Aligned Bayshore Holdings, LLC v. Westchester Surplus Lines Insurance Company
Filing
86
ORDER on Cross Motions for Summary Judgment. Order granting 48 Motion for Partial Summary judgment; denying 49 Motion for Summary Judgment. The Court therefore directs the Clerk to close this case and to remove it from the trial calendar. Any pending motions in this case are denied as moot. Signed by Judge Robert N. Scola, Jr on 6/17/2019. See attached document for full details. (kpe)
United States District Court
for the
Southern District of Florida
Aligned Bayshore Holdings, LLC,
Plaintiff,
v.
Westchester Surplus Lines
Insurance Company, Defendant.
)
)
)
) Civil Action No. 18-21692-Civ-Scola
)
)
)
Order on Cross Motions for Summary Judgment
Plaintiff Aligned Bayshore Holdings, LLC (“Aligned”) claims Westchester
Surplus Lines Insurance Company (“Westchester”) breached an insurance
contract by failing to cover damages it suffered as a result of Hurricane Irma.
Before the Court are the parties’ cross motions for summary judgment. (ECF
Nos. 48, 49.) After reviewing the parties’ written submissions and exhibits, and
the applicable law, the Court grants Westchester’s motion for partial summary
judgment (ECF No. 48) and denies Aligned’s motion (ECF No. 49).
I.
Factual Background
Westchester issued an insurance policy to Aligned that provided coverage
for Aligned’s windstorm and flood damage claims, including physical damage
and business interruption to both Monty’s Restaurant (the building) and the
marina area. (ECF No. 48 at ¶ 2). On September 10, 2017, Aligned sustained
losses due to the impacts of Hurricane Irma. (Id. at ¶ 3.) Aligned notified
Westchester of its losses, but claims Westchester did not promptly pay all
covered losses to Aligned. (ECF No. 6 at ¶¶ 9-11.) Aligned alleges that their
damages exceed $15.5 million, with the majority of the damage sustained by the
marina. (ECF No. 49 at ¶ 35.) Westchester has paid over $3 million in insurance
claims to Aligned. (ECF No. 48 at 4.)
Aligned alleges in its breach of contract claim that Westchester willfully
misinterpreted the insurance policy by improperly relying on an unverified
statement of values to cap its coverage. (See id. at ¶ 19–20.) Westchester
maintains that it properly interpreted the contract and has paid out the policy
maximum under the insurance policy’s flood coverage. (ECF No. 48 at 1.) Aligned
also asserted a bad faith claim, which was dismissed without prejudice by this
Court. (ECF No. 38.)
II.
The Insurance Contract
Westchester issued a commercial property policy, No. D37380118008, to
Aligned for the year May 21, 2017 to May 21, 2018. (ECF No. 49 at ¶¶ 1-2.) The
policy provides coverage for buildings, personal property, business interruption,
improvements and betterments, and docks and piers. (ECF No. 48 at ¶ 2.) The
insured property is a commercial property which includes a building, housing
Monty’s restaurant, and the outdoor marina and piers. (Id.). The insurance policy
covers various “causes of loss,” including flood damage. (ECF No. 47-1 at 14.)
The insurance policy contains Commercial Property Declarations (the
“Commercial Declarations”), which provide coverage of up to $12,250,000 as per
the “[m]ost recent schedule on file with Company.” (Id. at 10.) The parties agree
that the schedule referenced in the Commercial Declarations is a statement of
values. (ECF No. 49 at ¶ 8; ECF No. 55 at ¶ 8.) The statement of values, which
is incorporated by reference in the contract, sets out the property value and thus
the limit of insurance for each insured item. For example, the building is insured
up to $6,250,000, the docks up to $2,000,000, personal property up to
$1,000,000, and so on, equaling a total of $12,250,000 in insurance coverage.
(ECF No. 49 at ¶ 11.) The Commercial Declarations set out the following
information with regard to “location” and “coverages and limits provided.”
(ECF No. 47-1 at 10.)
The insurance policy also contains Flood Endorsements Declarations
(“Flood Declarations”). The Flood Declarations set out a reduced limit for flood
insurance: $10,000,000 per occurrence. (Id. at 14.) The Flood Declarations
states that “[t]he Flood limit is not a separate or additional Limit of Insurance. .
. The Reduced limit does not apply separately to the Premises, Locations,
Covered Property or Coverages listed. It is the most we will pay for all loss or
damage to the indicated Covered Property/Coverages at the Premises and
Locations listed, subject to all other applicable policy provisions.” (Id. at 14-15.)
