NOT FINAL UNTIL TIME EXPI RES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED

IN THE DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT

OMEGA INSURANCE COMPANY, ) ) Appellant, ) ) v. ) Case No. 2D16-449 ) WILLIAM WALLACE and JOAN WALLACE, ) husband and wife, ) ) Appellees. ) ___________________________________ ) Opinion filed August 16, 2017. Appeal from the Circuit Court for Polk County; John M. Radabaugh, Judge.

Scot E. Samis of Traub Lieberman Straus & Shrewsberry, LLP, St. Petersburg, for Appellant.

Richard N. Asfar and George A. Vaka of Vaka Law Group, P.L., Tampa and Richard T. Heiden of R ichard T. Heiden, P.A., Clearwater, for Appellees.

SILBERMAN, Judge. Omega Insurance Company seeks review of a final judgment awardi ng William and Joan Wallace just over $200,000 for subsurface reme diation in their sinkhole action. The final judgment was based on a directed ve rdict entered after the trial court refused to consider the testimony of Omega's expert engineers and the- 2 - neutral evaluator regarding the proper method of subsurface rep air. We conclude that the proper method of subsurface repair is a jury question and r everse. This appeal arises from a sinkhole insurance claim under a poli cy issued by Omega to the Wallaces in August 2010. Much of the argument on appeal, as in the trial court, concerns expert testimony and the proper definitio n of certain terms used in the Omega policy. The policy contains a sinkhole loss coverage endorsement which provides, in pertinent part, as follows:

B. COVERAGE We insure for direct physical loss to property covered under Section I caused by a Sinkhole Loss, including the costs incurred to: 1. Stabilize the land and building; and 2. Repair the foundation; In accordance with the recommendations of the professional engineer who verifies the presence of a Sinkhole Loss in compliance with Florida sinkhole testing standards and in consultation with you. (Emphasis added.) It also provides the following definitions: "Sinkhole Activity" means settlement or systematic weakening of the earth supporting such property only when such settlement or systematic weakening results from movement or raveling of soils, sediments, or rock materials into subterranean voids created by the effect of water on a limestone or similar rock formation. "Sinkhole Loss" means structural damage to the building, including the foundation, caused by Sinkhole Activity. Personal property coverage s hall apply only if there is structural damage to the building caused by Sinkhole Activity. (Emphasis added.) The endorsement thus provides coverage for d irect physical loss to covered property due to a "Sinkhole Loss" as defined in the pol icy. While the policy- 3 - defines "Sinkhole Loss" as "structural damage to the building, including the foundation," it does not define the term "structural damage." 1 After an initial flurry of expert reports, Omega agreed that th ere was a sinkhole loss and extended coverage. As is often the case with sinkhole claims, the dispute between the parties mainly concerned the proper method of subsurface repair. Omega retained an engineering firm that recommended compaction grouting to stabilize

the subsurface soil and to remediate the sinkhole conditions. The Wallaces obtained a subsurface repair protocol from another engineering firm that r ecommended underpinning in addition to compaction grouting. Omega then re quested neutral evaluation, 2 and the neutral evaluator concluded that there was no need for underpinning in addition to compaction grouting. Despite the neutral evaluator's recommendation, the Wallaces su bmitted a contract for subsurface repair including compaction grouting an d underpinning. When Omega refused to pay, the Wall aces sued Omega for breach of con tract. In count four of the operative complaint, the Wallaces alleged that Omega bre ached the policy by refusing to make payment on the repair contract.

1 We note that, after the cause of action accrued in this case, t he legislature adopted a five-part definition of "structural damag e." See § 627.706(2)(k), Fla. Stat. (2011); ch. 2011-39, § 22, at 570, Laws of Fla. Thi s amendment does not apply retroactively. Sevila v. F irst Liberty Ins. Corp., 7 F. Supp. 3d 1226, 1230 (M.D. Fla. 2014).

