Florida Peninsula Insurance Company v. Cespedes , 2014 Fla. App. LEXIS 20366 ( 2014 )

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
FLORIDA PENINSULA INSURANCE )
COMPANY, )
)
Appellant, )
)
v. ) Case No. 2D12-4575
)
MARICELA CESPEDES, )
)
Appellee. )
________________________________ )
Opinion filed December 17, 2014.
Appeal from the Circuit Court for
Hillsborough County; Sam D. Pendino,
Judge.
Kristen A. Tajak of Cole, Scott &
Kissane, P.A., Miami, for Appellant.
A. Lee Smith of Thompson Trial Group,
P.A., Tampa, for Appellee.
KELLY, Judge.
Maricela Cespedes brought an action against her property insurer, Florida
Peninsula Insurance Company, for failure to pay benefits regarding her claim for
sinkhole damages. Florida Peninsula moved for summary judgment arguing that Ms.
Cespedes' policy excluded sinkhole damage. Ms. Cespedes countered with a motion
for partial summary judgment in which she argued that her homeowner's insurance
policy was ambiguous regarding sinkhole coverage. The trial court granted her motion
and denied Florida Peninsula's motion. Florida Peninsula filed a timely notice of appeal
from the final judgment awarding Ms. Cespedes $125,400. Because we conclude that
Ms. Cespedes' policy unambiguously excluded sinkhole damage, we reverse.
The policy Florida Peninsula issued to Ms. Cespedes contained an
endorsement stating:
YOUR POLICY PROVIDES COVERAGE FOR A
CATASTROPHIC GROUND COVER COLLAPSE THAT
RESULTS IN THE PROPERTY BEING CONDEMNED AND
UNINHABITABLE. OTHERWISE, YOUR POLICY DOES
NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES.
YOU MAY PURCHASE ADDITIONAL COVERAGE FOR
SINKHOLE LOSSES FOR AN ADDITIONAL PREMIUM.
This endorsement was also contained in the Homeowners Declaration. In addition, the
Special Provisions Endorsement states:
The following Exclusion 1.i. is added to Section I –
Exclusions:
i. Loss caused by "sinkhole"
(1) "Sinkhole" means:
(a) A landform created by subsidence of soils,
sediment, or rock as underlying strata are
dissolved by ground water.
(b) A "sinkhole" may form by collapse into
subterranean voids created by dissolution of
limestone or dolostone or by subsidence as these
strata are dissolved.
(c) This exclusion does not apply to the peril of
"Catastrophic Ground Cover Collapse."
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The Special Provisions Endorsement also defines "catastrophic ground cover collapse"
as follows:
"Catastrophic ground cover collapse" means geological
activity that results in all of the following:
(1) The abrupt collapse of ground cover;
(2) A depression in the ground cover clearly visible to the
naked eye;
(3) Structural damage to the building, including the
foundation; and
(4) The insured structure being condemned and ordered to
be vacated by the governmental agency authorized by law to
issue such an order for that structure.
The only other provision in the policy that references sinkholes is also contained in the
Special Provisions Endorsement and states:
The following are additional conditions to Section I –
CONDITIONS of your policy:
17. Neutral Evaluation Program
With respect to a claim for alleged "Sinkhole loss", a neutral
evaluation program is available as follows:
a. Following receipt by us of a report from a
professional engineer or professional geologist on
the cause of loss and recommendations for repair
of property, or if we deny your claim, we will notify
you of your right to participate in a neutral
evaluation program administered by the Florida
Department of Financial Services (hereinafter
referred to as the department).
b. For alleged "Sinkhole loss" to property, this
program applies instead of the Mediation and
Appraisal condition set forth elsewhere in this
policy.
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c. You or we may file a request with the Department
for neutral evaluation; the other party must comply
with such request.
d. We will pay the costs associated with the neutral
evaluation regardless of which party makes the
request.
e. The neutral evaluator will be selected from a list
maintained by the Department.
The recommendation of the neutral evaluator will
not be binding on you or us.
f. Participation in the neutral evaluation program
does not change your right to file suit against us in
accordance with the Suit Against Us Condition 8 in
this policy.
