In Citizens Property Ins. Corp. v. River Manor Condominium Assoc., Inc., 2013 Fla. App. LEXIS 5729 (4th DCA April 10, 2013), the court primarily addressed a potential conflict between a policy exclusion and insurance coverage requirements of the Condominium Act, Fla. Stat. 718.111(11)(b). Ultimately, the court reversed the trial court’s summary judgment ruling in favor of River Manor Condominium Assoc., Inc. (“River Manor”) and held that the statute was not intended to impose a mandatory insurance obligation on carriers. In addition, the court addressed the propriety of other summary judgment issues related to appraisal amounts not owed pursuant to a purported agreement; duplicative amounts in an appraisal award; and items purportedly the responsibility of unit owners.

The case arises from Hurricane Wilma damage sustained by a condominium complex consisting of three buildings. Faced with a dispute over the amount of loss, the parties participated in the appraisal process which resulted in compensation awards for each of the three buildings and a $1,253,278.84 award for exterior common elements. The Citizens policies excluded from coverage “other structures on the demised premises…,” including carports, cabanas, swimming pools, Jacuzzis, piers, seawalls, bridges, ramps, walks, decks, patios and similar structures, along with landscaping items. The parties agreed that the exterior common elements appraisal award represented compensation for damage caused to such excluded items. Nevertheless, River Manor sought coverage based upon (1) a policy provision requiring that the policy be amended to “conform” to any conflicting statutes of the State where the property is located; and (2) Fla. Stat. 781.111(11)(b), which requires insurers that issue condominium policies to provide coverage for “[a]ll portions of the condominium property located outside the units,” and “[a]ll portions of the condominium property for which the declaration of condominium requires coverage by the association.” In particular, River Manor argued that the policies must be “amended” to delete the exclusions pursuant to the policy conformance clauses which provide that:

Any terms of this policy which are in conflict with the statutes of the State wherein the property is located are amended to conform to such statutes….

The trial court addressed the issue of whether the policy exclusions in fact conflict with Fla. Stat. 718.111(11)(b). Finding that the statute imposes a mandatory insurance obligation on carriers, and that a “conflict” existed between the exclusions and the statute, the trial court granted summary judgment in favor of River Manor and awarded the amounts the appraisal attributed to otherwise excluded items.

After a detailed analysis of statutory construction principles, the 4th DCA rejected the existence of a conflict, relying in part upon the determination that the subject matter of the statute is clearly the regulation of condominium associations—not the regulation of the business of insurance. Accordingly, the court reversed the trial court summary judgment with respect to exterior common elements:

We therefore hold that when considered as a cohesive whole, section 718.11(11), Florida Statutes (2005), is intended to regulate the insurance obligation of condominium associations by: (a) specifying the items that the association is responsible for covering versus the items that the unit owners are responsible for covering; and (b) requiring associations to use their “best efforts” to obtain the coverage it is responsible for securing.

The 4th DCA also addressed the question of whether the trial court prematurely entered summary judgment without considering Citizens’ objections to certain line item awards. Citizens refused to pay certain items from the appraisal award, claiming that they were: (a) indisputably not owed pursuant to an agreement of the parties; (b) duplicative of amounts included in other parts of the award; or (c) items that were the responsibility of the unit owners to insure. As to the first issue, the court determined that it does not raise a coverage issue, nor does it challenge the “amount of loss” determined by the appraisers. Accordingly, the 4th DCA held that such a defense, in the nature of an accord and satisfaction, is one that should have been entertained by the court, as it raises a claim not encompassed by the appraisal clauses in the policies, as well as one that appraisers are ill equipped to decide. The court also affirmed those summary judgment rulings in which the trial court refused to adjudicate Citizens’ claims that amounts awarded were duplicative or represent losses to property the unit owners – as opposed to River Manor – were obligated to insure.

This case is particularly significant in its recognition that insurance-related statutory provisions must be closely evaluated for an accurate determination of legislative intent as part of any statutory analysis. The court full appreciated that section 718.111(11)(b) does say that “every hazard insurance policy issued or renewed on or after January 1, 2004 … shall provide coverage” for the specified items, and that insurers – not condominium associations – issue or renew insurance policies. However, the literal meaning of this one isolated sentence does not reflect the intent of the statute when placed in proper context (i.e., an insurance component imposed upon condominium associations). In short, litigants should not rush to the conclusion that policy language in apparent conflict with a statutory provision should be conformed to the statute in question.