Shiloh Christian Ctr. v. Aspen Specialty Ins. Co.

By: Andrew Leslie

No. 22-11776 (11th Cir. Apr. 13, 2023).

On April 13, 2023, the United States Court of Appeals for the Eleventh Circuit addressed an “important and (as it turns out) interesting” issue concerning the interpretation of coverage from losses resulting from “named windstorms” within two consecutive written insurance policies.  On appeal from the U.S. District Court for the Middle District of Florida, the Court of Appeals addressed whether, under Florida law, in the event of a conflict between contracting parties’ subjective intentions and expectations, on the one hand, and the clear and unambiguous text of the agreement(s) on the other, the Court ruled that the latter must control.  In doing so, the Court reversed the decision of the district court.

The facts of this case strongly suggest that the parties intended that the insurance policies bargained for would exclude damages caused by named windstorms.  In 2014, Aspen Specialty Insurance Company (“Aspen”) issued an insurance policy providing coverage to Shiloh Christian Center’s (“Shiloh”) church and daycare.  In 2015, Shiloh asked Aspen to remove named windstorm coverage from the policy in exchange for a reduction of over $20,000 in annual premiums.  When Aspen accepted in July 2015, it issued an endorsement implementing the change to the policy, reduced Shiloh’s premium, and even refunded past payments made under the policy that included named-windstorm coverage.  Each year thereafter, Shiloh would renew its policy under the post-amendment coverage that excluded named windstorms, and even scribbled “Ex wind” on the “forms and conditions” section of its application(s).  Aspen then issued the 2016 policy as a “renewal of” the previous 2015 policy which was, interestingly, an additional “$10,000 cheaper than the amended 2015 policy.”  However, the 2016 policy language did not contain an exclusion for named windstorms.

Subsequently, in October 2016, Hurricane Matthew traveled through Melbourne and ripped the roof off Shiloh’s building, rainwater poured in and further damaged the property.  Shiloh filed a claim for damages related to Hurricane Matthew, and Aspen denied coverage citing the previously negotiated exclusion for losses caused by named windstorms.

The following year, Shiloh renewed its policy under the same terms and conditions, and again scribbled “EX wind” in its application just as it had done the previous year.  The quote Aspen provided cited the coverage exclusion for “Named Windstorms.” Shortly thereafter, Aspen formally issued the policy which likewise stated, “renewal of” the 2016 policy, yet the exclusions provision said nothing about “Named Windstorms.”  Then, as the Court describes, “[l]ike clockwork, in September 2017, a named windstorm–Hurricane Irma–blew through town and, you guessed it, tore the roof off of Shiloh’s building.”

Shiloh filed another claim citing the cause of loss as “Hurricane Irma,” and in the same fashion, Aspen denied Shiloh’s claim.  Thereafter, Shiloh sued Aspen for breach of contract, and the parties’ cross-motions for summary judgment asked for a declaration on the looming and not so simple question of law: Do the 2016 and 2017 policies cover named-windstorm related losses?  The district court found that the “explicit bargaining to remove named windstorm coverage, the reduced premiums . . . and the explicit language in the subsequent policy quotes” together excluded coverage for named windstorms.  The district court held that the evidence regarding the parties’ intent was “overwhelming” and granted summary judgment to Aspen.

On appeal, the Court reversed the district court’s ruling and held that both policies covered losses resulting from the named windstorms.  Because the case was filed in federal court based on diversity of citizenship between the parties, the Court applied Florida law and first looked to the cardinal principle that the text of a written policy is most important.  “Florida courts start with ‘the plain language of the policy, as bargained for by the parties.’”  State Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004) (internal citations omitted).   Additionally, Fla. Stat. § 627.419(1), “permits reviewing courts to venture outside of the policy’s four corners in limited circumstances-to consider for instance, whether an insured’s ‘application’ should be understood to ‘amplif[y], extend, or modif[y]’ the policy.”  However, the Court noted “that in the event of a conflict between the policy and the underlying application, the policy controls.” See Mathews v. Ranger Ins. Co., 281 So. 2d 345, 349 (Fla. 1973) (“[T]he general rule” is that “the provisions of the policy govern where conflict exists between the provisions of the application and the policy.”) (interpreting § 627.419(1)).

The Court further considered arguments on appeal that potential ambiguities existed in the text of the 2016 policy which did not appear in the 2017 policy.  That potential ambiguity, as the Court notes, is found in the 2016 Policy’s deductible provision which states “Named Windstorm[s]”: “DEDUCTIBLE: $5,000 Per Occurrence, except; $25,000 Per Occurrence as respects Wind and/or Hail (excluding Named Wind-storm).”  Because the Court found two possible interpretations as to the meaning of this provision, it turned to the contra proferentem cannon of insurance-contract interpretation and two prior decisions issued by the Supreme Court of Florida.  When presented with an insurance policy that is ambiguous on its face, “any ambiguity which remains after reading each policy as a whole and endeavoring to give every provision its full meaning and operative effect must be liberally construed in favor of coverage and strictly against the insurer.” Gov’t Emps. Ins. Co. v. Macedo, 228 So. 3d 1111, 1113 (Fla. 2017) (internal citations omitted).  Courts should not “plumb the depths for [extrinsic] evidence of the parties’ supposed intent.”  Shiloh Christian Ctr. v. Aspen Specialty Ins. Co., No. 22-11776 (11th Cir. Apr. 13, 2023).

Thus, despite the parties’ negotiations, intentions, and conduct after the supposed amendment, the Court here still found that (1) the 2017 policy language unambiguously covered losses caused by named windstorms, and (2) the 2016 policy, while “potentially ambiguous,” also covered losses caused by named windstorms because any ambiguity in the insurance policy was to be resolved in favor of coverage and against the drafter.

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