Kelley Kronenberg - In the Know - First-Party Property Appellate - December 2023

IN THE

D E C E M B E R 2023

NOW

FIRST- PARTY PROPERTY APPELLATE EDITION

Happy Holidays!

IN THIS ISSUE: • Exclusions – Earth Movement • Exclusions – Water Damage Exclusion and Limited Water Damage Coverage • Application of Presuit Notice Statute to Pre-Existing Policies • Appraisal – Dual Track

FIRST-PARTY PROPERTY APPELLATE TEAM

For any questions, please contact: Jeffrey M. Wank Chair of First-Party Property and Insurance Coverage Fort Lauderdale T: (954) 370-9970 jwank@kklaw.com

ADMISSIONS Florida • Georgia • United States Court of Appeal, Eleventh Circuit

SELECTED OPINIONS w Expert Inspections, LLC d/b/a ITest d/b/a Moldexpert.com a/a/o Pat Beckford v. United Property & Casualty Insurance Company, 333 So.3d 200 (Fla. 4th DCA 2022) (holding that an insurer cannot be required to follow the terms of an AOB contract where the insurer is not a party to that contract). w The Kidwell Group, LLC d/b/a Air Quality Assessors of Florida a/a/o Maria Amadio v. Olympus Insurance Company, Case No. 5D21-2955 (Fla. 5th DCA July 22, 2022) (interpreting section 627.7152, F.S., as applying to AOB contracts executed after the enactment of the statute, finding the policy inception date irrelevant to the analysis).

Partner

w Saunders v. Florida Peninsula Insurance Company, 314 So.3d 592 (Fla. 3d DCA 2020) (interpreting the “faulty workmanship” policy exclusion to include the workmanship process as well as the finished product in affirming the insurer’s denial of a property damage claim).

Tallahassee | Atlanta T: (850) 577-1301 kfernandes@kklaw.com

w The Kidwell Group, LLC d/b/a Air Quality Assessors of Florida a/a/o Benjamin Kivovitz, Case No. 4D212843 (Fla. 4th DCA June 15, 2022) (enforcing the new section 627.7152, F.S., requirement of including a line-item estimate with an AOB contract at the time of execution)

Kimberly J. Fernandes

ADMISSIONS Florida • U.S. District Court, Northern District of Florida • U.S. District Court, Middle District of Florida

SELECTED OPINIONS w Progressive American Insurance Company v. Glassmetics, LLC, No. 2D21-488, 2022 WL 1592154 (Fla. 2d DCA 2022) (“we reverse the trial court’s order and its conclusions (1) that the appraisal provision was against the public policy underlying section 627.428; (2) that the appraisal provision failed to provide sufficient procedures and methodologies; (3) that Progressive waived its appraisal right; (4) that the appraisal provision was unenforceable because Progressive failed to prove that the insured knowingly, voluntarily, and intelligently waived his rights of access to courts, to a jury trial, and to due process; and (5) that the appraisal provision contains an ambiguity.”).

Daniel Montgomery Partner Jacksonville T: (904) 549-7700 dmontgomery@kklaw.com

w All Auto Glass v. Progressive American Ins. Co., Case No. 2018-SC-3126, 2019-33-AP (Fla. Seminole Cnty. Appellate Division.) (“reversing trial court, holding ruling of district court of appeal in jurisdiction other than where trial court is located is binding upon trial court absent conflict with another district court of appeal. ) w Progressive Am. Ins. Co. v Broward Ins. Recovery Ctr., LLC, 322 So. 3d 103 (Fla. 4th DCA 2021) (“reversing trial court, holding prohibitive cost doctrine inapplicable to appraisal”).

