                   Case: 14-10549       Date Filed: 02/27/2015       Page: 1 of 18


                                                                                      [PUBLISH]

                     IN THE UNITED STATES COURT OF APPEALS

                                FOR THE ELEVENTH CIRCUIT
                                  ________________________

                                         No. 14-10549
                                   ________________________

                          D.C. Docket No. 8:12-cv-01161-EAK-MAP

SEVERIN HEGEL and STEPHANIE HEGEL,

llllllllllllllllllllllllllllllllllllllllPlaintiffs - Appellees,

versus

THE FIRST LIBERTY INSURANCE CORPORATION,

llllllllllllllllllllllllllllllllllllllllDefendant - Appellant.
                                       ________________________

                          Appeal from the United States District Court
                              for the Middle District of Florida
                                ________________________

                                        (February 27, 2015)
Before ED CARNES, Chief Judge, COX and GILMAN, ∗ Circuit Judges.




         ∗
             Honorable Ronald Lee Gilman, United States Circuit Judge for the Sixth Circuit, sitting
             by designation.
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GILMAN, Circuit Judge:

      This case involves an insurance-coverage dispute that began in 2011 between

Severin and Stephanie Hegel (the Hegels) and The First Liberty Insurance

Corporation (First Liberty). The Hegels claim that First Liberty improperly denied

their claim for a “sinkhole loss,” defined under their homeowner’s insurance policy

as “structural damage to the building, including the foundation, caused by sinkhole

activity.” First Liberty argues that the damage to the Hegels’ residence does not

qualify as “structural damage,” a term that was not defined in either the policy or the

version of the Florida sinkhole-insurance statute applicable to their claim. In

February 2014, the district court granted summary judgment for the Hegels, finding

that “structural damage” meant any “damage to the structure” and awarding them

$166,518.17 in damages. First Liberty timely appealed.

      For the reasons set forth below, we REVERSE the judgment of the district

court and REMAND the case for further proceedings consistent with this opinion.



                                I. BACKGROUND

A.    Factual background

      1. The insurance policy and Florida’s sinkhole-insurance statute

      The Hegels had a homeowner’s insurance policy with First Liberty for their

Spring Hills, Florida residence, effective October 5, 2010. This policy insured

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against “Sinkhole Loss” as an exception to the policy’s exclusion for damage caused

by earth movement. Under the policy, “Sinkhole Loss means structural damage to

the building, including the foundation, caused by sinkhole activity.” (Emphasis

added.) The policy, however, did not define the term “structural damage.”

       The version of the Florida statute governing sinkhole insurance that was in

effect in 2010 contained the same definition of “sinkhole loss” as the policy did, but

similarly failed to define the term “structural damage.”             See Fla. Stats.

§ 627.706(2)(c) (2005). Prior to the statute being substantially amended in 2005,

however, the term “sinkhole loss” was defined as “actual physical damage to the

property covered arising out of or caused by sudden settlement or collapse of the

earth supporting such property.” Fla. Stats. § 627.706(3) (1981) (emphasis added).

       The Florida Building Code (2004), on the other hand, defined “structural” as

it relates to buildings:

       For purposes of this code, “structural” shall mean any part, material or
       assembly of a building or structure which affects the safety of such
       building or structure and/or which supports any dead or designed live
       load and the removal of which part, material or assembly could cause,
       or be expected to cause, all or any portion to collapse or fail.

Fla. Bldg. Code, Existing Buildings § 202 (2004). And a May 17, 2011 amendment

to Florida Statutes § 627.706 eventually provided a detailed, technical definition of

“structural damage,” itself referencing the Florida Building Code:


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(2)(k) “Structural damage” means a covered building, regardless of the
date of its construction, [that] has experienced the following:

1. Interior floor displacement or deflection in excess of acceptable
   variances as defined in ACI 117-90 or the Florida Building Code,
   which results in settlement related damage to the interior such that
   the interior building structure or members become unfit for service
   or represents a safety hazard as defined within the Florida Building
   Code;

2. Foundation displacement or deflection in excess of acceptable
   variances as defined in ACI 318-95 or the Florida Building Code,
   which results in settlement related damage to the primary structural
   members or primary structural systems that prevents those members
   or systems from supporting the loads and forces they were designed
   to support to the extent that stresses in those primary structural
   members or primary structural systems exceeds one and one-third
   the nominal strength allowed under the Florida Building Code for
   new buildings of similar structure, purpose, or location;

3. Damage that results in listing, leaning, or buckling of the exterior
   load-bearing walls or other vertical primary structural members to
   such an extent that a plumb line passing through the center of
   gravity does not fall inside the middle one-third of the base as
   defined within the Florida Building Code;

4. Damage that results in the building, or any portion of the building
   containing primary structural members or primary structural
   systems, being significantly likely to imminently collapse because
   of the movement or instability of the ground within the influence
   zone of the supporting ground within the sheer plane necessary for
   the purpose of supporting such building as defined within the
   Florida Building Code; or

5. Damage occurring on or after October 15, 2005, that qualifies as
   “substantial structural damage” as defined in the Florida Building
   Code.


