Federal District Court Rejects Applicability of SB 408 Structural Damage Definition to 2009 Sinkhole Claim
Date Published: 12-22-2011
On December 7, 2011, in Bay Farms Corp. v. Great American Alliance Ins. Co., 2011 WL 6099367, the U.S. District Court for the Middle District of Florida granted an insured's motion for partial summary disposition, ruling that Senate Bill 408's ("SB 408") amendment providing a definition for the term "structural damage" could not be retroactively applied to the insurance policy in that case.
The relevant policy defined a sinkhole loss as: "structural damage to the building, including the foundation, caused by [sinkhole activity]." The policy did not define structural damage and incepted before SB 408 was enacted.
The parties filed cross-motions for partial summary judgment on the issue. The Court ruled that the amendment is not a true "clarification" of existing law, and that it is a substantive amendment that cannot be applied retroactively. Premising its decision on the fact that this amendment provided an entirely new definition for a previously undefined term, the Court also relied on the fact that the Florida Legislature amended this section several times without providing a definition of the term "structural damage."
The Court agreed with Bay Farms' argument that, simply by using the term "structural damage" in 2005, the Legislature could not have intended the highly technical definition provided by SB 408. While the Court found that SB 408's definition does not apply retroactively, it did not define the meaning of the term structural damage prior to SB 408, inasmuch as the carrier conceded that coverage would have been afforded if SB 408's definition did not apply.
This decision is not appealable at this stage of the litigation. However, the Court may always reverse this decision later in the litigation, and depending on the outcome, Great American may file an appeal. Additionally, because this is only a trial court decision, it is not binding authority on other cases.
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