Opinion
Case No. 5:18-cv-276-Oc-30PRL
2019-09-30
Donald GLASER and Mary Glaser, Plaintiffs, v. GEOVERA SPECIALTY INSURANCE COMPANY, Defendant.
Beaujeaux de Lapouyade, Ashley Noelle Harris, Merlin Law Group, PA, Tampa, FL, for Plaintiffs. Kristina L. Marsh, Gordon & Rees Scully Mansukhani, Tampa, FL, for Defendant.
Beaujeaux de Lapouyade, Ashley Noelle Harris, Merlin Law Group, PA, Tampa, FL, for Plaintiffs.
Kristina L. Marsh, Gordon & Rees Scully Mansukhani, Tampa, FL, for Defendant.
SUMMARY JUDGMENT ORDER
JAMES S. MOODY, JR., UNITED STATES DISTRICT JUDGE Donald and Mary Glaser's house was damaged during Hurricane Irma, but not in a way one might expect. The parties agree that the hurricane caused a widespread power outage that in turn caused the pump in the Glasers' septic system to lose power. When the pump lost power, water backed up and overflowed into the Glasers' house through a shower drain causing significant water damage. GeoVera Specialty Insurance Company, the Glasers' homeowner insurer, denied coverage for the water damage arguing that both the Water Damage and Power Failure exclusions in the policy precluded coverage.
After reviewing the insurance policy, the Court concludes—as odd as it sounds—that neither the Water Damage nor Power Failure exclusions prevent coverage for the water damage to the Glasers' house caused by a power failure. So the Court will deny GeoVera's Motion for Summary Judgment.
FACTS
The material facts are not in dispute.
On September 10, 2017, the Glasers' house in Mount Dora, Florida, lost power as a result of Hurricane Irma. Because of the power outage, the pump in the Glasers' septic system stop functioning. This caused brown water to backup or overflow into the Glaser's house through a shower drain for three to six hours. Ultimately, the backup flooded the Glasers' entire house with between 1 to 2 inches of water.
On September 12, 2017, the Glasers' reported the loss to GeoVera. GeoVera, which had issued the Glasers' an HO3 all-risk Homeowner's Policy, investigated the loss and determined that the water damage from the backup or overflow was not covered. The Glasers then sued GeoVera for breach of contract.
GeoVera did issue a payment to the Glasers for wind damage to their house caused by Hurricane Irma, but that payment does not appear to be disputed. Additionally, the Glasers made a claim for spoiled food at some point, which GeoVera also denied. In response to GeoVera's Motion, though, the Glasers state they are no longer pursuing that claim. So the only damage at issue for purposes of GeoVera's Motion is the water damage.
Relevant for purposes of this Motion, GeoVera relies on two exclusions to argue that the water damage is not covered by the policy. A few other provisions are relevant—or at least raised by the parties—though, so the Court will set out all the relevant policy provisions below.
SECTION I - PERILS INSURED AGAINST
A. Coverage A - Dwelling And Coverage B - Other Structures
1. We insure against direct physical loss to property described in Coverages A and B.
2. We do not insure, however, for loss:
a. Excluded under Section I - Exclusions;
...
c. Caused by:
...
(6) Any of the following:
(a) Wear and tear, marring, deterioration;
(b) Mechanical breakdown, latent defect, inherent vice or any quality in property that causes it to damage or destroy itself;
(c) deleted ;
Provisions in italics indicate that the main HO3 form is altered by the "Master Endorsement – Florida" form, which begins on page 41 of the policy, or by another endorsement. (Doc. 21-1).
(d) Smoke from agricultural smudging or industrial operations;
(e) Discharge, dispersal, seepage, migration, release or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape is itself caused by a Peril Insured Against named under Coverage C.
Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed;
(f) Settling, shrinking, bulging or expansion, including resultant cracking, of bulkheads, pavements, patios, footings, foundations, walls, floors, roofs or ceilings;
(g) Birds, rodents, insects, vermin, marsupials, animals, reptiles, fish, or pests, including but not limited to, termites, snails, raccoons, opossums, skunks, bats, armadillos, flies, bed bugs, lice, ticks, locusts, cockroaches, and fleas ;
(h) Nesting or infestation, or discharge or release of waste products or secretions, by any animals; or
(i) Animals owned or kept by an "insured".