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Fla. Stats. § 627.706(2)(k) (2011).

      2. The damage and estimates of repair

      The Hegels allege that, on March 1, 2011, they “discovered damage to their

home, including, but not limited to, progressive physical damage to the walls and

floors of the residence.” They subsequently submitted a claim for their damages to

First Liberty under their homeowner’s policy.

      First Liberty retained Structural Engineering and Inspections, Inc. (SEI) to

investigate the claim in September 2011. SEI concluded in a report that the Hegels’

residence “DOES NOT MEET the criteria for Structural Damage as defined by

Florida Statutes §627.706 [2011].” (Emphases in original.) The SEI report noted

some cracking and other issues, but determined that nothing rose to the level of

“structural damage” as defined in the 2011 version of the statute. In addition, SEI

listed several possible causes for the observed damage that were unrelated to

sinkholes, including differential settlements and ordinary concrete shrinkage. First

Liberty accordingly denied the Hegels’ claim in October 2011, stating that their

residence “ha[d] not sustained structural damage to the building or foundation” and

that the damage was “related to normal concrete shrinkage, differential settlement,

and improper embedment of [the] foundation.”




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      In November 2011, the Hegels requested a neutral evaluation by a public

adjuster. Kevin Scott, the neutral evaluator engaged for the claim, issued a report in

July 2012. He noted that if the sinkhole claim was made under a policy with an

effective date before May 17, 2011, then the 2011 definition of “structural damage”

set forth in Florida Statutes § 627.706 would not apply. His report concluded that

the damage to the Hegels’ residence was “the result of a combination of factors,

including sinkhole activity,” but that “the observed distresses to the house can

primarily be attributed to minor differential settlement of the structure and normal

shrinkage/drying characteristics of the masonry materials.”        Ultimately, Scott

recommended subsurface grouting, at an estimated cost of $105,075, to remediate

the sinkhole activity. He did not, however, apply any particular definition of

“structural damage” to his evaluation, finding only that “[t]here was physical

damage that resulted from settlement.”

      The Hegels subsequently hired Central Florida Testing Laboratories, Inc.

(CFTL) to review the findings and recommendations of SEI and the neutral

evaluator, and to conduct additional testing. CFTL, in a report issued in March

2013, found damage consisting of “widespread, minor cracking to both the exterior

and interior of the home.” Like the neutral evaluator, CFTL determined that

sinkhole activity was a contributing cause of the damage. To fully remediate the


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effects of the sinkhole activity, the report recommended shallow chemical grouting

in addition to the deep compaction grouting program proposed by the neutral

evaluator, and estimated the total cost at $145,775. The Hegels next retained

Champion Foundation Repair to prepare a bid based on CFTL’s recommended

remediation plan, with the bid coming in at $141,180. Finally, the Hegels retained

Triad Consulting Group (Triad) to estimate the cost of repairing cosmetic damages.

Triad’s bid totaled $20,743.17.

B.    Procedural background

      In April 2012, before the neutral evaluator had completed his report, the

Hegels filed suit against First Liberty for breach of contract in the Fifth Judicial

Circuit Court in and for Hernando County, Florida. First Liberty removed the case

the following month to the United States District Court for the Middle District of

Florida based on diversity of citizenship. It also filed an unopposed motion to stay

the litigation until the neutral evaluation was completed. The case was reopened in

September 2012, after which First Liberty filed a counterclaim for a declaratory

judgment that the Hegels’ claimed damage falls outside the scope of the

homeowner’s insurance policy.

      The two parties next filed competing motions for summary judgment. First

Liberty submitted that its counterclaim was a pure question of contract law and that


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there were no genuine disputes of material fact. It argued that the May 17, 2011

amendment to the definition of “structural damage” in Florida Statutes § 627.706

should be incorporated into the contractual definition of the term, and that the term

could not mean simply any “damage to the structure.”

