Third District Court of Appeal
State of Florida
Opinion filed August 16, 2023.
Not final until disposition of timely filed motion for rehearing.
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No. 3D22-1436
Lower Tribunal No. 20-1425
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People's Trust Insurance Company,
Appellant,
vs.
Sheila Banks, et al.,
Appellees.
An Appeal from the Circuit Court for Miami-Dade County, David C.
Miller, Judge.
Brett Frankel and Jonathan Sabghir (Deerfield Beach); and
Cole, Scott & Kissane, P.A., and Mark D. Tinker (Tampa) and Scott A.
Cole, for appellant.
The Nation Law Firm, LLP, and Mark A. Nation (Longwood), for
appellees.
Before LOGUE, C.J., and HENDON and GORDO, JJ.
HENDON, J.
People’s Trust Insurance Company (“PTIC”) appeals from an adverse
final summary judgment. We reverse.
Facts
The appellees, Sheila and Randy Banks (“Insureds” or “Appellees”),
own a home covered by an insurance policy issued by PTIC. That policy
insures against “direct physical loss to property.” The policy excludes
losses caused by “wear and tear” and “deterioration.” Unless the loss is
“otherwise excluded,” the policy covers insured property damaged by an
accidental discharge of water from within a plumbing system, including the
cost to tear out and replace any part of the building necessary to access
and repair that system, but does not cover the system itself. All of the
enumerated causes of loss are subject to an indirect and concurrent cause
provision, which reads,
SECTION I – EXCLUSIONS A. We do not insure for loss
caused directly or indirectly by any of the following. Such loss is
excluded regardless of any other cause or event contributing
concurrently or in any sequence to the loss. These exclusions
apply whether or not the loss event results in widespread
damage or affects a substantial area. . . .
One of the exclusions is for certain categories of water loss, including flood,
sump overflows, etc. In order to take advantage of a reduced premium, the
Insureds opted for a Water Damage Exclusion (“WDX”) endorsement to
their policy. That endorsement replaced the policy’s basic water exclusion,
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and defined water to include, among other things, “[d]ischarge or overflow
of water or steam from within a plumbing, heating, air conditioning or
automatic fire protective sprinkler system or from within a household
appliance,” and “[c]aused by or resulting from human or animal forces or
any act of nature.”
In addition to the WDX endorsement, the Insureds also purchased a
less expensive but more restrictive Limited Water Damage Coverage
(“LWD”) endorsement. The relevant provision provides coverage for
“sudden and accidental direct physical loss to covered property by
discharge or overflow of water or steam from within a plumbing . . .
system.” The limit of liability of the LWD endorsement provides,
LIMIT OF LIABILITY
The total limit of liability for all damage to covered property
provided by this endorsement is $10,000.00 per loss. This limit
applies to all damaged covered property under Coverage A, B,
and C combined.
This limit also includes the cost of tearing out and replacing any
part or portion of the covered building or other structure
necessary to access or repair that part or portion of the system
or appliance from which the discharge occurred or cause the
overflow.
(emphasis added).
In November 2018, the Insureds experienced a water loss caused by
the deterioration of their property’s old cast iron plumbing. They timely
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notified PTIC. The Insureds sought two kinds of coverage in their claim: 1)
coverage for the actual physical damage the water caused, and 2)
coverage for the cost of having to excavate the damaged pipes from the
property and repair the plumbing system. PTIC accepted the loss as
covered by the LWD endorsement. PTIC explained in a letter to the
Insureds that the coverage existed only as provided by the LWD
endorsement, and only up to the $10,000.00 limit. Without the LWD
endorsement, the loss would not have been covered pursuant to the WDX
endorsement. PTIC tendered the full $10,000.00 limit to the Insureds,
minus a $2,000 payment PTIC had already made.
The Insureds subsequently sued PTIC for breach of contract, seeking
the actual cash value of the loss and damages, and declaratory relief. PTIC
answered, asserting full payment under the LWD provision, thus
discharging its contractual obligation. Both parties moved for summary
judgment.
