A ruling Wednesday by the federal appellate court in Atlanta resolves new twists in a type of dispute that invariably arises between property owners and insurers after every hurricane: Was the damage caused by floodwaters or wind?
The 11th Circuit Court of Appeals overturned a decision to dismiss a Georgia church’s breach-of-contract and bad-faith claims against its insurer. The panel overruled District Court Judge Lisa G. Wood’s finding that expert testimony was required to prove the claim, and also threw out her conclusion that a surface water exclusion in the policy barred coverage for the damage.
Southern Mutual Insurance Co. had denied a $15 million claim by the Greater Hall Temple Church of God in Brunswick for damages caused by Hurricane Matthew in October 2016. While Wood decided that the insurer was within its rights, the 11th Circuit panel said a jury may find otherwise.
“Although it’s true that Greater Hall presents no admissible expert testimony and that none of Greater Hall’s lay witnesses actually saw Hurricane Matthew cause the roof damage to the church building, it seems to us that Greater Hall’s witnesses provide enough circumstantial evidence for a jury to draw the conclusion that the hurricane did, in fact, cause the roof damage,” the appellate court said.
Judge Wood had refused to allow the church to present expert testimony from three witnesses. One was a civil engineer who had little experience with the type of metal roof that had been installed on the church. Another was a roofing contractor who had put in a bid to repair the damage, but had little knowledge about the prior condition and no experience in determining the causes of roof damage. The judge rejected the third witness, the contractor who had installed the roof, because the church did not disclose the subject of his testimony until after the discovery deadline.
The judge did not bar those witnesses from providing lay testimony, but found that the church could not overcome Southern Mutual’s “unchallenged expert witness report” that found the water damage to the church was caused by poor workmanship.
Southern Mutual’s experts testified that the water damage to the interior of the church was caused by improper flashing that diverted rainfall through the building’s heating, ventilation and air condition ducts. There was also evidence that the church’s roof leaked long before the hurricane.
The 11th Circuit agreed with Wood that the expert testimony should be barred, but said the church might be able to prove its claim with lay testimony.
The panel noted that the church’s pastor had testified that after Hurricane Matthew struck, he found that water leaked in places that it had never leaked before. Another witness testified that the “entire roof had shifted” after the hurricane. One witness said “anyone in Gwynn County” could tell that Hurricane Matthew had damaged the church’s roof.
“Taken together, we think that this evidence ‘furnished facts from which a logical conclusion could be drawn’ that Hurricane Matthew caused the damage to the roof of Greater Hall’s church building,” the court said, citing a previous court ruling.
The appellate panel also found that the district court incorrectly concluded that damage to the court was caused by “surface waters,” which would be excluded by the policy.
“Greater Hall does not merely allege—as the district court’s ‘surface water’ analysis seems to presume—that rainwater accumulated on the church building’s roof and seeped into its interior,” the opinion says. “Rather, it claims that winds of Hurricane Matthew caused structural damage to the roof, creating holes through which rainwater was able to enter and cause damage to the church building’s interior.”
The court affirmed the decision to bar the church’s expert witnesses, but reversed the ruling that granted summary judgment and remanded the case to proceed to trial. The court also reversed the district court’s decision to dismiss Greater Hall’s bad-faith claims against the insurer.
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