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Log in or RegisterState Auto Prop. & Cas. Ins. Co. v. Distinctive Foods, LLC (2024)
The complaint did not allege an occurrence but rather only alleged intentional conduct.
Does Coverage Apply to a Vehicle Driven by the New Owner after the Insured Sold the Vehicle without Canceling the Policy? 2024.05.15
The insured sold a business vehicle and handed it over to the buyer. It was titled in the new owner’s name. Months later the new owner struck a parked vehicle. The owner of the parked vehicle is asserting a claim against the insured, who never removed the vehicle from the policy. Does the insured’s policy afford Liability Coverage for the claim?
EARTH MOVEMENT EXCLUSION: DOES IT APPLY TO A FALLING ROCK?
FACTS The insured's home is covered under an ISO HO 00 03 03 22 form. The home was damaged when a boulder from a cliff high above the home rolled down and hit the back corner of the house. The falling of the large boulder caused other rocks to be dislodged when it hit the cliff, and some of the other rocks also hit the home. QUESTION Is there coverage for the damage to the home caused by the falling boulder? POLICY LANGUAGE ISO HO 00 03 03 22 SECTION I - EXCLUSIONS We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area. . . . Earth Movement Earth movement means: Earthquake, including land shock waves or tremors before, during or after a volcanic eruption; Landslide, mudslide or mudflow; Subsidence or sinkhole; or Any other earth movement including earth sinking, rising or shifting. This Exclusion A.2. applies regardless of whether any of the above, in A.2.a. through A.2.d., is caused by an act of nature or is otherwise caused. However, direct loss by fire, explosion or theft resulting from any of the above, in A.2.a. through A.2.d., is covered. DISCUSSION Does the Earth Movement exclusion apply to the damage where a boulder fell off a cliff, dislodged other rocks, and damaged the home? The policy states that earth movement means earthquake and other events, including landslide, and any other earth movement including earth sinking, rising or shifting. Would falling rocks be considered a landslide? We are only aware of two cases involving falling rocks where soil or other land was not involved in the "slide". The most recent case involving this type of scenario is Sullivan v. Nationwide Affinity Ins. Co. of Am., No. 20-1063, 2021 WL 79765 (10th Cir. 1/11/21) (unpublished) (U.S. Court of Appeals for the Tenth Circuit, applying Colorado law) [reviewed at PLRB, Prop. Ins. L. Rev. 10860 (2021)], where an earth movement exclusion encompassed falling rocks or boulders that became dislodged and rolled down a hillside and collided with the insured home. The term "landslide" and the catch-all phrase "[a]ny other earth movement including earth sinking, rising or shifting" were broad enough to encompass falling rocks or boulders. Consequently, the exclusion unambiguously precluded coverage for the damage that occurred when one or more boulders became dislodged from the hill above, tumbled down, and rolled into the policyholders' home. Previously, Parker v. Safeco Ins. Co. of Am., 376 P.3d 114 (Mont. 7/19/16)[reviewed at PLRB, Prop. Ins. L. Rev. 9495 (2016)], held that the earth movement exclusion precluded coverage for damage to a cabin caused by a boulder that fell down a hillside and into the insured cabin. The Montana Supreme Court read the exclusion as broadly excluding coverage for any and all types of earth movement. The term "earth" included rocks as well as soil. The court held that nothing in the language of the exclusion suggested that "earth" was limited to soil. The term "landslide" in the context of the exclusion clearly applied to damage caused by a single, large boulder, and not just to two or more rocks or pieces of rock falling down a hillside. Before the Sullivan and Parker cases, there were a few cases involving falling rocks which also involved soil. In Western United Insurance Co. v. Heighton, 2016 WL 4916785 (D. Utah 9/14/16) (U.S. District Court for the District of Utah, applying Utah law) [reviewed at PLRB, Prop. Ins. L. Rev. 9545 (2016)], an earth movement exclusion in a homeowners policy precluded coverage for damage caused by a rockfall. The loss occurred when a "2700 ton piece of the bluff broke off, hit a steep slope, and triggered a downward shifting of a mass of rocks and soil toward [the insured] house." The earth movement exclusion specifically excluded loss or damage caused by "landslide." Although "landslide" was not defined in the policy, the ordinary meaning of the term included a rockfall. Consequently, the Earth Movement exclusion unambiguously applied to the loss. The court in Erie Ins. Property and Cas. Co. v. Chaber, 801 S.E.2d 207 (W.Va. 6/01/17) (West Virginia Supreme Court of Appeals, applying West Virginia