In granting Ms. Cespedes' motion for partial summary judgment and denying Florida
Peninsula's motion, the trial court found that this latter provision created an ambiguity
and that Ms. Cespedes was entitled to coverage for her sinkhole claim.
"The standard of review governing a trial court’s ruling on a motion for
summary judgment posing a pure question of law is de novo." Major League Baseball
v. Morsani, 790 So. 2d 1071, 1074 (Fla. 2001). The construction of an insurance
contract is a question of law, not a question of fact; therefore, our standard of review is
de novo. Kattoum v. N.H. Indem. Co., 968 So. 2d 602, 604 (Fla. 2d DCA 2007). We
agree with Florida Peninsula that the trial court erred as a matter of law in denying its
motion for summary judgment because Ms. Cespedes' policy clearly and
unambiguously excludes coverage for sinkhole damages.
If the language in an insurance policy is plain and unambiguous, a court
must interpret the policy in accordance with the plain meaning so as to give effect to the
policy as written. Washington Nat'l Ins. Corp. v. Ruderman, 117 So. 3d 943, 948 (Fla.
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2013). "In construing insurance contracts, 'courts should read each policy as a whole,
endeavoring to give every provision its full meaning and operative effect.' " Id. (quoting
U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 877 (Fla. 2007)). "If the relevant
policy language is susceptible to more than one reasonable interpretation, one providing
coverage and the other limiting coverage, the insurance policy is considered
ambiguous." Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). The
plain language of Ms. Cespedes' policy excludes sinkhole damage. The fact that the
policy contains a provision describing the neutral evaluation process in the event of a
sinkhole loss cannot reasonably be read as creating coverage for a loss that is
unambiguously excluded. Because the relevant policy language is susceptible to only
one reasonable interpretation, it was error for the trial court to deny Florida Peninsula's
motion for summary judgment. Accordingly, the judgment in favor of Ms. Cespedes is
reversed and this case is remanded with instructions to enter judgment in favor of
Florida Peninsula.
Reversed and remanded with instructions.
VILLANTI, J., Concurs with opinion.
ALTENBERND, J., Concurs and dissents with opinion.
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VILLANTI, Judge, Concurring.
I fully concur in Judge Kelly's opinion and write to point out that the
generally convoluted structure of homeowner's insurance policies in Florida did not work
an injustice in this case. Even if Ms. Cespedes' understanding of the policy was
relevant—which it is not in the face of the policy's unambiguous language, see SCG
Harbourwood, LLC v. Hanyan, 93 So. 3d 1197, 1200 (Fla. 2d DCA 2012)—the record
arguably shows that she knew that her policy did not include coverage for sinkhole loss.
At her deposition, Ms. Cespedes testified that she specifically recalled being informed
that sinkhole coverage would require an extra premium, and she specifically elected not
to pay that additional premium. Thus, it would be serendipitous indeed if we were to
allow her alleged inability to understand the provisions of her written policy to supersede
her knowledge that she opted not to pay the additional premium for sinkhole coverage
or to operate as some sort of penalty on Florida Peninsula for using the incorrect font in
a warning that Ms. Cespedes admittedly never read.
I also write to point out that insurance companies would be involved in
much less litigation if they devised an alternative to the current "one form fits all"
approach that requires them to customize each "standard" policy through the use of
endorsements and special provisions. This is particularly true for "sinkhole" coverage.
Prior to 2007, all Florida insurers were required to include "sinkhole" coverage in all
homeowner's policies. This coverage included damage, however small, from all
sinkhole activity, however small. But as of January 25, 2007, the legislature required
insurers to provide coverage only for "catastrophic ground cover collapse"—a narrower
term intended to limit the mandatory "sinkhole" coverage to only those situations in
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which, as the name implies, the top of the sinkhole has actually collapsed. See Ch.
2007-1, § 30, Laws of Fla. As of that date, insurers were no longer required to provide
coverage for damage caused by a sinkhole that did not actually collapse, although they
could continue to provide that broader coverage for an additional premium. While this
change in the extent of coverage was significant, the ungainly terminology of
"catastrophic ground cover collapse" has not caught on, and most insureds—and
indeed probably many insurance agents—fail to appreciate that the standard
homeowner's insurance policy no longer covers all types of sinkhole activity that could
result in damage to the insured's home. Moreover, it appears that the standard
homeowner's policy forms have not been amended to account for this change either—
providing nowhere on the "checklist of coverage" to indicate that coverage exists for
"catastrophic ground cover collapse" as distinguished from "sinkhole" coverage.
