Ocean View Towers Association, Inc. v. QBE Insurance Corporation

Filing 66

ORDER granting in part 41 Ocean View's Corrected Motion for Summary Judgment and 33 QBE's Motion for Partial Summary Judgment. See ORDER for details. Signed by Judge Robert N. Scola, Jr. on 12/22/2011. (jky)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 11-60447-Civ-SCOLA

OCEAN VIEW TOWERS
ASSOCIATION, INC.
Plaintiff,
v.
QBE INSURANCE CORP.,
Defendant.
___________________________/
ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT
THIS MATTER is before the Court on the Corrected Motion for Summary Judgment
[ECF No. 41], filed by Plaintiff Ocean View Towers Association, Inc. (“Ocean View”), and the
Partial Motion for Summary Judgment Regarding “Matching” or “Uniformity” and Replacement
Cost Value [ECF No. 33], filed by Defendant QBE Insurance Corporation (“QBE”). The Court
has carefully considered the Motions, the parties’ arguments, the applicable legal authorities, and
is otherwise fully advised in this matter. For the reasons more fully set forth below, the Court
concludes that the Motions should be granted in part. Ocean View is entitled to summary
judgment as to QBE’s second and third affirmative defenses, and QBE is entitled to summary
judgment on the issue of “matching” and Replacement Cost Value.
INTRODUCTION
This case arises from windstorm damage sustained by Ocean View to its condominium
towers during Hurricane Wilma in October 2005. The present dispute concerns the extent to
which Ocean View’s property insurance policy with QBE affords coverage for certain claimed
repairs.

Ocean View seeks summary judgment as to QBE’s second and third affirmative

defenses, which respectively concern whether Ocean View materially breached the “Duties In
The Event Of Loss Or Damage” provision of the insurance contract and whether it failed to
comply with the policy’s post-loss requirements. QBE in turn seeks a summary judgment
determination that Ocean View is not entitled to coverage for undamaged property in order to

ensure “matching” or “uniformity” after repairs, and also a determination that Ocean View is
entitled only to Actual Cash Value (“ACV”), and not Replacement Cost Value (“RCV”), benefits
under the policy. Before addressing these issues, the Court will briefly set out the undisputed
material facts and the parties’ arguments for and against summary judgment.
STATEMENT OF FACTS
Hurricane Wilma passed through South Florida on October 24, 2005, causing substantial
damage to a number of properties throughout the region. Ocean View Towers, a condominium
located Hallendale, Florida, was one such property. Ocean View obtained a property insurance
policy, which included windstorm coverage, from QBE in 2005. The policy was in effect from
May 11, 2005 until May 11, 2006. See Plaintiff’s Local Rule 7.5(c) Statement of Material Facts
[ECF No. 32], at ¶ 5 (“Pl.’s SMF”); QBE’s Responses to Plaintiff’s Statement of Material Facts
[ECF No. 45], at ¶ 5 (“QBE’s RSMF”).
The insurance contract provided coverage for “direct physical loss of or damage to
Covered Property,” and imposed upon the insured certain duties in the event of a covered loss.
See Form CP 00 17 04 02 of the Policy (“Coverage” provision), at 1. Among other things, the
insured was required to promptly notify the insurer of any “loss or damage,” to allow the insurer
to inspect and investigate the premises, and to comply with certain specified requests if made by
the insurer. See id. In relevant part, the policy provision imposing these obligations states as
follows:
E.

Loss Conditions
***
3.

Duties In The Event Of Loss Or Damage
a.

You must see that the following are done in
the event of loss or damage to Covered
Property:
(1)
Notify the police if a law may have
been broken.
(2) Give us prompt notice of the loss or
damage. Include a description of the
property involved.
(3) As soon as possible, give us a
description of how, when and where the loss
or damage occurred.

(4) Take all reasonable steps to protect the
Covered Property from further damage, and
keep a record of your expenses necessary to
protect the Covered Property, for
consideration in the settlement of the claim.
This will not increase the Limit of
Insurance. However, we will not pay for any
subsequent loss or damage resulting from a
cause of loss that is not a Covered Cause of
Loss. Also, if feasible, set the damaged
property aside and in the best possible order
for examination.
(5) At our request, give us complete
inventories of the damaged and undamaged
property. Include quantities, costs, values
and amount of loss claimed.
(6) As often as may be reasonably required,
permit us to inspect the property proving the
loss or damage and examine your books and
records.
Also permit us to take samples of damaged
and undamaged property for inspection,
testing and analysis, and permit us to make
copies from your books and records.
(7) Send us a signed, sworn proof of loss
containing the information we request to
investigate the claim. You must do this
within 60 days after our request. We will
supply you with the necessary forms.
(8) Cooperate with us in the investigation or
settlement of the claim.
b.

See id. at 9-10.

