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Timestamp: 2019-11-13 16:07:12
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ALLEN v. United Services Automobile Association, A Texas Reciprocal Inter–Insurance Exchange and Unincorporated Association, Defendant–Appellee. | FindLaw
ALLEN v. United Services Automobile Association, A Texas Reciprocal Inter–Insurance Exchange and Unincorporated Association, Defendant–Appellee.
Before ED CARNES, Chief Judge, JILL PRYOR and BLACK, Circuit Judges. J. Nixon Daniel, III, Terrie Lee Didier, Russell F. Van Sickle, Beggs & Lane, RLLP, Pensacola, FL, for Plaintiffs–Appellants. Stephen Edward Goldman, Wystan M. Ackerman, Robinson & Cole, LLP, Hartford, CT, Charles Franklin Beall, Jr., Thomas Larry Hill, Moore Hill & Westmoreland, PA, Pensacola, FL, for Defendant–Appellee.
We agree with the district court that the plain language of § 627 .7011(2) does not require an insurer to obtain a policyholder's written consent on a form approved by the Florida Office of Insurance Regulation (Regulation Office) before issuing BOL coverage greater than 25%. Additionally, Florida Statutes § 627.418(1) bars the Allens' suit because the only remedy available for providing extra insurance coverage is to enforce the contract as written. The Allens freely contracted to buy 50% coverage, that is exactly what they received, and no legal basis exists for reducing their premium payments. We therefore affirm.1
Neither this nor any other page is an approved Regulation Office form pursuant to Florida Statutes § 627.7011(2). Section 627.7011(2) mandates that “[t]he rejection or selection of alternative coverage shall be made on a form approved by the [Regulation] [O]ffice.” According to Florida Administrative Code Rule 69O–167.011, insurers can comply with § 627.7011(2)'s form requirement in two ways. First, the insurer may obtain the policyholder's written consent on Form OIR–1148, which is available on request from the Regulation Office. Fla. Admin. Code r. 69O–167 .011(3). Second, the insurer may obtain the policyholder's written consent on the insurer's own form that has been submitted to and approved by the Regulation Office. Id. The Allens never consented to 50% BOL coverage on Form OIR–1148. Nor did they consent to 50% BOL coverage on USAA's own form that could have been submitted to and approved by the Regulation Office. Thus, it is undisputed the Allens never gave written consent to 50% BOL coverage on an approved Regulation Office form. Instead, they contracted to purchase 50% BOL coverage on USAA's non-approved form.
Pursuant to Federal Rule of Civil Procedure 12(b)(6), USAA moved to dismiss the complaint for failure to state a claim. The district court stayed discovery and class certification pending adjudication of the motion to dismiss.2 After a hearing, the district court entered an order dismissing the complaint. The district court held § 627.7011(2) does not require an insurance provider to obtain the policyholder's written selection on an approved Regulation Office form before issuing a policy with more than 25% BOL coverage. The Allens timely filed a notice of appeal.
The Allens signed USAA's contract for 50% BOL coverage. They did not, however, give written consent to this coverage on an approved Regulation Office form. The question before us is whether USAA violated Florida Statutes § 627.7011(2) by providing 50% BOL coverage without the Allens' written consent on a form approved by the Regulation Office. To answer this question, we begin by interpreting § 627.7011(2). We then examine whether, even assuming USAA violated § 627.7011(2), the Allens' complaint should be dismissed pursuant to Florida Statutes § 627.418(1).
A. Florida Statutes § 627.7011(2)
In response, USAA argues § 627.7011(2) does not require an insurer to obtain a policyholder's written consent on a form approved by the Regulation Office before issuing BOL coverage greater than 25%. According to USAA, § 627.7011(2) is a gap-filling rule that applies only when the insured has refused BOL coverage altogether and imposes no restrictions on how a homeowner acquires extra BOL insurance.
Unless the insurer obtains the policyholder's written refusal of the policies or endorsements specified in subsection (1), any policy covering the dwelling is deemed to include the law and ordinance coverage limited to 25 percent of the dwelling limit. The rejection or selection of alternative coverage shall be made on a form approved by the [Regulation] [O]ffice․
To ascertain the meaning of subsection (2), one must understand its relationship to subsection (1). Rather than lay out subsection (1) in full, we describe its provisions in abridged form due to its protracted length.3
Pursuant to subsection (1), the insurer must offer each homeowner two “policies or endorsements” and the following three coverage options. Fla. Stat. § 627.7011(1). First, under subsection (1)(a), the insurer must offer a “policy or endorsement” to adjust claims on the basis of “replacement cost [ ],” which does not deduct depreciation from the value of the claim, as opposed to “actual cash value,” which does deduct depreciation value from the claim.4 Id. § 627.7011(1)(a). This option excludes BOL coverage. Id. Second, under subsection (1)(b), the insurer must offer a “policy or endorsement” to adjust claims on the basis of replacement cost including 25% BOL coverage. Id. § 627.7011(1)(b). Third, also under subsection (1)(b), the same “policy or endorsement” referring to 25% BOL coverage must additionally offer to adjust claims on the basis of replacement cost including 50% BOL coverage, as selected by the policyholder. Id.
