TALLAHASSEE – It’s apparently the end of the road for a Tampa couple’s grievance with American Integrity Insurance and the company’s all-risk coverage after the Florida Supreme Court decline to hear a case placing the blame on the insurer for devastation caused by Chinese drywall.
After moving into a new home in January 2009, William and Stacey Peek soon noticed the noxious odor of sulfur, which was allegedly forced to the couple to leave the residence. The sulfur odor corroded copper coils in an air conditioning unit and damaged other electrical equipment in the home, according to a court document.
The couple filed a claim with American Integrity Insurance, with whom they had an all-risk coverage plan. But the insurer asserted that the policy’s exclusions included “latent defects, corrosion, pollutants, and faulty, inadequate, or defective construction materials" and contended that the culprit, Chinese drywall, qualified for each of those definitions.
The Peeks took American Integrity Insurance to court for breach of contract. The case was decided in circuit court last year, where Dr. Ralph Moon, a botanist, testified as an expert witness.
Moon asserted that Chinese drywall is constructed with elemental sulfur, which begins emitting noxious gas the moment it comes into contact with the atmosphere. Because it was Moon’s opinion that the drywall began emitting destructive gases the moment it was constructed, it qualified for the insurer’s definition of “defective construction materials.”
The circuit court ruled against the Peeks and an appellate judge upheld that ruling. So the Peeks set their sights on the Florida Supreme Court and turned to Steve Brannock, board-certified appellate lawyer at Brannock & Humphries.
However, the Supreme Court, late last month, declined to hear the Peeks’ case. And that was disappointing from the Peaks and the appellate firm, according to Brannock.
“We thought it presented important questions about the respective burdens of proof between an insured and its insurance company when a combination of covered and non-covered perils combined to cause a loss, an issue that will arise in many Chinese drywall cases,” Brannock told the Florida Record.
While the insurer had argued that Chinese drywall feel outside the coverage of its all-risk plan, the Peeks asserted that humidity inside of the home could be considered concurrent damage.
The plaintiffs also felt the case offered an opportunity for the Supreme Court to add clarity to the definition of “ensuing loss” provisions in insurance policies, stated Brannock.
“Unfortunately the court’s initial review was confined to the 2nd District’s opinion which did not tell the full story, leaving out critical information that demonstrated the strength of the Peeks’ legal arguments and highlighted the legal errors below,” said Brannock.
While it may be the end of the line for the Peeks’ grievance with American Integrity, Brannock warned that it’s imperative that consumers fully understand their policies and the exclusions within them. Even all-risk policies won’t cover all risks.
“Most homeowners would assume that being driven out of their home by defective Chinese drywall would be covered,” Brannock said. “In many cases, such losses are excluded. This case demonstrates that it is very hard to convince the courts of coverage, even when the policy language is ambiguous.”