We may examine any insured under oath,
while not in the presence of any other
insured and at such times as may be
reasonably required, about any matter
relating to this insurance or the claim,
including an insured's books and records. In
the event of an examination, an insured's
answers must be signed.

With respect to covered losses, the insurance contract provided Ocean View with RCV
coverage, subject to certain terms. See QBE’s Reply in Support of Partial Motion for Summary
Judgment [ECF No. 59], at 7 (“QBE’s Reply”). The “Replacement Cost” provision states, in
relevant part, as follows:
G.

Optional Coverages
***

3.

Replacement Cost
a.

Replacement Cost (without deduction for
depreciation) replaces Actual Cash Value in
the Loss Condition, Valuation, of this
Coverage Form.
***

d.

We will not pay on a replacement cost basis
for any loss or damage:
(1) Until the lost or damaged property is
actually repaired or replaced; and
(2) Unless the repairs or replacement are
made as soon as reasonably possible after
the loss or damage.
***

f.

The cost of repair or replacement does not
include the increased cost attributable to
enforcement of any ordinance or law
regulating the construction, use or repair of
any property.
***

See Form CP 00 17 04 02 of the Policy, at 13-14. The “Valuation” provision of the policy, as
amended by the “Replacement Cost” provision, stated that the insurer will pay for “[g]lass at the
cost of replacement with safety glazing material if required by law,” notwithstanding the noincreased-cost-due-to-ordinance-or-law language above. See id. at 11.
Between October 25 and October 29, 2005, Ocean View notified QBE of damages
sustained to the property during Hurricane Wilma. See Pl.’s SMF ¶ 14; QBE’s RSMF ¶ 14. The
loss notice identified roof, building, and glass damage to the condominium. See Pl.’s SMF ¶ 15;

QBE’s RSMF ¶ 15. Thereafter, QBE’s agent retained Robert Sansone of Interloss, Inc., an
independent insurance adjusting firm representing insurance carriers, to investigate and to
ascertain the damage from the storm. See Pl.’s SMF ¶ 23; QBE’s RSMF ¶ 23. Adjusters such as
Sansone, who are retained by QBE to investigate a hurricane loss, are trained to recognize
typical damage resulting from a windstorm event. See Pl.’s SMF ¶ 27; QBE’s RSMF ¶ 27.
Accordingly, Sansone was instructed that he should inspect for evidence of physical damage that
may have been caused by the hurricane, regardless of whether the damage is identified, or
pointed out, by the insured. See Pl.’s SMF ¶ 26; QBE’s RSMF ¶ 26; O’Brien Dep. at 46-47.
Ocean View cooperated with QBE and its agents in their investigation of the loss and the
claim. See Pl.’s SMF ¶¶ 39-52; QBE’s RSMF ¶¶ 39-52.1 Neither Sansone nor QBE ever
requested or were denied a specific inventory of the claimed damages, the opportunity to inspect
or investigate the premises or Ocean View’s books and records, or the opportunity to take sworn
statements from any insured relating to the loss or damage from Hurricane Wilma. See Pl.’s
SMF ¶¶ 46-49; QBE’s RSMF ¶¶ 46-49. Sansone described the particular damage as concerning
the roof, fire alarm system, cooling tower, pool pump, roof door, and stucco on the exterior walls
of the building. See Pl.’s SMF ¶ 31; QBE’s RSMF ¶ 31. On November 2, 2005 and April 25,
2006, Sansone completed his investigation and estimated the amount of the Ocean View loss at
$396,312.09. See Pl.’s SMF ¶ 29; QBE’s RSMF ¶¶ 29, 54; Plaintiff’s Response to QBE’s
Statement of Additional Material Facts [ECF No. 56], at ¶ 54 (“Pl.’s RSAMF”). This estimate
was based primarily upon invoices provided by Ocean View. See Pl.’s SMF ¶ 29; QBE’s RSMF
¶ 29. In June 2006, consistent with Sansone’s investigation, QBE issued payment to Ocean
View on a RCV basis in the amount of $125,312.09, which accounted for the $396,312.09
estimate minus Ocean View’s deductible. See Pl.’s SMF ¶ 32; QBE’s RSMF ¶ 32.
1

This District’s Local Rule 56.1(b) requires the movant’s facts to be controverted by
reference to record evidence. Thus, where QBE has responded to Ocean View’s Statement of
Material Facts by merely asserting that “QBE denies Paragraph [ ] as phrased,” without citing
any record evidence to create a genuine issue of material fact, the Court has deemed such facts
admitted. This result is consistent with the Supreme Court’s directive that the nonmoving party
cannot rest on its laurels with “mere allegations or denials,” but instead must “go beyond the
pleadings and present competent evidence designating specific facts showing that there is a
genuine issue for trial.” See United States v. $183,791.00, 391 F. App’x 791, 794 (11th Cir.
2010) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). QBE’s “conclusory assertions” will not do. Maddox-Jones v.
Board of Regents of Univ. of Georgia, 2011 WL 5903518, at *2 (11th Cir. Nov. 22, 2011).