The Allens' argument is severely undermined, however, when this single sentence in subsection (2) is considered within the entire context of § 627.7011. “Where possible, courts must give full effect to all statutory provisions and construe related statutory provisions in harmony with one another.” Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So.2d 452, 455 (Fla .1992). Analysis of the whole statute establishes the approved form requirement applies only when a policyholder seeks to choose less than 25% BOL coverage.
Although subsection (2) requires the written rejection or selection of alternative coverage on an approved form, Fla. Stat. § 627.7011(2), subsection (1) contains no such requirement and simply provides a BOL policy “may be limited to 25 percent or 50 percent of the dwelling limit, as selected by the policyholder,” id. § 627.7011(1). From this discrepancy, one can infer that when a policyholder chooses 50% coverage, or any other level of coverage above 25%, writing on an approved form is not required. Had the Legislature intended to require a policyholder's written consent on an approved form to select BOL coverage above 25%, it presumably would have written subsection (2)'s requirement into subsection (1). “Where the legislature has included a specific provision in one part of a statute and omitted it in another part, we must conclude that it knows how to say what it means, and its failure to do so is intentional.” Paragon Health Servs., Inc. v. Cent. Palm Beach Cmty. Mental Health Ctr., Inc., 859 So.2d 1233, 1235 (Fla. 4th DCA 2003).
Our interpretation is bolstered by another sentence—directly following the approved form requirement in subsection (2)—which states: “The form must fully advise the applicant of the nature of the coverage being rejected.” Id. If an applicant selected coverage above 25%, she would not, by definition, be “rejecting” any coverage about which she could be advised. Rather, she would be gaining coverage above 25%. If the approved form requirement applied when an applicant selected coverage above 25%, the advisement requirement would be superfluous. “Statutory interpretations that render statutory provisions superfluous are, and should be, disfavored.” Johnson v. Feder, 485 So.2d 409, 411 (Fla.1986) (quotation omitted). If the Legislature were truly concerned about excessive insurance, it would not have limited the advisement requirement to situations in which the applicant rejected BOL coverage. Rather, the Legislature would have required applicants to be advised of the risks associated with excessive BOL coverage. Where another, plausible reading of the statute that does not render any language surplusage is available, a court “does not assume such clumsy draftsmanship.” Dewsnup v. Timm, 502 U.S. 410, 425, 112 S.Ct. 773, 782 (1992).
The statutory purpose of § 627.7011 is consistent with the interpretation that subsection (2)'s approved form requirement does not apply to BOL coverage exceeding 25%. Under Florida law, “to the extent that there is any ambiguity as to the intent of [a statutory provision], we are guided by the stated statutory purpose.” Woodham, 829 So.2d at 897. The statutory purpose of § 627.7011(2) is evident in subsection (4). The Legislature intended to “encourage policyholders to purchase sufficient coverage to protect them in case events excluded from the standard homeowners policy, such as law and ordinance enforcement ․, combine with covered events to produce damage or loss to the insured property.” Fla. Stat. § 627.7011(4). The Legislature undoubtedly sought to protect homeowners from insufficient insurance coverage.
The Allens, though, contend the final sentence of subsection (4) shows the Legislature was equally concerned with the financial burden of excessive insurance. The sentence says, “The intent is also to encourage policyholders to discuss these issues [of BOL coverage] with their insurance agent.” Id. This sentence does not evince the Legislature's concern about policyholders acquiring too much insurance. Read in conjunction with the prior sentence's discussion of “sufficient coverage,” id., this language signals the Legislature's intent to have insurance agents warn policyholders about the dangers of underinsuring one's home. The overriding concern of § 627.7011 is to decrease the prevalence of underinsurance, not excessive insurance. Accordingly, subsection (2)'s approved form requirement does not apply when a policyholder selects BOL coverage greater than 25% of the dwelling limit.
The Legislature originally enacted § 627.7011 in 1993. Act of Nov. 10, 1993, ch. 93–410, § 17, 1994 Fla. Laws 37–38 (codified at Fla. Stat. § 627.7011). The Legislature passed the statute in response to the widespread property insurance availability crisis caused by Hurricane Andrew. Staff of S. Comm. on Ins., Staff Analysis and Economic Impact Statement, SB 16C, 13th Leg., Spec. Sess. C, at 1–3 (Fla.1993).5 After the hurricane, the Legislature learned many policyholders were unaware they could have obtained coverage for replacement cost and BOL coverage. Staff of H.R. Comm. on Ins., Final Bill Analysis & Economic Impact Statement, HBs 33–C & 43–3, 13th Leg. Spec. Sess. C, at 3 (Fla.1993). The problem of insufficient BOL coverage was most pronounced for policyholders who were required by the Federal Emergency Management Administration to raise the floor level of their homes by several feet, a renovation that typically cost $10,000 to $30,000. Id.
