## Facts

- G. Frank Quesada and Rosa A. Quesada owned a four-year-old home in Florida insured under a Standard Flood Insurance Policy (SFIP) issued by the Federal Emergency Management Agency (FEMA) under the National Flood Insurance Act.
- On August 18, 1981, Tropical Storm Dennis caused exceptionally heavy rainfall and flooding in the area surrounding the home.
- No water entered the interior of the home.
- Floodwaters saturated the fill beneath the slab foundation; the saturated fill compacted and settled, shifting the slab and causing extensive cracking of floors and walls.
- FEMA denied the claim, asserting (1) there was no covered “flood” because the home’s interior was not inundated and (2) the loss fell within the SFIP’s “earth movement” exclusions (including settling and cracking).
- The United States District Court for the Southern District of Florida entered judgment for the Quesadas, finding coverage under the SFIP.
- FEMA appealed to the United States Court of Appeals for the Eleventh Circuit.

## Issues

1. Whether a covered “flood” under the SFIP requires water to enter the insured building’s interior.
2. Whether structural damage caused by floodwater saturation leading to soil compaction/settlement is excluded as “earth movement,” or covered as a direct physical loss caused by flood.

## Decision

- The Eleventh Circuit affirmed the district court’s judgment for the Quesadas.
- The court held that the SFIP’s definition of “flood” does not require interior water intrusion; inundation of normally dry land areas can satisfy the policy definition.
- The court held that the cracking and structural damage were a direct physical loss proximately caused by flood.
- The court rejected FEMA’s reliance on the earth-movement exclusion where the soil settlement was the immediate consequence of flood-induced saturation, not an independent geological event.

## Legal Principles

- Under the SFIP, “flood” is defined by a temporary condition of inundation of normally dry land areas from overflow or unusual and rapid accumulation or runoff of surface waters; coverage is not conditioned on water entering the building.
- Direct physical loss “by flood” includes damage proximately caused by floodwaters even when the immediate mechanism is soil saturation and resulting foundation movement.
- Earth-movement exclusions are construed in context and do not bar coverage where the land movement is a direct result of a covered flood and applying the exclusion would negate the policy’s flood coverage.
- Where causation facts are essentially undisputed, coverage turns on interpretation of the policy language applied to those facts.

## Conclusion

The court required FEMA to provide SFIP coverage for structural cracking caused by floodwater saturation and resulting soil settlement, holding that interior water entry is not a prerequisite to a covered flood and that the earth-movement exclusion did not apply to flood-caused settling.


Quesada v. Dir., Fed. Emergency Mgmt. Agency, 753 F.2d 1011 (11th Cir. 1985)