Nearly four years later, in March 2010, Ocean View retained Dietz International
(“Dietz”) to perform an inspection of the property. See QBE’s RSMF ¶ 61; Pl.’s RSAMF ¶ 61.
An adjuster from Dietz had been working on a neighboring property and noticed certain items at
Ocean View that were indicative of damage from the hurricane. See QBE’s RSMF ¶¶ 59-60;
Pl.’s RSAMF ¶¶ 59-60. Accordingly, Dietz offered to inspect the condominium in exchange for
a share of any additional insurance proceeds recovered, and Ocean View agreed. See QBE’s
RSMF ¶¶ 60-61; Pl.’s RSAMF ¶¶ 60-61. Dietz retained Paul Norcia, who prepared an estimate
of the damage in June 2010. See QBE’s RSMF ¶ 62; Pl.’s RSAMF ¶ 62. According to Norcia’s
report, the amount of damage attributable to the Hurricane Wilma loss was $5,329,180.38 (RCV)
or $4,139,757.42 (ACV).

See QBE’s RSMF ¶ 62; Pl.’s RSAMF ¶ 62.

Approximately

$514,000.00 of this claimed damage relates to repairs that would ensure “matching” or
“uniformity.” See QBE’s Statement of Undisputed Material Facts in Support of its Partial
Motion for Summary Judgment [ECF No. 33], at ¶ 8 (“QBE’s SMF”).
After discovering the additional alleged damages to the property, Ocean View did not
submit a supplemental claim for coverage to QBE, nor did it even notify QBE of the additional
claimed damages. See Pl.’s SMF ¶ 42; QBE’s RSMF ¶¶ 33-42. Instead, on October 15, 2010,
Ocean View filed suit against QBE in state court for breach of the insurance contract based upon
QBE’s alleged failure to properly cover damages stemming from the Hurricane Wilma loss. See
Pl.’s SMF ¶ 42; QBE’s RSMF ¶¶ 33-42. On March 1, 2011, after answering the Complaint and
asserting certain affirmative defenses, QBE removed this action to federal court based upon
diversity of citizenship jurisdiction under 28 U.S.C. § 1332. See Pl.’s SMF ¶ 44; QBE’s RSMF
¶ 44. The parties have now crossed moved for summary judgment.
SUMMARY JUDGMENT MOTIONS
I.

Ocean View’s Summary Judgment Motion

Ocean View has moved for summary judgment as to certain of QBE’s affirmative
defenses.2 See Ocean View’s Corrected Motion for Summary Judgment [ECF No. 41], at 4-15
(“Pl.’s Mot.”). QBE’s second affirmative defense is that recovery under the insurance contract is

2

Ocean View’s request for summary judgment as to QBE’s first affirmative defense is
now moot in light of QBE’s withdrawal of that defense. See Halifax Paving, Inc. v. U.S. Fire
Ins. Co., 481 F. Supp. 2d 1331, 1333 (M.D. Fla. 2007).

barred by Ocean View’s failure to adhere to the requirements of the “Duties In The Event Of
Loss Or Damage” provision. QBE maintains that:
[Ocean View] has materially breached the insurance contract, thereby relieving
QBE of any obligation under the policy by failing to provide timely notice of its
claim, failing to take all steps necessary to protect the Covered Property from
further damage, keeping an accurate record of all repairs and expenses, failing to
permit QBE to inspect the property as often as may reasonably be required, [and]
failing to permit QBE to examine and inspect all of the claimed damages as often
as may reasonably be required. As a result, any recovery is barred.
See QBE’s Answer/Affirmative Defenses, at 4. In its Motion, Ocean View argues that summary
judgment on this defense is appropriate because Ocean View indisputably notified QBE of the
Hurricane Wilma loss between October 25 and October 29, 2005, it kept an accurate record of all
repairs and expenses following the loss, and QBE waived the right to insist upon Ocean View’s
compliance with post-loss duties by failing to further investigate and by issuing payment
following its inspection and coverage determination. See Pl.’s Mot. at 5-14. Ocean View notes
that QBE did not make any post-loss demands that Ocean View failed to answer, either at the
time of the windstorm loss or at any time prior to its bringing suit.
QBE responds that a material factual dispute concerning the circumstances and timing of
Ocean View’s notice precludes summary judgment as to the second affirmative defense. See
QBE’s Response to Ocean View’s Motion for Summary Judgment [ECF No. 45], at 10-12
(“QBE’s Resp.”). According to QBE, the issue of Ocean View’s compliance with the notice
provisions of the policy is for the jury to determine. Notwithstanding Ocean View’s initial notice
to QBE of the hurricane loss in October 2005, QBE contends that timely notice is in dispute
because Ocean View failed to notify QBE, before filing suit, of the additional damages
discovered in 2010. QBE further argues that it was unable to perform a proper investigation of
the insured’s additional claims because the damages were not brought to its attention before this
lawsuit was instituted. Finally, QBE insists that it did not waive any of its rights under the policy
because it did not have knowledge of all material facts and, therefore, could not knowingly or
voluntarily relinquish any such rights. See QBE’s Resp. at 12-14. Thus, QBE argues, “there is a
genuine issue of material fact as to whether [Ocean View’s] conduct interfered with QBE’s
ability to investigate the loss, and should therefore be considered by the trier of fact.” Id. at 16.