TABLE OF

CONTENTS Exclusions – Earth Movement TOWER HILL PRIME INS. CO. v. IVET BERMUDEZ and MARIO BERMUDEZ, 3522-0828 (Nov. 29, 2023) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Exclusions – Water Damage Exclusion and Limited Water Damage Coverage PEOPLE’S TRUST INS. CO. v. PAUL GUNSSER, 6D23-492 (Nov. 9, 2023). . . . . . . . . . . . . . . . 5

Application of Presuit Notice Statute to Pre-Existing Policies REBECCA HUGHES v. UNIVERSAL PROPERTY & CASUALTY INS. CO., 6D23-296 (Nov. 22, 2023). 7

Appraisal – Dual Track HERITAGE PROPERTY & CASUALTY INS. CO. v. CENTURY PARK CONDOMINIUM NO. 2 ASSOCIATION INC., 3D2022-1489 (Oct. 18, 2023) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Exclusions – Earth Movement TOWER HILL PRIME INS. CO. v.

IVET BERMUDEZ and MARIO BERMUDEZ, 3522-0828 (Nov. 29, 2023) KK TAKEAWAY: Exclusions are strictly construed, and exclusion for land movement does not encompass shockwaves.

KK TAKEAWAY: Anti-concurrent causation language within the exclusion section of the policy does not apply to perils-insured avoidance provisions.

BACKGROUND: Insureds filed a breach of contract action based upon the denial of coverage for “cracking damage.” Insured believed the damage resulted from vibrations from 4 | IN THE

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a nearby rock quarry. Tower Hill denied coverage based on the policy excluding “earth movement.” The case proceeded to trial on the sole issue of causation. The jury determined that Tower Hill didn’t prove the damage was excluded. On appeal, Tower Hill challenged the trial court’s denial of a directed verdict regarding policy exclusions.

Tower Hill argued that ground vibrations from the blasting created ground movement, an excluded loss. The Insured claimed that shockwaves directly shook the house, thus a covered loss under an all-risk policy.

Thus, this was a battle of the experts with competing opinions.

Tower Hill also challenged the trial court’s jury instruction regarding concurrent causation, “whether shockwaves could combine with wear and tear, marring, or deterioration, as a concurrent covered cause of loss.” The parties agreed the policy contained anti-concurrent causation language in the exclusions section but did not contain the anti-concurrent causation language in the avoidance provision of the policy. Since the policy did not contain

the necessary anti-concurrent causation language within the avoidance provision, a loss caused by shockwaves could not be excluded via the avoidance provision of the policy.

Exclusions – Water Damage Exclusion and Limited Water Damage Coverage PEOPLE’S TRUST INS. CO. v. PAUL GUNSSER, 6D23-492 (Nov. 9, 2023) KK TAKEAWAY: Corrosion is the result of acts of nature.

KK TAKEAWAY: Policy language must be strictly construed, and a WDX endorsement that excludes water losses removes pre-existing tear-out.

KK TAKEAWAY: A LWD endorsement only creates limited coverage by its express terms.

BACKGROUND: The trial court granted Insured’s motion for summary judgment, finding that the WDX endorsement excluded water losses, but the LWD endorsement included tear-out. The WDX endorsement excluded water losses resulting from human or animal forces or any act of nature:

WATER DAMAGE EXCLUSION THIS ENDORSEMENT CHANGES YOUR POLICY, PLEASE READ IT CAREFULLY For a premium credit, your policy is changed as follows: ....

Under SECTION I – EXCLUSIONS item 3.

Water is replaced by the following: 3. Water, meaning: .... e. Discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance; . . . .... caused by or resulting from human or animal forces or any act of nature.

All other provisions of your policy that are not affected by this endorsement remain unchanged.

The LWD provision subsequently permitted limited water coverage for $10,000: LIMITED WATER DAMAGE COVERAGE THIS ENDORSEMENT CHANGES YOUR POLICY, PLEASE READ CAREFULLY AGREEMENT “We” will provide the insurance described in this endorsement in return for an additional premium paid by “you” and “your” compliance with all applicable provisions of this policy.

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The policy is endorsed to provide the following: Sudden and accidental direct physical loss to covered property by discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance.

with the policy’s previous language. Thus, while the original policy form included a tear-out, the subsequent WDX endorsement expressly excluded tear-out-related coverage resulting from water loss.

