Wednesday, December 9, 2009

Insured Not Required To Disprove Findings Of Insurer's Expert In Sinkhole Claim

UPDATE 2: The Florida Supreme Court entered an order accepting jurisdiction of this case.  The supreme court's order can be viewed HERE.

UPDATE: The Second District denied a motion for rehearing, granted a motion for certification to the Florida Supreme Court and withdrew the opinion discussed below.  A new opinion was released which can be found HERE.  The new opinion reaches the same result as the opinion discussed below and certifies the following question to the Florida Supreme Court:
DOES THE LANGUAGE OF SECTION 627.7073(1)(C) CREATE A PRESUMPTION AFFECTING THE BURDEN OF PROOF UNDER SECTION 90.304 OR DOES THE LANGUAGE CREATE A PRESUMPTION AFFECTING THE BURDEN OF PRODUCING EVIDENCE UNDER SECTION 90.303.
In Warfel v. Universal Ins. Co. of North America (2D08-3134), a divided panel on the Second District reversed the trial court's judgment in a sinkhole case.  Judge LaRose wrote the majority opinion and was joined by Judge WallaceJudge Villanti wrote a dissenting opinion.  The issue in the case relates to the insured's burden to present expert testimony to establish the loss was caused by a sinkhole.

The insurer hired an expert that determined the alleged sinkhole damage was cause was excluded items.  The insured's experts testified at trial that while the insurer's expert was correct, the damage was at least partially caused by a sinkhole.  The majority opinion stated:
Universal posited that section 627.7073(1)(c) required Mr. Warfel to prove that he suffered a sinkhole loss as specifically defined by statute...Universal reasoned that the SD II Global report findings are presumptively correct; the presumption shifted the burden of proof to Mr. Warfel. The trial court agreed
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We see no clear legislative expression that public policy compels a homeowner to shoulder the burden to disprove the findings and recommendations of the insurer's engineers and geologists. We are also mindful that, historically, an all-risks policy encumbers the insurer with the burden to prove that a claimed loss is not covered.
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Absent a clear legislative directive, we must conclude that section 627.7073(1)(c) is a "vanishing" or "bursting bubble" presumption that affected only Mr. Warfel's burden of producing evidence.
***
Because the trial court misapplied the presumption at work in this case and gave the jury an instruction improperly shifting the burden of proof, a new trial is required.
The dissent disagreed, stating:
I contend that because the statutory sections at issue in the case were enacted to advance social or public policy, a burden-shifting presumption applies...In fact, this case illustrates why section 627.7073's presumption ought to be a burden-shifting presumption. Upon receiving Mr. Warfel's claim, Universal hired experts whose qualifications met the requirements of the relevant statute and had those experts conduct the type of testing required by the statute. The experts then prepared a report as required by section 627.7073. This was all done at Universal's expense. At trial Mr. Warfel offered his own experts, who simply reviewed Universal's report and visited the property; they did not conduct independent testing consistent with the standards set forth in section 627.7072. Mr. Warfel's experts then simply disagreed with the report's conclusions and opined that a sinkhole contributed to the damage to Mr. Warfel's property. To apply a "vanishing" presumption under these facts effectively negates the presumption of correctness conferred upon the report by section 627.7073(1)(c). It is inconceivable that the legislature would enact a statute containing extensive detail regarding sinkhole testing and expert reports and that it would express its intent that the report "be presumed correct," only to have this presumption "vanish" when an expert hired by the insured simply testifies that he disagrees with the conclusions contained in the report. Allowing Mr. Warfel's experts to "vanish" the presumption created by the statute by simply testifying that they disagree with the report negates the statute's efforts to provide consistency in claims handling and reduce the number of disputed sinkhole claims. This type of ipse dixit logic from the insured's experts is not consistent with the history and intent of the statute.

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