Exception To c.(6)
Unless the loss is otherwise excluded or limited elsewhere in the policy, we cover loss to property covered under Coverage A or B resulting from an accidental discharge or overflow of water or steam from within a:
(i) Storm drain, or water, steam or sewer pipe, off the "residence premises"; or
(ii) Plumbing, heating, air conditioning or automatic fire protective sprinkler system or household appliance on the "residence premises". This includes the cost to tear out and repair only that part of a building or only that part of another structure covered under Coverage A or B , on the "residence premises", necessary to access and repair the system or appliance.
The cost that we will pay for the tear out and repair above is only that cost necessary to access and repair only that portion or part of the system or appliance that caused the covered loss, whether the system or appliance, or any part or portion of the system or appliance, is repairable or not.
In the event that additional tear out and repair are required beyond the coverage provided for access and repair in this provision, we will still pay only for the portion of the access and repair cost required to repair only that portion or only that part of the system or appliance that caused the covered loss as described above.
However, we do not cover loss:
(a) To the system or appliance from which this water or steam escaped ;
(b) On the "residence premises" caused by accidental discharge or overflow which occurs off the "residence premises" ;
(c) To a plumbing system, whether above or below the ground, caused by:
(i) Age, collapse, obsolescence, wear, tear ;
(ii) Fading, oxidization, weathering ;
(iii) Deterioration, decay, marring, delamination, crumbling, settling, cracking ;
(iv) Shifting, bulging, racking, sagging, bowing, bending, leaning ;
(v) Shrinkage, expansion, contraction, bellying, corrosion ;
(vi) The unavailability or discontinuation of a part or component of the system; or
(vii) Any other age or maintenance related issue ;
(d) To a plumbing system, whether above or below the ground, caused by the impairment, state or condition of the system, which prohibits repair' or replacement including access, necessary to connect the adjoining parts of appliances, pipes or system; or
For purposes of this provision, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment
Section I - Exclusion A.3. Water, Paragraphs a. and c. that apply to surface water and water below the surface of the ground do not apply to loss by water covered under c.(5) and c.(6) above.
...
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.
...
3. Water
This means:
...
b. Water which:
(1) Backs up through sewers or drains; or
(2) Overflows or is otherwise discharged from a sump, sump pump or related equipment;
...
This Exclusion A.3. applies regardless of whether any of the above, in A.3.a. through A.3.d. , is caused by an act of nature or is otherwise caused.
This Exclusion A.3. applies to, but is not limited to, escape, overflow or discharge, for any reason, of water or waterborne material from a dam, levee, seawall or any other boundary or containment system.
However, direct loss by fire, explosion or theft resulting from any of the above, in A.3.a. through A.3.d. , is covered.
4. Power Failure
Power Failure means the failure of power or other utility service if the failure takes place off the "residence premises". But if the failure results in a loss, from a Peril Insured Against on the "residence premises", we will pay for the loss caused by that peril.
(Doc. 21-1).
SUMMARY JUDGMENT STANDARD
Motions for summary judgment should be granted only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (internal quotation marks omitted); Fed. R. Civ. P. 56(c). The existence of some factual disputes between the litigants will not defeat an otherwise properly supported summary judgment motion; "the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The substantive law applicable to the claimed causes of action will identify which facts are material. Id. Throughout this analysis, the court must examine the evidence in the light most favorable to the nonmovant and draw all justifiable inferences in its favor. Id. at 255, 106 S.Ct. 2505.
Once a party properly makes a summary judgment motion by demonstrating the absence of a genuine issue of material fact, whether or not accompanied by affidavits, the nonmoving party must go beyond the pleadings through the use of affidavits, depositions, answers to interrogatories and admissions on file, and designate specific facts showing there is a genuine issue for trial. Celotex , 477 U.S. at 324, 106 S.Ct. 2548. The evidence must be significantly probative to support the claims. Anderson , 477 U.S. at 248–49, 106 S.Ct. 2505.
This Court may not decide a genuine factual dispute at the summary judgment stage. Fernandez v. Bankers Nat'l Life Ins. Co. , 906 F.2d 559, 564 (11th Cir. 1990). "[I]f factual issues are present, the Court must deny the motion and proceed to trial." Warrior Tombigbee Transp. Co. v. M/V Nan Fung , 695 F.2d 1294, 1296 (11th Cir. 1983). A dispute about a material fact is genuine and summary judgment is inappropriate if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson , 477 U.S. at 248, 106 S.Ct. 2505 ; Hoffman v. Allied Corp. , 912 F.2d 1379, 1383 (11th Cir.1990). However, there must exist a conflict in substantial evidence to pose a jury question. Verbraeken v. Westinghouse Elec. Corp. , 881 F.2d 1041, 1045 (11th Cir. 1989).
