In Roker v. Tower Hill Preferred Insurance Co., 40 FLW D764b (Fla. 2nd DCA March 27, 2015), the Second District Court of Appeal was asked to review a Summary Judgment granted to the homeowners insurer in a sinkhole case. 

The insurance company and the homeowner agreed that sinkhole activity caused damage to the insured home.  The insurance company’s engineer recommended a subsurface remediation play which only called for compaction and chemical grouting.  Tower Hill instructed its insured that it would only pay to remediate the sinkhole if the insured must enter into a contract for subsurface repairs in accordance with its engineering report.

The insured obtained a second opinion on the adequacy of the insurance company’s proposed subsurface remediation plan.  The second opinion found the insurance company’s plan deficient, and proposed an alternate remediation plan which included compaction, chemical grouting and underpinning.

The insured entered into a contract for subsurface repairs in accordance with the second opinion.  The insured sent the signed repair contract to Tower Hill.  Citing Florida Statute Section 627.707(5) (2010), Tower Hill advised it would not honor the repair contract because it was not in accordance with the remediation plan proposed by its engineers.  Section 627.707(5) states in part:

(a) Subject to paragraph (b), if a sinkhole loss is verified, the insurer shall pay to stabilize the land and building and repair the foundation in accordance with the recommendations of the professional engineer as provided under s. 627.7073, and in consultation with the policyholder, subject to the coverage and terms of the policy. The insurer shall pay for other repairs to the structure and contents in accordance with the terms of the policy.

(b) The insurer may limit its payment to the actual cash value of the sinkhole loss, not including underpinning or grouting or any other repair technique performed below the existing foundation of the building, until the policyholder enters into a contract for the performance of building stabilization or foundation repairs.

At the trial court level, Tower Hill argued that this statute required its insured to enter into a contract for subsurface repairs in accordance with its engineering report.  The trial judge agreed.  The insured appealed, and the 2nd DCA reversed, holding:

Tower Hill’s argument that the policy language of the sinkhole endorsement required Roker to enter into a contract based on Tower Hill’s engineer’s protocol as a condition precedent to payment is similarly without merit.  The policy merely provides that Tower Hill will cover the necessary repairs “[i]n accordance with the recommendations of the professional engineer who verifies the presence of a [s]inkhole [l]oss in compliance with Florida sinkhole testing standards.” The policy does not specify that the insurance company’s engineer unilaterally dictates the method of subsurface repairs. The parties do not dispute the fact that all three engineers who evaluated Roker’s home complied with Florida sinkhole testing standards.

To the extent that Tower Hill is arguing that section 627.7073(1)(c) creates a presumption which justifies mandating that the insured accept the recommendation of an insurer’s expert, the idea that an insurance company is entitled to rely on that presumption in the litigation context was rejected by the Florida Supreme Court in Warfel, 82 So. 3d at 57. In Warfel, the Florida Supreme Court explained that “[t]he application of a presumption as alleged and argued by [the insurer] at trial, that an insured could not overcome this presumption, would render any portion of section 627.7073 unconstitutional and inconsistent with all other provisions of the sinkhole statutes.” Id. at 58. Ultimately, the supreme court held that the presumption disappeared once evidence rebutting it was introduced. Id. at 59. Because Roker submitted evidence rebutting Tower Hill’s report, Tower Hill may not rely on section 627.7073(1)(c) to disprove the existence of a material fact.

In conclusion, the Court stated:

The question of which recommended method of subsurface repair is sufficient to repair Roker’s home is a question for the jury. Roker cooperated with Tower Hill throughout the claims process and exercised her statutory right to reject the neutral evaluator’s recommendation. Tower Hill refused to pay anything for subsurface repair after being provided with a contract for repairs based on the recommendations of a qualified engineer. There remains a bona fide dispute as to the proper method of subsurface repair and, thus, Roker’s loss.