2 Neutral evaluation is a nonbinding method of alternative disput e resolution created specifically for sinkhole cases. § 627.7074 , Fla. Stat. (2010). It is an informal proceeding in which each side presents its position to a qualified and neutral expert, who then issues a decision that is admissible at trial. § 627.7074(12), (13).- 4 - At trial, the Wallaces offered the expert testimony of engineer Sonny Gulati of Florida Testing and Environmental, Inc. ("FTE"). Gul ati concluded that there had been structural damage to the building and foundation of th e Wallace residence constituting a "Sinkhole Loss" as defined by the policy. Gulat i applied the engineering definition of "structural damage," which required that the load -carrying capability of the foundation be compromised. He concluded that the remediation s hould include both compaction grouting and underpinning. Omega offered the expert testimony of two engineers from SDII G lobal Corporation and the neutral evaluator. While the neutral evalu ator concluded there was damage to the structure, he was not asked to give an opinion on whether there was a "Sinkhole Loss" as defined by the policy. The SDII engineers c oncluded there was a "Sinkhole Loss," but they applied the definition of structural damage that was used by the insurance industry and some courts. 3 This definition of structural damage only required damage to the structure rather than compromise of the load-carrying capability of the foundation. The SDII engineers and the neutral evaluato r also characterized the damage as "cosmetic" because it could be repaired without repai ring the foundation or load-bearing portions of the structure. They agreed with Gulat i that compaction grouting was necessary for remediation, but they did not believe the dam age was significant enough to require underpinning. At the close of Omega's case, the Wallaces moved for a directed verdict on count four of the amended complaint, arguing that Gulati’s o pinion established the

3 See, e.g., Shelton v. Liberty Mut. Fire Ins. Co., 25 Fla. L. We ekly Fed. D73a (M.D. Fla. Apr. 17, 2013), and cases cited therein.- 5 - method of subsurface repair as a matter of law. According to t he Wallaces, the policy contained language requiring that any subsurface repair protoco l be recommended by a "professional engineer who verifies the presence of a Sinkhole Loss." They asserted that their expert, Gulati, was the only professional engineer w ho verified that there was a "Sinkhole Loss" using what they claimed to be the proper defi nition of structural damage, which was the engineering definition. Omega's counsel responded that the defense experts also found a "Sinkhole Loss" for which the pol icy provides coverage. Counse l maintained that in light of the conflicting expert testimony as to the proper method of repair, that issue was appropriate for resolution by the jury. Counsel added that und er the Wallaces' strained interpretation of the policy, Gulati's opinion testimony on beh alf of the Wallaces could not even be considered. According to counsel, the policy conta ined language requiring that any subsurface repair protocol be prepared "in compliance with Florida sinkhole testing standards." Counsel asserted that Gulati's protocol co uld not have met this standard because he did not perform any testing at the Wallace residence. Counsel stated that if the court were inclined to grant the Wallaces' m otion for directed verdict, then Omega should be permitted to amend its pleadings to deny c overage. Counsel reiterated that was not the preferred option as "we want to fix the house." The trial court granted the Wallaces a directed verdict on coun t four and denied Omega's motion to amend the pleadings. The court ultima tely entered a final judgment awarding the Wallaces $207,628.96 (the full amount of the policy plus prejudgment interest). The court denied Omega’s motions for re hearing and new trial- 6 - and Omega's renewed motion to require a contract for repair as a condition of subsurface repair benefits. 4 On appeal, Omega asserts that the trial court erred in granting the Wallaces' motion for directed verdict, denying its request to a mend its pleadings, and denying its motion to require a contract for repair as a condit ion of subsurface repair benefits. We conclude that the trial court erred in granting a directed verdict in favor of the Wallaces on the proper method of repair and reverse. This holding renders the remaining issues moot. This court conducts a de novo review of orders granting directe d verdicts. Jackson Hewitt, Inc. v. Kaman, 100 So. 3d 19, 27 (Fla. 2d DCA 2 011). The issue that gave rise to the directed verdict is a matter of contract inter pretation. The Wallaces relied on the portion of the sinkhole endorsement providing cov erage for sinkhole damages "[i]n accordance with the recommendations of the profes sional engineer who verifies the presence of a Sinkhole Loss in compliance with Flo rida sinkhole testing standards and in consultation with you." (Emphasis added.) Th e Wallaces asserted that, under this provision, a subsurface repair protocol may be used only if it is

