Castillo v. State Farm Fire & Casualty Company, 32 FLW D2474a (Fla. 3rd DCA October 17, 2007)
In this case, the insured homeowner alleged that "nearby blasting created shockwaves and vibrations which damaged the insured dwelling without displacement or permanent displacement of the earth" and that the amount for the repair "of the blasting damages" was $74,761.83. State Farm sought to exclude the damages based upon the following exclusion:
"We do no insure under any coverage for an y loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss; or (d) whether the event occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or exteneral forces, or occurs as a result of any combination of...
b. Earth Movment, meaning the sinking, rising, shifting, expanding or contracting of earth, all whether combined with water or not. Earth movement includes but is not limited to earthquake, landslide, mudflow, sinkhole, subsidence and erision...."
The Third DCA distinguished this case from two prior cases State Farm Fire & Casualty Co. v. Castillo, 829 So.2d 242 (Fla. 3rd DCA 2002) ("Castillo I (no relation to the current case), and Fayadv. Clarendon National Insurance Company, 899 So.2d 1082 (Fla. 2005). In the current case, the Court recognized that the allegations in the complaint were that vibrations and shockwaves caused by blasting "without displacement of the earth resulted in damage to an insured dwelling." The court then noted that "[t]he policy does not specifically address whether or not damages caused by blasting, shockwaves, or vibrations categorically fall under "earth movement" and would, therefore, be excluded from coverage."
Importantly, court then went on to state that "'when the terms of the contract are ambiguous [and] susceptible to different interpretations, parol evidence is admissible to 'explain, clarify or elucidate' the ambiguous term.' Strama v. Union Fidelity Life Insurance Company, 793 So.2d 1129, 1132 (Fla. 1st DCA 2001)( citing Friedman v. Va. Metals Prods. Corp., 56 So.2d 515, 517 (Fla. 1952))." The court then held looked at State Farm's internal operating guidelines to determine whether the exclusion was applicable in this case. Indeed, the court held that "State Farm's internal operating guideline OG 75-105 is both instructive and admissible as parol evidence. The allegatiosn by the Castillos that vibrations and shockwaves actually occurred and damaged the insurad dwelling without accompanying displacement of the earth appear to be contemplated as a potentially covered loss by State Farm." For example, the operating guideline states at OG 75-105 V. A. "Damage from blasting, headache balls, etc. cannot occur unless the earth moves. Therefore, the 'in the absence of' language found in the earth movement exclusion would apply to eliminate coverage. By interpretation, coverage will be provided for damage as a result of shockwaves being transmitted through the earth so long as there is no permanent displacement of the earth itself.... B. 2. Blasting that causes shockwaves/vibration to be transmitted through the earth to the insured dwelling and which shockwaves damage the dwelling without displacement of the earth would be considered a covered loss."
Based on this language and the language of the policy, the court determined that the insured could proceed to a jury. The court noted that whether or not the shockwaves and vibrtations alleged by the Castillos damaged their dwelling without displacement of the earth is an issue of material fact. The court also noted the longstanding Florida law that "[w]hen an insurer relies on an exclusion to deny coverage, it has the burden of demonstrating that the allegations of the complat are cast solely and entirely within the policy exclusion and are subject to no other reasonable interpretation." Northland Casualty Company v. HBE Corp., 160 F. Supp. 2d 1348, 1359 (M.D. Fla. 2001). Moreover, "[o]nce the insured establishes a loss apparently within th terms of an all-risk policy, th eburden shifts to the insurer to prove that the loss arose from a cause which is excepted." B&S Assocs., Inc. v. Indemnity Casualty & Property, Ltd., 641 So.2d 436, 437 (Fla. 4th DCA 1994)(citing Hudson v. Prudential Property & Casualty Insurance Company, 450 So.2d 565 (Fla. 2nd DCA 1984).
