26 Fla. L. Weekly Supp. 2a
Online Reference: FLWSUPP 2601AFFOInsurance — Homeowners — Coverage — Exclusions — Mold — Trial court erred in granting motion to dismiss by ruling on an ultimate fact in dispute regarding whether claim for mold testing services performed following water intrusion fell within policy’s mold exclusion — Remand for further proceedings
AFFORDABLE INSPECTION SERVICES, Appellant, v. AMERICAN SECURITY INSURANCE CO., Appellee. Circuit Court, 11th Judicial Circuit (Appellate) in and for Miami-Dade County. Case No. 16-497 AP. L.T. Case No. 16-001896-SP-23. March 7, 2018. An appeal from the County Court of the 11th Judicial Circuit; Myriam Lehr, Judge. Counsel: Vin Roy Venkatesh, for Appellant. Cherine Smith Valbrun, for Appellee.
(Before MUIR, MARIN and SANCHEZ-LLORENS, JJ.)
(MARIN, Judge.) Before this Court is an appeal of a County Court’s order which dismissed with prejudice the Appellant’s complaint. We find the County Court erred in failing to find the facts, as pled, when accepted as true, successfully alleged a cognizable legal claim. We also find the County Court exceeded the bounds of the motion to dismiss by ruling on an ultimate fact in dispute which cannot be resolved in a motion to dismiss. Accordingly, we reverse the County Court’s decision and remand this case for further proceedings.
Background
This appeal involves the terms of a home insurance policy governing mold.
The Appellant, Affordable Inspection Services, is a company engaged in the business of mold testing. In 2015, Guydeline Larsen hired the Appellant to determine if water intrusion contaminated certain areas of the kitchen. In 2014, Larsen’s property was allegedly “damaged by a water event.” Larsen, as the homeowner and insured beneficiary, filed a claim with her insurance carrier, the Appellee, American Security Insurance Company. After filing her claim, Larsen hired the Appellant to test for mold and to evaluate the extent of the water damage. In consideration for the services performed, Larsen executed an assignment of benefits, assigning her post-loss insurance benefits to the Appellant. After conducting the assessment, the Appellant submitted its invoice directly to the Appellee for the mold testing services performed. The Appellee denied the claim on the grounds that mold is not a covered loss; and therefore, coverage will not be extended for mold testing services. Based on this refusal to pay the claim, the Appellant sued the Appellee for breach of the insurance contract.
In response, the Appellee filed a motion to dismiss the complaint on the grounds that the Appellant’s claim for payment is solely based on damages related to mold which the insurance policy expressly excludes from coverage. As proof, the Appellee referenced the Appellant’s invoice attached to the complaint and specific allegations contained in the complaint which purportedly acknowledged that the Appellant is seeking insurance benefits for mold contamination testing services.
To substantiate the company’s mold exclusion policy, the Appellee included the following policy clause in its motion to dismiss:
We do not insure loss:
(3) caused by:
(f) any of the following
(3) Smog, rust or other corrosion, fungi, mold, wet or dry rot. Fungi means any type or form of fungus, including mold or mildew, and any mycotoxins, spores, scents or by-products produced or released by fungi;
(The Record, at 81, i.e., Appellee’s Motion to Dismiss, ¶ 7).
In opposition to the motion to dismiss, the Appellant filed its response asserting, first, that mold contamination is not excluded under the policy since it is a resulting loss caused by a peril insured against, i.e., water intrusion. Second, dismissal of the complaint is procedurally inappropriate when dismissal would be based on what caused the damage, which is a factual dispute for later consideration.
Siding with the insurer, the trial court granted the motion to dismiss with prejudice following the hearing. The order contained no explanation regarding this decision. Consequently, following this ruling, the Appellant timely filed the pending appeal.
Our Decision
Based on a de novo review, we find the County Court erred in dismissing the complaint.