In reply, Ocean View stresses that it promptly notified QBE of the windstorm loss
following Hurricane Wilma and that it provided a reasonably particular description of the alleged
damages to the condominium. See Ocean View’s Reply in Support of Summary Judgment [ECF
No. 57], at 2-6 (“Pl.’s Reply”). Ocean View contends the policy did not require it to do anything
more. Under the policy, the insured need not, according to Ocean View, give notice before filing
suit of all damages it intends to claim. Ocean View argues that QBE never availed itself of the
proof of loss procedures available to it in that QBE never requested a sworn statement pertaining
to the detailed losses from the storm, nor did it exercise its right to more extensively inspect the
property or request additional information from the insured. Consequently, Ocean View insists it
should be granted summary judgment as to the issue of compliance with post-loss duties.
Ocean View also seeks summary judgment as to QBE’s third affirmative defense, which
concerns what an insured must do in order to maintain suit against the insurer. See Pl.’s Mot. at
14-15. The policy provides that no insured may bring suit against QBE unless the insured has
fully complied with the policy’s coverage terms. In its third affirmative defense based on this
provision, QBE asserts that:
Plaintiff has failed to comply with all of its contractual obligations under the
policy, including but not limited to, failure to provide timely notice of its claim,
failing to take all steps necessary to protect the Covered Property from further
damage, keeping an accurate record of all repairs and expenses, failing to permit
QBE to inspect the property as often as may reasonably be required, failing to
permit QBE to examine and inspect all of the claimed damages as often as may
reasonably be required prior to filing the instant action. As such, Plaintiff has not
complied with all terms of the policy and, thus, the instant Complaint is
premature.
See QBE’s Answer/Affirmative Defenses, at 5. Here again, QBE is insisting that Ocean View
may not recover under the policy because it did not, prior to filing suit, notify QBE of the
additional claimed damages and failed to permit QBE an opportunity to investigate such
additional damages. On summary judgment, Ocean View argues that, for the reasons above, it
did all that the insurance contract required of it in notifying QBE of the loss following the
windstorm and permitting QBE an opportunity to inspect the premises and request any additional
information as may have been required to process the claim. See Pl.’s Mot. at 14. No requests
were made of Ocean View, it argues, so QBE cannot now argue that Ocean View failed in any of
its contractual duties. Further, Ocean View asserts that QBE cannot be heard to complain that
this litigation is premature when it never sought a stay or abatement of this action to force

compliance with any outstanding post-loss duties and to permit it an opportunity to investigate
the additional claimed damages.
QBE responds that summary judgment is precluded by factual issues as to whether Ocean
View fully complied with its post-loss duties before filing suit. See QBE’s Resp. at 16-17. QBE
further argues that it had no duty to seek a stay or abatement of this action in order to demand
Ocean View’s compliance. In reply, Ocean View asserts that QBE is attempting to use the
policy as both a “sword and shield” in order to defeat recovery. See Pl.’s Reply at 8-9. It again
emphasizes that QBE could have, but did not, request a stay of the litigation.
II.

QBE’s Summary Judgment Motion

QBE has moved for a summary judgment determination that Ocean View is not entitled
to coverage to ensure “matching” or “uniformity” in repairs and replacements. See QBE’s
Partial Motion for Summary Judgment [ECF No. 33], at 5-7 (“QBE’s Mot.”). “Matching” and
“uniformity” in the property insurance industry are directed to situations in which replacements
to physically damaged materials do not match the existing undamaged materials. QBE argues
that the policy provides coverage only for “direct physical loss or damage” and does not cover
the replacement of undamaged property in order to ensure “matching” or “uniformity.” QBE
points out that no Florida statute requires this of the insurer, except in the case of homeowner’s
policies. Ocean View’s policy is a commercial residential insurance contract, not a
homeowner’s policy.
In response, Ocean View argues that the policy does not specifically address the issue of
“matching” and that QBE’s corporate representative, Timothy O’Brien, testified during
deposition that QBE’s custom and practice is to pay for “matching” in some situations. See
Ocean View’s Response to Partial Motion for Summary Judgment [ECF No. 43], at 3-14. Ocean
View also points to the fourth prong of the “Loss Payment” provision, which provides that QBE
may, at its option, repair or replace with “property of like kind and quality.” According to Ocean
View, this “matching” provision should not be limited to situations in which the insurer opts to
repair the property itself, but logically should be extended to cover situations in which the insurer
elects to pay the cost of the repairs as well, given that the insured will want to create a matched
and uniform appearance when conducting its own repairs. Further, Ocean View contends that
the policy should be interpreted in light of industry usage and custom, which recognizes that
“matching” is appropriate under some circumstances as a matter of indemnity.

