Cheetham v. S. Oak Ins. Co.
| Decision Date | 07 June 2013 |
| Docket Number | No. 3D11–3277.,3D11–3277. |
| Citation | 114 So.3d 257 |
| Parties | Melania CHEETHAM and Charlie Cheetham, Appellants, v. SOUTHERN OAK INSURANCE COMPANY, Appellee. |
| Court | Florida District Court of Appeals |
OPINION TEXT STARTS HERE
Alvarez, Carbonell, Feltman, Jimenez & Gomez, PL, and Paul B. Feltman, for appellants.
Russo Appellate Firm, P.A., and Elizabeth K. Russo and Susan S. Lerner; Diaz Briscoe Medina, P.A., and Esperanza Diaz Briscoe, Miami, for appellee.
Before ROTHENBERG, EMAS, and LOGUE, JJ.
Melania and Charlie Cheetham (collectively, “the Cheethams”) appeal from a final judgment entered in favor of their insurer, Southern Oak Insurance Company (“Southern Oak”), based on the trial court's finding that the Cheethams' claimed loss was specifically excluded under their policy. As we conclude the claimed loss does not fall within the exclusion, we reverse the final judgment and remand for further proceedings.
The Cheethams filed a claim with their insurer, Southern Oak, after their home sustained water damage. After Southern Oak denied the claim, the Cheethams filed suit, claiming the loss was covered by their all-risk homeowners' insurance policy. In response, Southern Oak asserted that the “Water Damage” exclusion, specifically section A.3.b., was applicable, and, therefore, the Cheethams' loss was not covered. The relevant provisions of the policy, including the water damage exclusion, provide as follows:
....
1. We insure against risk of direct physical loss to property described in Coverages A and B.
2.We do not insure, however, for loss:
a.Excluded under SectionI— Exclusions;
....
c.Caused by:
....
(6) Any of the following:
(a) Wear and tear, marring, deterioration;
....
Exception To c.(6)
Unless the loss is otherwise excluded, we cover loss to property covered under Coverage A or B resulting from an accidental discharge or overflow of water or steam from within a:
(i) Storm drain, or water, steam or sewer pipe, off the “residence premises”; or
(ii)Plumbing ... system1 ... on the “residence premises ”.[[2 This includes the cost to tear out and replace any part of a building, or other structure, on the “residence premises”, but only when necessary to repair the system.... However, such tear out and replacement coverage only applies to other structures if the water ... causes actual damage to a building on the “residence premises”.
We do not cover loss to the system ... from which this water ... escaped.
For purposes of this provision, a plumbing system ... does not include a sump, sump pump or related equipment or a roof drain, gutter, down spout [sic] or similar fixtures or equipment.
Section I—Exclusion A.3. Water Damage, Paragraphs a. and c. that apply to surface and water below the surface of the ground do not apply to loss by water covered under c.(5) and (6) above.
....
We insure for direct physical loss to the property described in Coverage C caused by any of the following perils unless the loss is excluded in Section I—Exclusions.
....
12. Accidental Discharge Or Overflow Of Water Or Steam
a. This peril means accidental discharge or overflow of water ... from within a plumbing ... system....
b. This peril does not include loss:
(1) To the system ... from which the water ... escaped;
....
(3) On the “residence premises” caused by accidental discharge or overflow which occurs off the “residence premises”; ....
....
c. In this peril, a plumbing system ... does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment.
d. Section I—Exclusion A.3. Water Damage, Paragraphs a. and c. that apply to surface water and water below the surface of the ground do not apply to loss by water covered under this peril.
....
A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.
....
3. Water Damage
Water Damage means:
a. Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind;
b.Water or water-borne material which backs up through sewers or drains or which overflows or is discharged from a sump, sump pump or related equipment; or
c. Water or water-borne material below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure;
caused by or resulting from human or animal forces or any act of nature.
(emphasis indicated by underscoring).
