Allen v. USAA Cas. Ins. Co.

• Decision Date: 25 June 2015
• Docket Number: No. 14–13478,14–13478
• Citation: 790 F.3d 1274
• Parties: James R. ALLEN, Diane Z. Allen, Matthew J. Schall, Judith A. Schall, Husband and Wife Individually and as Representatives of Others Similarly Situated, Plaintiffs–Appellants, v. USAA CASUALTY INSURANCE COMPANY, A Texas Corporation, Defendant, United Services Automobile Association, A Texas Reciprocal Inter–Insurance Exchange and Unincorporated Association, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

790 F.3d 1274

James R. ALLEN, Diane Z. Allen, Matthew J. Schall, Judith A. Schall, Husband and Wife Individually and as Representatives of Others Similarly Situated, Plaintiffs–Appellants

v. USAA CASUALTY INSURANCE COMPANY, A Texas Corporation, DefendantUnited Services Automobile Association, A Texas Reciprocal Inter–Insurance Exchange and Unincorporated Association, Defendant–Appellee.

No. 14–13478

United States Court of Appeals, Eleventh Circuit.

June 25, 2015.

J. Nixon Daniel, III, Terrie Lee Didier, Russell F. Van Sickle, Beggs & Lane, RLLP, Pensacola, FL, for Plaintiffs–Appellants.

Stephen Edward Goldman, Wystan M. Ackerman, Robinson & Cole, LLP, Hartford, CT, Charles Franklin Beall, Jr., Thomas Larry Hill, Moore Hill & Westmoreland, PA, Pensacola, FL, for Defendant–Appellee.

Appeal from the United States District Court for the Northern District of Florida.

Before ED CARNES, Chief Judge, JILL PRYOR and BLACK, Circuit Judges.

Opinion

BLACK, Circuit Judge:

After James R. Allen and Diane Z. Allen (collectively, the Allens) purchased building ordinance and law (BOL) insurance from United Services Automobile Association (USAA) covering 50% of their home's value, they suffered no losses triggering payment. Now the Allens seek to recover a portion of their premium payments because they assert they would have elected to pay for BOL insurance covering only 25% of their home's value. Nonetheless, their position is that had they actually suffered a loss, they would have been entitled to 50% of their home's value, not 25%. The Allens appeal the district court's dismissal of their complaint, arguing Florida Statutes § 627.7011(2) entitles them to a refund of the difference in premiums USAA would have charged for 25% rather than 50% BOL coverage.

We agree with the district court that the plain language of § 627.7011(2) does not require an insurer to obtain a policyholder's written consent on a form approved by the Florida Office of Insurance Regulation (Regulation Office) before issuing BOL coverage greater than 25%. Additionally, Florida Statutes § 627.418(1) bars the Allens' suit because the only remedy available for providing extra insurance coverage is to enforce the contract as written. The Allens freely contracted to buy 50% coverage, that is exactly what they received, and no legal basis exists for reducing their premium payments. We therefore affirm.¹

I. BACKGROUND

The Allens are a married couple who have resided in Pensacola, Florida since 2000. Since 2002, the Allens have obtained homeowner's insurance coverage from USAA. These policies have included BOL coverage.

Building ordinances can significantly raise the cost of repairing or replacing a damaged structure. These costs are not covered by standard property insurance, which typically covers only the cost of restoring the building to its original condition. BOL coverage fills this gap by paying for the cost of complying with building codes or other legal requirements when repairing or replacing a structure after a covered loss. For example, assume a house is built with single-pane windows. Thereafter, the local government enacts a rule requiring double-pane windows, and a window subsequently breaks. The primary insurance coverage pays the cost to replace a single-pane window, and BOL coverage pays the additional cost required to upgrade to the double-pane window. BOL coverage is stated as a percentage of the primary dwelling coverage. Thus, an insurance policy for a $100,000 home with 25% BOL coverage provides $25,000 to pay for upgrades required by law.

From March 3, 2002 to March 3, 2006, the Allens' policies included 25% BOL coverage. Since March 3, 2006, the Allens' policies have included 50% BOL coverage. The policies effective from 2006 to 2013 contain a page titled “Building Ordinance or Law Coverage—Florida,” which specifies each policy includes 50% BOL coverage.

Neither this nor any other page is an approved Regulation Office form pursuant to Florida Statutes § 627.7011(2). Section 627.7011(2) mandates that “[t]he rejection or selection of alternative coverage shall be made on a form approved by the [Regulation] [O]ffice.” According to Florida Administrative Code Rule 69O–167.011, insurers can comply with § 627.7011(2)'s form requirement in two ways. First, the insurer may obtain the policyholder's written consent on Form OIR–1148, which is available on request from the Regulation Office. Fla. Admin. Code r. 69O–167.011(3). Second, the insurer may obtain the policyholder's written consent on the insurer's own form that has been submitted to and approved by the Regulation Office. Id. The Allens never consented to 50% BOL coverage on Form OIR–1148. Nor did they consent to 50% BOL coverage on USAA's own form that could have been submitted to and approved by the Regulation Office. Thus, it is undisputed the Allens never gave written consent to 50% BOL coverage on an approved Regulation Office form. Instead, they contracted to purchase 50% BOL coverage on USAA's non-approved form.