      In their motion, the Hegels claimed that they had met their burden of proving

that the damage to the residence came within the terms of the policy, noting that First

Liberty had not submitted any evidence to refute the opinions of the neutral

evaluator and CFTL that sinkhole activity existed. The Hegels further argued that

summary judgment on the damages claim was appropriate because First Liberty had

not challenged any of the estimates of monetary damages.

      To obtain expedited appellate review of the contract-interpretation question,

and solely for the purposes of summary judgment, First Liberty stipulated that

should the district court conclude that “structural damage” means any “damage to

the structure,” First Liberty would admit that such damage exists and was caused by

sinkhole activity, and would accept the Hegels’ submitted monetary-damages

estimates.

      The district court denied First Liberty’s summary-judgment motion in

September 2013, relying on prior, unpublished Middle District of Florida decisions

considering similar disputes under Florida law. It held that the term “structural


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damage” should be interpreted to mean any “damage to the structure.” Later

decisions from the same court, however, have defined “structural damage” more

narrowly. See Gonzalez v. Liberty Mut. Fire Ins. Co., 981 F. Supp. 2d 1219, 1231

(M.D. Fla. 2013) (holding that “structural damage” means “damage that impairs the

structural integrity of the building”); Franqui v. Liberty Mut. Fire Ins. Co., No.

8:12-cv-01257-T-27MAP, 2014 WL 1092405, at *7 (M.D. Fla. Mar. 18, 2014)

(unpublished) (holding that “structural damage” means “damage to the structural

components of the building, excluding damage that is cosmetic in nature”).

      In February 2014, the district court granted the Hegels’ motion for summary

judgment, awarding them $166,518.17 in damages plus prejudgment interest. Final

judgment was entered on February 5, 2014. First Liberty timely filed a notice of

appeal two days later.



                                II. ANALYSIS

A.    Standard of review

      We review an order granting summary judgment de novo and apply the same

legal standards that governed the district court’s decision. Ave. CLO Fund, Ltd. v.

Bank of Am., N.A., 723 F.3d 1287, 1293 (11th Cir. 2013). A district court properly

grants summary judgment when the movant shows that “there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.”

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Chapman v. Procter & Gamble Dist., LLC, 766 F.3d 1296, 1312 (11th Cir. 2014)

(quoting Fed. R. Civ. P. 56(a)) (internal quotation marks omitted).

      Contract interpretation is subject to the same de novo review. Am. Cas. Co.

v. Etowah Bank, 288 F.3d 1282, 1285 (11th Cir. 2002). Because insurance policies

are considered contracts, “[i]nterpretation of insurance policy language is [also] a

matter of law, subject to de novo review.” Graber v. Clarendon Nat’l Ins. Co., 819

So. 2d 840, 842 (Fla. Dist. Ct. App. 2002) (citing Coleman v. Fla. Ins. Guar. Ass’n,

517 So. 2d 686 (Fla. 1988)); see also Mich. Millers Mut. Ins. Corp. v. Benfield, 140

F.3d 915, 924 (11th Cir. 1998). Questions of statutory interpretation are likewise

reviewed de novo. Boroski v. Dyncorp Int’l, 700 F.3d 446, 450 (11th Cir. 2012).

B.    The district court erred in equating the contractual term “structural
      damage” with any “damage to the structure”

      On appeal, First Liberty sets forth two independent, alternative theories to

support its argument that the district court’s contractual interpretation was

erroneous: (1) the plain meaning of “structural damage” cannot be any “damage to

the structure” in the context of the contractual phrase “structural damage to the

building”; and (2) the insurance policy incorporates the definitions of “structural”

under the Florida Building Code (2004) and “structural damage” as “clarified” by

the 2011 amendment to Florida Statutes § 627.706, such that the term “structural

damage” must mean more than any “damage to the structure.” We agree with First

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Liberty that the plain meaning of “structural damage” cannot be simply any

“damage to the structure” in the relevant context.       As to the more technical

definitions of “structural” and “structural damage” contained in the Florida Building

Code and Florida Statutes § 627.706, however, we disagree with the proposition that

they are incorporated into the insurance policy.

      1.     The plain meaning of the term “structural damage” as used in
             the context of the insurance policy cannot be any “damage to
             the structure”

      “Because federal jurisdiction over this matter is based on diversity, Florida

law governs the determination of the issues on this appeal.” State Farm Fire and

Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004). In interpreting

insurance policies,

      Florida courts start with the plain language of the policy as bargained
      for by the parties. If that language is unambiguous, it governs. If the
      relevant policy language is susceptible to more than one reasonable
      interpretation, one providing coverage and the other limiting coverage,
      the insurance policy is considered ambiguous, and must be interpreted
      liberally in favor of the insured and strictly against the drafter who
      prepared the policy.

