Farm that the damage was caused by an arrow shot into his pool by an unknown deer hunter, which damaged the pool liner and then led to the pool collapse. Klein later found a piece of an arrow at the bottom of the pool. State Farm denied coverage, asserting that the swimming pool was not a “building” and that the collapse was not covered, even if caused by an arrow piercing the pool liner. Further, State Farm relied upon exclusions in the policy.

The court denied State Farm’s motion for summary judgment because its engineering report was not in an admissible form. Therefore, State Farm had not established from the language of the policy a prima facie case that damage to the pool walls, brick border and patio area was caused by wear, tear and the deterioration of the pool liner. State Farm also failed to establish that damage was caused by earth movement.