James R. ALLEN, Diane Z. Allen, Matthew J. Schall, Judith A. Schall, Husband and Wife Individually and as Representatives of Others Similarly Situated, Plaintiffs-Appellants, v. USAA CASUALTY INSURANCE COMPANY, A Texas Corporation, Defendant, United Services Automobile Association, A Texas Reciprocal Inter-Insurance Exchange and Unincorporated Association, Defendant-Appellee.
No. 14-13478
United States Court of Appeals, Eleventh Circuit.
June 25, 2015.
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.
Before ED CARNES, Chief Judge, JILL PRYOR and BLACK, Circuit Judges.
BLACK, Circuit Judge:
After James R. Allen and Diane Z. Allen (collectively, the Allens) purchased building ordinance and law (BOL) insurance from United Services Automobile Association (USAA) covering 50% of their home‘s value, they suffered no losses triggering payment. Now the Allens seek to recover a portion of their premium payments because they assert they would have elected to pay for BOL insurance covering only 25% of their home‘s value. Nonetheless, their position is that had they actually suffered a loss, they would have been entitled to 50% of their home‘s value, not 25%. The Allens appeal the district court‘s dismissal of their complaint, arguing
We agree with the district court that the plain language of
I. BACKGROUND
The Allens are a married couple who have resided in Pensacola, Florida since 2000. Since 2002, the Allens have obtained homeowner‘s insurance coverage from USAA. These policies have included BOL coverage.
Building ordinances can significantly raise the cost of repairing or replacing a damaged structure. These costs are not covered by standard property insurance, which typically covers only the cost of restoring the building to its original condition. BOL coverage fills this gap by paying for the cost of complying with building codes or other legal requirements when repairing or replacing a structure after a covered loss. For example, assume a house is built with single-pane windows. Thereafter, the local government enacts a rule requiring double-pane windows, and a window subsequently breaks. The primary insurance coverage pays the cost to replace a single-pane window, and BOL coverage pays the additional cost required to upgrade to the double-pane window. BOL coverage is stated as a percentage of the primary dwelling coverage. Thus, an
From March 3, 2002 to March 3, 2006, the Allens’ policies included 25% BOL coverage. Since March 3, 2006, the Allens’ policies have included 50% BOL coverage. The policies effective from 2006 to 2013 contain a page titled “Building Ordinance or Law Coverage—Florida,” which specifies each policy includes 50% BOL coverage.
Neither this nor any other page is an approved Regulation Office form pursuant to
The Allens filed a proposed class action complaint in the Northern District of Florida alleging USAA violated
Pursuant to
II. STANDARD OF REVIEW
We review de novo a
Under
III. DISCUSSION
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
A. Florida Statutes § 627.7011(2)
Both parties agree an insurer must obtain a policyholder‘s written consent on a form approved by the Regulation Office before issuing less than 25% BOL coverage. The Allens argue the district court erred in concluding
To accomplish this objective, the Allens assert,
In response, USAA argues
We analyze
Subsection (2) of
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.
If the policy already provides for replacement cost insurance including 25% BOL coverage, the insurer need not separately offer the first two coverage options listed above. Id. However, the insurer must still offer the third coverage option for replacement cost insurance including 50% BOL coverage. Id.
Thus, subsection (1) requires the insurer to offer two “policies or endorsements.” The first “policy or endorsement” offers replacement cost coverage. The second “policy or endorsement” offers both 25% and 50% BOL coverage. There are accordingly two “policies or endorsements” and three coverage options.
Turning to subsection (2), a policy is deemed to include 25% BOL coverage
Subsection (2) thus functions as a gap-filling measure. If a policyholder receives the two “policies or endorsements” specified in subsection (1) and does not reject them in writing on an approved form, the policy is deemed to include 25% BOL coverage adjusted according to replacement cost. In this way, a policyholder who simply signs an insurance contract without reading the fine print and explicitly rejecting replacement cost coverage or BOL coverage would still acquire a sufficient, minimum level of protection.
The Allens would agree with our analysis until this point. They would not dispute that a policyholder is entitled to 25% BOL coverage when she signs a homeowner insurance policy and does not explicitly reject such coverage. However, the Allens contend that when a policyholder selects BOL coverage above 25% percent, that selection must be made on a form approved by the Regulation Office.
The Allens’ entire argument hinges on a single sentence in subsection (2): “The rejection or selection of alternative coverage shall be made on a form approved by the [Regulation] [O]ffice.”
Considered in isolation, the Allens’ interpretation of this sentence is persuasive. The ordinary meaning of the word “alternative” is “a proposition or situation offering a choice between two things wherein if one thing is chosen the other is rejected.” WEBSTER‘S NEW INTERNATIONAL DICTIONARY 63 (3d ed. 1976). The word “alternative” is therefore not limited to a downward departure. If a policyholder selects 50% BOL coverage, she has chosen that amount and rejected the 25% BOL coverage.