DISCUSSION
GeoVera argues that the water damage to the Glasers' house is excluded from coverage based on the Water Damage and Power Failure exclusions. The Glasers, though, argue neither exclusion applies, and instead argue their claim is covered pursuant to the "Exception to c.6" provision. The Court concludes neither party is entirely correct, and that the loss is not excluded from coverage.
Before analyzing the insurance policy, the Court notes that the parties agree Florida substantive law governs interpretation of the insurance policy. Cameron v. Scottsdale Ins. Co. , 726 F. App'x 757, 759 (11th Cir. 2018) (citing Mid-Continent Cas. Co. v. Am. Pride Bldg. Co., LLC , 601 F.3d 1143, 1148 (11th Cir. 2010) ). So this Court is bound by the decisions of the Florida Supreme Court and Florida appellate courts "absent some persuasive indication that the Florida Supreme Court would decide the issue differently." Id. (citing State Farm Fire & Cas. Co. v. Steinberg , 393 F.3d 1226, 1231 (11th Cir. 2004) ).
"In Florida, the terms used in an insurance contract are given their ordinary meaning, and the policy must be construed as a whole ‘to give every provision its full meaning and operative effect.’ " Southern-Owners Ins. Co. v. Easdon Rhodes & Assocs. LLC , 872 F.3d 1161, 1164 (11th Cir. 2017). "An unambiguous policy provision is ‘enforced according to its terms whether it is a basic policy provision or an exclusionary provision.’ " Id. But "[i]f policy language is susceptible to multiple, reasonable interpretations, however, the policy is considered ambiguous and must be ‘interpreted liberally in favor of the insured and strictly against the drafter who prepared the policy.’ " Id. A provision is not ambiguous merely because it is complex or requires analysis. Id.
With these interpretation principles in mind, the Court will apply the facts of this case to the insurance policy. As a roadmap, the Court will begin by analyzing the Power Failure exclusion since the parties agree the power failure caused the loss. The Court will then turn to the exception within the Power Failure exclusion. Next the Court will analyze the Water Damage exclusion, upon which GeoVera also relies. And finally, the Court will address some additional arguments.
A. The Power Failure Exclusion
The parties agree that the Glasers' loss was caused by a power failure that occurred off the residence premises, so the Court first considers the Power Failure exclusion. Under this exclusion, the GeoVera policy does not provide coverage for "loss caused directly or indirectly by" "the failure of power or other utility service if the failure takes place off the ‘residence premises.’ " (Doc. 21-1, pp. 16–17). Because of the anti-concurrent cause provision at the top of the exclusions section of the policy, this exclusion bars coverage "regardless of any other cause or event contributing concurrently or in any sequence to the loss." (Doc. 21-1, p. 16). Without doubt, the Glasers' claim falls squarely within this exclusion, which means there is no coverage unless an exception applies.
B. The Exception to the Power Failure Exclusion
Fortuitously, the Power Failure exclusion contains an applicable exception. The second sentence of the exclusion states: "But if the failure results in a loss, from a Peril Insured Against on the ‘residence premises’, we will pay for the loss caused by that peril." (Doc. 21-1, p. 17). In other words, this exception provides coverage for any loss caused by the Power Failure that is not otherwise excluded by the insurance policy. Applying this exception to our case, then, GeoVera's policy covers the damage to the Glaser's house so long as the damage is not excluded by another provision of the policy.
Before taking the next step in the analysis, the Court pauses to consider the interpretation of the exception to the Power Failure exclusion in more depth because such a broad interpretation of the exception admittedly appears to swallow the entire exclusion. And if it did, this would be error because a court interpreting an insurance policy "must strive to give meaning to every provision, so we must look at [each provision] to determine its meaning within the policy." Dahl-Eimers v. Mut. of Omaha Life Ins. Co. , 986 F.2d 1379, 1382 (11th Cir. 1993). But here, the Court concludes the expansive exception can coexist with the Power Failure exclusion with both still being meaningful, thanks to the anti-concurrent cause provision.
Hypotheticals will make this point clearer. Consider a policy that provides coverage for loss from fire, but it does not cover loss from a power failure or mold and has an anti-concurrent cause clause. Now assume a power failure occurs (off the residence premises) that somehow causes a fire at the residence premises. Under the exception in this case, such loss would be covered.
