A federal district court in Florida has ruled that the earth movement exclusion in an insurance policy excluded coverage for structural damage to a home that allegedly came about after 4,000 gallons of water leaked from a water heater.
The Case
Barbara and Charles Hatch asserted that about 4,000 gallons of water flooded their home from a leak that originated from the hot water heater. They notified their insurer, GeoVera Specialty Insurance Company, which inspected the property, hired a company to mitigate the damage, and issued a payment to the Hatches to repair the property.
When the Hatches began demolition and repairs, they discovered a crack in the floor of the master bedroom closet. They then retained Guardian Inspection & Information Services to perform an inspection, and GeoVera retained Summit Engineering Consulting, Inc., to do so, as well. Both reported additional damage to the foundation and structure of the home.
GeoVera subsequently denied coverage, concluding that the damage was excluded under the earth movement exclusion in its policy.
The Hatches sued GeoVera, and the parties moved for summary judgment.
The District Court's Decision
The district court ruled that the structural damage to the Hatches' home was excluded under the earth movement exclusion in their insurance policy and that GeoVera was entitled to summary judgment on that portion of the Hatches' claim.
In its decision, the district court explained that, under the GeoVera policy, any damage caused by the accidental discharge of water from the hot water heater, including the structural damage to the Hatches' home, was covered “unless otherwise excluded.”
The district court added that the “logical reading” of the policy was that if coverage was excluded under the earth movement exclusion, it was “otherwise excluded” and, therefore, whether the structural damage was covered turned on the issue of whether it was caused by earth movement.
The district court then pointed out that all of the expert opinions – including the opinions of the Hatches' experts – agreed that the structural damage had been caused by the movement of the earth beneath the foundation, either by compression or densification of the soil or by the erosion of the soil.
The district court ruled that the water did not directly cause the structural damage. Rather, there was an “intervening step” – the water caused the earth movement, and “the earth movement caused the structural damage.”
As “clearly set forth” in the policy, the district court stated, it did not matter whether the earth movement was caused by natural forces or otherwise; the earth movement caused the structural damage and, therefore, it was not covered.
The district court rejected the Hatches' contention that it should apply the concurrent cause doctrine, which applied where “independent perils” converged and no single cause could be considered the sole or proximate cause of a loss. The district court pointed out that the GeoVera policy contained an anti-concurrent cause provision that stated that loss caused by earth movement was “excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.”
Accordingly, the district court concluded, even if the water from the hot water heater was a concurrent cause of the damage, it was excluded under the policy.
The case is Hatch v. GeoVera Specialty Ins. Co., No: 6:17-cv-2142-Orl-41DCI (M.D. Fla. June 18, 2019). Attorneys involved include: For Barbara Hatch, Charles Hatch, Plaintiffs: Christine Marie Deis, Matthew Struble, LEAD ATTORNEYS, Struble, P.A., Fort Lauderdale, FL. For GeoVera Specialty Insurance Company, Defendant: Burke George Lopez, Emily Chalela Ayvazian, Kristina L. Marsh, LEAD ATTORNEYS, Hinshaw & Culbertson, LLP, Tampa, FL.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].