General Star Indem. Co. v. W. Fla. Village Inn, Inc.

• Decision Date: 30 April 2004
• Docket Number: No. 2D02-4012.,2D02-4012.
• Citation: 874 So.2d 26
• Parties: GENERAL STAR INDEMNITY COMPANY, Appellant, v. WEST FLORIDA VILLAGE INN, INC., d/b/a Best Western Village, Inc., Appellee.
• Court: Florida District Court of Appeals

874 So.2d 26

GENERAL STAR INDEMNITY COMPANY, Appellant, v. WEST FLORIDA VILLAGE INN, INC., d/b/a Best Western Village, Inc., Appellee.

No. 2D02-4012.

District Court of Appeal of Florida, Second District.

April 30, 2004.

Janet L. Brown of Boehm, Brown, Fischer & Harwood, P.A., Maitland, for Appellant.

Matthew R. Danahy of Douglas L. Grose, P.A., Tampa, for Appellee.

WALLACE, Judge.

This appeal raises two questions concerning the proper interpretation of provisions for deductibles in a policy of casualty insurance. First, if a policy provision concerning the amount of the applicable deductible is ambiguous, may reference be made to the unambiguous provisions of the insured's application for insurance and other policy provisions to determine the amount of the deductible? Second, for the purpose of determining the extent of the insurer's obligation to pay the insured for loss to covered property under the policy of insurance, is the amount of the deductible to be applied to noncovered loss as well as covered loss under the policy? We answer the first question in the affirmative, answer the second question in the negative, and reverse the final judgment in favor of the insured that ruled to the contrary.

The Facts

West Florida Village Inn, Inc., doing business as Best Western Village Inn (West Florida), renewed a commercial property insurance policy issued by General Star Indemnity Co. (General Star) to insure the five-building motel complex West Florida operated in Pensacola, Florida. Subject to the terms and conditions of the policy, West Florida paid an annual premium of $21,000 in return for an agreement by General Star to indemnify West Florida for damage caused by covered causes of loss to an aggregate limit of $4,185,600.

On or about September 28, 1998, Hurricane Georges struck the Florida Panhandle with high winds and heavy rain, damaging West Florida's motel. West Florida consulted a public adjuster to determine its loss and subsequently submitted a claim to General Star to recover $476,522.07 under the policy. General Star rejected West Florida's claim, and the dispute was referred to arbitration as provided by the policy. The dispute primarily concerned the policy's scope of coverage. In its claim, West Florida attributed the cause of loss to "Hurricane George [sic]." Although the policy provided payment for direct physical loss to the property, General Star rejected the claim on the ground that the loss was caused by "wind-driven rain," which General Star asserted was an excluded cause of loss under the policy. The arbitration panel issued an appraisal award determining the amount of loss payable under the policy—less West Florida's portion of arbitration expenses—to be $154,710.25. From the appraisal award figure, General Star withheld $83,712 based on its interpretation of a policy provision calling for a deductible in that amount applicable to loss caused by windstorm and hail. General Star issued payment of $70,998.25 to satisfy West Florida's claim arising from Hurricane Georges.

West Florida filed suit against General Star for breach of the insurance contract. The complaint asserted that $5,000 was the deductible applicable to windstorm loss, not $83,712. The windstorm deductible provision appeared on a document titled "Multiple Deductible Form," which was referenced on the declarations page and included in the policy. West Florida contended that the Multiple Deductible Form was ambiguous and must be construed in favor of the insured.

West Florida's complaint also asserted that regardless of the amount of the deductible, General Star incorrectly applied the deductible to the amount of loss. According to West Florida, because of ambiguity in the deductible provision of the Building and Personal Property Coverage Form, General Star should not have applied the deductible to the amount of loss covered under the policy, which was the appraisal award of $154,710.25. Instead, the deductible should have been applied to the total loss caused by Hurricane Georges, including the covered loss and noncovered loss. West Florida alleged the total loss to be $476,522.07 based upon its public adjuster's prior determination of the total loss. Applying the deductible to the total loss, West Florida would have been entitled to the full amount of the covered loss, $154,710.25, because the difference between the total loss and the covered loss exceeded the amount of the deductible regardless of whether the amount of the deductible was $83,712 or $5,000. Contending that the policy terms were ambiguous and must be construed in its favor, West Florida sued to recover $83,712 that it claimed to be due under the policy.

