DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
MARTHA C. CASTRO,
Appellant,
v.
PEOPLE’S TRUST INSURANCE COMPANY,
Appellee.
No. 4D20-1070
[April 28, 2021]
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Donald W. Hafele, Judge; L.T. Case No. 50-2018-CA-
002002-XXXX-MB.
Daniel T. Galo of Ligman Martin, P.L., Wellington, for appellant.
Mark D. Tinker and Mary Lou Cuellar-Stilo of Cole, Scott & Kissane,
P.A., Tampa, and Brett Frankel and Jonathan Sabghir of People’s Trust
Insurance Company, Deerfield Beach, for appellee.
DAMOORGIAN, J.
Martha Castro (“Castro”) appeals the trial court’s entry of final
summary judgment in favor of People’s Trust Insurance Company
(“People’s Trust”). The trial court found Castro materially breached the
insurance policy by failing to comply with the policy’s option to repair
provision. On appeal, Castro argues summary judgment was improper
because (1) People’s Trust failed to establish she materially breached the
policy; (2) the option to repair provision is invalid because it violates
section 627.7011(3)(a), Florida Statutes (2017), which requires an insurer
to pay actual cash value for the damaged property; (3) the option to repair
provision is not enforceable because Castro did not sign the policy; and
(4) People’s Trust did not overcome Castro’s affirmative defenses of
unconscionability and inadequate consideration. We affirm on all issues
and write only to address Castro’s arguments that the option to repair
provision was invalid and that she did not materially breach the policy.
Castro owns a home insured by People’s Trust. The policy contains a
Preferred Contractor Endorsement which gives Castro a premium
discount/credit of $68. In exchange for the credit, People’s Trust has the
option to use Rapid Response Team, LLC (“Rapid Response”) to repair any
damages. Specifically, the Preferred Contractor Endorsement provides, in
pertinent part:
In consideration of the premium credit shown on “your”
Declarations Page, “you” agree to the following:
THIS ENDORSEMENT ALLOWS US AT OUR OPTION TO
SELECT RAPID RESPONSE TEAM, LLC™ TO MAKE
COVERED REPAIRS TO YOUR DWELLING OR OTHER
STRUCTURES.
“You” agree that in the event of a covered loss to “your”
dwelling or other structures on the “residence premises,”
other than a sinkhole loss “we” at our option may select Rapid
Response Team, LLC™ to repair “your” damaged property as
provided by the policy and its endorsements.
This endorsement does not reduce the applicable deductible
under the policy. “You” will be responsible for paying the
amount of the deductible to Rapid Response Team, LLC™.
In the event People’s Trust exercises its repair option, the policy
provides:
J. Our Option
At our option:
...
5. You must provide access to the property and execute any
necessary municipal, county or other governmental
documentation or permits for repairs to be undertaken.
6. You must execute all work authorizations to allow
contractors and related parties entry to the property.
7. You must otherwise cooperate with repairs to the property.
8. You are responsible for payment of the deductible stated in
your declaration page.
2
9. Our right to repair or replace, and our decision to do so, is
a material part of this contract and under no
circumstances relieves you or us of our mutual duties and
obligations under this contract.
In June 2017, Castro, through her attorney, filed a claim for water
damage under the policy. People’s Trust inspected the property, notified
Castro’s attorney through a letter that it accepted coverage for the loss,
invoked its option under the policy to repair the damages caused by the
loss, and assigned Rapid Response to do the repairs. The letter explained
that Castro was responsible for paying a $2,500 deductible to Rapid
Response and requested Castro provide a “Sworn Proof of Loss” statement
supported by a detailed estimate. Castro submitted the required sworn
proof of loss. She also submitted the claim to appraisal, as the parties
disputed the scope and cost of repairing the damage. In December 2017,
an appraisal award was entered identifying the scope of the loss and the
cost to repair the damage in the amount of $14,809.42.
People’s Trust attempted to contact Castro to request her execution of
an authorization form for repairs and compliance with the deductible. The
first attempt was made to Castro’s attorney on December 11, 2017;
the second attempt was made to Castro’s attorney on December 27, 2017 1;
the third attempt was made directly to Castro on December 29, 2017; and
the fourth attempt was made directly to Castro on February 13, 2018.
Castro did not respond, did not execute a work authorization for repairs,
and did not pay the deductible.