The Insureds argued below, and here, that the WDX provision in the
policy did not apply to their loss because the wear and tear, and
deterioration of the cast iron pipes was not caused by human, animal, or
any “act of nature,” as stated in the WDX endorsement. They point out that
the phrase “act of nature” is not defined. Instead, they contend that the
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corrosion in the pipes was a “natural process,” not an “act of nature,” thus,
the WDX exclusion for “act of nature” is inapplicable. As a result, they
maintain, the WDX endorsement does not apply, and the LWD
endorsement was not triggered. Even if it was, they argue, the LWD only
applies to limit the actual physical damage caused by water from a
plumbing system and does not limit coverage for the cost of tearing out any
part of the Insured’s home to repair the plumbing system from which the
water escaped.
PTIC, on the other hand, asserted that, in exchange for a reduced
premium, the Insureds accepted the WDX endorsement which eliminated
all coverage for water damage. The Insureds then bought back limited
water damage coverage via the LWD endorsement, which covered “direct
physical loss . . . by discharge or overflow of water . . . from within a
plumbing system.” That coverage came with a payout limit of $10,000.00,
which limit expressly included tear-out costs, and which PTIC duly paid
pursuant to the LWD contract.
In August 2020, the trial court heard both motions for summary
judgment and granted partial summary judgment in favor of the Insureds,
and denied PTIC’s motion for summary judgment. The trial court concluded
that the wear and tear, and deterioration, was not caused by an “act of
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nature,” as required by the WDX endorsement, and the LWD endorsement
did not apply to the cost of tearing out and replacing the plumbing in the
Insureds’ property. The parties agreed to take the claim to appraisal
pursuant to the policy terms. The appraisal award totaled $113,318.17.
PTIC appeals from the final judgment granted to the Insureds pursuant to
the appraisal award.
Discussion
Insurance policy construction is a question of law subject to de novo
review. People's Tr. Ins. Co. v. Progressive Express Ins. Co.,
336 So. 3d
1207, 1209 (Fla. 3d DCA 2021); Arguelles v. Citizens Prop. Ins. Corp.,
278
So. 3d 108, 111 (Fla. 3d DCA 2019); Fayad v. Clarendon Nat’l. Ins. Co.,
899 So. 2d 1082, 1085 (Fla. 2005) (citing Dimmitt Chevrolet, Inc. v. Se. Fid.
Ins. Corp.,
636 So. 2d 700, 701 (Fla. 1993)) (“[T]he issue of whether an
exclusionary clause precludes coverage for damages is a question of
law.”). Additionally, the appellate court must construe insurance policies in
a reasonable, practical, and just manner. First Pros. Ins. Co. v. McKinney,
973 So. 2d 510 (Fla. 1st DCA 2007). Where the language in an insurance
contract 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.” Wash. Nat’l. Ins. Corp. v. Ruderman,
117 So. 3d 943, 948 (Fla.
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2013); U.S. Fire Ins. Co. v. J.S.U.B., Inc.,
979 So. 2d 871, 877 (Fla. 2007)
(holding that, in construing insurance contracts, courts should read each
policy as a whole, endeavoring to give every provision its full meaning and
operative effect).
This Court declines to interpret the insurance policy language at issue
in such a way as to separate the ordinary meaning of “act of nature” from
“natural process.” To conclude that the deterioration of the Insureds’ old
cast iron plumbing pipes is not an “act of nature” would lead to an absurd
result, i.e., coverage costs in excess of what was expressly excluded from
the bargained-for coverage. “[A] single policy provision should not be read
in isolation and out of context, for the contract is to be construed according
to its entire terms, as set forth in the policy and amplified by the policy
application, endorsements, or riders.” State Farm Mut. Auto. Ins. Co. v.
Mashburn,
15 So. 3d 701, 704 (Fla. 1st DCA 2009).
Recent appellate cases involving the identical policy language, and
as applied to similar facts, have interpreted the phrase “act of nature” to
mean ordinary natural processes rather than extraordinary, unforeseen
events, or events usually classified as an “act of God.” See Dodge v.
People's Tr. Ins. Co.,
321 So. 3d 831, 835 (Fla. 4th DCA 2021) (“Corrosion,
the chemical reaction between iron and moist air, is an act of nature or a
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naturally occurring force. Thus, the rust or corrosion occurred because of a
natural act.”); Rosa v. Safepoint Ins. Co.,
350 So. 3d 468, 471 (Fla. 5th
DCA 2022) (“[T]he rust or other corrosion that occurred in the pipes in [the
insured's] dwelling, regardless of whether it was perhaps preventable or
controllable, was a naturally occurring force and thus an act of nature. As
an act of nature, the loss came within the policy exclusion for ‘any act of
nature.’”). Notably, in Santana v. People's Trust Insurance Co., 48 Fla. L.