Following procedural maneuvering not relevant here, the parties submitted the matter to voluntary trial resolution in Hillsborough County pursuant to section 44.104, Florida Statutes (2001). Following a bench trial, the trial resolution judge found "patent ambiguity" in both the Multiple Deductible Form and in the deductible provision of the Building and Personal Property Coverage Form. Construing these provisions in favor of the insured, the trial resolution judge determined the amount of the deductible to be $5,000 and further found that this amount was absorbed by West Florida's total loss in excess of its covered loss. The trial resolution judge determined that the amount of loss not covered by the policy exceeded $90,000; thus a deductible of either $5,000 or $83,712 applied to the total loss resulted in General Star's liability for the full amount of the covered loss, $154,710.25. The trial resolution judge's final decision awarded West Florida $83,712 as the balance due under the policy. The circuit court entered final judgment enforcing the trial resolution judge's decision.

The Law

Our review calls for interpretation of the Multiple Deductible Form¹ and the deductible provision of the Building and Personal Property Coverage Form.² The standard of review is de novo. See Biltmore Constr. Co. v. Owners Ins. Co., 842 So.2d 947, 949 (Fla. 2d DCA),

review dismissed, 846 So.2d 1148 (Fla.2003); Auto-Owners Ins. Co. v. Marvin Dev. Co., 805 So.2d 888, 891 (Fla. 2d DCA 2001). The facts determined in the voluntary trial resolution proceeding are not subject to appeal. See § 44.104(11).

General principles of Florida insurance law guide our resolution of this appeal. Like other contracts, contracts of insurance should receive a construction that is reasonable, practical, sensible, and just. Weldon v. All Am. Life Ins. Co., 605 So.2d 911, 915 (Fla. 2d DCA 1992). Terms used in a policy should be read in light of the skill and experience of ordinary people. Lindheimer v. St. Paul Fire & Marine Ins. Co., 643 So.2d 636, 638 (Fla. 3d DCA 1994). Insurance policies will not be construed to reach an absurd result. Deni Assocs. of Fla., Inc. v. State Farm Fire & Cas. Ins. Co., 711 So.2d 1135, 1140 (Fla. 1998).

We are mindful that policy provisions excluding or limiting the insurer's liability are construed more strictly than coverage provisions. Purrelli v. State Farm Fire & Cas. Co., 698 So.2d 618, 620 (Fla. 2d DCA 1997). Such limiting provisions must be construed in favor of the insured if they are ambiguous or reasonably susceptible to more than one meaning. Deni, 711 So.2d at 1138. However, the rule of liberal construction in favor of the insured applies only when a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of construction. Id. In construing an insurance policy, courts should read the policy as a whole, endeavoring to give every provision its full meaning and operative effect. Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla.2000). Indeed, a single policy provision should not be considered in isolation, but rather, the contract shall be construed according to the entirety of its terms as set forth in the policy and as amplified by the policy application, endorsements, or riders. Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So.2d 161, 166 (Fla.2003) (citing § 627.419(1), Fla. Stat. (2002)); The Praetorians v. Fisher, 89 So.2d 329, 333 (Fla. 1956). The lack of a definition of an operative term does not, by itself, create ambiguity. State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So.2d 1072, 1076 (Fla. 1998); Great Am. Ins. Cos. v. Souza, 855 So.2d 187 (Fla. 4th DCA 2003). Further, ambiguity does not exist merely because an insurance contract is complex and requires analysis to interpret it. Swire Pac. Holdings, 845 So.2d at 165; Koenigsberg v. Intercontinental Ins. Co., 571 So.2d 578, 579 (Fla. 4th DCA 1990) (construing a deductible provision); Am. Motorists Ins. Co. v. Farrey's Wholesale Hardware Co., 507 So.2d 642, 645 (Fla. 3d DCA 1987); Travelers Ins. Co. v. C.J. Gayfer's & Co., 366 So.2d 1199, 1201 (Fla. 1st DCA 1979). Where no ambiguity exists, the policy shall be construed according to the plain language of the policy as bargained for by the parties. Anderson, 756 So.2d at 33.

The Multiple Deductible Form

The Multiple Deductible Form lists two covered causes of loss, "Special" and "Windstorm and Hail,"³ and two deductible amounts, $5,000 and $83,712. West Florida contends that the spatial arrangement of the phrase "All Covered Causes of Loss except as listed below" in relation to the other items created confusion, suggesting that $5,000 was the deductible applicable to loss caused by windstorm and, presumably, $83,712 was the deductible applicable to all other causes of loss except windstorm.

Standing alone, the Multiple Deductible Form is not a model of clarity. However, the form's ambiguity is readily resolved when read together with other parts of the contract. First, a quick reference to the policy application resolves any doubt that the $83,712 deductible applies to "Windstorm and Hail" damage. See Mathews v. Ranger Ins. Co., 281 So.2d 345, 348 (Fla. 1973)

("The application thus becomes a part of the agreement...