4 The sinkhole endorsement contains a loss settlement provision w hich provides, in pertinent part: We may limit any payment for Sinkhole Loss to the actual cash value, not including any repairs below the foundation, until you enter into a contract for building stabilization or foundation repairs. After you ent er into a contract, we shall pay the amounts necessary to begin and perform such repairs as the work is performed and the expenses are incurred, without requiring you to advance payment for such repairs. This provision is consistent with section 627.707(5)(b), Florid a Statutes (2010).- 7 - recommended by a "professional engineer who verifies the presen ce of a Sinkhole Loss" using the engineering definition of "structural damage." The Wallaces also relied on the portion of the sinkhole endor sement that defines "Sinkhole Loss" as "structural damage to the building, including the foundation, caused by Sinkhole Activity." They successfully convinced the trial court that the opinion of their expert was unrefuted as to the existence of st ructural damage and a sinkhole loss. They claimed that a directed verdict in their f avor was appropriate

because SDII and the neutral eva luator refused to agree that th ere was "structural damage to the building" using the engineering definition of "st ructural damage" and, therefore, did not "verif[y] the presence of a Sinkhole Loss." There is nothing in the plain language of the insurance policy' s sinkhole endorsement that requires the use of a particular definition, t o the exclusion of other definitions, to determine the existence of "structural damage" in order to provide an opinion on the proper method of subsurface repair. To uphold t he directed verdict below, this court would have to read additional language into t he policy. 5 Cf. Roker v. Tower Hill Preferred Ins. Co., 164 So. 3d 690, 693 (Fla. 2d DCA 2015) (holding that a statute requiring the insurer to pay for repair "in accordance with the recommendations of the professional engineer" did not "require the insured to e nter into a contract for the subsurface repairs recommended by the insurer's engineer to the exclusion of any other professional recommendations").

5 For this same reason, we find no merit in Omega's assertion tha t Gulati's opinion could not be considered because Gulati did not personal ly perform testing "in compliance with Florida sinkhole testing standards."- 8 - Omega's expert engineers agreed that the Wallaces had a covered sinkhole loss based on damage to the structure, even though the y disagreed as to the precise definition to be given to the term "structural damage" and the appropriate method of repair. The testimony of Omega's experts that there had been a sinkhole loss based on sinkhole activity that damaged the Wallace's resi dence was consistent with the terms of the policy. Thus, the trial court erred in r efusing to consider that testimony. By extending coverage for the Wallaces' "Sinkhole Loss," Omega necessarily conceded that there had been structural damage, as contemplated by the policy, caused by "Sinkhole Activi ty." Any dispute as to wheth er there was sufficient structural damage to constitute a "Sinkhole Loss" was rendered moot, and the only issue to be resolved at trial pertaining to subsurface damage w as the proper method of repair. Generally, the question of the pr oper method of subsurface repa ir of a home damaged by sinkhole activity is for the jury to resolve. Roker, 164 So. 3d at 694. At trial, the parties offered the testimony of four engineers, and they all agreed there was damage to the structure even though they disagreed regardin g the proper method of subsurface repair. Omega's tw o experts from SDII and the ne utral evaluator testified that compaction grouting alone was the proper protocol. The Wa llaces' expert from FTE disagreed and testified that underpins should be added. Omega correctly argues that the jury should have been allowed to resolve this dispute. We therefore reverse the final judgment and remand for a jury trial on the method of repair. We note that any judgment on remand must be consistent with the- 9 - policy's loss settlement provision which only obligates Omega t o pay for subsurface repairs after the insureds enter into a contract and then only obligates Omega to make payment as the work is performed. See Citizens Prop. Ins. Corp . v. Stieben, 200 So. 3d 215, 215-16 (Fla. 2d DCA 2016); Citizens Prop. Ins. Corp. v. Bl aha, 194 So. 3d 411, 416 (Fla. 2d DCA 2016).

Reversed and remanded.

LaROSE, C.J., and CREN SHAW, J., Concur.