In reply, QBE again emphasizes that the policy only provides coverage for actual loss or
damage, not for “matching.” See QBE’s Reply at 2-5. QBE argues that the “Loss Payment”
provision does not provide otherwise; it obligates the insurer to use materials “of like kind and
quality” only where the insurer opts to repair or replace the damaged property itself. QBE did
not make that election here. Further, QBE contends that Ocean View may not rewrite the
policy’s terms by reference to purported industry custom or inapplicable case law.
The second portion of QBE’s summary judgment motion concerns whether Ocean View
is entitled to coverage based upon RCV versus ACV. See QBE’s Mot. at 7-9. QBE argues that
Ocean View may not obtain RCV benefits here because Ocean View has not repaired or replaced
the allegedly damaged items. According to QBE, the insurance contract in this case provides
RCV coverage only after “the lost or damaged property is actually repaired or replaced,” and
even then only if “the repairs or replacement[s] are made as soon as reasonably possible after the
loss or damage.”
Ocean View responds that QBE paid its initial claim on a RCV basis in June 2006 even
though no repairs had been made by the insured and, accordingly, QBE must pay on that basis
now. See Pl.’s Resp. at 14-17. Ocean View insists that because “it is QBE’s practice to pay for
replacement cost benefits up front if the damaged item needs to be repaired/replaced,” it must do
so with regard to Ocean View’s additional claims of damage. See id. at 15. According to Ocean
View, under these circumstances QBE has waived its right to require the insured’s strict
compliance with the policy. Ocean View also argues in the alternative that even if recovery is
limited to ACV benefits, QBE is required under the “Valuation” provision of the policy to cover
the cost of replacing glass with safety glazing material as required by law. Ocean View contends
that in hurricane zones such as Broward County, windows and doors must be replaced with
“impact rated” glass, which may require windows and doors containing safety glazing material.
Ocean View asserts that there is at least a genuine issue of fact as to whether that is the case here.
QBE replies that insurance coverage cannot be expanded via waiver or estoppel.
See QBE’s Reply at 6-9. QBE also maintains that, under the policy’s plain terms, where an
insured has not elected to make the repairs, coverage is provided on an ACV, as opposed to
RCV, basis. Moreover, as to Ocean View’s safety glazing argument, QBE points out that the
“Replacement Cost” provision of the policy does not provide coverage for any additional costs of
repair or replacement attributable to requirements imposed by law or ordinance. Further, QBE

argues, the federal provisions requiring safety glazing on glass make clear that safety glazing
glass is not the same as high wind impact resistant glass and that safety glazing is designed for
another purpose entirely – namely, as the federal regulations state, to reduce or eliminate
unreasonable risks of injury or death when glass is broken by human contact, not by high winds.
Thus, according to QBE, the policy’s reference to safety glazing glass does not apply to require
coverage on a RCV basis where Ocean View has not yet undertaken the repairs.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 56, “summary judgment is appropriate where
there ‘is no genuine issue as to any material fact’ and the moving party is ‘entitled to a judgment
as a matter of law.’” See Alabama v. North Carolina, 130 S. Ct. 2295, 2308 (2010) (quoting
Fed. R. Civ. P. 56(a)). “Summary judgment is particularly suited to cases of insurance coverage
because the interpretation of a written contract is a matter of law to be decided by the court.”
Int’l Ship Repair & Marine Servs., Inc. v. N. Assur. Co. of Am., 2011 WL 5877505, at *4
(M.D. Fla. Nov. 23, 2011).
At the summary judgment stage, the Court must view the evidence in the light most
favorable to the nonmoving party, see Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970),
and it may not weigh conflicting evidence to resolve disputed factual issues, see Skop v. City of
Atlanta, Ga., 485 F.3d 1130, 1140 (11th Cir. 2007). Yet, where the record as a whole could not
lead a rational trier of fact to find in the nonmovant’s favor, there is no genuine issue of fact for
trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
“[O]nce the moving party has met its burden of showing a basis for the motion, the
nonmoving party is required to ‘go beyond the pleadings’ and present competent evidence
designating ‘specific facts showing that there is a genuine issue for trial.’” United States v.
$183,791.00, 391 F. App’x 791, 794 (11th Cir. 2010) (quoting Celotex Corp. v. Catrett, 477 U.S.
317, 324 (1986)). Thus, the nonmoving party “may not rest upon the mere allegations or denials
of his pleadings, but [ ] must set forth specific facts showing that there is a genuine issue for
trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (citation omitted). Mere
“metaphysical doubt as to the material facts” will not suffice. Matsushita, 475 U.S. at 586.
“Likewise, a [nonmovant] cannot defeat summary judgment by relying upon conclusory
assertions.” Maddox-Jones v. Board of Regents of Univ. of Georgia, 2011 WL 5903518, at *2
(11th Cir. Nov. 22, 2011).

