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Florida Attorneys Prevail in Catastrophic Ground Cover Collapse Case

Litchfield Cavo LLP partner Jason M. Chodos along with attorney Dana B. Kuczynski received a favorable partial summary judgment ruling from the US District Court, Middle District of Florida on a commercial first-party property matter following a contentious catastrophic ground cover collapse case at a 13 building condominium complex in Florida. The insured’s commercial property policy from our client, a nationwide insurance company, provided “Catastrophic Ground Cover Collapse” coverage as the only form of coverage for loss or damage resulting from earth movement.

The insured submitted a claim alleging the sinkhole cast a wide “zone of influence” and that the hole was impacting four separate condominium buildings as well as a freestanding retaining wall. The insured further alleged that policy limits would be implicated on all four buildings to make necessary repairs, including underpinning, grouting and cosmetic repairs. The insured was also seeking coverage for repairs to the retaining wall, patios, sidewalks, land, landscaping, condominium unit owner property, “matching” damages, uncollected association dues on one building following an order to vacate, and costs to erect a security fence surrounding the sinkhole. After claim investigation, our client accepted coverage for repairs to covered property at the one building adjacent to the sinkhole. In this respect, it issued payment for undisputed repair costs. Our client denied coverage for the remainder of the claim and the insured then brought suit.

Litchfield Cavo was retained midway through the case, substituted in as counsel, and helped guide our client through nearly a year of discovery and two mediations that resulted in an impasse. Our attorneys filed a motion for summary judgment arguing that the majority of the insured’s claim is not covered under the policy, and further argued that the insured failed to use all reasonable means to mitigate their damages and should be barred from any further insurance proceeds.

Our attorneys prevailed on what appears to be the first ruling in the country where a court was asked to interpret the “Catastrophic Ground Cover Collapse” provision. The ruling also reinforced the argument that “matching” damages and monetary expenses are not covered under a commercial property policy, which are two types of claimed categories of loss that are appearing with increased frequency here in Florida. The Court’s ruling that there is no coverage for remediation of land or for costs to “fill or backfill” also left open the possibility that there may not be coverage for any alleged grouting expenses with the assumption that a jury determines that grouting is land remediation, as opposed to building remediation.

The Court’s ruling addressed numerous categories of claimed damages that may be applicable to other types of future claims in addition to sinkhole or catastrophic ground cover collapse matters.

To read the full summary, please click here. To learn more about Litchfield Cavo’s first-party property practice area in Florida, please contact Jason Chodos and Dana Kuczynski.