Weekly D646 (Fla. 3d DCA Mar. 29, 2023) (citation opinion), this Court has
chosen to follow the precedent set by Dodge and Rosa. See also Certain
Interested Underwriters at Lloyd's London v. Pitu, Inc.,
95 So. 3d 290, 293
(Fla. 3d DCA 2012) (finding the water loss exclusion endorsement was
clear and unambiguous in its limitation of coverage for those losses
covered by the policy to $25,000); Herrington v. Certain Underwriters at
Lloyd's London,
342 So. 3d 767, 770 (Fla. 4th DCA 2022) (“The policy
language covers ‘loss caused by the water including the cost of tearing out’
parts of the structure to repair the system which leaked. ‘Tear out’ costs are
thus part of the water damage loss. Therefore, the endorsement limiting all
water damage loss includes tear out expenses.”); Panettieri v. People's Tr.
Ins. Co.,
344 So. 3d 35, 40 (Fla. 4th DCA 2022) (holding no separate and
distinct coverage exists for tear out costs apart from water damage); Yanes
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v. Nat'l Specialty Ins. Co.,
548 F. Supp. 3d 1307, 1315 (S.D. Fla. 2021)
(“Reading the provisions of the Subject Policy together as a whole, the
Court finds that [the insurer’s] liability under the Subject Policy—including
liability for Tear Out Coverage—is limited by the [Limited Water Damage
Coverage Endorsement] to $10,000.00.”).
As explained in Panettieri,
A plain reading of the exception to c. (5) indicates that tear out
coverage is included as part of the loss to property unless the
loss is excluded. Therefore, no separate and distinct coverage
exists for tear out costs apart from water damage, as Insured
argues. The Perils Insured Against provision simply defines tear
out coverage as included as part of covered loss to property,
but excluded when the loss is excluded.
As noted above, based on our analysis in Dodge, we find
that the loss caused by water damage is excluded by the WDE
Endorsement. Hence, the loss, including tear out costs, is
otherwise excluded in the policy, and thus, the exception to c.
(5) does not provide coverage for tear out costs here. As a
result, no ambiguity or conflict exists within these provisions of
the policy. The loss is left expressly excluded under the WDE
Endorsement.
Panettieri, 344 So. 3d at 39–40 (citation and footnote omitted).
The Insureds argue that this Court should follow the holding and
reasoning from Security First Insurance Co. v. Vazquez,
336 So. 3d 350,
351 (Fla. 5th DCA 2022), reh'g denied (Mar. 25, 2022), review dismissed,
SC22-583,
2022 WL 1764701 (Fla. May 31, 2022), and Security First
Insurance Co. v. Nichols, 48 Fla. L. Weekly D837 (Fla. 6th DCA Apr. 21,
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2023) (per curiam affirmance citing to Vasquez), rather than follow the
reasoning of Dodge, Panettieri, and Rosa. We decline.
As an initial matter, Vazquez can be distinguished from the present
matter. In that case, the Court noted that Security First could have, but did
not, expressly recite that the tear-out costs were subject to the $10,000
limit of liability contained in the LWD Endorsement. The Court reasoned
that because the limit of liability provision in Security First’s LWD
Endorsement could reasonably be interpreted in each party's favor, and
because the ambiguity was created by Security First, the Court affirmed the
lower court’s ruling in favor of the insured homeowner. Vazquez, 336 So.
3d at 353.
In the case before us, however, the LWD endorsement in PTIC’s
policy expressly provides that “[t]he total limit of liability for all damage to
covered property provided by this endorsement is $10,000.00 per loss.
This limit applies to all damaged covered property under Coverage A, B,
and C combined,” and “[t]his limit also includes the cost of tearing out and
replacing any part or portion of the covered building or other structure
necessary to access or repair that part or portion of the system or
appliance from which the discharge occurred or caused the overflow.”
(emphasis added). Because of the difference in the relevant policy
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language, Vazquez is not applicable and we decline to follow it. We
continue to follow the precedent set by the Courts in Dodge, Panettieri,
Rosa, and Santana.
Accordingly, we reverse and remand for entry of summary judgment
in favor of PTIC.
Reversed and remanded.
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