131_C140

WAS SURFACE WATER FROM HEAVY RAINS A FLOOD?

Commercial Property	Flood
Surface Water	Ambiguity

Intrepid Insurance Company (Intrepid) insured Prestige Imports, Inc.’s (Prestige) auto dealership (including its vehicle inventory) for the period August 5, 2009 to August 5, 2010. Intrepid’s policy included the following provision:

“…We will not pay for any loss or damage caused directly or indirectly by the following…Such loss or damage is excluded regardless of any other cause or event covered hereunder which contributes concurrently or in any sequence to the loss or damage:

c. Flood–waves, tides, surface water, overflow of any body of water, or their spray, all whether driven by wind or not, including any earth movement or mudslide caused by or resulting from the accumulation of water on or under the surface of the ground.”

Heavy rains on December 17, 2009 caused storm water drainage systems adjacent to Prestige’s dealership to overflow. The water that flowed onto Prestige’s property immersed 31 vehicles to varying degrees. Prestige filed a claim with Intrepid that Intrepid denied based on the flood exclusion. Prestige disagreed and sued Intrepid.

At trial, Prestige moved for partial summary judgment on the issue of coverage, arguing that the damage resulted from storm drain back-up that Intrepid’s flood exclusion neither excluded nor included in the definition of flood. The trial court granted partial summary judgment to Prestige and Intrepid appealed.

The District Court of Appeal of Florida, Third District’s review was based on the policy’s plain meaning. When contract terms are unambiguous, courts give that language its plain and ordinary meaning. Intrepid argued that falling rain pooled in areas adjacent to Prestige’s property and then flowed into Prestige’s property. In that case, the damage was caused by surface water that the Intrepid policy excluded. On the other hand, it did not specifically exclude water that flowed from the storm drainage system. The court determined that this was a disputed issue of fact that precluded summary judgment. It reversed the partial summary judgment in favor of Prestige and remanded the case for further proceedings consistent with this opinion.

One dissenting justice agreed with the reversal but disagreed that determining the coverage issue required resolving any issue of fact. His opinion was that the flood damage to the property was clearly caused by the storm drainage system’s inability to cope with the unprecedented downpour in the area and that this conclusion required a finding of no coverage as a matter of law.

District Court of Appeal of Florida, Third District. Intrepid Insurance Company, Appellant, v. Prestige Imports, Inc. Appellee. No. 3D10-3440. Oct. 12, 2011. 78 So.3d 583