The Allens buttress this argument by noting the sentence refers to the selection, not just the rejection, of alternative coverage. If the approved form requirement applied only when a policyholder sought to reject at least 25% BOL coverage, there would be no reason to include the word “selection,” which necessarily refers to BOL coverage exceeding 25%. See State v. Goode, 830 So. 2d 817, 824 (Fla. 2002) (“[T]he Legislature does not intend to enact useless provisions, and courts should avoid readings that would render part of a statute meaningless.“).
The Allens’ argument is severely undermined, however, when this single sentence in subsection (2) is considered within the entire context of
Although subsection (2) requires the written rejection or selection of alter-
Furthermore, contrary to the Allens’ argument, the inclusion of the word “selection” in subsection (2) is not superfluous merely because a policyholder‘s selection of BOL coverage over 25% is not subject to the approved form requirement,
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 (1992).
The statutory purpose of
2. Legislative history
When, as here, the words of the Legislature are clear, “the legislative history of a statute is irrelevant.” First Healthcare Corp. v. Hamilton, 740 So. 2d 1189, 1196 (Fla. 4th DCA 1999), disapproved on other grounds by Fla. Convalescent Ctrs. v. Somberg, 840 So. 2d 998 (Fla. 2003). We nonetheless note the legislative history of
The Legislature originally enacted
The Legislature created the Study Commission on Property Insurance and Reinsurance, which met during the summer of 1993 and recommended the contract reforms codified in
B. Florida Statutes § 627.418(1)
Alternatively, even if USAA had violated
Again, under Florida law we examine the statute‘s plain language. See Atwater, 95 So. 3d at 90. Section
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 only plausible reading of
The first sentence of
By contrast, the second sentence of
Nonetheless, the Allens argue the second sentence of
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.”
IV. CONCLUSION
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 (1982). We affirm the district court‘s dismissal of the complaint.
AFFIRMED.
APPENDIX
(1) Prior to issuing a homeowner‘s insurance policy, the insurer must offer each of the following:
(a) A policy or endorsement providing that any loss that is repaired or replaced will be adjusted on the basis of replacement costs to the dwelling not exceeding policy limits, rather than actual cash value, but not including costs necessary to meet applicable laws and ordinances regulating the
(b) A policy or endorsement providing that, subject to other policy provisions, any loss that is repaired or replaced at any location will be adjusted on the basis of replacement costs to the dwelling not exceeding policy limits, rather than actual cash value, and also including costs necessary to meet applicable laws and ordinances regulating the construction, use, or repair of any property or requiring the tearing down of any property, including the costs of removing debris. However, additional costs necessary to meet applicable laws and ordinances may be limited to 25 percent or 50 percent of the dwelling limit, as selected by the policyholder, and such coverage applies only to repairs of the damaged portion of the structure unless the total damage to the structure exceeds 50 percent of the replacement cost of the structure.
An insurer is not required to make the offers required by this subsection with respect to the issuance or renewal of a homeowner‘s policy that contains the provisions specified in paragraph (b) for law and ordinance coverage limited to 25 percent of the dwelling limit, except that the insurer must offer the law and ordinance coverage limited to 50 percent of the dwelling limit. This subsection does not prohibit the offer of a guaranteed replacement cost policy.
(2) 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 office. The form must fully advise the applicant of the nature of the coverage being rejected. If this form is signed by a named insured, it is conclusively presumed that there was an informed, knowing rejection of the coverage or election of the alternative coverage on behalf of all insureds. Unless the policyholder requests in writing the coverage specified in this section, it need not be provided in or supplemental to any other policy that renews, insures, extends, changes, supersedes, or replaces an existing policy if the policyholder has rejected the coverage specified in this section or has selected alternative coverage. The insurer must provide the policyholder with notice of the availability of such coverage in a form approved by the office at least once every 3 years. The failure to provide such notice constitutes a violation of this code, but does not affect the coverage provided under the policy.
. . . .
(4) A homeowner‘s insurance policy must include in bold type no smaller than 18 points the following statement:
”LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE THAT YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO CONSIDER THE PURCHASE OF FLOOD INSURANCE FROM THE NATIONAL FLOOD INSURANCE PROGRAM. WITHOUT THIS COVERAGE, YOU MAY HAVE UNCOVERED LOSSES. PLEASE DISCUSS THESE COVERAGES WITH YOUR INSURANCE AGENT.”
The intent of this subsection is to encourage policyholders to purchase sufficient coverage to protect them in case events excluded from the standard homeowners
. . . .
SUSAN H. BLACK
UNITED STATES CIRCUIT JUDGE