There was an argument that corrosion is not an act of nature. The Sixth District clarified its position that corrosion is an act of nature, joining previous decisions from the Third, Fourth, and Fifth District Courts of Appeal.

LIMIT OF LIABILITY: The Property Coverage limit for liability for all covered property provided by this endorsement is shown on your Declaration Page, per occurrence.

This coverage does not increase the Property Coverage limit(s) of liability that apply to the damaged covered property.

All other provisions of your policy that are not affected by this endorsement remain unchanged.

At trial, the jury found the water loss to be less than the LWD endorsement limits but found significantly higher damages for tear-out.

People’s Trust (“PTI”) appealed. The Sixth District upheld the trial court’s decision specific to applying the WDX provision but held the trial court erred in finding the LWD endorsement reinstated the original tearout coverage. The standard policy language covered ancillary losses such as slab tearout unless “otherwise excluded.” The WDX endorsement excluded tear-out, consistent 6 | IN THE

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The Sixth District was clear that while the LWD endorsement carved in limited water coverage, it was limited to “direct, sudden, or accidental.” This limitation expressly excludes tear-out, which is indirect, delayed, and purposeful (i.e., ancillary). Further, the Sixth District reiterated Panettieri v. People’s Tr. Ins., 344 So. 3d 35, 41 (Fla 4th DCA 2022), holding that a similar WDX endorsement removed any previous coverage for water damage. In this case, the WDX language removed the coverage originally afforded for tear-out.

Application of Presuit Notice Statute to PreExisting Policies – Application of Water Damage Exclusion REBECCA HUGHES v. UNIVERSAL PROPERTY & CASUALTY INS. CO., 6D23-296 (Nov. 22, 2023) KK TAKEAWAY: The Sixth DCA certifies conflict with the Fourth DCA on applying section 627.70152, Florida Statutes, o/k/a SB76, to policies predating statutory enactment.

KK TAKEAWAY: There is no clear, express language of legislative retroactive intent.

a policy that pre-dated section 627.70152, Florida Statutes. The trial court granted the dismissal, and the Insured appealed.

The Sixth District Court of Appeals held there is no express intent to have the statute apply to policies that pre-date the statute’s effective date. The Sixth District specifically challenged the position that the application language of the statute “applies to all suits” was express intent to apply to pre-existing policies. The Sixth District clarified this is only an application as to what types of lawsuits the statute applies, not to the period when the statute applies. The Sixth District conflicts with the Fourth District’s decision in Cole v.

Universal Property & Casualty Ins. Co., 363 So. 3d 1089 (Fla. 4th DCA 2023), holding that the statute’s express requirement that it was a condition precedent to suit was express intent and that if the legislature intended to limit the statute, they could have done so.

The Sixth District held that even if the legislature intended to apply the pre-suit notice requirement retroactively, it was substantive and thus could not be applied retroactively. Specifically, the Sixth District held:

KK TAKEAWAY: Even with retroactive intent, the requirement to file a notice allowing for further time to resolve the claim is a substantive change as it both delays the opportunity to file suit and permits the avoidance of attorney’s fees.

1) Complying with the presuit notice requirement allows an Insurer to avoid attorney’s fees which is substantive. The Sixth analogized this to the Menendez holding, where the PIP statute allowed the payment of the claimed amount.

BACKGROUND: The parties do not dispute this matter concerning the application of section 627.70152, Florida Statutes, to a claim on IN THE

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2) The presuit notice process is substantive as it allowed for a delay in an Insured’s ability to bring their lawsuit.

The Sixth District again analogized this to the Menendez holding, where the PIP statute allowed another thirty days.

Application of Presuit Notice Statute to preexisting policies REBECCA HUGHES v. UNIVERSAL PROPERTY & CASUALTY INS. CO., 6D23-296 (Nov. 22, 2023) KK TAKEAWAY: The Sixth DCA certifies conflict with the Fourth DCA on applying section 627.70152, Florida Statutes, o/k/a SB76, to policies predating statutory enactment.