Now instead consider a situation in which a power failure causes mold to grow, perhaps because an HVAC system is off for an extended period. In this case, the loss would be excluded from coverage because of the power failure and mold exclusions, coupled with the anti-concurrent cause provision. Absent the power failure exclusion and the anti-concurrent cause provision, there would potentially be an argument that the mold damage was covered despite the mold exclusion because the power failure was the efficient proximate cause of the loss. See Empire Indem. Ins. Co. v. Winsett , 325 F. App'x 849, 851 (11th Cir. 2009) (explaining Florida's efficient proximate cause analysis as follows: "The efficient proximate cause is ‘the one that sets others in motion.’ If the efficient proximate cause is covered, then the claim for damages will be covered even if the other causes are not covered.").
As illustrated by the above hypotheticals, both the Power Failure exclusion and its exception have meaning under the Court's interpretation because of the policy's anti-concurrent cause provision. The Court also notes that this interpretation is supported by decisions from other jurisdictions interpreting similar power failure exclusions and exceptions. See e.g. Gies v. City of Gering , 13 Neb.App. 424, 695 N.W.2d 180, 195 (2005) ("The fact that the exception under power failure speaks in terms of ‘Covered Cause of Loss’ rather than a more specific risk such as a fire or an explosion as found in [other exceptions to exclusions] does not affect our conclusion. It merely means that the exception to the exclusion was not intended to be limited to just fire; rather, the exception would be applicable if a power failure resulted in any risk of direct physical loss or damage that is neither a limitation nor an exclusion under the terms of the policy and which risk caused loss or damage.").
With that explanation, the Court will now turn to the Water Damage exclusion.
C. Water Damage Exclusion
GeoVera argues the Glasers' damage is also excluded based on the Water Damage exclusion. This exclusion bars coverage for loss caused by water that either (1) "backs up through sewers or drains" or (2) "overflows or is otherwise discharged from a sump, sump pump or related equipment." (Doc. 21-1, p. 16). GeoVera argues that both subsection of the exclusion apply because the Glasers' house was damaged by water that backed up or overflowed from the septic tank—which GeoVera alleges is a sump, sump pump, or related equipment—through a shower drain. Again, at first glance, the facts of this case appear to fall squarely within this exclusion.
But Florida courts interpreting water damage exclusions substantially similar to the one in this case have determined that they only apply if the water that backs up or overflows "originat[es] from somewhere other than the residence premises' plumbing system." Cheetham v. S. Oak Ins. Co. , 114 So. 3d 257, 263 (Fla. Dist. Ct. App. 2013). The Eleventh Circuit recently relied on Cheetham in an unpublished opinion to reach the same conclusion. See Cameron v. Scottsdale Ins. Co. , 726 F. App'x 757, 762 (11th Cir. 2018). The reason the Cheetham and Cameron courts reached this conclusion is because if the other types of water excluded in the water damage exclusion applied to water originating on the residence premises. Cheetham , 114 So. 3d at 262–63 ("Paragraphs a. and c. of the water damage exclusion reflect that there will be no coverage for water damage to the residence premises, which were caused by outside forces unrelated to the residence premises' plumbing system.... Based on our de novo review of the relevant policy provisions, we conclude that the exclusions from coverage contemplated by paragraphs a., b., and c. of the water damage exclusion relate to damage caused by water originating from somewhere other than the residence premises' plumbing system."). Because the water at issue in this case originated in the Glasers' septic tank on their property, the question is whether it is part of the residence premises' plumbing system.
The Court concludes that it is. While the parties focus on definitions from the Florida Building Code-Plumbing Edition ("FBC-P") to support their respective positions, the Court must start by looking to the insurance policy and then by giving the words their ordinary meaning. Southern-Owners Ins. Co. , 872 F.3d at 1164. And here, the Court finds support in the GeoVera insurance policy that a septic tank would be considered part of the plumbing system. Specifically, the policy states in the Master Endorsement – Florida form: "a plumbing system includes a septic system." (Doc. 21-1, p. 44). Although this statement relates to a separate provision, the Court finds it very persuasive. And considering the ordinary meaning of septic tank, the Court concludes it would be part of a plumbing system.