The Flood Declarations incorporate by reference the Commercial Declarations:
(Id. at 14.)
The policy also contains a Flood Coverage Endorsement (“Flood
Endorsement”). (ECF No. 47-1 at 96.) The Flood Endorsement references the
Flood Declarations and states that “[t]he Limit of Insurance for Flood is shown
in the Flood Coverage Schedule or the Declarations. . . The Limit of Insurance
for Flood is the most we will pay in a single occurrence of Flood for loss or damage
caused by the Flood.” (Id. at 98.)
The parties dispute whether the $10 million flood coverage limit is
“blanket” coverage or if it is subject to a statement of values. (ECF No. 49 at ¶
11.) In other words, whether it is limited by the value of each covered property.
Aligned argues that the policy provides blanket coverage for flood damage.
Westchester argues that the policy’s flood coverage is subject to a statement of
values. Moreover, even if the Plaintiff agreed that a statement of values applies,
the parties dispute which statement of values applies here. (Id. at 15.)
III.
Legal Standard
Summary judgment is proper if following discovery, the pleadings,
depositions, answers to interrogatories, affidavits and admissions on file show
that 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 (1986); Fed. R. Civ. P. 56. In reviewing a motion for summary judgment, the
Court must “view the evidence and all factual inferences therefrom in the light
most favorable to the non-moving party, and resolve all reasonable doubts about
the facts in favor of the non-movant.” Feliciano v. City of Miami Beach, 707 F.3d
1244, 1247 (11th Cir. 2013) (quoting Skop v. City of Atlanta, Ga., 485 F.3d 1130,
1143 (11th Cir. 2007)). So, when a conflict arises between the facts presented by
the parties, the Court must credit the nonmoving party’s version. Id. The moving
party bears the burden of proof to demonstrate the absence of a genuine issue
of material fact. Celotex, 477 U.S. at 323.
IV.
Analysis
A.
Whether a Statement of Values Applies to Flood Coverage
Aligned moves for summary judgment on its claim for breach of contract
arguing that the insurance policy creates blanket coverage for flood damage up
to $10 million. (ECF No. 49 at 9.) Blanket coverage means that it is not subject
to a statement of values. In other words, the value of each covered property is
not taken into consideration by Westchester when paying an insurance claim.
Aligned points to language in the contract as well as the absence of the words
“statement of values” or “schedule” in the Flood Declarations and the Flood
Endorsement to conclude that the statement of values does not apply. According
to Aligned, if Westchester wanted to write a flood policy that was subject to a
statement of values, it could have done so. (Id. at 11.)
On the other hand, Westchester moves for summary judgment arguing
that it has paid the limits of the flood coverage based on the statement of values
on file with the company. To date, Westchester has paid Aligned $3,033,216.76
for damages caused by Hurricane Irma. (ECF No. 48 at ¶ 10.) According to
Westchester, this is the maximum due under the policy and coverage limits set
out in the statement of values. (Id.) The statement of values, as applied by
Westchester, is the following:
(ECF No. 47-12.) Under this statement of values, Aligned may claim up to
$6,250,000 for damage to the Monty’s building, $1,000,000 in personal property
losses, and $2,000,000 in business interruption loss. Aligned may also claim up
to $2,000,000 for damage to the marina and $1,000,000 for business
interruption and rental income loss related to the marina. Therefore, the
maximum that Aligned can recover for the marina is $3,000,000. Westchester
has paid out the maximum under its interpretation of the policy. However,
Aligned believes the entire $10 million of coverage should apply to the marina,
without reference to a statement of values. The Court disagrees.
In construing insurance contracts, Courts must “apply a construction that
is practical and reasonable as well as just.” Weldon v. All American Life Ins. Co.,
605 So. 2d 911, 915 (Fla. 1992). “[I]nsurance policies will not be construed to
reach an absurd result.” Deni Assocs. of Fla., Inc. v. State Farm Fire & Case Ins.
Co., 711 So. 2d 1135, 1140 (Fla. 1998.) “[I]n 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).
Here, the policy contains the Commercial Declarations and the Flood
Declarations. The parties agree that the Commercial Declarations incorporate by
reference the statement of values. (ECF No. 49 at ¶ 8; ECF No. 55 at ¶ 8.) The
Commercial Declarations set out the “location” as: “Most recent schedule on file
with the Company totaling $12,250,000.” (ECF No. 47-1 at 10) The Flood
Declarations set out the location as: “Covered Locations for Flood are the same
as the Covered Locations shown in the Commercial Property Declarations[.]” (Id.
at 14.) The Commercial Declarations also set out the “Coverage and Limits
Provided” as: “$12,250,000 per occurrence primary (per schedule, not blanket).”
