CITIZENS Prop. Ins. Corp. v. HAMILTON

• Decision Date: 08 September 2010
• Docket Number: No. 1D09-4128.,1D09-4128.
• Parties: CITIZENS PROPERTY INSURANCE CORPORATION, Appellant, v. William T. HAMILTON and Cynthia L. Hamilton, Appellees.
• Court: Florida District Court of Appeals

43 So.3d 746

CITIZENS PROPERTY INSURANCE CORPORATION, Appellant, v. William T. HAMILTON and Cynthia L. Hamilton, Appellees.

No. 1D09-4128.

District Court of Appeal of Florida, First District.

July 7, 2010.

Rehearing Denied September 8, 2010.

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Elizabeth McArthur and David A. Yon of Radey Thomas Yon & Clark, P.A., Tallahassee, for Appellant.

James F. McKenzie of McKenzie & Hall, P.A., Pensacola, for Appellees.

KAHN, J.

In this wind insurance claim case, a jury awarded policy limits to the Hamiltons, whose mobile home was destroyed by Hurricane Ivan. Appellant Citizens Property Insurance Corp. (Citizens) raises numerous points; we focus upon the following: (1) the exclusion of evidence that flooding caused the total loss of the insured properties, including evidence that the Hamiltons also had a flood insurance policy from which they recovered policy limits; (2) the admission into evidence of the county's "substantial damage" determination; (3) the trial court's failure to give appellant's proposed jury instructions, including the contention that the court erred in failing to instruct the jury on the total loss recovery rule; and (4) an award of prejudgment interest on unpaid damages from the date of the loss. We affirm in part and reverse in part.

FACTUAL AND PROCEDURAL BACKGROUND

As of September 2004, appellees William and Cynthia Hamilton lived in a mobile home on Blackwater Bay, in Milton, Florida. Owing to the home's location in a flood zone, appellees obtained an insurance policy from the National Flood Insurance Program (NFIP), insuring the residence and its contents against flood loss. The Hamiltons also purchased an insurance policy from Citizens, a statutorily created insurer of last resort authorized to write insurance in Florida. The Citizens policy insured the home, its contents, and other on-site properties against loss caused by certain named perils, including windstorm. Conversely, the Citizens policy excluded coverage for losses caused by water damage, such as resulting from flood, waves, tidal water, and overflow. An anti-concurrent cause (ACC) clause in the policy stated that loss caused directly or indirectly by an excluded peril "is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss."

On September 16, 2004, storm surge and wave action from Hurricane Ivan washed away the Hamiltons' home, as well as out buildings described as a rabbit coop and metal garage. After appellees submitted a claim under the flood policy, adjusters inspected the property to make payment recommendations to the NFIP, set forth in a Flood Narrative and Final Report. In conjunction with the claim, NFIP provided the Hamiltons with a contents form, which listed separate columns for damage caused by flood or, alternatively, by wind. Appellees prepared and submitted the form, listing all items as damaged by flood. Mr. Hamilton also returned a sworn proof-of-loss, swearing that he was claiming under the policy for the full value of the home and its contents, based on the "flood loss" of September 2004. NFIP accepted the adjusters' recommendation to pay full policy limits for the loss, issuing to the Hamiltons checks of $63,700 (dwelling coverage) and $31,000 (contents).

The Santa Rosa County Building Inspection Department issued to appellees a notice of determination of "substantial damage," stating that the Hamiltons' dwelling had sustained damages exceeding 50 percent of its pre-damage value "as the result of the flooding related to Hurricane Ivan." Rather than undergo the expense to rebuild the home in compliance with floodplain regulations requiring elevation of the lowest floor to or above the 100-year flood elevation, appellees instead placed the land up for sale.

The Hamiltons thereafter presented a claim for total loss of their home under the windstorm policy issued by Citizens. Like NFIP, appellant sent an adjuster to inspect the property and determine the extent of the insurer's liability. The adjuster concluded that only tree damage to the roof of the garage had been caused by wind. A supplement to the resulting report recommended payment of $6,370 for wind damage, which Citizens subsequently paid to appellees.