Id. (quoting Auto-Owners Ins. Co. v Anderson, 756 So. 2d 29, 34 (Fla. 2000))

(internal quotation marks omitted).

      Both the Hegels and First Liberty contend that the term “structural damage” is

unambiguous and should be given its “plain meaning,” but the parties disagree on


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what that meaning is. Even the district judges in the Middle District of Florida, in

interpreting the same term in similar insurance policies under Florida law, have

reached opposite conclusions.      Compare Ayres v. USAA Cas. Ins. Co., No.

8:11-cv-816-T-24TGW, 2012 WL 1094321, at *4 (M.D. Fla. Apr. 2, 2012)

(unpublished) (holding that “structural damage” means “damage to the structure”),

with Gonzalez v. Liberty Mut. Fire Ins. Co., 981 F. Supp. 2d 1219, 1231 (M.D. Fla.

2013), and Franqui v. Liberty Mut. Fire Ins. Co., No. 8:12-cv-01257-T-27MAP,

2014 WL 1092405, at *7 (M.D. Fla. Mar. 18, 2014) (unpublished).

      This court has held that “differing interpretations of the same provision is

evidence of ambiguity, particularly when a term is not explicitly defined or clarified

by the policy.” Dahl-Eimers v. Mut. of Omaha Life Ins. Co., 986 F.2d 1379, 1382

(11th Cir. 1993) (citation omitted). On the other hand, the lack of a definition in a

policy “does not necessarily render the term ambiguous and in need of interpretation

by the courts.” State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So. 2d 1072,

1076 (Fla. 1998). And the directive to interpret insurance policies liberally in favor

of the insured applies “[o]nly when a genuine inconsistency, uncertainty, or

ambiguity in meaning remains after resort to the ordinary rules of construction.”

Excelsior Ins. Co. v Pomona Park Bar & Package Store, 369 So. 2d 938, 942 (Fla.

1979).


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      Here, no genuine ambiguity exists because construing “structural damage” to

mean simply any “damage to the structure” in the context of the insurance policy is

facially unreasonable.   Defining “structural damage” as such merely begs the

question of what is “structural” or “structure,” and what does either mean within the

phrase “structural damage to the building”? Terms and phrases cannot be viewed

in isolation; “courts must construe an insurance contract in its entirety, striving to

give every provision meaning and effect.” Dahl-Eimers, 986 F.2d at 1381 (citing

Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So. 2d 938, 941 (Fla.

1979)).

      The district court awarded the Hegels damages for all subsurface and

cosmetic repairs based on the parties’ stipulation that there was “physical damage to

Plaintiffs’ home.” Because “structural damage” is necessary for the Hegels to

recover under the policy, the court must have equated “physical damage to

Plaintiffs’ home” with “structural damage to the building.” Equating the two,

however, essentially defines “structural damage” as “physical damage”—an

untenable result.    Such a construction would render the word “structural”

meaningless because all property damage is physical, thereby violating a

foundational rule of contract construction that every word be given effect. See

Equity Lifestyle Props., Inc. v. Fla. Mowing And Landscape Serv., Inc., 556 F.3d


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1232, 1242 (11th Cir. 2009) (“[This court] must read the contract to give meaning to

each and every word it contains, and . . . avoid treating a word as redundant or mere

surplusage ‘if any meaning, reasonable and consistent with other parts, can be given

to it.’” (quoting Roberts v. Sarros, 920 So. 2d 193, 196 (Fla. Dist. Ct. App. 2006))).

Indeed, at oral argument, counsel for the Hegels was unable to identify what type of

damage to the property would not be “structural” under their preferred definition.

      The key problem here is one of confusion between the words “structural” and

“structure.” In construing insurance-policy terms, Florida courts “commonly adopt

the plain meaning of words contained in legal and non-legal dictionaries.” Brill v.

Indianapolis Life Ins. Co., 784 F.2d 1511, 1513 (11th Cir. 1986) (citing Gov’t Emps.

Ins. Co. v. Novak, 453 So. 2d 1116, 1118 (Fla. 1984)). “Structural” is an adjective,

defined in the Oxford English Dictionary as “[f]orming a necessary part of the

structure of a building or other construction, as distinct from its decoration or

fittings.” Structural, adj., Oxford English Dictionary, http://www.oed.com/view/

Entry/191887 (June 2014) (last visited Feb. 26, 2015). The noun “structure,” on the

other hand, is simply a synonym for a building. See Structure, n., Oxford English




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Dictionary, http://www.oed.com/view/Entry/191895 (June 2014) (last visited Feb.

