Court Opinion

ID: 9906234
Source: CourtListenerOpinion
Date Created: 2023-12-01 15:03:40.587095+00
Date Added: 2024-06-11T09:24:11.249694
License: Public Domain

FIFTH DISTRICT COURT OF APPEAL
                STATE OF FLORIDA
                 _____________________________

                      Case No. 5D22-1404
                  LT Case No. 2019-30212-CICI
                 _____________________________

STATE FARM FLORIDA
INSURANCE COMPANY,

    Appellant,

    v.

JORETHA M. JAMES,

    Appellee.
                 _____________________________

On appeal from the Circuit Court for Volusia County.
Dennis Craig, Judge.

C. Ryan Jones and Scot E. Samis, of Traub Lieberman Straus &
Shrewsberry, LLP, St. Petersburg, for Appellant.

Mark A. Nation, of The Nation Law Firm, LLP, Longwood, and
Marisa Glassman, of Morgan & Morgan, Tampa, for Appellee.

                        December 1, 2023

PER CURIAM.

     The legal issue presented is the meaning of the word “incur”
in a so-called tear out clause in a homeowners policy issued by
State Farm Florida Insurance Company. Joretha M. James, the
policy holder, successfully sued State Farm for water damage to
her home plus the cost of tearing out portions of the home to
access the location of the water intrusion in the plumbing system.
The trial court rejected State Farm’s argument that James did
not “incur” the tear out costs as that term is used in the policy.
State Farm now appeals.

     The parties agree on the facts in this case, including the
amount of tear out costs ($38,834.28) as determined by State
Farm’s appraisal. State Farm does not dispute it must pay these
costs. It claims, however, that its policy does not authorize
payment of the invoice because the repair contract that James
entered with the contractor was “illusory” because James could
cancel it at any time. State Farm frames the issue on appeal as
“Whether an insured ‘incurs’ an expense by signing a contract
that can be voided by the insured.” The policy language is as
follows:

    13. Tear Out. If a Loss Insured to Coverage A property
    is caused by water or steam escaping from a system or
    appliance, we will also pay the reasonable cost you incur
    to tear out and replace only that particular part of the
    building or condominium unit owned by you necessary
    to gain access to the specific point of that system or
    appliance from which the water or steam escaped.

(Emphasis added). The key question is whether the word “incur”
favors State Farm’s interpretation (that an insured must enter a
repair contract the insured cannot void) or the insured’s
interpretation (that she has incurred the loss for which
reasonable repair costs are due and payable as reflected by the
contract and appraisal amount). The trial court agreed with
James and entered summary judgment in her favor.

     In deciding this case, the standard of appellate review is de
novo, meaning we need not defer to the trial court’s
interpretation and, instead, we perform our own independent
legal analysis. See Chandler v. Geico Indem. Co., 78 So. 3d 1293,
1296 (Fla. 2011) (“The issue in this case stems from a trial court’s
ruling on summary judgment based upon the interpretation of an
insurance contract which causes our standard of review to be de
novo.”). In doing so, we must determine if the plain meaning of
the wording of the tear out clause is clear and unambiguous; if so,
our work is done, if not we labor on.

                                 2
     We begin by noting two key points. First, the policy was
drafted by State Farm, which failed to include a definition of the
meaning of the word “incur,” thereby leaving it open to
potentially different meanings. Because “incur” is not defined, “‘it
should be given its plain and ordinary meaning” in the context
presented. Gov’t Emps. Ins. Co. v. Macedo, 228 So. 3d 1111, 1113
(Fla. 2017) (quoting Botee v. S. Fid. Ins. Co., 162 So. 3d 183, 186
(Fla. 5th DCA 2015)).

     Secondly, because State Farm drafted the policy, it will be
construed against the insurer if two or more reasonable
interpretations exist. See Botee, 162 So. 3d at 186 (observing that
a policy is ambiguous when its “language is susceptible to more
than one reasonable interpretation, one providing coverage and
the other limiting coverage”). An ambiguity “must be liberally
construed in favor of coverage and strictly against the insurer.”
Macedo, 228 So. 3d at 1113 (quoting Wash. Nat’l Ins. Corp. v.
Ruderman, 117 So. 3d 943, 950 (Fla. 2013)).

