U.S. District Court Judge: ‘Structural Damage’ Definition in Florida Prior to 2011 Statutory Amendments Excludes Cosmetic Damage

Court expands previous ruling, rules that prior to the 2011 amendments to Florida’s sinkhole statutes, the term “structural damage” in the context of coverage for a sinkhole loss meant “damage to the structural components of the building, excluding damage that is cosmetic in nature.”

In an order interpreting the meaning of the term “structural damage” as utilized in the context of sinkhole loss claims made under a policy that pre-dates the amendments to section 627.706, Florida Statutes as enacted on May 17, 2011, the Honorable James D. Whittemore, United States District Judge for the Middle District of Florida, Tampa Division has ruled that “structural damage” means “damage to the structural components of the building, excluding damage that is cosmetic in nature.” In Andres Franqui et. al v. Liberty Mut. Fire Ins. Co., case number 8:12-cv-01257-T-27MAP, the Plaintiffs filed suit against their homeowners insurance carrier based on the denial of a sinkhole loss claim. Upon being noticed of a claim, Liberty Mutual conducted structural damage testing at the insured property and determined that the insured home had not been structurally damaged. The Plaintiffs’ policy of insurance, effective from December 3, 2010 through December 3, 2011 included coverage for sinkhole loss and defined sinkhole loss as “structural damage to the building, including the foundation, caused by sinkhole activity.” The policy did not include a definition for structural damage. Subsequently, Plaintiffs filed a breach of contract action against Liberty Mutual, alleging that their home had been damaged by sinkhole activity and/or collapse activity, covered perils under the policy.

In Bay Farms Corp. v. Great American Alliance Ins. Co., Judge Whittemore previously ruled that the term “structural damage” simply meant any “damage to the structure.”  In Gonzalez v. Liberty Mut. Fire Ins. Co., another federal judge in the Middle District found that the term “structural damage” required damage from a purported sinkhole to “impair the integrity of the building which would be expected to cause a portion of the building to collapse or fail.” Judge Whittemore declined to follow the ruling in Gonzalez, finding that this interpretation would limit coverage and could not be read in light of the skill and experience of ordinary people. Nonetheless, Judge Whittemore’s recent interpretation is a reversal of his earlier ruling, which included cosmetic damage under the definition of “structural damage.”. Judge Whittemore found that the Oxford English Dictionary definition, which provides that “structural” means “Of or pertaining to the structure of a building as distinguished from its decorations or fittings” was consistent with what a reasonable, ordinary person would understand the phrase “structural damage to the building” to mean. Further, the Court held that an ordinary person would not consider cosmetic or aesthetic damage to a building or damage to the “decorations or fittings” of a building “structural damage”.

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