Quesada v. Director, Federal Emergency Management Agency

Frank and Rose Quesada (defendants) owned a four-year-old home in Florida. The Quesadas had a flood insurance policy issued by the Federal Emergency Management Agency (FEMA) under the National Flood Insurance Act. The FEMA policy defined a flood as the temporary inundation of normally dry land by inland or tidal waters, unusual runoff, or mudslides. The FEMA policy specifically excluded from coverage damage caused by windstorms, fires, earthquakes, or other non-mudslide earth movements. When Tropical Storm Dennis hit Florida, it flooded the area around the Quesadas’ home. The floodwaters fully saturated the sandy soil on which the Quesadas’ home was built and almost reached the top of the Quesadas’ concrete slab foundation; however, the floodwaters stopped before rising high enough to enter the living space of the Quesadas’ home. Because of the saturation of the soil, the ground under the Quesadas’ home compacted and settled, causing the concrete slab foundation to shift. The foundation shifting caused extensive cracking in the walls and floors of the Quesadas’ home. The Quesadas filed a claim under their FEMA flood insurance. FEMA denied the claim, arguing that (1) floodwaters must enter a home to count as a covered flooding event; and (2) the earth-movement exception applies to bar coverage of any losses caused by the soil settling under the Quesadas’ home. At trial, FEMA’s claims adjuster testified that the cracks in the Quesadas’ home were fresh and that the house was built correctly on the same type of sand fill typically used in the area. There was no evidence presented that the Quesadas’ home was susceptible to damage from soil compaction under normal circumstances. The trial court ordered FEMA to cover the Quesadas’ claim. FEMA appealed.