     State Farm’s primary argument is that the meaning of
“incur” in its policy includes an implicit, unwritten requirement
that an insured must sign a repair contract that contains no
opportunity for cancellation. State Farm concedes that this gloss
on the meaning of “incur” is not specifically set out in its policy.
Indeed, an insured would have no warning that such a
requirement exists until the denial of its claim on this basis. As
such, the plain meaning of “incur” as used in State Farm’s policy
does not contain even a hint that an insured’s contract must be
non-voidable before payment will be allowed. State Farm’s
interpretation simply adds an undisclosed requirement that the
policy language does not support. See State Farm Fla. Ins. Co. v.
Crispin, 290 So. 3d 150, 152 (Fla. 5th DCA 2020) (“[W]e are
mindful that we may not ‘rewrite contracts, add meaning that is
not present, or otherwise reach results contrary to the intentions
of the parties.’” (quoting Intervest Constr. of Jax, Inc. v. Gen. Fid.
Ins. Co., 133 So. 3d 494, 497 (Fla. 2014))).

    In further support of its position, State Farm relies on
Ceballo v. Citizens Property Insurance Corp., 967 So. 2d 811 (Fla.
2007), in which the supreme court noted that the insurer had

                                  3
conceded that to “incur” an expense “means to become liable for
the expense, but not necessarily to have actually expended it.” Id.
at 815 (emphasis added). As the highlighted language suggests,
Ceballo, rather than supporting State Farm’s position, cuts in the
other direction. The issue in Ceballo was whether the insured
had to prove that it incurred a loss to be entitled to the payment
of supplemental insurance benefits (up to 25% of the primary
policy). The supreme court agreed with the Third District, both of
which required the insured to show that it had become liable for
and thereby incurred the expenses for which it sought recovery.
The underlying logic is that where the amount of coverage
depends on the amount of the loss, the insured must demonstrate
the extent of the actual loss incurred but need not actually
expend funds to be entitled to payment from an insurer.

     No dispute exists that James demonstrated an actual loss
and is entitled to tear out costs of $38,834.28, an amount
established by the appraisal; the existence and amount of the loss
sustained are clearly established. As in Ceballo, James does not
have to actually expend funds on a loss to be entitled to insurance
proceeds. Nothing in the State Farm policy says that James is
required to expend her own funds (or get a loan) to pay for tear
out costs before she is entitled to seek and receive payment. The
policy could have been written to say that State Farm would
reimburse “the reasonable costs you have paid for tear out”
repairs, but it was not. Compare State Farm Fla. Ins. Co. v.
Phillips, 134 So. 3d 505 (Fla. 5th DCA 2014) (holding that
because a policy expressly allowed it, State Farm could withhold
payment of benefits until a homeowner contracted for the repair
of subsurface sinkhole damages) with State Farm Fla. Ins. Co. v.
Nichols, 21 So. 3d 904 (Fla. 5th DCA 2009) (reaching the opposite
result in a case where the policy contained no such provision).

     State Farm also argues that “incur” means that a policy
holder must be “liable” for the tear out costs, even if State Farm
denies coverage. That too would require adding language and
meaning beyond the common understanding of the tear out
clause. The contract at issue allowed James to void the contract if
State Farm denied coverage, which is a commonsense safeguard
to protect insureds from situations where insurers do not provide
coverage or payment. Why would insureds commit to a costly

                                4
non-voidable contract if they are left on the hook entirely if
insurers fail to pay for losses? State Farm acknowledges that
giving “effect to plain meaning of the [repair] agreement’s terms
allows [James] to void the contract in the event State Farm does
not pay for the Tear Out.” Nothing in the State Farm policy or
Florida law, however, requires that policyholders enter non-
voidable contracts that they are powerless to cancel if coverage is
denied. An opt-out clause protects those who choose to not expend
their monies on costly repair contracts and pursue other options.
Plus, it makes little sense to impute a non-textual mandate that
policyholders must enter non-voidable contracts; an insurer that
denies coverage has no say or legal interest thereafter in forcing
policyholders to incur non-voidable expenses.

    Overall, the competing interpretations of the tear out clause
favors that of the insured. State Farm’s interpretation is not
supported by the text or context; we would have to strain to find
that it prevails over the meaning advanced by James.
Accordingly, we affirm the trial court’s entry of summary
judgment for James.*

    AFFIRMED.