These standard homeowner's insurance policy forms, which consistently
reference coverage terms and conditions that do not actually apply to any given policy
and which fail to reflect statutory coverage changes that have been in effect for almost
eight years, can be addling to even experienced agents, adjusters, and attorneys.
Florida policyholders deserve better. However, an insured's befuddlement resulting
from these standard forms cannot create coverage where none otherwise exists.
Hence, I agree that we must reverse the judgment in this case and remand for entry of
summary judgment in favor of Florida Peninsula.
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ALTENBERND, Judge, Concurring in part and dissenting in part.
Although I reluctantly agree that Maricela Cespedes is not entitled to
summary judgment due to the plain language in the endorsement identified as "FP
CGCC (03/08)," which is quoted in bold type in the court's opinion, I do not believe that
this endorsement entitles Florida Peninsula to summary judgment at this stage of the
proceedings. The statutory language in this endorsement is intended to be an obvious
warning provided to the insured about the contents of the insurance contract, not an
endorsement buried deep inside the contract. Thus, while I agree that the policy does
contain a legally unambiguous exclusion for sinkhole damage, in the absence of a
warning on the face of the policy, it is not clear to me that the exclusion is enforceable.
Without stating the facts in detail, it is fair to say that Ms. Cespedes and
Florida Peninsula's field agent both thought this policy provided sinkhole coverage from
the point when she first reported her suspicions that her home had sustained sinkhole
damage in June 2009 through the time when the licensed professional engineer
retained by Florida Peninsula confirmed her suspicions in 2010.1 Apparently, it was
only when a more highly trained case manager reviewed the file that the insurance
company realized that the policy contained an exclusion. Thus, the initial inquiry in this
1
To the extent that Judge Villanti's concurrence suggests that no remand
is necessary to make factual determinations in this case because Ms. Cespedes knew
her 2009 policy did not include coverage for sinkhole loss and that she had not elected
to pay for that coverage, I believe he may read too much into the deposition. She
testified that she asked for "anything that covers my house." The declarations page
simply has no information from which an insured can determine whether a premium has
been charged for this coverage. Ms. Cespedes testified that her agent thought she had
sinkhole coverage when she reported the claim in June 2009. She knew that she had
no coverage in the policy issued after the claim in 2010.
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case might be to determine why both Ms. Cespedes and the trained field adjuster were
unable to determine that the policy "unambiguously excluded sinkhole damage." Five
circumstances appear to explain their confusion.
First, neither the transmittal letter with the policy nor the beginning
sections of the insurance policy contains a warning that this exclusion exists. Section
627.706(4), Florida Statutes (2008), required insurers offering policies that exclude
coverage for sinkhole damage to "inform policyholders in bold type" of that exclusion.
The majority's opinion quotes the statutory warning and relies on it as the primary
source of the clear and unambiguous exclusion of coverage. But, as I read the statute
in the context of the insurance code, the warning is not intended to be an endorsement
added to the end of the policy. It is not supposed to be a part of the contract at all; it is
supposed to be a bold front-end warning informing the insured about the exclusion that
is somewhere within the contract.
In this case, the declarations page lists "Forms and Endorsements." In
that list is "FP CGCC (03/08)." This is the warning given to the insured. By contrast,
the declarations page has two issues disclosed in bold type. Section 627.7011(4),
Florida Statutes (2008), required a policy to "include" a statement in bold type
concerning "law and ordinance coverage." Florida Peninsula dutifully placed that
warning on the declarations page. Likewise, section 627.701(4)(a), Florida Statutes,
required a bold warning on the "face" of the policy that the policy contained a separate
deductible for hurricane losses. Florida Peninsula placed that warning on page two of
the declarations. But Florida Peninsula did nothing similar for the sinkhole exclusion.
These circumstances do not make the policy legally ambiguous. I am not
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certain what, if any, remedy is available to Ms. Cespedes if Florida Peninsula failed to
comply with section 627.706(4), Florida Statutes. This is the issue I would leave open
for consideration on remand.