law) [reviewed at PLRB, Prop. Ins. L. Rev. 9750 (2017)], noted in a footnote that Murray v. State Farm Fire & Cas. Co., 509 S.E.2d 1 (W.Va. 1998) [reviewed at PLRB, Prop. Ins. L. Rev. 5270 (1999) ], was helpful because it clarified the meaning of the word "landslide" as used in the insurance policy. It stated that the ordinary meaning of the word "landslide" in an insurance policy would include a sliding down of a mass of soil or rock on or from a steep slope. Several cases have defined landslide as the sliding or slipping down of a mass of soil or earth or rock down a steep slope. See Olmstead v. Lumbermens Mut. Ins. Co., 259 N.E.2d 123 (Ohio 1970), and Niagara Fire Ins. Co. v. Curtsinger, 361 S.W.2d 762 (Ky. App. 1962) where the courts considered the ordinary meaning of the term "landslide" as used in a policy covering the building to be the sliding down of mass of soil or rock on steep slope). Conclusion Based on these cases, to the extent that the loss here was due to large rocks or boulders sliding or falling down a steep slope, the damage to the home would arguably be treated as a landslide, and thus barred from coverage by the earth movement exclusion. Change in Policy Language Note that before the 2000 edition of the HO 00 03 policy, despite language designed to avoid such a result, many courts applied the exclusion only to events that were both natural and catastrophic. In the 2000 form, it was spelled out for the first time that the exclusion applies whether or not the event results in widespread damage and whether or not it is caused by human or animal forces. For a discussion of the Earth Movement exclusion and how it has been applied in various states, see PLRB, State-by-State Annotations, Earth Movement.
Great Lakes Ins. SE v. Concourse Plaza A Condo. Ass’n (2024)
(U.S. Court of Appeals for the Eleventh Circuit, applying FL law) Facts The policyholder --condominium association--sustained damage following Hurricane Irma in September 2017. It filed a claim and the insurer sent out an adjuster to inspect the property. The adjuster found damages to the building to be $31,035.21, well below the policy's deductible. Accordingly, in March 2018, the insurer sent the policyholder a letter advising the net claim was zero. The policyholder responded on September 4, 2020--almost three years after the date of its Irma claim. It disputed the estimate but did not provide a competing estimate. Instead, the policyholder stated it was currently assessing the damage itself. The letter also advised that the insurer should consider the letter notice of its intent to pursue additional benefits under the policy in accordance with the policy’s notice provisions and Fla. Stat. § 627.70132. Id. at 2-3. On April 8, 2021, the policyholder filed a proof of loss statement, providing a damages estimate of $6,403,728.62, and invoked the appraisal provision. It later revised its estimate to $3,276,080.50 while maintaining its appraisal demand. The insurer filed suit, seeking a declaratory judgment ruling that the policyholder’s September 2020 letter did not constitute a valid notice of a supplemental insurance claim under Fla. Stat. § 627.70132 and that it therefore failed to provide qualifying notice within the statutory three-year period following landfall of the hurricane. The policyholder counterclaimed, seeking to compel appraisal and for breach of contract. Both parties moved for summary judgment to which the trial court ruled in favor of the insurer. This appeal followed. Id. at 4-5. Statutory Language Fla. Stat. § 627.70132 in effect at the time of the dispute, read in relevant part: A claim, supplemental claim, or reopened claim under an insurance policy that provides property insurance, as defined in s. 624.604, for loss or damage caused by the peril of windstorm or hurricane is barred unless notice of the claim, supplemental claim, or reopened claim was given to the insurer in accordance with the terms of the policy within 3 years after the hurricane first made landfall or the windstorm caused the covered damage. For purposes of this section, the term "supplemental claim" or "reopened claim" means any additional claim for recovery from the insurer for losses from the same hurricane or windstorm which the insurer has previously adjusted pursuant to the initial claim. ******************** Note the statute has been amended since the loss and now reads as follows: (1) As used in this section, the term: (a) “Reopened claim” means a claim that an insurer has previously closed, but that has been reopened upon an insured’s request for additional costs for loss or damage previously disclosed to the insurer. (b) “Supplemental claim” means a claim for additional loss or damage from the same peril which the insurer has previously adjusted or for which costs have been incurred while completing repairs or replacement pursuant to