KK TAKEAWAY: There is no clear, express language of legislative retroactive intent.

KK TAKEAWAY: Even with retroactive intent, the requirement to file a notice allowing for further time to resolve the claim is a substantive change as it both delays the opportunity to file suit and permits the avoidance of attorney’s fees.

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BACKGROUND: The parties do not dispute this matter concerning the application of section 627.70152, Florida Statutes, to a claim on a policy that pre-dated section 627.70152, Florida Statutes. The trial court granted the dismissal, and the Insured appealed.

The Sixth District Court of Appeals held there is no express intent to have the statute apply to policies that pre-date the statute’s effective date. The Sixth District specifically challenged the position that the application language of the statute “applies to all suits” was express intent to apply to pre-existing policies. The Sixth District clarified this is only an application as to what types of lawsuits the statute applies, not to the period when the statute applies. The Sixth District conflicts with the Fourth District’s decision in Cole v. Universal Property & Casualty Ins. Co., 363 So. 3d 1089 (Fla. 4th DCA 2023), holding that the statute’s express requirement that it was a condition precedent to suit was express intent and that if the legislature intended to limit the statute, they could have done so.

The Sixth District held that even if the legislature intended to apply the pre-suit notice requirement retroactively, it was substantive and thus could not be applied retroactively. Specifically, the Sixth District held: 1) Complying with the presuit notice requirement allows an Insurer to avoid attorney’s fees which is substantive. The Sixth analogized this to the Menendez

holding, where the PIP statute allowed the payment of the claimed amount.

2) The presuit notice process is substantive as it allowed for a delay in an Insured’s ability to bring their lawsuit. The Sixth District again analogized this to the Menendez holding, where the PIP statute allowed another thirty days.

Appraisal – Dual Track

KK TAKEAWAY: Appraisal can proceed under a dual-track methodology in the Third District Court of Appeals.

BACKGROUND: Heritage sought relief from a trial court order compelling the appraisal of the claim as requested by the Insured. The Third District Court of Appeals relied upon its previous precedent permitting the dualtrack approach for appraisal. The basis is to preserve coverage issues while allowing for the expeditious determination of the amount of loss.

HERITAGE PROPERTY & CASUALTY INS. CO. v. CENTURY PARK CONDOMINIUM NO. 2 ASSOCIATION INC., 3D2022-1489 (Oct. 18, 2023)

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NOTABLE

CASE WINS Successful Pursuit of 57.105 Motion Results in $68k+ Judgment Alison J. Trejo

Jeffrey M. Wank

Todd A. Schwartz

Partner

Chair of First-Party Property and Insurance Coverage

Partner

Read More

Kelley Kronenberg Secures Victory for Citizens Property Insurance Corporation in Recent Appeal Kimberly J. Fernandes

Read More

Partner

For additional successes in First-Party Property cases, please click here.

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AWARDS AND

ACCOLADES FIRM AWARDS Kelley Kronenberg has been the recipient of numerous awards and honors both firm-wide and for a number of our practices, including individual accolades. Below is a select list of recognition and awards:

2021 – 2023 Top Workplaces USA Energage

2020 – 2023 Top Workplaces Sun Sentinel

2019 – 2023 Best Law Firms U.S. News - Best Lawyers

2022 Best Places To Work New Orleans CityBusiness

2020 – 2022 Compass Award Leadership Council on Legal Diversity

2021 – 2022 Top Places To Work Ragan Communications

2019, 2021 – 2023 Women In Law Scorecard The National Law Journal

2016 – 2023 Largest Law Firms Tampa Bay Business Journal

2017 – 2022 Biggest Law Firms in Florida Florida Trend

2012 – 2023 NLJ 500 The National Law Journal

2020 – 2022 Business of the Year South Florida Business Journal

2012 – 2023 Top Law Firms South Florida Business Journal

2017 – 2022 400 Largest Law Firms Law360

2011 – 2022 100 Largest Law Firms Daily Business Review

2016 – 2022 Largest Central Florida Law Firms Orlando Business Journal

2022 Best Midsize Law Firm To Work For Vault

2021 Diversity Scorecard The American Lawyer

2021 Diversity Team Award Profiles in Diversity Journal

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MEET THE

CONTRIBUTORS Jeffrey M. Wank Chair of First-Party Property and Insurance Coverage Email Jeffrey M. Wank

