Carneiro Da Cunha v. Standard Fire Ins. Company/Aetna Flood Ins. Program
| Decision Date | 01 December 1997 |
| Docket Number | Nos. 96-4308,96-4309,s. 96-4308 |
| Parties | 11 Fla. L. Weekly Fed. C 825 Jose Maria CARNEIRO DA CUNHA and Ivy Carneiro Da Cunha, Plaintiffs-Appellants, v. The STANDARD FIRE INSURANCE COMPANY/AETNA FLOOD INSURANCE PROGRAM, Defendant-Appellee. Marsha G. MADORSKY and Jeffrey Rothstein, Plaintiffs-Appellants, v. The STANDARD FIRE INSURANCE COMPANY/AETNA FLOOD INSURANCE PROGRAM, Defendant-Appellee. Jay Allen SIEGEL, Plaintiff, Lois H. Siegel, Plaintiff-Appellant, v. The STANDARD FIRE INSURANCE COMPANY/AETNA FLOOD INSURANCE PROGRAM, Defendant-Appellee. Irving GETZ and Joan Getz, Plaintiffs-Appellants, v. The STANDARD FIRE INSURANCE COMPANY/AETNA FLOOD INSURANCE PROGRAM, Defendant-Appellee. Irwin ADLER and Helene Adler, Plaintiffs-Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Andrew Hall, Douglas M. Horn, Miami, FL, for Plaintiffs-Appellants.
Paul C. Kessler, Edward D. Schuster, Kessler, Massey, Catri, Holton & Kessler, P.A., Ft. Lauderdale, FL, for Defendant-Appellee in 96-4308.
Richard Joseph Suarez, Hardeman & Suarez, Miami, FL, Richard A. Warren, South Miami, FL, for Defendant-Appellee in 96-4309.
Appeals from the United States District Court for the Southern District of Florida.
Before CARNES, Circuit Judge, and KRAVITCH and REAVLEY *, Senior Circuit Judges.
We address in this opinion two separate appeals which raise similar issues. In case No. 96-4308, Jose and Ivy Carneiro Da Cunha, Marsha Madorsky and Jeffrey Rothstein, Irving and Joan Getz, and Lois Siegel, plaintiffs below, appeal a summary judgment in favor of Standard Fire Insurance Company/Aetna Flood Insurance Program (Aetna). In case No. 96-4309, Irwin and Helene Adler, plaintiffs below, appeal a summary judgment in favor of State Farm Fire and Casualty Company (State Farm). Both cases were filed in the same district court and consolidated for some purposes below. Appellants' homes were damaged by Hurricane Andrew in 1992, and the district court ruled that the ground floors of these homes had only limited coverage under flood insurance policies issued by Aetna and State Farm. We affirm.
The appellants are owners of three-story townhouses in a real estate development known as L'Hermitage. The homes are located in Dade County, Florida, abutting Biscayne Bay. Appellants all had flood insurance offered through the National Flood Insurance Program, a federal program created by the National Flood Insurance Act of 1968(Act) and administered by the Federal Emergency Management Agency (FEMA). 1
Appellant Irwin Adler, an owner of one of the townhouses, was also involved in the design, construction and marketing of the townhouses. He met with representatives of FEMA and the City of Miami to secure flood insurance for the townhouses. FEMA and the City imposed certain requirements on the buildings, including a requirement from the City that some units have break-away walls on the ground floor. Adler testified that "[w]e had to inform the owners that [the ground floors] were not to be habitable," but later explained his understanding was "not that you couldn't use it, couldn't keep furniture down there or anything, but they wanted people to be told that it wasn't habitable Flood insurance for L'Hermitage units under the National Flood Insurance Program was obtained through insurance agents John Wilkerson and Robert Seitlin. Wilkerson was acting as an agent for the National Flood Insurance Program (though he later became a State Farm agent) and Seitlin was with the firm of Seitlin & Company. Wilkerson testified that he informed FEMA that "there was habitation" on the ground level floors and that the ground level floors did not have true break-away walls. FEMA told him to write the policies "as a three-story building." Wilkerson testified that he thought the ground floor was covered but did not discuss with Adler whether the ground floors were or were not covered by the policies. Seitlin testified to his understanding that the ground floors were "not to be used for any living purposes, and that [the developer] was to tell the people who he was going to sell it to that that was the situation." His understanding was that the ground floor was "going to be a garage, a laundry room and storage; nothing else."
in the tune of being a sleeping facility.... It was not used, per se, as a bedroom."