26, 2015) (defining “structure” as “[a] building, an edifice”). 1

        Based on these definitions, “damage to the structure” would encompass any

physical damage to a building, even if only cosmetic, whereas “structural damage”

would exclude damage to a building’s “decoration or fittings.” Any structural

damage would necessarily encompass damage to the building, but the opposite is not

necessarily true; i.e., many types of lesser damage to a building would not be

structural damage.         To equate “structural damage” with any “damage to the

structure,” as the district court did, is thus untenable.

        Even the Hegels in their appellate brief appear to retreat from the district

court’s definition, arguing instead that the “damage must be to the structure itself as

determined by professional engineers.” But this definition is no better than the

district court’s definition because it fails to account for how professional engineers

assess “structural damage.” Kevin Scott, the neutral evaluator and a professional

engineer, defined the term as follows: “It’s damage which impedes the structural

components from supporting the loads that they are intended to support. That is my

engineering opinion of structural damage.” Scott’s definition is essentially the


   1
       In keeping with Eleventh Circuit Internal Operating Procedure 10 under Federal Rule of
       Appellate Procedure 36, ‘Citation to Internet Materials in an Opinion,’ a copy of the internet
       materials cited in this opinion is available at this Court’s Clerk’s Office.

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same as the only published district-court decision to squarely decide the plain

meaning of the term. See Gonzalez v. Liberty Mut. Fire Ins. Co., 981 F. Supp. 2d

1219, 1231 (M.D. Fla. 2013) (interpreting “structural damage” to mean “damage

that impairs the structural integrity of the building”). We agree with the excellent

analysis in Gonzalez and therefore construe the phrase “structural damage to the

building” to mean “damage that impairs the structural integrity of the building.”

      2.     “Structural damage” as used in the 2005 version of Florida’s
             sinkhole-insurance statute does not mean “damage to the
             structure”

      Both parties acknowledge that the 2005 version of Florida Statutes § 627.706

applies to the Hegels’ insurance policy. Although that version does not define the

term “structural damage,” the legislative history behind its enactment is fully

consistent with our determination regarding the plain meaning of the term. Recall

that, in 2005, the Florida legislature changed the definition of “sinkhole loss” from

“actual physical damage to the property covered” to “structural damage to the

building.” Ch. 2005-111, § 17, Laws of Fla. In making the 2005 revision, the

legislature’s intention was “generally to reduce the number of sinkhole claims and

related disputes arising under prior law.” Ch. 2011-39, § 21, Laws of Fla. This

statement strongly implies that “structural damage” is different from—and more

restrictive than—“actual physical damage.”


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      3. Definitions from other sources are not relevant in determining the
         plain meaning of the term “structural damage” as used in the
         Hegels’ insurance policy

      First Liberty urges us to incorporate into the insurance policy the relatively

narrow definitions of “structural” as set forth in the Florida Building Code (2004)

and “structural damage” as “clarified” by the 2011 amendment to Florida Statutes

§ 627.706. But we must determine the plain meaning of the term “structural

damage” utilizing the procedure required by Florida law. See Garcia v. Fed. Ins.

Co., 969 So. 2d 288, 291-92 (Fla. 2007) (stating that insurance contracts are

construed according to their plain meaning and that, when doing so, courts may

consult dictionary definitions). “[C]ourts may not rewrite contracts, add meaning

that is not present, or otherwise reach results contrary to the intentions of the

parties.” Interline Brands, Inc. v. Chartis Specialty Ins. Co., 749 F.3d 962, 965

(11th Cir. 2014) (quoting Taurus Holdings, Inc. v. U.S. Fidelity and Guar. Co., 913

So. 2d 529, 532 (Fla. 2005)) (internal quotation marks omitted). And an insurer

cannot, “by failing to define the terms [in a policy] . . . , insist upon a narrow,

restrictive interpretation of the coverage provided.” Dahl-Eimers v. Mut. of Omaha

Life Ins. Co., 986 F.2d 1379, 1382 (11th Cir. 1993) (internal quotation marks

omitted). We therefore decline to incorporate these specific definitions into the

Hegels’ insurance policy.


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                               III. CONCLUSION

      For all of the reasons set forth above, we REVERSE the judgment of the

district court and REMAND the case for further proceedings consistent with this

opinion. This will require the district court to decide if a genuine dispute of

material fact exists regarding how much, if any, structural damage to the Hegels’

house (as properly defined) is due to sinkhole activity.          The district court’s

determination on this issue will in turn lead to either a new grant of summary

judgment for the appropriate party or to a trial on the merits.




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