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

IN THE DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT

CITIZENS PROPERTY INSURANCE ) CORPORATION, ) ) Appellant, ) ) v. ) Case No. 2D13

- 3899 ) HECTOR MUNOZ and ALBA MUNOZ, ) ) Appellee s

. )

_ ____________________________ _ __ ___ ) Opinion filed December 24, 2014. Appeal from the Circuit Court for Hillsborough County; Paul L. Huey, Judge. Kara Berard Rockenbach of Methe & Rockenbach, P.A., West Palm Beach, for Appellant. Raymond T. Elligett, Jr., and Amy S. Farrior of Buell & Elligett, P.A., Tampa; and Michael Laurato and Erin Dunnavant of Austin & Laurato, P.A., Tampa, for Appellees.

KHOUZAM, Judge.

We affirm the decision below and write to address two issues: an insurance company's reliance on its engineer's report and the burden of proof in a suit involving an endorsement to an "all risk s " insurance policy.- 2

- In Dec ember 2009, Hector and Alba Munoz noticed numerous cracks in the walls of their hom e. At the time, t he residence was insured by a policy issued by Citizens Property Insurance Corp . The policy ( form CIT HO

- 3 07 08) insured against the risk of direct, physical losses to the property unless specifically excluded. The policy contained an exclusion for loss caused by sinkholes , but the parties had added an endorsement for sinkhole loss coverage (form CIT 23 94 07 08) . The Munozes reported the damage to Citizens in J anuary 2010, and Citizens engag ed Madrid Engineering Group to complete a si nkhole evaluation. When the firm determined that the damage was not caused by a s inkhole, Citizens denied the Munozes' claim. The
Munoz es hired SDII Global Corporation to ev aluate the damage, and SDII determined that the damage was caused by a sinkhole. W ithout informing Citizens of SDII 's report , the Munozes filed suit for coverage in May 2011 . A jury trial was held

.

The Munozes presented evidence in support of their position that the damage to their property had been caused by a sinkhole. After the M unozes rested their case, Citizens moved for directed verdict , arguing that it could not have breac hed the insurance contract when its engineer completed a statutorily compliant report finding no sinkhole activity and it did not receive a contrary professi onal opinion before the complaint was filed. The Munozes responded that they were under no obligation to provide a contrary report prior to filing suit. The trial court denied Citizens' motion for
directed verdict , and Citizens presented evidence in supp ort of their position that the damage to the Munozes' property had not been caused by a sinkhole but instead by excluded causes

.- 3

- At the charge conference , there was a dispute over the burden of proof, an issue that hinges on the nature of the policy

— spec ifically, whether it is a n "all risk s "

or "named peril s " policy. 1 The parties agreed that the original po licy was an "all risk s " policy. B ut Citizens argued that the sinkhole endorsement transformed the sinkhole coverage into "named perils" coverage. Th e Munozes, on the other hand, contended that the endorsement did not change the underlying "all risks" nature of the policy. The trial court agreed with the Munozes and instructed the jury on the burden of proof accordingly. The jury returned a verdict i n favor of the Munozes, and a f inal judgment

was entered . Citizens timely ap pealed . We affirm , writing to address Citizens' claims that the trial court erred in denying the motion for directed verdict and instructing the jury on the burden of proof. W e affirm as to the remaining issue without comment.

I. MOTION FOR DIRECTED VERDICT
The trial court properly denied Citizens' motion for directed verdict because the Munozes were under no obligation to provide a contrary report to Citizens before filing suit. It is true that Citizens w as required by statute to hire an engineer or geologist to conduct testing and issue a report. See § 627.707(2), (4) , Fla. Stat. (2010)

. And section 627.7073(1)(c) does provide that this re port "shall be presumed correct. " Bu t this statutory scheme was "designed to provide a framework for insurance companies to follow when encountering specific types of claims , in this case claims

1 An "all risks" policy protects against all direct losses except those explicitly excluded from the policy; conversely, a "n amed perils" policy only protects against perils explicitly named as included in the policy. See Fisher v. Certain Interested Underwriters at Lloyds Subscribing to Contract No. 242/99 , 930 So. 2d 756, 758 (Fla. 4th DCA 2006).- 4