On February 7, 2018, People’s Trust received a mediation request from
Castro’s public adjuster. People’s Trust responded that same day by
directing the public adjuster to contact the Department of Financial
Services to facilitate the mediation. The record contains nothing further
regarding scheduling of mediation.
On February 16, 2018, People’s Trust filed suit against Castro
seeking (1) specific performance of the policy; (2) declaratory relief as to its
coverage obligations; and/or (3) a finding that Castro materially breached
the policy by failing to allow Rapid Response to make the repairs and
failing to pay the deductible. Castro answered the complaint and denied
breaching the policy, asserted affirmative defenses, and petitioned for a
declaratory judgment seeking a court declaration that the option to repair
1 The attorney’s office responded advising it was no longer representing Castro
and to contact Castro directly.
3
provision was not authorized by statute and not a valid option contract.
Both parties later filed competing motions for summary judgment.
The matter ultimately proceeded to a summary judgment hearing. At
the hearing, People’s Trust argued its option to repair provision was proper
and enforceable. Castro argued she was never put on notice that “she had
to sign or else,” that the policy provision at issue was unconscionable, and
that she never selected a deductible. In granting summary judgment in
favor of People’s Trust, the trial court, in part, explained:
The record reflects [People’s Trust] timely exercised its
election-to-repair, provided coverage for the reported loss, and
completed appraisal in accordance with the Policy to
determine the scope of repairs to the insured dwelling.
Furthermore, Florida Statu[t]es and Florida case law
recognizes and upholds an insurer’s right to repair within an
insurance policy as a means of indemnification. Castro’s
failure to return some form of a work authorization
acknowledging that [People’s Trust’s] preferred contractor was
authorized to commence covered repairs pursuant to the
appraisal panel’s estimated scope of repairs, and failure to
either pay or make arrangements for payment of the
applicable deductible was a material breach of the contract.
That breach was inherently prejudicial, because it deprived
[People’s Trust] of the entire benefit of its bargain. Castro
obtained a premium discount by selecting the Preferred
Contractor Endorsement and its option to repair, but then
denied [People’s Trust] that very option to repair.
This appeal follows.
Section 627.7011, Florida Statutes (2017), provides:
(3) In the event of a loss for which a dwelling or personal
property is insured on the basis of replacement costs:
(a) For a dwelling, the insurer must initially pay at least the
actual cash value of the insured loss, less any applicable
deductible. The insurer shall pay any remaining amounts
necessary to perform such repairs as work is performed and
expenses are incurred. If a total loss of a dwelling occurs, the
insurer shall pay the replacement cost coverage without
reservation or holdback of any depreciation in value, pursuant
to s. 627.702.
4
§ 627.7011(3)(a), Fla. Stat. (2017). Section 627.7011(5) carves out an
exception to subsection (3) and allows insurers to exercise a right to repair
damaged property. Specifically, section 627.7011(5)(e) provides “[t]his
section does not . . . [p]rohibit an insurer from exercising its right to repair
damaged property in compliance with its policy and s. 627.702(7).”
(emphasis added). Section 627.702(7), in turn, provides:
Nothing herein shall be construed as prohibiting an insurer
from repairing or replacing damaged property at its own
expense and without contribution on the part of the insured
except, as provided in subsection (6), when an insured has
elected to purchase stated value coverage. Such repair or
replacement of damaged property shall be in lieu of any
liability created by subsection (1); and any insurer so
repairing or replacing shall have no liability pursuant to
subsection (1), provided such insurer returns to the named
insured a portion of the premium, for all policy terms during
which the policy limits were the same as those in effect on the
date on which the loss occurred, equal to that portion of the
premium paid for limits of insurance on the structure in
excess of the cost of replacement.
§ 627.702(7), Fla. Stat. (2017).
With these parameters in mind, we address Castro’s argument that the
policy’s option to repair provision is unenforceable because it violates
section 627.7011(3)(a). In support of her argument, Castro highlights the
use of the word “and” in section 627.7011(5)(e) and asserts that “an
insurer can only choose to make repairs in lieu of a cash payment if the
policy provides for repairs to be done and the loss falls within the type of
loss addressed by [section] 627.702(7).” Because section 627.702(7) is
found in the section governing total losses, Castro maintains that section
627.7011(5)(e) does not apply because she only suffered a partial loss. In
other words, Castro argues that section 627.7011 only affords an insurer
the option to repair if the property is a total loss.
