Steuart Petroleum Co., Inc. v. Certain Underwriters at Lloyd's London

• Decision Date: 18 April 1997
• Docket Number: No. 96-2706,96-2706
• Citation: Steuart Petroleum Co., Inc. v. Certain Underwriters at Lloyd's London, 696 So.2d 376 (Fla. App. 1997)
• Parties: 22 Fla. L. Weekly D1046 STEUART PETROLEUM COMPANY, INC., Appellant, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON and London Market Insurance Companies, Appellees.
• Court: Florida District Court of Appeals

Page 376

696 So.2d 376

22 Fla. L. Weekly D1046

STEUART PETROLEUM COMPANY, INC., Appellant, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON and London Market Insurance Companies, Appellees.

No. 96-2706.

District Court of Appeal of Florida First District.

April 18, 1997.

Rehearing Denied July 10, 1997.

Tim E. Sleeth and Earl E. Googe, Jr. of Smith, Hulsey & Busey, Jacksonville; Jerold Oshinsky and Lois Casaleggi Wolf of Dickstein, Shapiro, Morin & Oshinsky, L.L.P., Washington, DC, for Appellant.

R. Dennis Withers of Robins, Kaplan, Miller & Ciresi, Atlanta, GA; William T. Stone of Cole, Stone & Stoudemire, Jacksonville, for Appellees.

PER CURIAM.

Steuart Petroleum appeals two final summary judgments determining that Steuart was not entitled to recover under its insurance contract with Lloyd's for (1) expenses for firefighting foam used to extinguish a massive five day fire or for (2) the amount of Steuart's settlement with the City of Jacksonville for extraordinary firefighting services. We affirm without discussion as to the second issue and reverse as to the first issue.

Steuart owned and operated a petroleum storage facility in Jacksonville, Florida. In January, 1993, a massive gasoline fire began in one of the tanks at the facility. The fire was extinguished after burning for almost five days. When the fire began, Steuart had on its premises fire fighting foam worth $15,985.00. In order to extinguish the fire, Steuart had to bring in additional foam valued at $768,691.00. Lloyd's accepted Steuart's claim for the foam valued at $15,985.00, but denied the claim for the remainder of the foam based on the foam loss assumption clause contained in the policy of insurance.

In Steuart's complaint against Lloyd's, it alleged Lloyd's had agreed to indemnify Steuart for loss and damage to covered property resulting from "all risks of direct physical loss or damage" except those expressly excluded or limited, and that loss or damage by fire is not expressly excluded or limited, therefore the policy insures against property loss or damage by fire up to $25,000,000. ¹ Steuart further alleged that the policy contained a "sue and labor" clause which required Steuart to "sue, labor, and travel, or in and about the defense, safeguard and recovery or the property insured," ² and that the policy contained an endorsement for "expenses to reduce loss" which covers expenses necessarily incurred to reduce loss although such expenses may not exceed the amount of the loss reduced. Steuart alleged that the foam expenditure was necessary to extinguish the fire and prevent its spread to other tanks valued at over $8 million, and that Lloyd's failure to pay that portion of the loss constituted a breach of its obligation under the policy's coverage provisions, sue and labor clause, and endorsement no. 3 for amounts necessarily incurred to prevent greater loss.

In its second amended answer denying coverage of the disputed expense, Lloyd's asserted, basically, that the terms and conditions of the policy speak for themselves, and when read as a whole, the policy only covered the foam that was on the premises at the time the fire originated. Lloyd's asserted that the "expenses to reduce loss" provision was not actually an endorsement as it was issued along with the policy.

Steuart filed a motion for summary judgment, and Lloyd's filed a cross-motion for partial summary judgment as to the fire extinguishing foam, asserting the "foam loss assumption clause" limited coverage to the value of the foam on the premises when the fire originated, that none of the other clauses superseded this foam assumption clause, and that if any ambiguity existed, it should be construed against Steuart as the drafter of the policy through its insurance brokers. Lloyd's admitted that the foam expense was incurred by Steuart to defend, safeguard, save, and preserve the storage facility, and that it was incurred for the purpose of reducing the loss.

The trial court granted Lloyd's motion for partial summary judgment on the excess foam issue, finding that the foam loss assumption clause controlled, and that the expenses to reduce loss clause did not supercede the foam loss clause. The court found it immaterial whether the expense to reduce loss clause was a subsequent endorsement since the clauses were not in conflict, as they did not deal with the same subject matter, and the foam loss clause specifically limited liability to foam on the premises when the fire originated. Further, the expenses to reduce loss clause was a general clause, and the two clauses could be reconciled and given effect. There were no genuine issues of material fact as to foam extinguishing expenses, rather, the issue was one of law.

Appellant's argument on appeal is basically that the policy, considered as a whole, including endorsements, covers the disputed foam expense because the expenses to reduce loss endorsement and the foam loss assumption clause both deal with loss reduction expenses, and the two are in conflict, therefore the clause providing greater coverage--the expenses to reduce loss...