an open claim for which timely notice was previously provided to the insurer. (2) A claim or reopened claim, but not a supplemental claim, under an insurance policy that provides property insurance, as defined in s. 624.604, including a property insurance policy issued by an eligible surplus lines insurer, for loss or damage caused by any peril is barred unless notice of the claim was given to the insurer in accordance with the terms of the policy within 1 year after the date of loss. A supplemental claim is barred unless notice of the supplemental claim was given to the insurer in accordance with the terms of the policy within 18 months after the date of loss. The time limitations of this subsection are tolled during any term of deployment to a combat zone or combat support posting which materially affects the ability of a named insured who is a servicemember as defined in s. 250.01 to file a claim, supplemental claim, or reopened claim. (3) For claims resulting from hurricanes, tornadoes, windstorms, severe rain, or other weather-related events, the date of loss is the date that the hurricane made landfall or the tornado, windstorm, severe rain, or other weather-related event is verified by the National Oceanic and Atmospheric Administration. (4) This section does not affect any applicable limitation on civil actions provided in s. 95.11 for claims, supplemental claims, or reopened claims timely filed under this section. Trial Court Holding The trial court granted summary judgment in favor of the insurer. Trial Court Rationale Relying on Goldberg v. Universal Property & Casualty Insurance Co., 302 So. 3d 919 (Fla. Dist. Ct. App. 2020), the trial court held that Fla. Stat. § 627.70132 required an insured party's notice of a supplemental claim to include an estimate of claimed damages. Because the policyholder’s letter did not do so, the court ruled it had failed to provide qualifying notice within three years as required by the statute. Appellate Court Holding Reversed and remanded. Appellate Court Rationale Neither Statute Nor Policy Language Required Notice of Supplemental Claim To Include Estimate of Damages. The court first acknowledged that there were no relevant decisions from the Florida Supreme Court interpreting § 627.70132. However, two appellate courts issued decisions. First, Goldberg v. Universal Property & Casualty Insurance Co., 302 So. 3d 919, 923 (Fla. Dist. Ct. App. 2020), decided that an insured’s attempt to claim additional payment for an already adjusted loss qualified as a supplemental claim under § 627.70132. The court stated that a “competing estimate by an insured's independent adjuster, or by a prospective contractor" would suffice. Id. at 6. The second appellate decision was Patios W. One Condo. Ass'n v. Am. Coastal Ins. Co., 49 Fla. L. Weekly 75 (Dist. Ct. App. 2024) where the court held that § 627.70132 did not require a notice of a supplemental claim to contain an estimate of additional damages. Instead, the statute required only that "the notice of a supplemental or reopened claim (1) be 'given to the insurer in accordance with the terms of the policy' and (2) constitute an 'additional claim for recovery' for losses from 'the same hurricane.'" Id. at 6-7. Patios rejected Goldberg’s conclusion that the statute required a damages estimate, noting the statute was not a supplemental claim statute but a notice of supplemental claim statute. The court here noted it was bound to follow Patios as it was a decision of the state appellate district in which the federal court where the present case arose from sat. Id. at 7 (“Therefore, because this is an appeal of a case arising out of the Miami Division, we apply the Third District Court of Appeal's Patios decision.”) Accordingly, for the policyholder’s September 2020 letter to qualify as a valid notice of a supplemental claim under § 627.70132, it must have been "given to the insurer in accordance with the terms of the policy" and "constitute an additional claim for recovery for losses from the same hurricane." Id. (quoting Patios). Here, it was undisputed that the letter sought additional recovery for the same hurricane as the original claim. Further, the insurer conceded that the policy did not impose a requirement to provide an estimate of damages. Therefore, the letter qualified as a notice of a supplemental claim under Fla. Stat. § 627.70132. Because it was sent within three years of the date Hurricane Irma made landfall, the provisions of Fla. Stat. § 627.70132 were satisfied. Comments For further discussion of late notice issues, see Florida - Late Notice. Publication Status: Note that this case was decided in an unpublished opinion. While the opinion is not binding precedent, it may be cited as persuasive authority under Federal Rules of Appellate Procedure Rule 32.1.
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