Both the plain language of § 627.7011(2) and its legislative history demonstrate a homeowner need not give written consent on an approved Regulation Office form to acquire BOL coverage above 25%. Since USAA did not violate § 627.7011(2), the district court did not err in dismissing the complaint. The Allens failed to allege a violation of § 627.7011(2), and USAA therefore did not breach the contract because the Allens paid for and received the 50% BOL coverage in the policy.
B. Florida Statutes § 627.418(1)
Any insurance policy, rider, or endorsement otherwise valid which contains any condition or provision not in compliance with the requirements of this code shall not be thereby rendered invalid, except as provided in s. 627.415, 6 but shall be construed and applied in accordance with such conditions and provisions as would have applied had such policy, rider, or endorsement been in full compliance with this code. In the event an insurer issues or delivers any policy for an amount which exceeds any limitations otherwise provided in this code, such insurer shall be liable to the insured or his or her beneficiary for the full amount stated in the policy in addition to any other penalties that may be imposed under this code.
The plain language of the statute does not support the Allens' interpretation for two reasons. First, the statute's words do not distinguish between premium recovery and property loss. The Allens claim the word “liable” in the second sentence refers only to property loss, but the word “liable” is not defined in the statute. In the absence of a statutory definition, “words are construed in their plain and ordinary sense.” Jones v. Williams Pawn & Gun, Inc., 800 So.2d 267, 270 (Fla. 4th DCA 2001). The ordinary meaning of “liable” is broad enough to include both premium recovery and property loss. See Webster's New International Dictionary 1302 (3d ed.1976) (defining “liable” as “bound or obligated according to law or equity”). The Allens' narrow interpretation therefore finds no support in the statutory text.
Additionally, the Allens' interpretation would yield bizarre, inconsistent results. According to the Allens, a noncompliant insurance policy must be construed as if “in full compliance with this code,” yet at the same time also be construed “for the full amount stated in the policy.” Fla. Stat. § 627.418(1). A court cannot simultaneously construe an insurance policy as fully in compliance with governing law while also giving effect to terms not fully in compliance. We resist attributing to the Legislature an intention that “would render the statute internally inconsistent.” Mancuso v. State, 636 So.2d 753, 755 (Fla. 4th DCA 1994). The district court did not err in dismissing the complaint because § 627 .418(1) mandates enforcement of the Allens' policies as written.
The Allens claim they received no value from their BOL insurance because their home never suffered a covered loss, and they now wish to recoup their premiums. Florida law does not countenance that result. The Allens freely contracted to buy 50% coverage, and that is precisely what they received. They cannot now, with the benefit of hindsight, undo their decision to protect their home from unrealized risk. The value of insurance lies in the “[t]he transfer of risk from insured to insurer ․ and that transfer is complete at the time that the contract is entered.” Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 130, 102 S.Ct. 3002, 3009 (1982). We affirm the district court's dismissal of the complaint.
1. We deny the Allens' motion to certify state law questions to the Florida Supreme Court.
2. While the motion to dismiss was pending, Matthew J. Schall and Judith A. Schall (collectively, the Schalls), a married couple residing in Pensacola, Florida, filed a separate suit raising nearly identical claims against USAA Casualty Insurance Company, a wholly owned subsidiary of United Services Automobile Association. The district court consolidated the Allen and Schall cases and stayed the Schall case pending the resolution of the motion to dismiss. In light of this procedural history, our analysis applies uniformly to the Allens and Schalls, on the one hand, and USAA and USAA Casualty Insurance Company, on the other. Where this opinion refers to the Allens, the reference includes the Allens and the Schalls. Where this opinion refers to USAA, the reference includes United Services Automobile Association and USAA Casualty Insurance Company.
3. The text of § 627.7011 relevant to this appeal is attached as an appendix.
4. “In other words, replacement cost policies provide greater coverage than actual cash value policies because depreciation is not excluded from replacement cost coverage, whereas it generally is excluded from actual cash value.” Trinidad v. Fla. Peninsula Ins. Co., 121 So.3d 433, 438 (Fla.2013).
5. “[W]hile not determinative of final legislative intent,” legislative staff analyses are “one touchstone of the collective legislative will.” GTC, Inc. v. Edgar, 967 So.2d 781, 789 (Fla.2007).
6. Florida Statutes § 627.415 is inapplicable here. That section prohibits insurers from issuing policies “purporting to make any portion of the charter, bylaws, or other constituent document of the insurer ․ a part of the contract unless such portion is set forth in full in the policy.” Fla. Stat. § 627.415.