The Hamiltons then filed suit against Citizens, seeking to recover full policy limits. The complaint alleged that the Hamiltons' dwelling was insured against losses caused by windstorm by a "valued policy" subject to section 627.702, Florida Statutes (2004). Appellees advanced the claim on the strength of Mierzwa v. Florida Windstorm Underwriting Association, which (incorrectly) interpreted the Valued Policy Law (VPL), section 627.702, Florida Statutes (2004), to allow an insured whose dwelling sustained a total loss by combination of wind and flood to recover the entire policy limits under a wind-only policy if the insured could prove that any part of the total loss was attributable to wind. See 877 So.2d 774 (Fla. 4th DCA 2004), superseded by statute, § 627.702(1)(b), Fla. Stat. (2005), as recognized in Fla. Farm Bureau Cas. Ins. Co. v. Cox, 967 So.2d 815, 821 (Fla.2007).

Citizens moved for partial summary judgment, arguing plaintiffs' recovery under the windstorm policy should be limited to the pre-storm value of their home, less payments received from NFIP. Appellant filed a second motion for partial summary judgment, asserting that any damages payable under the policy must be based on actual cash value, pursuant to the policy provision that provides for actual cash value when the damaged property is not actually repaired or replaced. Citizens also moved in limine to exclude evidence regarding Santa Rosa County's substantial damage rule. The trial court denied or deferred ruling on Citizens' motions, but granted the Hamiltons' motion in limine to bar evidence of the amount of flood carrier payments and estimates.

The parties' trial experts offered conflicting opinions on whether the mobile home sustained anything more than minor wind damage before being inundated and washed away by storm surge. Mark Spitznagel, a professional engineer and general contractor, testified for the Hamiltons:

[T]he majority of the damage was caused by the high winds and the storm surge just washed away what was left of the house. The house would have been substantially damaged well before the storm surge would have washed away the debris or toppled over what was left if it hadn't been toppled over already.

Spitznagel estimated the cost of a replacement home at $120,000, including the expense to elevate the unit as required by the floodplain regulations. Conversely, James Phillip Wilbourn, II, a licensed structural engineer, offered his expert opinion on behalf of Citizens:

In reaching this conclusion, we do not minimize appellant's interest in presenting evidence to rebut the Hamiltons' claim that wind caused the total loss of the home. Generally, however, "there ... will be other evidence having more probative value and involving less likelihood of prejudice than the victim's receipt of insurance-type benefits." Williams v. Pincombe, 309 So.2d 10, 11 (Fla. 4th DCA 1975). Here, the trial court blocked appellant only from admitting the dollar amount of flood insurance payments and estimates, leaving Citizens free to reference the existence of the Hamiltons' flood insurance policy, the Hamiltons' submission of a flood claim, and the flood carrier's resulting adjustment of that claim, as well as the physical damage caused by flood. One of the flood adjusters specifically testified concerning preparation of an estimate for repair or replacement of the dwelling. Also Citizens had wide latitude to attempt proof through expert testimony that the loss came about entirely from flood.

Cases recognizing the collateral source rule as a rule of evidence "reason that introduction of [such] evidence misleads the jury on the issue of liability and, thus, subverts the jury process." Gormley, 587 So.2d at 458. This entire matter turned upon the related issues of whether the Hamiltons' mobile home was a total loss and, if so, whether the covered peril (wind) caused the loss. The extent to which a different insurance carrier paid out claims for damage caused by a different peril could reasonably be expected to muddle the issues properly before the jury, if not raise the specter of "unfair prejudice." See § 90.403, Fla. Stat. (2009). We would rarely disturb an evidentiary determination to which the law has committed such discretion. See Owen v. Crosby, 854 So.2d 182, 191 (Fla.2003) (recognizing that "a large measure of discretion rests in the trial judge to determine whether the probative value of the evidence is substantially outweighed by its prejudicial effect"); Webster v. Body Dynamics, Inc., 27 So.3d 805, 809 n. 12 (Fla. 1st DCA 2010) (affording "substantial discretion to trial courts to exclude otherwise relevant evidence" pursuant to section 90.403); Children's Palace, Inc. v. Johnson, 609 So.2d 755, 757 (Fla. 1st DCA 1992) (according "great deference" to "[a] trial court's determination under section 90.403").

The Legislature, through years of experience, assuredly knows how to abrogate the collateral source rule, and indeed has done so, albeit in an incremental manner. See, e.g., § 627.736(3), Fla. Stat. (2009) (precluding insured motorist from recovering "damages for which personal injury protection benefits are paid or payable"); § 768.76(1), Fla. Stat. (2009) (providing for reduction in the amount of damages awarded to personal injury claimant "by the total of all amounts which have been paid for the benefit of the claimant, or which are otherwise available to the claimant, from all collateral sources"). In this matter, under the statute in effect at the time of the loss, the common law collateral source rule had not been legislatively altered. S...