Those familiar with Hurricane Wilma litigation in South Florida may be fully aware of a recent trend of trial court rulings which take cases away from juries, seemingly depriving policyholders of their days in court. Summary judgment rulings on “late notice” defenses basically ended the cases and took the factual determinations away from the jury. Terms such as “late notice as a matter of law” and “the insurer was prejudiced in its investigation of the damage” suddenly appeared at summary judgment phase rulings. Many members of the plaintiffs’ bar contend that the nature of such disputes contain factual issues that should not be decided by courts at the summary judgment phase, but should be left for determination by a jury.

The Fourth District Court of Appeal in Florida recently issued an opinion reversing a trial court ruling that granted a summary judgment in favor of State Farm on the late notice issue. Surprisingly, the opinion does not contain any discussion of the “late notice as a matter of law” issue that had appeared recently in some cases. Rather, Stark v. State Farm Florida Insurance Company, No. 4D10-4945 (Fla. 4th DCA June 20, 2012), involved the question of whether the insurer’s investigation was “prejudiced” by the timing of the notice given by the policyholders. How is an insurer “prejudiced” in its investigation? After all, we are not talking about insurance companies as part of some suspect classification deserving heightened scrutiny.

Much of the determination will involve questions of material fact that should be left for a jury’s determination.

In this case, Mr. and Mrs. Stark had a policy with State Farm at the time of Hurricane Wilma. Their hurricane deductible was $9,665.00. The policy required the insureds to give “immediate notice” to State Farm or its agent in the event of a loss. After Hurricane Wilma, the Starks became “aware of roof damage” to their home. They hired a company to replace approximately twenty-three broken roof tiles, for the cost of $300. The Starks also applied for financial relief from FEMA in order to cover the cost of the broken tiles. The Starks believed that the cost of repairing the damage “would not exceed the deductible” of $9,665. Throughout the next few years, the Starks’ roof continued to leak and their home continued to suffer further damage. They reported their claim to State Farm on March 9, 2009, over three years after Hurricane Wilma.

An investigator for State Farm observed fifty-two repaired roof tiles and thirteen replaced roof tiles, but was “unable to establish a date and cause of loss.” As a result of the investigator’s review, State Farm informed the Starks that the investigator could “not find any accidental direct physical loss to the dwelling which [could] be directly related to Hurricane Wilma.” The Starks provided State Farm a receipt for $300 in repairs from 2005 reflecting that the repairs were “the result of storm damage caused by Hurricane Wilma.” In response, the insurer claimed that the receipt did not “sufficiently overcome [its] prejudiced ability to independently investigate the cause and date of any damage which necessitated the roof repairs.”

The lawsuit for breach of contract followed. State Farm raised the Starks’ failure to comply with the post-loss duties under the policy as an affirmative defense.

State Farm filed a motion for summary judgment on the notice issue. In opposition, the Starks filed a couple of affidavits from their engineer and a public adjuster. The engineer’s affidavit stated that his inspection, even in 2012, revealed the “classic pattern of wind damage” and that would have been evident to State Farm’s inspection as well. The public adjuster’s affidavit stated that he met State Farm’s inspector at the property and he noted that State Farm’s inspector told him there appeared to be storm damage to the roof. Despite that evidence, the trial court granted State Farm’s motion for summary judgment, finding that the Starks failed to report the loss in a timely fashion, and, therefore prejudice was presumed.

The Fourth District Court of Appeals held that the affidavits created issues of material fact as to whether the insureds could overcome any presumption of prejudice to State Farm. The Court held the evidence suggested that the insureds could convince a jury that their noncompliance with the notice provision did not prejudice the insurer by depriving it of the opportunity to investigate the facts. The appellate court reversed the trial court’s ruling and remanded the case to proceed further.

As it stands now, the Starks will presumably have their day in court, and be able to present their case to a jury. Interestingly, a case presenting a similar issue to the Fourth District Court of Appeal, Slominski v. Citizens Property Insurance Corporation, 4D10-4372, will be argued at 10 a.m. on June 26, 2012. Those who are interested can watch the Slominski oral argument live by clicking here.