LEGAL ANALYSIS
Upon careful consideration, the Court finds that Ocean View is entitled to summary
judgment on QBE’s second and third affirmative defenses. The Court also finds that QBE is
entitled to summary judgment as to the principle of “matching,” as well as to the issue of RCV.
Below, each issue is addressed in turn.
I.

QBE’s Second Affirmative Defense

Ocean View is entitled to summary judgment as to QBE’s second affirmative defense
because, under the plain language of the policy, Ocean View fully complied with the “Duties In
The Event Of Loss Or Damage” provision.

Under Florida law,3 “insurance contracts are

construed in accordance with the plain language of the policies as bargained for by the parties.”
Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). “Where the policy language is
plain and unambiguous, no special rule of construction or interpretation applies, and the court
should give the plain language in the contract the meaning it clearly expresses.” N. Pointe Cas.
Ins. Co. v. M & S Tractor Servs., Inc., 62 So. 3d 1281, 1282 (Fla. 2d DCA 2011). “Courts are
not free to rewrite an insurance policy or to add terms or meaning to it.” Royal Ins. Co. v. Latin
Am. Aviation Servs., Inc., 210 F.3d 1348, 1351 (11th Cir. 2000); see also Heritage Ins. Co. of
Am. v. Cilano, 433 So. 2d 1334, 1335 (Fla. 4th DCA 1983) (“When the terms of an insurance
policy are clear and unambiguous the terms must be applied as written, the court not being free
to reshape the agreement of the parties.”).
Here, QBE argues that Ocean View failed to notify it of the additional claimed damages
prior to filing suit and that there is at least an issue of fact as to whether Ocean View provided
prompt notice to the insurer of the claimed damages. The Court finds Ocean View did all that
the policy demanded of it. The insurance contract, in the “Duties In The Event Of Loss Or
Damage” provision, required Ocean View to provide QBE “prompt notice” of any “loss or
damage” and to “[i]nclude a description of the property involved.” See Form CP 00 17 04 02 of
the Policy, at 9. Ocean View complied. Indeed, it is undisputed that Ocean View contacted
QBE between October 25 and 29, 2005 to notify the insurance company of its “loss” from
3

Because this Court sits in diversity in this case, it must apply the law of the forum state,
which is Florida. See Living Legends Ret. Ctr., Inc. v. Lexington Ins. Co., 208 F. App’x 805, 807
(11th Cir. 2006) (“The district court ruling in this case turned on the interpretation of an
insurance contract. Since the court was sitting in diversity, it applied the law of the forum state,
Florida.”).

Hurricane Wilma, which descended on South Florida on October 24, 2005.

Further, it is

undisputed that Ocean View’s loss notice identified roof, building, and glass damage to the
condominium.
Upon receiving this information, the “Duties In The Event Of Loss Or Damage”
provision entitled QBE to fully investigate and to make a host of demands upon Ocean View.
QBE could have requested of Ocean View “complete inventories of the damaged and
undamaged property,” including “quantities, costs, values and amount of loss claimed.”
See Form CP 00 17 04 02 of the Policy, at 9. QBE could have requested of Ocean View an
opportunity “to inspect the property proving the loss or damage and examine [its] books and
records” and also “to take samples of damaged and undamaged property for inspection, testing
and analysis, and . . . to make copies from [its] books and records.” See id. at 10. QBE could
have requested of Ocean View “a signed, sworn proof of loss containing the information we
request to investigate the claim.” See id. And, QBE could have requested of Ocean View the
opportunity to “examine any insured under oath, while not in the presence of any other insured
and at such times as may be reasonably required, about any matter relating to this insurance or
the claim, including an insured’s books and records.” See id.
Sansone inspected the property on November 2, 2005 and April 25, 2006, but QBE made
no requests for more particularized inventories of damages. Nor did it ask to further inspect the
premises or to review Ocean View’s books and records. Nor did it ask to obtain any signed
statements or to examine any insured under oath. Indeed, no such requests were outstanding at
any time before Ocean View filed suit. See Pl.’s SMF ¶¶ 45-52; QBE’s RSMF ¶¶ 45-52.
In short, the policy required Ocean View to provide prompt notice of the “loss or
damage.” It did so by informing QBE of the Hurricane Wilma “loss.” The insurance contract
required no more. QBE had a full and fair opportunity to investigate the damage from the
windstorm loss and to request additional information from Ocean View, but failed to fully do so.
See Pl.’s SMF ¶¶ 45-52; QBE’s RSMF ¶¶ 45-52. Absent such, Ocean View was under no
obligation to give QBE notice of the additional claimed damages before filing suit. While it may
not make sense to QBE that an insured can submit notice of a loss, receive payment for claimed
damages, and then years later run into court claiming millions of dollars in additional damages,
that is not this Court’s concern. See Deni Assocs. of Fla., Inc. v. State Farm Fire & Cas. Ins.
Co., 711 So. 2d 1135, 1139 (Fla. 1998) (“As a court, we cannot place limitations upon the plain