We disagree with Castro’s interpretation of the statute as such an
interpretation would lead to absurd results. Although Castro is correct
that section 627.7011(5)(e) states that an insurer is not prohibited “from
exercising its right to repair damaged property in compliance with its
policy and s. 627.702(7),” legislative intent mandates that the word “and”
be construed as “or.” See Winemiller v. Feddish,
568 So. 2d 483, 485
(Fla. 4th DCA 1990) (“[I]t is well settled in the law that courts may construe
5
‘and’ as ‘or’ in statutes where legislative intent mandates it.”). Otherwise,
as correctly argued by People’s Trust, a right to repair option could never
be triggered under the statute. This is because if a property is considered
a total loss, there is no possibility of “repair.” See Citizens Prop. Ins. Corp.
v. Hamilton,
43 So. 3d 746, 753 (Fla. 1st DCA 2010) (“A building is
considered an actual total loss, under the identity test, if it has lost its
identity and specific character as a building, and becomes so far
disintegrated, it cannot be possibly designated as a building, although
some part of it may remain standing. [A] building is considered a
constructive total loss when the building, although still standing, is
damaged to the extent that ordinances or regulations in effect prohibit or
prevent the building’s repair, such that the building has to be demolished.”
(alteration in original) (internal citations and quotation marks omitted)).
The legislature, by carving out an exception to subsection 627.7011(3)
allowing insurers to exercise a right to repair damaged property, clearly
did not intend for the interpretation advocated by Castro. Thus, we hold
that the policy’s option to repair provision is enforceable and entirely
consistent with section 627.7011.
Our holding is further buttressed by the fact that “[t]he election-to-
repair endorsement has been an established option for various Florida
residential insurance policy forms for several years.” People’s Tr. Ins. Co.
v. Franco,
305 So. 3d 579, 582 (Fla. 3d DCA 2020). And in fact, the Second
District in Ganzemuller v. Omega Insurance Co.,
244 So. 3d 1189 (Fla. 2d
DCA 2018), impliedly rejected the same argument presented by Castro on
appeal. In deciding whether sections 627.7011(5)(e) and 627.702(7)
relieved an insured from its obligation to pay the deductible when the
insurer invokes its option to repair partial losses, the Second District
explained:
Subsection (5)(e) makes clear that section 627.7011 does not
“[p]rohibit an insurer from exercising its right to repair
damaged property in compliance with its policy and s.
627.702(7).” § 627.7011(5)(e). Nothing in this language
suggests a statutory intent to eliminate policy deductibles for
partial losses as well as total losses where the insurer elects
to make repairs. Our conclusion is buttressed by the fact that
subsection 627.702(7) provides that the insurer’s repair or
replacement of damaged property is in lieu of liability under
subsection 627.702(1), which deals with the insurer’s liability
under the policy for a covered total loss.
Id. at 1191. In affirming the order dismissing the insureds’ complaint with
prejudice, the Second District held that “the pertinent statutory sections
6
relied on by the [insureds] do not eliminate an insured’s obligation to pay
the required deductible under the policy when the insured suffers a partial
loss that the insurer elects to repair.” Id. Thus, the Second District
recognized that the option to repair a partial loss is authorized under the
statute.
We next address the issue of whether Castro materially breached the
policy by failing to execute the work authorization and failing to pay the
deductible. Castro acknowledges that she failed to execute the work
authorization and pay the deductible, but nonetheless maintains that she
substantially complied with the policy by submitting the required proof of
loss and invoking the appraisal process. We disagree.
Castro appears to conflate her compliance with unrelated policy
provisions and the provisions at issue in this case. Regardless of her
submission of the proof of loss and invocation of appraisal, it is undisputed
that Castro failed to execute a work authorization and refused to pay the
deductible as expressly required under the policy. It is further undisputed
that Castro provided no explanation for her failure to comply with these
two provisions. Castro’s breach of these two provisions, in turn, deprived
People’s Trust of its contractual right to repair the property. Under these
circumstances, we hold that Castro’s failure to execute the work
authorization and to pay the required deductible constituted a total breach
of the policy’s option to repair. See Arguello v. People’s Tr. Ins. Co.,
No. 4D20-69,
2021 WL 1202390, at *7 (Fla. 4th DCA Mar. 31, 2021)
(Conner, J., concurring specially) (recognizing that if an insured refuses to
sign the work authorization for repairs, it could constitute a reason for a
complete forfeiture of the policy).
Affirmed.
WARNER and MAY, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
7
