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Southern District Addresses Valuation in Policy

In SUMMIT TOWERS CONDOMINIUM ASSOCIATION, INC., v. QBE INSURANCE CORPORATION, 23 Fla. L. Weekly Fed. D265a (S.D. Fla. May 29, 2012)(Seitz, D.J.), the court found that where one section of policy provides for the insured to receive “actual cash value” for a loss and another section provides for “replacement cost,” the section providing for replacement cost provides that, “[i]f shown as applicable in the Declarations, the following Optional Coverages apply separately to each item,” and the Declarations page identifies the “Value Option” as “RC,” replacement cost is the value option in force under the policy.

Given the shortness of the opinion, the entire opinion is provided below:


THIS MATTER is before the Court following the Court's Order [DE-153] denying Defendant QBE Insurance Corporation's Motion for Partial Summary Judgment [DE-69]. During the pretrial conference, the parties and the Court identified a legal issue of insurance policy (Commercial Property Insurance Policy (No. QF2310-08) (“Policy”)) involving Valuation and the parties agreed to brief that issue for the Court. The Court has now considered Summit Towers' brief [DE-177], QBE's response [DE-178] and Summit Towers reply [DE-179]. For the reasons set fort below, the Court will enter summary judgment in favor of QBE finding that the “Valuation” section G.3 of the Policy completely supercedes Section E.8.

The parties disagree about how QBE will determine the value of property in the event of a covered loss.1 The Policy contains two sections relevant to valuation -- one provides for Summit Towers to receive “actual cash value” for a loss (see Section E.8.a-c) while the other provides for “replacement cost” (see Section G.3.a-f). Summit Towers argues that these two sections coexist and can be read together to determine the value of a covered loss under the Policy. The Court, however, agrees with QBE that Section E.8 has been superseded by Section G.3. Section G provides that, “[i]f shown as applicable in the Declarations, the following Optional Coverages apply separately to each item.” Policy, G [DE 69-3, p. 42 of 57]. The Declarations page, in turn, identifies the “Value Option” as “RC”. Id. at p. 4 of 57. The optional coverage Summit Towers purchased, “Replacement Cost,” set out at G.3 and identified in the declarations as “RC” is therefore the value option in force under the Policy.

Summit Towers disagrees and argues that only the phrase “actual cash value” in Section E.8. has been replaced by the phrase “replacement cost” from Section G.3. This construction would allow for subsection E.8.c. to remain a part of the Policy and ostensibly allow Summit Towers to obtain glass at the cost of replacement with safety glazing materials. Summit Towers' argument, however, does not give effect to all of the provisions of the Policy and renders the subsections of G.3. superfluous. Moreover, it is not possible to harmonize all of the sections of the Policy under Summit Towers' interpretation. The subsections of E.8 provide exceptions to the payment of actual cash value to Summit Towers and identify scenarios where QBE will pay at replacement cost for covered losses. If the Court merely replaces the phrase “actual cash value” with “replacement cost” in Section E.8, that section would then provide that Summit Towers would be paid at replacement cost for a covered loss except in certain circumstances where it would still be paid at replacement cost. It is nonsensical to interpret the Policy in the manner Summit Towers suggests. The Court must reject this interpretation and concludes that Section G.3 completely replaces Section E.8 of the Policy. This construction gives effect to each provision of the Policy and comports with the plain language of that agreement. City of Homestead v. Johnson, 760 So.2d 80, 84 (Fla. 2000) [25 Fla. L. Weekly S206a] (“All the various provisions of a contract must be so construed, if it can reasonably be done, as to give effect to each.”).

Based on the forgoing, it is

ORDERED that this Order shall amend the Court's Order [DE-153] denying Defendant QBE Insurance Corporation's Motion for Partial Summary Judgment [DE-69]. Summary Judgment is hereby GRANTED in favor of QBE on the policy interpretation issue addressed herein such that Section G.3 of the Policy completely supercedes Section E.8.


1Generally, under Florida law, “in construing insurance policies, courts should read each policy as a whole, endeavoring to give every provision its full meaning and operative effect.” Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla. 2000) [25 Fla. L. Weekly S211a]; see also Fla. Stat. § 627.419(1) (“Every insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy.”). Policy terms are given their plain and ordinary meaning and read in light of the skill and experience of ordinary people. Anderson, 756 So.2d at 34; see also Vencor Hosps., Inc. v. Blue Cross Blue Shield of R.I., 284 F.3d 1174, 1180-81 (11th Cir. 2002) [15 Fla. L. Weekly Fed. C315a].

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