language of a policy [ ] simply because we may think it should have been written that way.”); see
also Green v. Life & Health of Am., 704 So. 2d 1386, 1391 (Fla. 1998) (“parties are free to
contract even though either side may get what turns out to be a ‘bad bargain,’” and a court may
not “substitute [its] judgment for that of parties to the contract in order to relieve one of the
parties from apparent hardships of an improvident bargain”) (citation omitted). This Court is
obliged to enforce the plain policy language as written. See Prudential Prop. & Cas. Ins. Co. v.
Swindal, 622 So. 2d 467, 473 (Fla. 1993) (court cannot “judicially rewrite an insured’s policy,”
as “contracts of insurance must be construed by resorting to the plain language of the policies as
freely bargained for by the parties”). Therefore, the Court must grant Ocean View’s motion of
summary judgment as to QBE’s second affirmative defense.
II.

QBE’s Third Affirmative Defense

For like reasons, Ocean View is also entitled to summary judgment as to QBE’s third
affirmative defense. The policy provides that no insured may bring suit against QBE unless the
insured has fully complied with the policy’s coverage terms. See Form CP 00 90 07 88 of the
Policy, at 1. In its third affirmative defense based on this provision, QBE contends that Ocean
View may not recover under the policy because it did not, prior to filing suit, notify QBE of the
additional claimed damages and failed to permit QBE an opportunity to investigate such
additional damages. Thus, again, QBE is arguing that Ocean View failed to comply with the
“Duties In The Event Of Loss Or Damage” provision. For the reasons stated above, however,
the Court has already rejected this argument based on the policy’s plain language as applied to
the undisputed facts. QBE points to no other policy provision with which Ocean View allegedly
failed to comply. Accordingly, the third affirmative defense fails and Ocean View is entitled to
summary judgment.
III.

Policy Coverage for “Matching” or “Uniformity”

On this issue, summary judgment for QBE is required because the plain language of the
policy does not afford coverage to ensure “matching” or “uniformity” in repairs. In reaching this
conclusion, the Court follows the reasoning of Strasser v. Nationwide Mutual Insurance
Company, 2010 WL 667945, at *1 (S.D. Fla. Feb. 22, 2010). In Strasser, the district court
considered analogous policy language and found that the insurer did not have a duty to match
under the insurance policy. See id.

Here, QBE argues that the policy provides coverage only for “direct physical loss or
damage” and does not cover the replacement of undamaged property to ensure “matching.” The
Court agrees. See Form CP 00 17 04 02 of the Policy, at 1. In fact, the policy makes no mention
of “matching” at all. The closest it comes is in the “Loss Payment” provision, which obligates
the insurer to use materials “of like kind and quality” – but only where the insurer opts to repair
or replace the damaged property itself. See id. at 10. QBE did not make that election here.
Moreover, as QBE emphasizes, no Florida statute requires the insurer to provide
coverage for “matching,” except in the case of homeowner’s policies. See Strasser, 2010 WL
667945, at *1 (observing that Fla. Stat. § 626.9744 applies only to homeowner’s policies).
Ocean View’s policy here is a commercial residential insurance contract, not a homeowner’s
policy.