The Court also concludes that the ordinary understanding of sump and sump pump would not apply to a septic tank or the pump therein. "When the operative language of an insurance policy is deemed to be ambiguous, the policy must be construed to provide coverage." Old Dominion Ins. Co. v. Elysee, Inc. , 601 So. 2d 1243, 1245 (Fla. Dist. Ct. App. 1992). But just because terms are undefined does not render them ambiguous. Id. Instead, the terms "should be accorded their plain and unambiguous meaning." Id.
Applying those principles here, the Court concludes the term "sump" and, concomitantly, "sump pump" are ambiguous in the policy if they encompass a septic tank. That is because the policy in several sections states that a plumbing system or household appliance does not include a sump or sump pump, but elsewhere says that a plumbing system does include a septic tank. So at least as far as whether a septic tank is included in the definition of a sump or sump pump in the policy, those terms are ambiguous, and the Court must construe the policy in favor of coverage.
The result would be the same even if the terms were not ambiguous and accorded their plain and unambiguous meaning. Based on the definitions in the FBC-P, a septic pump cannot be a sump pump because a sump pump is used "for the removal of drainage, except raw sewage. " (Doc. 21, p. 7 (citing the FBC-P)). But the experts appear to agree that part of the Glaser's septic system included a sump. There is nothing in the record, though, showing from which portion of the septic system the water backed up, which means GeoVera has not demonstrated that the water backed up from a sump simply by virtue of demonstrating the water came from the septic system. So a fact question exists that would prevent the Court from entering summary judgment for GeoVera if the terms were unambiguous.
Because the water that backed up and overflowed into the Glasers' house originated from within the residence premises' plumbing system, the Court concludes the Water Damage exclusion does not apply. Since GeoVera has pointed to no other provisions that would bar coverage, the Court concludes GeoVera has not shown that the Glasers' loss is not covered as a matter of law. Therefore, the Court must deny its summary judgment motion.
D. Additional Arguments
Rather than following the above analysis, the Glasers, quite confusingly, began their analysis by arguing the policy afforded coverage for their loss under an entirely different provision. Their analysis begins in the Perils Insured Against section of the insurance policy at the "Exception to c.(6)." (Doc. 21, p. 9). That exception, which is set forth above, is an exception to the limitations in section 2.c.(6) of the Perils Insured Against section.
The reason the Glasers' argument is so confounding is that the Glasers do not allege that their loss was caused by any of the coverage limitations in section 2.c.(6). Instead, they jump to the exception without identifying a loss to which the exception applies. They then argue their loss is covered because of the exception and cite to this erroneous conclusion to argue that the exclusions on which GeoVera relied do not bar their loss.
This misguided logic is contrary to Florida law. "Unless the policy expressly excludes the loss from coverage, [an all-risk] policy provides coverage for all fortuitous loss or damage...." Fayad v. Clarendon Nat. Ins. Co. , 899 So. 2d 1082, 1085 (Fla. 2005). And an exception to an exclusion does not create coverage under Florida law. See Auto Owners Ins. Co. v. Travelers Cas. & Sur. Co. , 227 F. Supp. 2d 1248, 1263 (M.D. Fla. 2002). So the Glasers cannot show that the Water Damage and Power Failure exclusions are inapplicable by relying on an exception to create coverage. Instead, as the Court did above, they must show that either the supposed exclusion does not apply, or the exception to the applicable exclusion does apply.
Having addressed that issue, the Court somewhat understands the basis for the Glasers' mistaken reliance on the "Exception to c.(6)." In both Cheetham and Cameron , the "Exception to c.(6)" was relevant because the pipes that caused the overflows had deteriorated. Deterioration is a loss excluded in section c.(6) of those policies (and in the GeoVera policy). So when the Cheetham and Cameron courts were determining whether the loss was covered, they necessarily had to consider the "Exception to c.(6)."
But there is another reason the Cheetham and Cameron courts considered the "Exception to c.(6)," which is also relevant in this case. It was the comparison between the exception and the Water Damage exclusion that led the courts to conclude that the Water Damage exclusion only applies to water that does not originate within the residence premises' plumbing system. Cheetham , 114 So. 3d at 261–64 ; and Cameron , 726 F. App'x at 760–62. And it is precisely because the GeoVera policy contains a substantially similar Water Damage exclusion and nearly identical "Exception to c.(6)" that both Cheetham and Cameron are binding in this case.
Accordingly, it is ORDERED AND ADJUDGED that Defendant GeoVera Specialty Insurance Company's Motion for Summary Judgment (Doc. 20) is DENIED.
DONE and ORDERED in Tampa, Florida, this 30th day of September, 2019.