The Allens filed a proposed class action complaint in the Northern District of Florida alleging USAA violated § 627.7011(2) by providing 50% BOL coverage without the Allens' written consent on a form approved by the Regulation Office. The time period encompassed by the complaint includes USAA policies issued since April 1, 2008. The Allens sought a declaratory judgment, permanent injunction, and damages for breach of contract measured by the difference in the premiums that USAA would have charged for 25% rather than 50% BOL coverage.

Pursuant to Federal Rule of Civil Procedure 12(b)(6), USAA moved to dismiss the complaint for failure to state a claim. The district court stayed discovery and class certification pending adjudication of the motion to dismiss.² After a hearing, the district court entered an order dismissing the complaint. The district court held § 627.7011(2) does not require an insurance provider to obtain the policyholder's written selection on an approved Regulation Office form before issuing a policy with more than 25% BOL coverage. The Allens timely filed a notice of appeal.

II. STANDARD OF REVIEW

We review de novo a Rule 12(b)(6) dismissal for failure to state a claim and construe the factual allegations in the complaint in the light most favorable to the plaintiff. Lord Abbett Mun. Income Fund, Inc. v. Tyson, 671 F.3d 1203, 1206 (11th Cir.2012). This Court ordinarily does not consider anything beyond the face of the complaint and documents attached thereto when analyzing a motion to dismiss. Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1368–69 (11th Cir.1997). However, where a document—such as an insurance policy—is central to the plaintiff's claim, its contents are not in dispute, and the defendant attaches the document to its motion to dismiss, this Court may consider that document as well. Fin. Sec. Assurance, Inc. v. Stephens, Inc., 500 F.3d 1276, 1284 (11th Cir.2007).

Under Rule 12(b)(6), dismissal is proper when, “on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action.” Marshall Cnty. Bd. of Educ. v. Marshall Cnty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir.1993). This Court may affirm for any reason supported by the record, even if not relied upon by the district court. United States v. $121,100.00 in U.S. Currency, 999 F.2d 1503, 1507 (11th Cir.1993).

III. DISCUSSION

The Allens signed USAA's contract for 50% BOL coverage. They did not, however, give written consent to this coverage on an approved Regulation Office form. The question before us is whether USAA violated Florida Statutes § 627.7011(2) by providing 50% BOL coverage without the Allens' written consent on a form approved by the Regulation Office. To answer this question, we begin by interpreting § 627.7011(2). We then examine whether, even assuming USAA violated § 627.7011(2), the Allens' complaint should be dismissed pursuant to Florida Statutes § 627.418(1).

A. Florida Statutes § 627.7011(2)

Both parties agree an insurer must obtain a policyholder's written consent on a form approved by the Regulation Office before issuing less than 25% BOL coverage. The Allens argue the district court erred in concluding Florida Statutes § 627.7011(2) does not require a policyholder's written consent on an approved Regulation Office form before issuing BOL coverage greater than 25%. According to the Allens, when the Florida Legislature enacted § 627.7011(2), it sought to ensure homeowners were sufficiently, but not excessively, insured.

To accomplish this objective, the Allens assert, § 627.7011(2) sets 25% as the default BOL coverage, then requires the policyholder's written consent on an approved form to depart upward or downward from this 25% level. The Legislature crafted this requirement to protect owners of relatively new homes from paying for unnecessary insurance. If a home were built within the past two years, for example, BOL coverage would be virtually useless because the home is likely in compliance with the most recent building codes.

In response, USAA argues § 627.7011(2) does not require an insurer to obtain a policyholder's written consent on a form approved by the Regulation Office before issuing BOL coverage greater than 25%. According to USAA, § 627.7011(2) is a gap-filling rule that applies only when the insured has refused BOL coverage altogether and imposes no restrictions on how a homeowner acquires extra BOL insurance.

1. Statutory text

We analyze Florida Statutes § 627.7011(2) in accordance with Florida law because a federal district court sitting in diversity applies the substantive law of the state in which it sits. Esfeld v. Costa Crociere, S.P.A., 289 F.3d 1300, 1306 (11th Cir.2002). When construing a statute, we strive to effectuate the Legislature's intent. Borden v. East–European Ins. Co., 921 So.2d 587, 595 (Fla.2006). To discover this intent, we first examine the statute's plain language. See Atwater v....