Appellants' homes were damaged by Hurricane Andrew, which struck on August 24, 1992. While flood insurance for L'Hermitage was originally purchased directly from the federal government under the National Flood Insurance Program, at the time the hurricane struck all appellants had policies offered by private insurers Aetna and State Farm. FEMA has developed a Standard Flood Insurance Policy, or SFIP. 2 By statute and regulation private insurers may offer the SFIP under the "Write-Your-Own" (WYO) program. 3 By regulation, a WYO company "shall arrange for the adjustment, settlement, payment and defense of all claims arising from policies of flood insurance it issues under the Program, based upon the terms and conditions of the Standard Flood Insurance Policy." 4
Plans for the homes indicate that the ground floor consisted of a garage, storage room, bathroom, laundry area, and a "multi-purpose room." The evidence shows that appellants were using the ground floors as ordinary living areas, with furniture, carpeting, etc.
Aetna and State Farm denied some or all of the Andrew-related claims submitted by each appellant, precipitating this litigation. The district court ruled by summary judgment that the insurers were not liable for flood damage to appellants' ground floors, except for ground floor damages to those items listed in Article V(F) of the policy as covered. Under this provision coverage is generally denied, and is limited to certain excepted items, such as sump pumps, oil tanks and cisterns.
Summary judgment is appropriate if the record discloses "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 5
Policies issued under the National Flood Insurance Program are contracts. 6 "As contracts, the standard policies issued under the Program are governed by federal law, applying 'standard insurance law principles.' " 7 "Contract interpretation is generally a question of law." 8 The initial question of whether a contract is ambiguous is also question of law for the court, subject to de novo review. 9
Under ordinary rules of contract construction, "a court must first examine the natural and plain meaning of a policy's language," and an "ambiguity does not exist simply because a contract requires interpretation or fails to define a term." 10 "While ambiguous contracts are construed against their authors, meaning should not be added to clear and unambiguous language." 11
Applying these basic principles of insurance contract interpretation, the district court correctly ruled, as a matter of law, that coverage for damages to the ground floors of the townhouses was limited to the items listed in Article V(F) of the policy. Article V(F) provides that the insurer does not cover the following:
Enclosures, contents, machinery, building components, equipment and fixtures located at an elevation lower than the lowest elevated floor of an elevated post-FIRM building....
Construing this provision requires reference to other provisions in the SFIP and applicable federal regulations. There can be no dispute that the policies at issue are subject to limitations on coverage imposed by federal statute and regulation. The policies themselves state, on their first page, that they are issued pursuant to and subject to all terms of the National Flood Insurance Act of 1968 and applicable federal regulations in Title 44 of the Code of Federal Regulations. Accordingly, appellants "are bound not only by the terms of the policy, but by the terms of the statute and the applicable regulations." 12
The Director of FEMA is authorized by the Act to "define or redefine, by rules and regulations, any scientific or technical term used in this Act," and to "provide by regulation for general terms and conditions of insurability" under the National Flood Insurance Program. 13 By regulation all flood insurance offered under the National Flood Insurance Program is subject to the Act, regulations issued under the Act, and the terms and conditions of the SFIP, and all policies offered by private insurers under the WYO program must follow the form of the SFIP. 14
FEMA is authorized by statute to create flood plain maps. 15 The undisputed summary judgment evidence shows that FEMA had created a Flood Insurance Rate Map (FIRM) covering the land where appellants homes were constructed. A FIRM is "an official map of a community," on which the Federal Insurance Administrator has delineated "special hazard areas." 16 The SFIP defines a "post-FIRM" building to include those constructed after the effective date of the initial FIRM. The SFIP defines a "base flood" as the 100-year flood, i.e. the flood "having a one percent chance of being equaled or exceeded in any given year." The property on which the homes were constructed are in special hazard area "AE" of the FIRM map, 17 with a base flood elevation of 10 to 12 feet.
In these circumstances, federal regulation requires that communities, in order to be eligible for federal flood insurance, require residential structures in zone AE to "have the lowest floor (including basement) elevated to or above the base flood level." 18
The evidence is undisputed that the ground floors of appellants' homes were not constructed above the base flood elevation. The ground elevation for the homes is 5 to 6 feet according to surveys. As such, the ground floors were not "elevated" as required by regulation, and federal flood insurance cannot cover damage to the...
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