Florida Court Rejects Claim Replacement Of Undamaged Property Is Necessary For Aesthetic Uniformity

Late last week a federal court in Florida tossed a condominium association’s claims that it was entitled to replace undamaged hallway carpeting, wallpaper, baseboards, and woodwork in order to “achieve aesthetic uniformity” with similar hallway components replaced after water damage.  In Great Amer. Ins. Co. v. Towers of Quayside No. 4 Condominium Ass’n., 2015 U.S. Dist. LEXIS 150358, 2015 WL 6773870 (S.D. Fla., Nov. 4, 2015), the court held that replacing undamaged property to insure “matching” is only appropriate if the repairs concern “a continuous run” of items such as that.

shutterstock_175299539The policyholder owned a 25-story condominium building in Miami.  There was a tiled elevator landing on each floor separating the east and west hallways, and those portions of the structure on floors three through twenty-five had a uniform appearance by design.  On February 11, 2013, a valve broke in an air conditioning unit on the east side of the 11th floor, and cascading water damaged the hallways on the east side of the building all the way down to the third floor.

The policy insured against “direct physical loss,” and it specifically excluded coverage for “[d]elay, loss of use, loss of market, or any other consequential loss.”  The carrier paid $170,292 for damage to drywall, carpeting, baseboards, insulation, woodwork, and wallpaper in the east hallways.  The insured contended that that did not constitute full compensation, however, arguing that it was entitled to replace undamaged hallway components (carpeting, wallpaper, baseboard, and woodwork) on both floors twelve through twenty-five and in the west side hallways on floors three through eleven in order to “achieve aesthetic uniformity between the new carpeting, wallpaper, baseboards and woodwork installed in the area that suffered water damage and the rest of the building.”  According to the condominium association, that was necessary to completely restore the structure to its pre-loss condition.

The insurer responded by filing a declaratory judgment action and moving for summary judgment, and the motion was granted in part last Thursday by the Southern District of Florida’s Judge James Lawrence King.  In the words of the opinion, “the policy plainly only provides coverage for ‘direct physical loss,’ specifically excludes coverage for consequential loss, and makes no mention of ‘matching’ or ‘aesthetic uniformity’ at all.”  Judge King therefore held that there was no coverage whatsoever for replacement of undamaged hallway components on the 14 floors above the loss.  In addition, he rejected the claim for carpeting replacement in the west side hallways on floors three through eleven because it was undisputed that a tiled lobby separated the east and west hallways.

The judge denied the motion with respect to the remaining hallway components (wallpaper, baseboard, and woodwork) on floors three through eleven, however, noting that under Ocean View Towers Ass’n. v. QBE Ins. Corp., 2011 WL 6754063, 2015 U.S. Dist. LEXIS 147579 (S.D. Fla. 2011)

coverage for matching, for the purposes of achieving aesthetic uniformity, is appropriate where repairs concern ‘any continuous run of an item or adjoining area’ for materials such as wallpaper, baseboards, [and] woodwork.

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[A]s it is unclear whether the wallpaper, baseboards, and woodwork on floors three through eleven form a continuous run from one end of the building to the other, or whether these components are separated from each other in the same manner the carpeting in the east and west hallways is separated by the central elevator lobby on each floor, Great American has failed to establish it is entitled to summary judgment with respect to whether it must provide “matching” coverage for these components

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About The Property Insurance Law Observer
For more than four decades, Cozen O’Connor has represented all types of property insurers in jurisdictions throughout the United States, and it is dedicated to keeping its clients abreast of developments that impact the insurance industry. The Property Insurance Law Observer will survey court decisions, enacted or proposed legislation, and regulatory activities from all 50 states. We will also include commentary on current issues and developing trends of interest to first-party insurers.
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