Steuart Petroleum Co. v. Certain Underwriters at Lloyd's LondonSteuart Petroleum Co. v. Certain Underwriters at Lloyd's London
- Reporters:
- ,
- Before:
- Booth, Joanos, Wolf (per curiam)
Steuart Petroleum appeals two final summary judgments determining that Steuart was not entitled to recover under its insurance contract with Lloyd‘s for (1) expenses for firefighting foam used to extinguish a mаssive five day fire or for (2) the amount of Steuart‘s settlement with the City of Jacksonville for extraordinary firefighting services. We affirm without discussion as to the second issue and reverse as to the first issue.
Steuart owned and operated a petroleum storage facility in Jacksonville, Florida. In January, 1993, a massive gasoline fire began in one of the tanks at the facility. The fire was extinguished after burning for almоst five days. When the fire began, Steuart had on its premises fire fighting foam worth $15,985.00. In order to extinguish the fire, Steuart had to bring in additional foam valued at $768,691.00. Lloyd‘s accepted Steuart‘s claim for the foam valued at $15,985.00, but denied the claim for the remainder of the foam based on the foam loss assumption clause contained in the policy of insurance.
In Steuart‘s complaint against Lloyd‘s, it alleged Llоyd‘s had agreed to indemnify Steuart for loss and damage to covered property resulting from “all risks of direct physical loss or damage” except those expressly excluded or limited, and thаt loss or damage by fire is not expressly excluded or limited, therefore the policy insures against property loss or damage by fire up to $25,000,000.1 Steuart further alleged that the policy contained
In its second amended answer denying сoverage of the disputed expense, Lloyd‘s asserted, basically, that the terms and conditions of the policy speak for themselves, and when read as a whole, the policy only cоvered the foam that was on the premises at the time the fire originated. Lloyd‘s asserted that the “expenses to reduce loss” provision was not actually an endorsement as it was issued along with the policy.
Steuart filed a motion for summary judgment, and Lloyd‘s filed a cross-motion for partial summary judgment as to the fire extinguishing foam, asserting the “foam loss assumption clause” limited coverage tо the value of the foam on the premises when the fire originated, that none of the other clauses superseded this foam assumption clause, and that if any ambiguity existed, it should be construed against Steuart as the drafter of the policy through its insurance brokers. Lloyd‘s admitted that the foam expense was incurred by Steuart to defend, safeguard, save, and preserve the storage facility, and that it was incurred for the purpose of reducing the loss.
The trial court granted Lloyd‘s motion for partial summary judgment on the excess foam issue, finding that the foam loss assumption clause controllеd, and that the expenses to reduce loss clause did not supercede the foam loss clause. The court found it immaterial whether the expense to reduce loss clause was a subsеquent endorsement since the clauses were not in conflict, as they did not deal with the same subject matter, and the foam loss clause specifically limited liability to foam on the premises when the fire originated. Further, the expenses to reduce loss clause was a general clause, and the two clauses could be reconciled and given effect. There were no genuinе issues of material fact as to foam extinguishing expenses, rather, the issue was one of law.
Appellant‘s argument on appeal is basically that the policy, considered as a wholе, including endorsements, covers the disputed foam expense because the expenses to reduce loss endorsement and the foam loss assumption clause both deal with loss reductiоn expenses, and the two are in conflict, therefore the clause providing greater coverage—the expenses to reduce loss provision—prevails. Appellant also сontends that the expenses to reduce loss endorsement reversed prior language in the policy, and that the foam loss clause need not be read to limit the expenses to reduce loss endorsement in order to have meaning. Appellant points out that Lloyd‘s admitted the balance of the foam was an expense incurred to reduce loss, and witnesses for Lloyd‘s agreed the expenses to reduce loss endorsement alone would cover the foam. Further, the expense was incurred to protect the insured property, so it was in accord with the sue and labor clause.
Appellee responds that the expenses to reduce loss clause does not extend liability to cover foam costs beyond what is set forth in the foam loss assumрtion clause, and the two clauses do not conflict. Appellee contends that when all provisions are given effect, and any apparent inconsistencies reconciled, thе foam clause expressly limits recovery to the value of foam located on the premises at the
The following language is contained in the main body of the policy:
FOAM LOSS ASSUMPTION CLAUSE
In consideration of the rate of premium at which this policy is written, Underwriters shall be liable for the loss to foam оr other fire extinguishing materials lost, expended, or destroyed in fighting fire, involving property insured hereunder, including the loss to similar material which may be brought on the premises for the purpose of extinguishing fire аlready in progress at the time such materials are ordered and delivered, but the liability shall not exceed the combined value of such extinguishing materials which are on the premises, or on adjacent premises if such materials are jointly owned, at the time the fire originates.
The following language appears on a separate page appended to the poliсy:
ENDORSEMENT NO. 3
EXPENSES TO REDUCE LOSS
This policy covers such expenses as are necessarily incurred for the purpose of reducing any loss under this policy, though such expense may not exceed the amount which the lоss under this policy is thereby reduced.
All other terms and conditions remain unchanged.
Interpretation of a contract is a matter of law, with regard to which the appellate court is on equal footing with the trial court. See Ballantyne v. Ballantyne, 666 So.2d 957 (Fla. 1st DCA 1996). “We are bound to аssign to contract provisions the meaning that would be attached to them by an ordinary person of average understanding,” Nugget Oil, Inc. v. Universal Security Insurance Co., 584 So.2d 1068, 1070 (Fla. 1st DCA 1991), citing United States Fidelity & Guaranty Co. v. Rood Investments, Inc., 410 So.2d 1373, 1374 (Fla. 5th DCA 1982). We conclude that both the foam loss assumption clause and the expenses to reduce loss clause deal with the subject of loss reduction expenses and that they are in conflict, therefore the clause affording greater coverage will prevail. See Government Employees Insurance Co. v. Burak, 373 So.2d 89 (Fla. 3d DCA 1979)(when two provisions in an insurance policy deal with the same subject matter, the one affording greater coverage will prevail). The foam expense required to extinguish this massive five dаy fire was unquestionably an expense necessarily incurred to reduce loss. In addition, in general, to the extent an endorsement is inconsistent with the body of the policy, the endorsement controls. See generally 13A John A. Appleman and Jean Appleman, Insurance Law & Practice §§ 7537-8 (1976). We are not persuaded by appellee‘s assertion that the provision labeled “endorsement” was not an endorsement.3 It does not appear to be unusual for an endorsemеnt to be attached before delivery of the policy; See id. Further, we believe the cases appellee relies on, Excelsior Insurance Co. v. Pomona Park Bar & Package Store, 369 So.2d 938 (Fla.1979), and Nugget Oil, supra, are distinguishable in that they did not involve endorsements.
AFFIRMED in part, REVERSED in part and REMANDED for further consistent proceedings.
BOOTH, JOANOS and WOLF, JJ., concur.
Notes
This policy covers the prоperty insured hereunder against all risks of direct physical loss or damage occurring during the period of this policy from any external cause, except as hereinafter excluded.
In the event of any loss or damage insured against, it shall be lawful and necessary for the Insured, his or their factors, servant and assigns, to sue, labor and travel or, in and about the defense, safeguard and recоvery of the property insured hereunder, or any part thereof, without prejudice to this insurance, nor shall the acts of the Insured or Underwriters, in recovering, saving and preserving the property insurеd in case of loss be considered a waiver or an acceptance of abandonment.