(Id. at 10.) The Flood Declarations also incorporate this language: “Covered
Property and Coverages for Flood are the same as the Covered Property and
Coverages shown in the Commercial Property Declarations[.]” (Id. at 14.) Aligned
argues that the Flood Declarations, unlike the Commercial Declarations, do not
mention a statement of values or schedule. (ECF No. 49 at 10-11.) As shown
above, however, the Flood Declarations explicitly refer to and incorporate the
Commercial Declarations. (ECF No. 47-1 at 14.) Therefore, the statement of
values applies to flood coverage.
Moreover, the Flood Declarations set out a “reduced limit” for flood
coverage. Instead of the policy’s $12,250,000 coverage limit, the Flood
Declarations creates a reduced limit of $10,000,000. (Id.) The Flood Declarations
state: “The Flood limit . . . is part of and included in the Limit of Insurance which
applies to other Covered Causes of Loss . . . the Flood limit is not a separate or
additional Limit of Insurance.” (Id.) (emphasis added). Furthermore, the
“Reduced Limit does not apply separately to the Premises, Locations, Covered
Property or Coverages listed. It is the most we will pay for all loss of damage to
the indicated Covered Property/Coverages at the Premises and Locations listed,
subject to all other applicable policy provisions.” (Id. at 15.) (emphasis
added). One such applicable provision is the “Occurrence Limit of Liability
Endorsement.” (ECF No. 47-1 at 75.) Under this endorsement, which applies to
all commercial property coverage, “[t]he premium for this policy is based upon
the Statement of Values on file with the Company.” (Id.) Reading the policy as a
whole, flood coverage is not to be interpreted as a separate or additional coverage
scheme. See Anderson, 756 So. 2d at 34 (“[I]n construing insurance policies,
courts should read each policy as a whole, endeavoring to give every provision
its full and operative effect.”). Under the plain meaning of the policy’s language,
flood coverage is subject to the same limitations as the rest of the policy,
including the statement of values. Id. at 33 (policy must be construed “in
accordance with the plain language of the policy as bargained for by the parties”).
Reading it otherwise would mean that Westchester agreed to cover the individual
parts of the property well beyond their property value and would render the
statement of values meaningless. See Pacific Employers Ins. Co. v. Wausau
Business Ins. Co., 508 F. Supp. 2d 1167, 1175 (M.D. Fla. 2007) (“terms of an
insurance policy should be taken and understood in their ordinary sense and
the policy should receive a reasonable, practical and sensible interpretation”).
Aligned also argues that the Commercial Declarations do not apply to all
coverage parts as per the Forms Schedule. (ECF No. 49 at 10.) The Forms
Schedule is similar to a table of contents that sets out general provisions which
are “applicable to all coverage parts” and then the “commercial property”
provisions. (ECF No. 47-1 at 8.) According to Aligned, because the Commercial
Declarations are not in the “applicable to all coverage parts” section, they must
not apply to flood coverage. As argued by Westchester, interpreting the policy
this way would be absurd. (ECF No. 55 at 13.) As discussed above, the Flood
Declarations incorporates by reference the Commercial Declarations. Moreover,
the policy should be read as a whole to give every provision meaning and effect.
Reading the Commercial Declarations in isolation would mean the Commercial
Property Supplemental Declarations, identifying the names of the insureds,
would also be inapplicable to flood. Such a result is untenable.
B.
Which Statement of Values Applies
Having determined that a statement of values applies to flood coverage,
the Court must also determine which statement of values applies. Westchester
maintains that the correct statement of values is the following:
(ECF No. 47-12.) Aligned argues that it never received or approved the above
Statement of Values (the “SOV”). The applicable statement of values, according
to Aligned, is the Premises Schedule first submitted with Aligned’s commercial
insurance application on June 2, 2017. (ECF No. 54 at 11.)
(ECF No. 47-2 at 10.) The only relevant difference between Westchester’s SOV
and Aligned’s Premises Schedule is that the business interruption/extra
expenses value is not divided between the building and the marina. (ECF No. 54
at ¶ 14.) Under Westchester’s SOV, Aligned can recover business interruption
loss up to $1,000,000 for the marina and $2,000,000 for the building. Under
Aligned’s Premises Schedule, Aligned can recover $3,000,000 in business
interruption loss regardless of whether it is associated with the marina or the
building.