See, e.g., Form CP 00 17 04 02 of the Policy, at 1 (identifying coverage for

“COMMERCIAL PROPERTY”). Therefore, the statute does not apply. See Strasser, 2010
WL 667945, at *1. Absent any controlling provision of law directing otherwise, then, the Court
must once again follow the policy’s clear language, which does not cover “matching.”
Nevertheless, Ocean View contends that the optional “matching” directive in the “Loss
Payment” provision should not be limited to situations in which the insurer elects to repair the
property itself, but logically should be extended to cover situations in which the insurer chooses
to pay the cost of the repairs as well, given that the insured will want to create a matched and
uniform appearance when conducting its own repairs. Further, Ocean View contends that the
policy should be interpreted in light of industry usage and custom, which recognizes that
“matching” is appropriate under some circumstances as a matter of indemnity.4 The Court
4

As a matter of industry custom and practice, estimates may include coverage for
“matching” with regard to “[a]ny continuous run of an item or adjoining area” where materials
such as painting, wallpapering, siding, carpeting, and roof tiles are involved. See Sansone Dep.
at 65-66; QBE’s Reply at 5. In granting summary judgment here, the Court does not hold that
“matching” is never appropriate. To the contrary, the Court merely holds that the unambiguous
language of this insurance policy does not require it in all circumstances. In this regard, the
Court emphasizes that “the parties to an agreement are bound by the contract into which they
enter, not according to the contractual obligations of others.” Shaw v. Nat’l Union Fire Ins. Co.
of Pittsburgh, Pa., 605 F.3d 1250, 1255-56 (11th Cir. 2010). And, “[a]lthough Florida law
permits [the Court] to ‘consider established custom and usage in the insurance industry,’ [the
Court] will not make the parties to one contract abide by the terms of another.” See id. (citation
omitted). Nevertheless, QBE should ensure coverage for “matching” consistent with standard
industry practice where repairs concern “any continuous run of an item or adjoining area” for
materials such as painting, wallpapering, siding, carpeting, and roof tiles.

rejects these arguments. Both arguments invite the Court to do violence to the policy’s plain
terms. This Court declines. Accordingly, summary judgment on the issue of “matching” shall
be rendered in favor of QBE.
IV.

Replacement Cost Value Coverage

QBE is entitled to summary judgment on this issue because the insurance contract does
not require it to provide coverage on a RCV basis. As QBE correctly argues, the policy plainly
provides RCV coverage only after “the lost or damaged property is actually repaired or
replaced,” and even then only if “the repairs or replacement[s] are made as soon as reasonably
possible after the loss or damage.” See Form CP 00 17 04 02 of the Policy, at 14. Here, the
repairs have yet to occur; therefore, the policy does not afford RCV coverage.5 Again, where the
policy is plain, the Court cannot rewrite it.
Ocean View contends, however, that QBE has waived its right to require strict
compliance with the policy’s terms because QBE previously paid on a RCV basis in June 2006
and “it is QBE’s practice to pay for replacement cost benefits up front if the damaged item needs
to be repaired/replaced.” See Pl.’s Resp. at 15. This argument lacks merit. In Florida, the law is
clear that coverage may not be expanded through waiver or estoppel. See, e.g., Lloyds Underwriters at London v. Keystone Equip. Fin. Corp., 25 So. 3d 89, 92 (Fla. 4th DCA 2009) (“Florida
law holds that the doctrines of estoppel and waiver cannot be applied to create or extend
insurance coverage.”).
Ocean View also argues in the alternative that if recovery is limited to ACV benefits,
QBE is required under the “Valuation” provision of the policy to cover the cost of replacing
glass with safety glazing material as required by law. The Court is not persuaded by this
argument either. The “Replacement Cost” provision of the policy plainly states that “[t]he cost
of repair or replacement does not include the increased cost attributable to enforcement of any
ordinance or law regulating the construction, use or repair of any property.” See Form CP 00 17
04 02 of the Policy, at 14. Moreover, the relevant provisions of federal law make clear that
safety glazing glass is not the same as high wind impact resistant glass, and that safety glazing is
designed for another purpose entirely – namely, as the federal regulations state, to “reduce or
eliminate unreasonable risks of death or serious injury to consumers when glazing material is
5

To the extent there are covered damages to the roof that have already been the subject
of repairs, QBE obviously would be required to provide RCV benefits for those repairs.

broken by human contact.” See 16 C.F.R. § 1201.1(a) (emphasis supplied). Thus, the policy’s
reference to safety glazing glass does not require QBE to cover the cost of high wind impact
resistant glass here. Accordingly, the Court will enter summary judgment in favor of QBE on
the RCV issue.
CONCLUSION
As explained above, the Court concludes that Ocean View is entitled to summary
judgment on QBE’s second and third affirmative defenses, and QBE is entitled to summary
judgment on the issues of “matching” and RCV. Accordingly, it is hereby ORDERED and
ADJUDGED that Ocean View’s Corrected Motion for Summary Judgment [ECF No. 41] and
QBE’s Partial Motion for Summary Judgment Regarding “Matching” or “Uniformity” and
Replacement Cost Value [ECF No. 33] are GRANTED IN PART.

DONE and ORDERED in chambers at Miami, Florida on December 22, 2011.

________________________________
ROBERT N. SCOLA, JR.
UNITED STATES DISTRICT JUDGE
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