MAKAR and JAY, JJ., concur.
MAKAR, J., concurring, with opinion.
SOUD, J., specially concurring, with opinion.

                 _____________________________

    Not final until disposition of any timely and
    authorized motion under Fla. R. App. P. 9.330 or
    9.331.
               _____________________________

    * We also grant James’s motion for appellate attorney’s fees

and remand the matter to the trial court for a determination of
the correct amount.

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                                             Case No. 5D22-1404
                                    LT Case No. 2019-30212-CICI

MAKAR, J., concurring.

     The policy at issue says that State Farm will “pay the
reasonable cost you incur to tear out and replace” portions of the
residence to access the point where the problem arose. (Emphasis
added). Try as I might, I’m unable to conclude that this language
plainly and unambiguously means that a policyholder incurs the
tear out costs at the time when the loss occurs. James sustained a
loss due to the water leak at her residence; no costs were incurred
at that time. The loss potentially made tear out costs necessary to
remedy the problem, but it did not trigger the tear out clause.
Instead, the clause was triggered when James, as the
policyholder, thereafter took action and incurred costs in the
remedial stage, for example, by entering a reasonable repair
contract. State Farm makes the argument that incurring costs
means the policyholder must have an ironclad irrevocable
contract; or that the policyholder must have paid such costs. Both
arguments are less reasonable than the middle ground that the
policyholder advances, i.e., that by entering the contract at issue
she has incurred the costs for purposes of payment under the tear
out clause, thereby supporting affirmance.

                                6
                                                Case No. 5D22-1404
                                       LT Case No. 2019-30212-CICI

SOUD, J., specially concurring.

     I concur with this Court’s affirmance in this case because, in
my view, the “tear out” provision of the insurance contract sub
judice is not in any way ambiguous.

                                  I.

     James made a claim with State Farm after her Daytona
Beach property suffered water damage in August 2018. State
Farm initially denied any payments for repairs because it
concluded the estimated damages did not exceed her policy’s
deductible. As a result, James filed suit for breach of contract,
after which State Farm exercised its right to appraisal. The
appraisal determined that the tear out damages were $38,834.28,
an amount in excess of James’s deductible.

     The homeowner’s policy required State Farm to “pay the
reasonable cost [James would] incur to tear out and replace”
those portions of her residence needed to access the failed pipe(s).
Based thereon, and following appraisal, James requested
payment. Rather than pay the amount due James after appraisal,
State Farm again denied payment, this time asserting James had
not yet “incurred” the tear out expenses.

    Importantly, James previously had signed a contract with
Advanced Pace Technologies (“APT”) for the repairs to her
property. Recognizing that James would (or did) file a claim with
State Farm, the APT repair contract included the following
provision:

    Project Background and Payment Modification
    Agreements: . . . Further, if such insurance claim(s) are
    made by OWNER [James] and OWNER is thereafter
    notified that its insurance carrier will not cover
    such claim(s) and/or remit payment for the necessary
    repairs to the claimed losses, and only after OWNER

                                  7
    has exhausted all reasonable avenues of recovery
    from its insurance carrier(s), this Proposal is voidable
    by the OWNER at any time prior to APT commencing
    work on the Property, upon satisfactory proof to APT
    that OWNER has reasonably complied with this section
    of the Proposal.

(Second emphasis added).

      In light of this provision, State Farm argues that it properly
denied James’s claim because her contract with APT for repairs
is “illusory” and does not trigger its payment obligations under
the policy. State Farm’s argument fails.

                                II.

     There is no dispute as to the amount at issue. Rather, this
case presents a legal disagreement about when State Farm must
pay James. To resolve this disagreement, the central question
this Court must answer is this: when does James “incur” the
$38,834.28 in tear out costs for purposes of the policy?

                                A.

