Citizens Prop. Ins. Corp. v. Ashe

• Decision Date: 12 January 2011
• Docket Number: No. 1D09-1546.,1D09-1546.
• Citation: 50 So.3d 645
• Parties: CITIZENS PROPERTY INSURANCE CORPORATION, Appellant/Cross-Appellee, v. Herbert J. ASHE, Appellee/Cross-Appellant.
• Court: Florida District Court of Appeals

50 So.3d 645 CITIZENS PROPERTY INSURANCE CORPORATION, Appellant/Cross-Appellee, v. Herbert J. ASHE, Appellee/Cross-Appellant. No. 1D09-1546. District Court of Appeal of Florida, First District. Nov. 17, 2010. Rehearing Denied Jan. 12, 2011.

G. Alan Howard and Robert M. Dees of Milam, Howard, Nicandri, Dees & Gillam, P.A., Jacksonville, for Appellant.

Louis K. Rosenbloum and Steven J. Baker, Pensacola, for Appellee.

PER CURIAM.

Citizens Property Insurance Corporation (Citizens) appeals a final judgment requiring it to pay Appellee Herbert J. Ashe $109,729.48 under the windstorm insurance policy issued by Citizens for damages to the Ashe's home caused by Hurricane Ivan in September 2004. In arriving at the amount of damages, the trial court based its ruling on the "Other Insurance" clause in the Citizens policy. Both parties contend, and we agree, that application of the "Other Insurance" clause in the Citizens policy was erroneous.

Citizens also argues that the trial court erred in denying summary judgment underthe so-called "total loss recovery rule," asserting that Ashe was fully compensated for his loss with payment of the policy limits under his flood policy and the partial payment under the wind policy. For the reasons that follow, we reject Citizens' contention that the total loss recovery rule applies here.

Finally, Citizens contends that the trial court erred in granting Ashe's motion in limine and excluding the introduction of evidence that Ashe's home was covered by flood insurance and that Ashe recovered $225,200 in proceeds from his flood insurance policy. For the reasons explained below, we agree in part, and reverse the trial court's order granting Ashe's motion in limine except with respect to the amount of insurance proceeds Ashe received.

On cross-appeal, Ashe contends that the trial court erred by precluding him from submitting to the jury a claim that wind caused a total loss to his insured property under Florida's Valued Policy Law (VPL), section 627.702, Florida Statutes (2004). We find that the trial court erred in ruling that Ashe could not submit to the jury a claim that wind caused a total loss. As noted, however, Citizens is entitled to introduce evidence and argument that Ashe successfully sought recovery under his flood insurance.

Accordingly, the final judgment is reversed, and the cause is remanded for further proceedings consistent with this opinion.

Factual and Procedural Background

Ashe's Pensacola residence was constructed on pilings; the ground level included a garage and storage area, and the upper level had breakaway walls and contained the living spaces. The home was completely destroyed by Hurricane Ivan on September 16, 2004, with nothing remaining but the pilings.

Ashe had insured the home with a Citizens wind-only insurance policy with limits of $188,000. Citizens is a governmental entity created under section 627.351(6), Florida Statutes (2004), to provide insurance for residential and commercial property for property owners who are unable to procure insurance through the private insurance marketplace.

Because the Citizens policy expressly excludes flood damage, Ashe had also obtained a separate flood insurance policy on the home through the National Flood Insurance Program (NFIP), which was issued through United Service Automobile Association (USAA) with policy limits of $225,200.

Citizens and USAA used the same adjuster. The adjuster inspected the property and determined that the actual cash value of the house was $233,720 and the total replacement cost value was $258,716.51. Once the replacement cost was determined, after deducting depreciation of $30,000 and the $500 deductible under the flood policy, the adjuster found the actual cash value of the total loss to be $228,216.51.¹ As found by the trial court and undisputed by the parties, Ashe "received payment of the full policy amount of $225,200 from the flood carrier, although [Ashe] never executed or submitted to the flood carrier a Proof of Loss form. [Ashe] accepted the payment from the flood carrier and endorsed the check for the benefits."

The adjuster also estimated that wind caused damage of $30,530.32 to the home. Citizens paid Ashe $26,770.32, which is the adjuster's estimate less the deductible provided in the Citizens wind-only policy. Thus, in total, Ashe was paid $251,970.

Ashe asserted below that the home was a total loss because of wind damage and that the evidence would establish that it was blown from its pilings prior to any storm surge. He contended that he was entitled to recover a total loss under his wind-only VPL policy. Citizens disagreed that Ashe was entitled to any further payment. This action ensued.