The Cheethams' claim was tried. At trial, it was undisputed that due to age and deterioration, a pipe located on the “residence premises” broke and/or collapsed. As the pipe was located underneath the ground, debris entered the pipe, forming a blockage, which ultimately caused waste water and/or material to back up through the blocked pipe and into the “residence premises” through drains. At the close of the evidence, based on the undisputed facts, Southern Oak renewed its motion for a directed verdict, arguing that the relevant policy provisions were unambiguous and that the Cheethams' claimed loss was excluded under the policy. The trial court granted Southern Oak's motion for a directed verdict, finding that the relevant policy provisions were unambiguous and that the Cheethams' loss was excluded by section A.3.b. The trial court entered final judgment in favor of Southern Oak, and the Cheethams' appeal followed.
The issues before this Court are (1) whether the all-risk policy is ambiguous where it provides for coverage for the “accidental discharge” of water “within a ... plumbing ... system ... on the ‘residence premises' ” caused by “deterioration,” but excludes “water damage” caused by “[w]ater or water-borne material which backs up through sewers or drains,” and (2) whether the exclusion applies when a pipe located within the plumbing system of the “residence premises” breaks due to deterioration, causing debris to enter the pipe and forming a blockage, and as a result of the blockage, waste water and/or material backed up through the blocked pipe “within” the “plumbing system” and then into the “residence premises” through drains.
We review de novo the trial court's granting of Southern Oak's motion for a directed verdict based on its finding that the policy excluded coverage for the claimed loss. See Diaz v. Impex of Doral, Inc., 7 So.3d 591, 593 (Fla. 3d DCA 2009) (); see also Fayad v. Clarendon Nat'l Ins. Co., 899 So.2d 1082, 1085 (Fla.2005) (); State Farm Mut. Auto. Ins. Co. v. Parrish, 873 So.2d 547, 549 (Fla. 5th DCA 2004) (); Liberty Mut. Ins. Co. v. Weiss, 790 So.2d 475, 476 (Fla. 3d DCA 2001) ().
In determining whether the Cheethams' all-risk insurance policy excludes coverage for their claimed loss, we are guided by the following principles of insurance contract interpretation:
We begin with the guiding principle that insurance contracts are construed in accordance with “the plain language of the polic[y] as bargained for by the parties.” Auto–Owners Ins. Co. v. Anderson, 756 So.2d 29, 33 (Fla.2000) (quoting Prudential Prop. & Cas. Ins. Co. v. Swindal, 622 So.2d 467, 470 (Fla.1993)) (alteration in original). However, if the salient policy language is susceptible to two reasonable interpretations, one providing coverage and the other excluding coverage, the policy is considered ambiguous. See Anderson, 756 So.2d at 34;Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So.2d 161, 165 (Fla.2003). Ambiguous coverage provisions are construed strictly against the insurer that drafted the policy and liberally in favor of the insured. See Anderson, 756 So.2d at 34;State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So.2d 1072, 1076 (Fla.1998); Deni Assocs. of Florida, Inc. v. State Farm Fire & Cas. Ins. Co., 711 So.2d 1135, 1138 (Fla.1998). Further, ambiguous “exclusionary clauses are construed even more strictly against the insurer than coverage clauses.” Anderson, 756 So.2d at 34;see also Demshar v. AAACon Auto Transport, Inc., 337 So.2d 963, 965 (Fla.1976) (). Thus, the insurer is held responsible for clearly setting forth what damages are excluded from coverage under the terms of the policy.
Fayad, 899 So.2d at 1086. Based on these principles, we must examine the all-risk policy, as a whole, to determine if it is ambiguous. However, we note that an insurance policy is not ambiguous “simply because it is complex or requires analysis,” Garcia v. Fed. Ins. Co., 969 So.2d 288, 291 (Fla.2007), or because relevant words used within the policy are not defined by the policy. Old Dominion Ins. Co. v. Elysee, Inc., 601 So.2d 1243, 1246 (Fla. 1st DCA 1992).
The portion of the Cheethams' all-risk policy titled, “Section I—Perils Insured Against,” provides, in relevant part, that Southern Oak “insure[s] against risk of direct physical loss” to the dwelling or other structures, but does not insure for any loss “ [e]xcluded by Section I—Exclulsions ” or caused by “ deterioration.” (emphasis added). Thus, at first glance, without examining the “...
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