     To answer such a question, Florida courts turn to the
insurance policy. As is the case with any legal instrument—
whether it be a constitution, statute, ordinance, regulation,
contract or will1—the text is supreme. See Ham v. Portfolio
Recovery Assocs., LLC, 308 So. 3d 942, 946 (Fla. 2020). Therefore,
to properly interpret the tear out provision and its requirement
that James “incur” tear out expenses, the court “start[s] with the
text of the insurance policy,” Parrish v. State Farm Fla. Ins. Co.,
356 So. 3d 771, 774 (Fla. 2023), because “we are bound by the
plain meaning” of its words. State Farm Mut. Auto. Ins. Co. v.
Menendez, 70 So. 3d 566, 569 (Fla. 2011).

   “If the language used in an insurance policy is plain and
unambiguous, a court must interpret the policy in accordance

    1 See Antonin Scalia & Bryan A. Garner, Reading Law: The

Interpretation of Legal Texts 51 (2012).

                                 8
with the plain meaning of the language used so as to give effect to
the policy as it was written.” Serendipity at Sea, LLC v.
Underwriters at Lloyd’s of London Subscribing To Pol’y No.
187581, 56 F.4th 1280, 1285 (11th Cir. 2023) (quoting Travelers
Indem. Co. v. PCR Inc., 889 So. 2d 779, 785 (Fla. 2004)). Simply
put, when the language of a contract is plain and unambiguous, it
controls—full stop.2

     An insurance policy is considered ambiguous only when it is
susceptible to more than one reasonable interpretation, one
providing for, and the other limiting, coverage. See id.; see also
Botee v. S. Fid. Ins. Co., 162 So. 3d 183, 186 (Fla. 5th DCA 2015).
However, “a provision is not ambiguous ‘simply because it is
complex or requires analysis.’” Serendipity at Sea, 56 F.4th at
1285 (quoting Penzer v. Transp. Ins. Co., 29 So. 3d 1000, 1005
(Fla. 2010)). And “[u]ndefined terms . . . are ‘not automatically
rendered ambiguous.’” Roberson v. USAA Cas. Ins. Co., No. 5:15-
CV-454-OC-30PRL, 2016 WL 5848719, at *3–4 (M.D. Fla. Oct. 6,
2016) (quoting Penzer v. Transp. Ins. Co., 545 F.3d 1303, 1306
(11th Cir. 2008)). “Only when a genuine inconsistency,
uncertainty, or ambiguity in meaning remains after resort to the
ordinary rules of construction is the rule [about ambiguity]
apposite.” Sphinx Int’l, Inc. v. Nat’l Union Fire Ins. Co., 412 F.3d
1224, 1228 (11th Cir. 2005) (quoting Excelsior Ins. Co. v. Pomona
Park Bar & Package Store, 369 So. 2d 938, 942 (Fla. 1979)).

     Florida courts will neither search nor strain for ambiguities
that do not exist in an otherwise clear contractual provision. See
id. Nor will we torture the words of a contract so as to subject it
to a forced or “unnatural” interpretation. See id. at 1228–29
(quoting Thomas v. Prudential Prop. & Cas., 673 So. 2d 141, 142
(Fla. 5th DCA 1996) (“[O]ur courts should not put strain and
unnatural construction on the terms . . . of the policy in order to
create uncertainty or ambiguity.”)).

    2  See Shiloh Christian Ctr. v. Aspen Specialty Ins. Co., 65
F.4th 623, 627 (11th Cir. 2023) (“The cardinal principle is that a
policy’s text is paramount . . . . If the policy’s ‘language is
unambiguous, it governs’—end of story.” (citations omitted)).

                                 9
     Rather, when reading insurance policies, Florida courts
deploy time-tested, long-enduring rules of construction. See KT
State & Lemon LLLP v. Westchester Fire Ins. Co., No. 8:21-CV-
1941-TPB-AAS, 2023 WL 2456499, at *2 (M.D. Fla. Mar. 10,
2023). In doing so, we read insurance policies—indeed, any
contract—“in a common-sense and natural manner,” id., and “in
light of the skill and experience of ordinary people.” Penzer, 545
F.3d at 1306 (citation omitted); see also Roberson, 2016 WL
5848719, at *3–4 (quoting Penzer, 545 F.3d at 1306).

                                B.

     To determine the meaning of “incur” in the policy before us,
we first review the contract “to determine whether the parties
agreed to give [“incur”] a meaning other than the one ascribed to
it in general usage.” Parrish, 356 So. 3d at 774. They did not.
Therefore, the term “incur” “‘should be given its plain and
ordinary meaning, and [we] may look to legal and non-legal
dictionary definitions to determine such a meaning.’” Gov’t Emps.
Ins. Co. v. Macedo, 228 So. 3d 1111, 1113 (Fla. 2017) (quoting
Botee, 162 So. 3d at 186).