Section 627.702(1) provides in pertinent part that "[i]n the event of the total loss of any building ... insured by any insurer as to a covered peril, ... the insurer's liability under the policy for such total loss, if caused by a covered peril, shall be in the amount of money for which such property was so insured as specified in the policy and for which a premium has been charged and paid." ² The trial court granted summary judgment for Ashe on the authority of Mierzwa v. Florida Windstorm Underwriting Association, 877 So.2d 774 (Fla. 4th DCA 2004); subsequent to the entry of final summary judgment, however, Mierzwa was disapproved in Florida Farm Bureau Casualty Insurance Co. v. Cox, 967 So.2d 815 (Fla.2007). On appeal of the summary judgment, this court reversed, citing Cox. See Citizens Property Ins. Co. v. Ashe, 967 So.2d 420 (Fla. 1st DCA 2007).

In Cox, the supreme court held that when the total loss is caused by the combination of covered and non-covered perils, the VPL does not apply. As this court recently explained in Florida Farm Bureau Casualty Insurance Co. v. Mathis:

In Cox, the Florida Supreme Court ruled that section 627.702(1), Florida Statutes (2004) was 'intended only to set the value of the property insured by the policy in order to conclusively establish the property's value when there is a total loss.' 967 So.2d at 819. In short, the VPL is simply a valuation statute. Id. The court ruled that under the statute, 'an insurer is liable for a loss by a peril covered under the policy for which a premium has been paid.' Id. at 820. The Court in Cox rejected the Fourth District Court of Appeal's decision in Mierzwa ...., explaining:

'In Mierzwa, as here, the insured property was damaged by a combination of wind and water in a hurricane. The insurer asserted that it was responsible for the percentage of the total loss attributable to wind. The insurer did not contest the total valueof the property. We find that the Fourth District misconstrued the VPL in holding that 'if the insurance carrier has any liability at all to the owner for a building damaged by a covered peril and deemed a total loss, that liability is for the face amount of the policy.' Mierzwa, 877 So.2d at 775-76.'

Id. at 821. Importantly, the Court expressly limited its holding 'to only those cases in which a covered peril did not cause a total loss or constructive total loss.' Id. n. 6 (emphasis added).

33 So.3d 94, 97 (Fla. 1st DCA 2010) (emphasis in original).

On remand, the case was set for trial. Ashe filed a motion in limine asking the court to exclude any reference to flood insurance coverage or payments made by the flood insurer. Ashe argued that the flood insurance adjuster's estimate and the amount he was paid was irrelevant and immaterial because the issues to be tried were the amount of wind damage and whether the wind caused a total loss. Although he acknowledged that Citizens could defend by introducing evidence that flood waters caused some or all of the damage, Ashe contended that the existence or nonexistence of a flood insurance policy did not tend to prove a material fact that would assist the jury in determining the issues. He argued that evidence concerning other insurance would be confusing, inflammatory, and highly prejudicial. The trial court granted the motion in limine.

Citizens filed a motion for summary judgment based upon the total loss recovery rule applied in other jurisdictions. Under this rule, when an insured has coverage under both a flood policy and a wind policy, the insured's recovery is limited to the total amount of flood and wind insurance coverage, or to the pre-storm value of the structure, whichever is less. Citizens argued that after Ashe was paid the full flood policy limits by USAA and the wind payment from Citizens, under the total loss recovery rule, Ashe had been paid more than the pre-storm value of the house and was not entitled to any further recovery. The trial court denied Citizens' motion.

After the jury was chosen, the court announced its intention to apply the "Other Insurance" clause in the Citizens policy. That clause provides:

11. Other Insurance

a. If a loss covered by this policy is also covered by other insurance, we will pay only the proportion of the loss that the Limit of Liability that applies under this policy bears to the total amount of insurance covering the loss.

Neither Ashe nor Citizens argued that the Other Insurance clause applied, and both parties objected to the trial court's ruling.

Applying this clause, the trial court announced that Ashe would be entitled to recover from Citizens 45.5% of the pre-storm value of the house. The court determined the percentage by calculating the proportion of the Citizens policy limits to the total amount of wind and flood limits of $413,200. The court divided the $188,000 wind limit by the total wind and flood limits of $413,200 to reach a percentage of 45.5%. The court indicated that the only question to be determined was the pre-storm actual cash value of the house. The court found that Citizens was required to pay 45.5% of whatever the jury determined was the pre-storm value of the house. In addition, the trial court announced its agreement with the total loss recovery rule and stated that, but...