CSK partners, Aram Megerian and Paydon Broeder, recently completed CSK's sixth post-COVID live jury trial in Florida. In this case, Aram and Paydon of CSK’s Tampa office obtained a complete defense verdict in Pinellas County in a drain line/slab leak case. This case was the first civil jury trial in Pinellas County since the COVID-19 shutdown.
Factual Background
The case was reported to the Carrier as a sewer back up. After an investigation, the claim was denied for no physical loss. Months later, the Insured provided a report and estimate from Advanced Pace Technologies totaling $174,000. The Carrier then investigated with a plumber, who found a “20 foot belly in the line” and recommended a complete drain line replacement. The Carrier informed the Insured that the Policy’s $10,000 Limited Water Damage Endorsement (LWD) applied and that a reinspection with a field adjuster would be necessary to prepare an estimate. The Insured withdrew the claim based on the Carrier’s representations that the Water Damage Endorsement (WD) and LWD applied, and filed suit eight days later.
Litigation
During the lawsuit, we filed a motion for summary judgment regarding the $10,000 on behalf of the Carrier. The Court ultimately denied our motion, finding the WD endorsement did not apply because the condition of the pipes was not caused by “human or animal forces, or any act of nature,” thus the LWD was not triggered. The Court further ruled that even if the WD endorsement did apply, the LWD did not apply to tear out. Based on that ruling, the Insured later argued at trial that the Carrier breached the contract by misapplying the Policy.
During the course of litigation, CSK hired Pipe Restoration Solutions (PRS) to video-scope the drain lines. PRS determined that while the drain lines were old and had buildup/scaling, it was in good enough condition to hydro-jet and reline. Our expert, Dewey Mixon, testified at trial that his company could reline the house without the need to tear out any portion of the building/structure.
Mediation/Settlement Offers
This case was mediated in the early part of 2020, prior to the motions for summary judgment. After losing the motion for summary judgment concerning the Policy’s $10,000 cap, the Insured withdrew all prior offers. In September 2020, we served a proposal for settlement on the Insured only, which was rejected without a counter. Later, about 45 days before trial, we proposed a high/low agreement in order to avoid trial and proceed directly to an appeal from the summary judgment ruling concerning the $10,000 cap. The Insured’s high number and low number were essentially the same. The Insured refused to provide any global numbers and rejected all other offers of settlement.
Pre-Trial
Before trial, the court adopted almost the entirety of the Insured’s jury instructions and verdict form. The court also put the burden to prove whether “tear out was necessary” on the Carrier, over our objections.
Trial
At trial, the voir dire process was streamlined due to Covid-19, with the Chief Judge handling the hardship challenges. There was eventually a panel of 37 jurors with 5 excused for hardship. The court imposed a 45-minute time limit per side, and each struck 19 jurors for cause. There were 3 additional cause challenges by the Carrier, one of which was agreed to by the Insured. However, the judge denied these challenges and the Carrier was forced to use its peremptory challenges.
The Insured’s opening focused on the court’s finding that the Carrier misapplied the Policy’s $10,000 cap and the fact that our own plumber found a belly under the slab. In contrast, the Carrier argued that (1) no physical damage was found at the property, (2) the Insured withdrew his claim from consideration, hindering the Carrier’s ability to make a final determination, and (3) once the Carrier’s expert was allowed to inspect, the Carrier found that tear out was not necessary as relining was possible.
During the Insured’s case in chief, counsel presented the live testimony of the Insured, the plumber who performed a hydrostatic test, a home inspector who obtained moisture readings, an expert plumber, and an expert general contractor, and read the depositions of the Carrier’s corporate representative and pre-suit plumber, who found a belly in the line.
During the Carrier’s case in chief, we called Dewey Mixon of PRS, who testified that the line needed to be jetted and could be relined without tear out. We also read the deposition designations of the field adjuster, who found no physical damage at the property.
On the fourth day of trial, the Insured’s closing argument focused on the alleged damage to the structure fill under the home and the alleged crumbling garage floor. At no point did the Insured focus on any potential damage to the bathroom where the alleged backup took place. The Insured again highlighted the fact that the Carrier’s letter to the Insured (1) “misapplied” the $10,000 cap, and (2) found that the loss was covered. In turn, the Carrier’s closing focused on the fact that all the witnesses who testified regarding damages were not present at the property during the Policy period when the Carrier initially found no damage. The Carrier also argued that not one witness testified that there was an odor, which presumably would be present if there was sewage seeping into the structural fill. In their rebuttal, the Insured’s counsel said he was “stumbling” and otherwise did not have a response as to why there would not be a smell if raw sewage was seeping into the soil/fill under the house.
Verdict
The jury verdict included three questions: (1) whether there was direct physical loss to the property during the Policy period; (2) whether the Carrier proved it was not necessary to tear out a portion of the building; and (3) what was the amount necessary to compensate the Insured. After two and a half hours, the jury returned a verdict for the Carrier, finding the Insured did not prove by the greater weight of the evidence that the home sustained a direct physical loss during the Policy period.
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