     Black’s Law Dictionary defines “incur” as “[t]o suffer or bring
on oneself (a liability or expense).” Incur, BLACK’S LAW
DICTIONARY (11th ed. 2019); see also Hall v. United States, 566
U.S. 506, 512 (2012) (using this definition); Hillsborough Cnty.
Sheriff’s Off. v. Hilsman, 23 So. 3d 743, 745 (Fla. 1st DCA 2009)
(same). In the American Heritage Dictionary, incur is defined as
“[t]o acquire or come into (something usually undesirable);
sustain[.]” Incur, THE AMERICAN HERITAGE DICTIONARY (5th ed.
2019).

     Importantly, while we often—and rightly—turn to
dictionaries to inform our opinions as to the plain meaning of
terms, Florida courts do not engage in a merely robotic exercise
when called upon to interpret legal texts; nor do we toil for a
strict (or lenient) interpretation. “A text should not be construed
strictly, and it should not be construed leniently; it should be
construed reasonably, to contain all that it fairly means.” Antonin
Scalia, A Matter of Interpretation: Federal Courts and the Law 23
(emphasis added). Thus, the proper and important work of the

                                10
court is to arrive at a “fair reading” of the contract; that is to say,
“determining the application of a governing text to given facts on
the basis of how a reasonable reader, fully competent in the
language, would have understood the text at the time it was
issued.” See Scalia & Garner, Reading Law at 33 (emphasis
added).

     Based upon the plain meaning of the term “incur” and a fair
reading of the tear out provision in toto, it seems clear that
James “sustained” the tear out expense or cost of $38,834.28
when her property was damaged by water in August 2018. She
“suffered” the expense, as Black’s defines “incur.” James suffered
the expense even though she has not yet paid that expense.
Indeed, this fair reading is buttressed by the very nature of
homeowner insurance claims, where insureds rely upon proceeds
from contracted-for insurance coverage to pay for the expense
suffered.

     Further, this interpretation is consistent with the definition
of “incur” State Farm advanced in its arguments, which is born
from Ceballo v. Citizens Property Insurance Corp., 967 So. 2d 811,
815 (Fla. 2007). In Ceballo, the Florida Supreme Court agreed
that “‘to incur’ means to become liable for the expense, but not
necessarily to have actually expended it.” Id. (emphasis added). At
oral argument, State Farm conceded that the definition from
Ceballo is essentially indistinguishable from the definition of
“incur” in Black’s.

    Further still, James “brought on herself” the liability to pay
APT for the costs of the tear out necessary when she executed the
contract for repairs contemplated in the appraisal. James’s
execution of the repair contract with APT brings her claim
squarely within Black’s definition of “incur.”

     State Farm’s argument that the repair contract with APT is
illusory strains all credibility. “Illusory” is defined as “Deceptive;
based on a false impression.” Illusory, BLACK’S LAW DICTIONARY
(11th ed. 2019). The is no reasonable reading of James’s contract
with APT that can lead to the conclusion it is illusory. No
colorable argument exists to suggest the contract is deceptive or
based on a false impression.

                                  11
     State Farm’s argument that James has not incurred the tear
out costs because James can void the APT repair contract is
simply meritless. By the express terms of the contract, James
may void the repair contract with APT only if State Farm notifies
her that it “will not cover such claim(s) and/or remit payment for
the necessary repairs to the claimed losses[.]” Even in the face of
a denial by State Farm, James may void the APT repair contract
“only after [James] has exhausted all reasonable avenues of
recovery from” State Farm.3 This is the only door through which
James may pass to void the repair contract—and State Farm
alone holds the key.

                               III.

    As a result, in my view, a fair reading of the tear out
provision properly understood in a common-sense and natural
manner leads to only one reasonable conclusion: James has
incurred the tear out costs made necessary by the water leak at
her residence. Therefore, the summary judgment in favor of
James is properly affirmed.

    3 Given the appraisal, there is no possibility that State Farm

will ultimately successfully deny James’s claim.

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