The remaining four factors probably confused Ms. Cespedes and the
insurance company's field agent, but they are not matters that will entitle her to any
relief on remand. Nevertheless, they warrant comment. The second factor is the
policy's four-page "Homeowners Declaration." As explained above, it reveals the added
exclusion only in the cryptic code listed in the "Forms and Endorsements." Because
sinkhole coverage is already included within the body of the main policy, which is
identified as "HO 00 03 04 91," this is not an added coverage option; it is merely an
exclusion. Thus, there is no place on the declarations page to list an amount of
coverage or the price charged for "sinkhole coverage." Coverages that may be included
within a policy usually are stated on the declarations page with either a statement of the
price charged, the premium, or with the word "included" or "excluded." Without that
option or a statement that the premium has been reduced in light of an added exclusion,
nothing on the declarations page directly informs the insured of this exclusion.
Third, the original HO-3 insurance policy that was commonly issued in the
1970s was a relatively short and readable contract that could be comprehended by a
high school graduate. It has evolved in this case into a seventeen-page form identified
as "HO 00 03 04 91." Because that form is intended for use in many states, it does not
align with Florida law or the underwriting desires of Florida insurers. As a result, the
seventeen-page form is followed by a fourteen-page "Special Provisions—Florida"
endorsement, identified as "FP 23 04 08," that adds and deletes contract language from
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the national form. In my opinion, while not legally ambiguous, it has become structurally
ambiguous and exceedingly difficult for Florida's homeowners to read and understand.
Except in the eyes of trained lawyers and insurance agents, there is nothing plain and
unambiguous about the standard homeowner's insurance policy. But under the
applicable Florida law, the homeowner is not treated differently than a large corporation
with a lawyer in charge of risk management; the fact that the policy is "complex or
requires analysis" does not render the policy ambiguous. Penzer v. Transp. Ins. Co., 29
So. 3d 1000, 1005 (Fla. 2010) (rule stated as to commercial coverage); Garcia v. Fed.
Ins. Co. 969 So. 2d 288, 290-91 (Fla. 2007) (rule stated as to homeowner's coverage).
Fourth, and perhaps most telling, there is a mistake in the "checklist of
coverage" that was provided with this policy. The checklist was inserted immediately
after the declarations page and before the main sections of the policy. In the checklist,
the box next to "sinkhole" coverage contains a "Y," which is the letter for "yes, you have
this coverage." A reasonable person might think that a mistake or misrepresentation of
coverage in such a checklist would create an ambiguity within the policy. But the
legislature does not agree.
To address the problem of modern insurance policies that are too complex
for average Floridians to understand, the legislature requires insurance companies to
give the homeowner an "outline of coverage" either with the policy or before it arrives.
See § 627.4143, Fla. Stat. (2008). Florida Peninsula's "checklist of coverage" is its
compliance with this statute. But subsection 627.4143(5) requires the insurer to tell the
homeowner that the checklist is for "informational purposes only." The checklist cannot
change the provisions of the contract. Id. Subsection 627.4143(6) even attempts to
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create a rule of evidence prohibiting the admission of the checklist into evidence in a
civil case. Thus, this serious mistake in the outline of coverage provides no avenue of
redress for Ms. Cespedes.
Fifth, as the court's opinion explains, the "Special Provisions—Florida"
endorsement contains both a sinkhole exclusion and a "Neutral Evaluation Program"
section. In other words, Florida Peninsula has included the procedures for addressing a
sinkhole claim in its standard form, while also excluding sinkhole coverage in that form.
By including the sinkhole procedures in a standard form that never covers sinkholes,
Florida Peninsula may not have created an ambiguity for a trained attorney, but I
understand why the trial court concluded that it created an ambiguity for the
homeowner. The supreme court has stated: "However, in construing insurance policies,
courts should read each 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) (citing Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So. 2d
938, 941 (Fla. 1979)). In this instance, the neutral evaluation portion of the policy
cannot be given effect because there are no covered claims to which it can apply. This
useless portion of the policy under the case law does not seem to create an ambiguity.
Thus, I agree with the majority on this point because the law compels me to do so.
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