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involving sinkhole damage . The application of a specific provision within that scheme [such as t he presumption in section 627.7073(1)(c)] to the evidentiary context is both misguided and inappropriate." Unive rsal Ins. Co. of N. Am. v. Warfel , 82 So. 3d 47 , 57 (Fla. 2012). Indeed , as this court has recently noted, " 'the [s]ection 627.707(c)
presump tion in favor of the insurer's engineer's report neither alters the fact of sinkhole damage nor forecloses litigation that attempts to discover the fact of sinkhole damage.' " Herrera v. Tower Hill Preferred Ins. Co. , 39 Fla. L. Weekly D2257, D2258 n.2 (F la. 2d DCA Oct. 29, 2014) (alteration in original) (quoting Su rrett v. First Liberty Ins. Co. , No.
8:11

– cv
– 60

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– 23MAP, 2011 WL 3879515 , at *2 (M.D. Fla. Sept. 2, 2011)).
" 'I n regard to insurance contracts, a specific refusal to pay a claim is the
breach w hich triggers the cause of action . . . .' " Allstate Ins. Co. v. Kaklamanos , 843 So. 2d 885, 892 (Fla. 2003) ( quoting Donovan v. State Farm Fire & Cas. Co. , 574 So. 2d 285, 286 (Fla. 2d DCA 1991))

. Here, a valid dispute about the existence of a
covered loss under the insurance policy arose at the time Citizens denied coverage. See Tower Hill Select Ins. Co. v. McKee , 39 Fla. L. Weekly D1756 , D1756 (Fla. 2d DCA Aug. 20, 2014). And Citizens has failed to point to any legal authority or any portion of
the policy requiring the Munozes to have given Citizens a contrary report prior to filing
suit. 2

2 The cases of Omega Insurance Co. v. Johnson , 39 Fla. L. Weekly D1911, D1912

- 13 (Fla. 5th DCA Sept. 5, 2014), and State Farm Florida Insurance Co. v. Colella , 95 So. 3d 891 , 894 (Fla. 2d DCA 2012), on which Citizens relies, are distinguishable from the instant case. The issue in thos e cases was whether the insurance company had wrongfully or unreasonably caused the insured to resort to litigation, whereas here the issue is whether a covered loss existed. Indeed, in both of those cases the insurance companies had already paid the insu red s ' claim s

. Omega , 39 Fla. L. Weekly at D1912; Colella , 95 So. 3d at 894.- 5

- II. BURDEN OF PROOF The trial court properly allocated the burden of proof. This court's opinion
in Hudson v. Prudential Property & Casualty Insurance Co. , 450 So. 2d 565 (Fla. 2d DCA 1984), is controlling here. The Hudsons had purchased a policy that insured their residence against all risks of physical loss except as otherwise excluded. Id. at 566. The policy contained an exclusion for loss caused by earth m ove ment or sinking, but an endorsement had been added to provi de coverage for sinkhole loss. Id. This court held that " [ t ] hat endorsement did not change the 'all risks' nature of the underlying policy; it merely narrowed the earth sinking exclusion." Id

. at 568. In so holding, this court relied

on Strubble v. United Service Automobile Ass'n , in which California's Second District Court of Appeal noted:

[E] arthquake coverage provided by the policy arose from a special endorsement thereto. Undoubtedly ea rthqu ake itself is a specific peril. But the coverage of a liability insurance policy must be construed broad ly and its exclusions narrowly. We, therefore, regard the earthquake endorsement as merely narrowing the earth movement exclusi on and as not chan ging the 'all

- risks' n ature of the underlying policy. To hold otherwise would be a case of the tail wagging the dog.
110 Cal. Rptr. 828, 832 n.6 ( Cal. Dist. Ct. App. 1973) (citation omitted)

. Similarly, t he sinkhole endorsement in this case does not cha nge the nature of the underlying "al l risks" policy

. Generally, an insured seeki ng coverage pursuant to an "all risks" policy must prove that a loss occurr ed to the property during the policy period. Hudson , 450 So. 2d at 568. If the insured meets this i nitial burden, the burden shifts to the insurer to- 6

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show that the loss resulted from an excluded cause. Id. The insured does not need to disprove any excluded causes. Id. Here, the trial court correctly determined that the policy at issue was an "all ri sks" policy and allocated the burden of proof consistently with this finding.

Affirmed.

VILLANTI and WALLACE , JJ., Concur.