Hicks v. American Integrity Insurance Company of Florida, Case No. 5D17–1282, decided Feb. 23, 2018

Where an exclusionary clause can be interpreted in more than one way, the 5th DCA may read it in the way most likely to find coverage.

Hicks was insured under an “all risks” policy. While Hicks was out of town for an extended period of time, the water supply line to his refrigerator began to leak, slowly at first and increasing over time to the point that it was leaking approximately 1,000 gallons per day. Hicks filed a claim with AIIC. Following its investigation, AIIC denied the claim on the basis of its policy exclusion for constant or repeated seepage. Hicks filed suit against AIIC, alleging breach of contract. AIIC filed a motion for summary judgment on the basis of its policy exclusion of leaks occurring over a period of more than 14 days. In his counter motion for summary judgment, Hicks argued he was entitled to all losses occurring within the first 13 days following the start of the leak. In support of his motion, Hicks submitted a report from a forensic general contractor, which attempted to determine the portion of the loss resulting from the first 13 days of the leak. The trial court sided with AIIC, reasoning that, while its policy might provide coverage for the first 13 days of the loss, it could not determine the time frame of the damage.

On appeal, Hicks argued that AIIC’s exclusion applied only to the losses caused by water on day 14 and onward. The appellate court noted that the trial court had actually conceded that the policy “might” cover “the loss in the first 13 days.” The court was not persuaded by trial court’s reasoning that AIIC was entitled to summary judgment because the court could not determine whether the loss occurred in the first 13 days. Noting that under an all-risk policy, once an insured establishes a loss covered under the terms of the policy, the burden shifts to the insurer to prove the applicability of a particular exclusion.

In addition, while the appellate court did not explicitly agree with Hicks’ reasoning, it did find that the exclusion was susceptible to more than one interpretation. Because insurance clauses are to be construed narrowly, and exclusionary clauses even more narrowly, any ambiguity is construed against the insurer.

Where an exclusionary clause could be interpreted in more than one way, the court was inclined to read it in the way most likely to find coverage. The court reversed the summary judgment in favor of AIIC and remanded the case to the trial court for entry of partial summary judgment in favor of Hicks on the issue of coverage within the first 13 days of the loss. It further found that the burden was on AIIC to prove that a particular loss was sustained after the thirteenth day for the purposes of exclusion under the clause. 


Case Law Alerts, 2nd Quarter, April 2018

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