Aligned’s primary argument is that the author of the SOV, Glenn Peterson,
an insurance broker, is not Aligned’s agent and Aligned did not know he was
involved in the insurance renewal process with Westchester. (ECF No. 54 at 15.)
According to Aligned, Peterson himself thought the Premises Schedule was the
correct schedule. (Id. at 16.) Westchester argues that Peterson’s agency
relationship with Aligned is irrelevant because Rick Alvarez, the marketing
manager with the insured’s retail agent, is Aligned’s agent, reviewed the SOV,
and discussed it with Aligned. (ECF No. 66 at 2.) The Court agrees.
Aligned does not dispute that Alvarez is its agent. (See ECF No. 54.) Alvarez
testified that he met with Jose Hevia, owner and president of Aligned Bayshore,
Renae Asher, CFO of Prime Marina Group, and Tony Arias, insurance consultant
for Aligned, to discuss the renewal of Aligned’s insurance policy with
Westchester. (ECF No. 48-2 at 26-27.) During that meeting, Hevia informed
Alvarez that he wanted to reduce Aligned’s coverage for the upcoming year. (Id.
at 29.) The real property value was reduced from $7,000,000 to $6,250,000, the
marina from $3,000,000 to $2,000,000, and the business interruption expenses
were divided between the building ($2,000,000) and the marina ($1,000,000).
(Id. at 29, 38-39.) These values were correctly reflected in the SOV, which Alvarez
reviewed once it was created by Peterson. (Id. at 36.) When asked about the
division of the $3,000,000 in business interruption expenses between the
building and marina, Alvarez testified that it had been that way for the “previous
two years probably.” (Id. at 139-140.) He also testified that he told Aligned that
these were the limits, including the separation of the business interruption
expenses between building and marina. (Id. at 140.) In fact, when asked if he
considers the application for insurance a schedule of values, he responded, “No,
it’s not the Schedule of Values.” (Id. at 102.) This is also consistent with
Peterson’s testimony that the document submitted with the application is not a
statement of values because it is titled “Subject of Insurance.” (ECF No. 47-4 at
159:10-22 (“Actually, I don’t agree because that’s not a schedule. . . there is
nothing on here that says anything about Schedule of Values and/or Statement
of Values.”)). Both Alvarez and Peterson testified that the SOV was the only
statement of values on file with Westchester. (ECF No. 48-2 at 92; 47-4 at 24.)
The evidence that Aligned points to for the argument that Peterson believed that
the Premises Schedule was the correct schedule is an inconclusive email. (ECF
No. 47-14 at 2.) In this email, Peterson asks someone from Westchester whether
the $3,000,000 limit for business interruption, “$2,000,000 at the restaurant
and $1,000,000 at the marina,” is “one limit.” (Id.) There is no response in the
email chain. At most, this shows that he was aware of the division between the
restaurant and marina but was asking how it was to be applied.
Aligned’s only attempt to refute that Alvarez was acting on instructions
from Hevia is a one sentence denial without a citation to the record. (ECF No. 54
at ¶ 12 (“Hevia did not instruct Mr. Alvarez to reduce the limits by the amounts
stated.”)). Therefore, the Court will “not consider evidence, if there is any,
supporting the assertions for which the plaintiff provided no citations to the
record.” Pye v. Fifth Generation, Inc. No. 4:14CV493-RH/CAS, 2016 WL 9046788,
at *2 (N.D. Fla. Sept. 27, 2016). Accordingly, the Court finds that there is no
dispute that Alvarez, as Aligned’s agent, was acting on Hevia’s instructions when
he procured a policy based on the SOV, which was the only SOV on file with
Westchester. The Defendant is entitled to summary judgment.
V.
Conclusion
The Court therefore grants Defendant Westchester’s motion for partial
summary judgment (ECF No. 48.)1 and denies Aligned’s motion for summary
judgment. (ECF No. 49.) Although styled a motion for “partial” summary
judgment, the Court believes granting the motion resolves the entire dispute
between the parties. The Court therefore directs the Clerk to close this case and
The Court instructed the Defendant to re-file its motion for summary judgment
and correct its citations to the record. The corrected motion is ECF No. 85.
Accordingly, the Clerk is directed to terminate this motion.
1
to remove it from the trial calendar. Any pending motions in this case are denied
as moot.
Done and ordered in chambers, at Miami, Florida, on June 17, 2019.
Robert N. Scola, Jr.
United States District Judge
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