Jeffrey Wank is Chair of First-Party Property

Jeffrey also has experience in handling complex

and Insurance Coverage focusing his practice on

civil and commercial matters, including the defense

first-party property insurance Defense, including

of personal injury, premises liability, employment

coverage and bad faith litigation. Jeffrey also

discrimination, medical malpractice, nursing home

handles the defense of a wide array of third-party

liability, homeowner and condominium association

insurance defense claims.

claims, and construction defect cases.

Jeffrey assists insurers in all aspects of coverage

Jeffrey has been named a Florida Super Lawyer

disputes, including responses to civil remedy

Rising Star since 2014. In 2011, he was elected

notices of insurer violations, pre-suit investigations

to the Broward Bar Association Young Lawyers

and coverage evaluations, declaratory judgment

Section Board of Directors, where he served as

and bad faith litigation. He defends property

Secretary on the organization’s Executive Board

insurers throughout Florida in first-party coverage

and moved up to President in June 2015. Jeffrey

matters, where many of the claims involve sinkhole,

was also named the Chair on the Board of Directors

windstorm, fire, mold, theft and water losses.

of Legal Aid Service of Broward County & Coast to

In addition, Jeffrey serves as coverage and bad faith counsel in third-party actions, including monitoring the defense of litigation. As part of this role, he is

Coast Legal Aid of South Florida for the 2019 term and previously served as the Vice Chair for the 2018 term.

often asked to draft detailed coverage opinions,

Jeffrey earned his Bachelor of Science in Political

reservation of rights letters, declinations, and

Science from Florida State University and went

prosecute declaratory relief actions.

on to earn his Juris Doctor degree from Nova Southeastern University Shepard Broad Law Center.

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Daniel Montgomery Partner Email Daniel Montgomery

Kelley

Daniel received his Bachelor of Science degree

Kronenberg where he assists in handling matters

in Criminal Justice, summa cum laude, with a

related to first-party property insurance defense.

Certificate of Crime Scene Investigation, from

Daniel handles all aspects of first-party property

Colorado Technical University. He then went on to

defense, including coverage disputes, pre-suit

earn his Juris Doctor degree from Florida Coastal

investigations, fraud investigations, and CRN

School of Law, graduating cum laude.

Daniel

Montgomery

is

a

Partner

at

responses. Additionally, our clients frequently engage Daniel to assist with the development of claims processes and procedures. Daniel’s practice is also focused on the highly-specialized areas of first-party property appeals and auto glass defense.

Prior to joining Kelley Kronenberg, Daniel worked as an Associate Attorney with an Am Law 200 firm, focusing his practice on first-party auto coverage and litigation, general liability litigation, and appellate law. Daniel also practiced as an Assistant State Attorney for Florida’s Fourth Judicial Circuit, in Jacksonville, where he litigated a variety of criminal proceedings through trial and served as a liaison for UVISA Certifications.

Since Law School, Daniel continued his education by obtaining a Master of Science, summa cum laude, from Florida State University, with a Certificate in U.S. Intelligence. Daniel acquired an additional LL.M. in Executive Litigation Management from Baylor Law School.

During Daniel’s career he has served on several committees and groups continually working to develop awareness, knowledge, and best practices in a variety of areas including mental health, utilizing technology to drive efficiencies, special investigations, and litigation management best practices.

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A Firm Built on Relationships KELLEY KRONENBERG IS A MULTI-PRACTICE BUSINESS LAW FIRM.

with over

400

Employees

more than

the convenience of

Attorneys

Locations

200

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Founded in 1980, the firm is one of the fastest-growing law firms in Florida and amongst the largest in the U.S. The firm serves all types and sizes of public and private companies, including small businesses and individuals nationwide.

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