In determining whether the complaint presents the essential substantive elements of a claim for relief, this Court carefully reviewed the allegations contained within the four corners of the complaint, its attachments, and documents incorporated by reference; and accepted, as true, all facts and inferences pled. Wallace v. Dean, 3 So. 3d 1035, 1042-1043 (Fla. 2009) [34 Fla. L. Weekly S52b]; Ralph v. City of Daytona Beach, 471 So. 2d 1 (Fla. 1983); Lonestar Alternative Solution, Inc. v. Leview-Boymelgreen Soleil Developers, LLC, 10 So. 3d 1169, 1171 (Fla. 3d DCA 2009) [34 Fla. L. Weekly D1048a]. In this case, the record reflects that the complaint, which incorporates the insurance policy by reference, adequately sets forth a cause of action, which when accepted as true, is a claim upon which relief could be granted.
A dispositive issue in the pending appeal is whether the exclusionary terms of the insurance policy, incorporated by reference, bar at the outset the Appellant’s cause of action for breach of the insurance contract. As is common amongst most standardized home insurance policies, the subject insurance policy excludes coverage for damages resulting from mold. The policy reads, in pertinent part:
PERILS INSURED AGAINST
COVERAGE A — DWELLINGS and
COVERAGE B — OTHER STRUCTURES
We insure against risk of direct lost to property described in Coverages A and B only if that loss is a physical loss to property, however, we do not insure loss:
3. Caused by:
f. any of the following:
(3) Smog, rust or other corrosion, fungi, mold, wet or dry rot.
(The Record, at 89-90, i.e., Insurance Policy, page 3)
This excluded peril, attributable to gradual deterioration of the property over time, is viewed as an avoidable peril if ordinary maintenance is maintained. Charles S. LiMandri, Emerging Coverage Issues In First Party Mold Claims 25 No. 12 Ins. Litg. Rep. 329 (2003); Douglas G. Houser, Mold: Another Four-Letter Word Every Coverage Attorney Needs To Know, 38 Tort Trial & Ins. Prac. L. J. 15 (2002). However, when mold deterioration is not caused by a latent defect, but instead is caused by a covered external event, the insured is entitled to recover under the home insurance policy as a resulting loss. 11 Couch on Ins. §153:80 – Deterioration, Corrosion, And Rot (Third ed.)
In this case, the policy does provide coverage for mold when mold is the loss and not the cause of the loss. That is, in light of the clear and unambiguous insurance provision, noted above, the policy only precludes recovery if the damage is “caused by” or results from mold. We therefore conclude that the Appellant’s complaint comports with the above-noted policy provision.
Moreover, the policy contains ensuing loss clauses which typically operate as exceptions to specified policy exclusions, such as the mold exclusion clause. 11 Couch on Ins. §153:82 Exception From Exclusions For “Ensuing Loss” From Water Damage (Third ed.) For instance, the policy notably reads, in part:
PERILS INSURED AGAINST
Under items 1. [General Exclusions consisting of losses attributable to: (a) ordinances, (b) earth movement, (c) water damage from surface water overflow, subsurface seepage or sewer water backups, (d) power failure, (e) neglect, (f) war, (g) nucleur hazard and (h) intentional loss] and 2. [Collapses] any ensuing loss to property described in coverage A [dwellings] and B [other structures] not excluded or excepted in this Certificate is covered.
(The Record, at 90, i.e., Insurance Policy, page 4 – Perils Insured Against, column 1, last paragraph).
The policy also reads:
GENERAL EXCLUSIONS
We do not insure for loss to property described in Coverages A [dwellings] and B [other structures] caused by [weather conditions, failure to act, defective construction or maintenance]. However, any ensuing loss to property described in Coverages A [dwellings] and B [other structures] not excluded or excepted in this Certificate is covered.
(The Record, at 91, i.e., Insurance Policy, page 5 – General Exclusions, ¶2, column 1).
Put simply, any ensuing loss to a covered dwelling or other structure which stems from an excluded peril is covered although the excluded peril itself is not covered. Accordingly, while the excluded peril itself may not be compensated, the resulting damage created will be. Thus, in theory, in applying the policy’s ensuing loss clauses to the present case, the cost of testing for mold would be covered as an ensuing loss, even though there is no coverage for the cost of correcting or repairing the excluded peril from which the damage stems. See Raymond C. King, Toxic Mold Litigation, Chapt. 9, §9.05 Mold and Water Claims, ABA-T MOLD L §9.05 (ABA 2008); and See 11 No. 39 Andrews Ins. Coverage Litig. Rep. 875 – Ensuing Loss Clauses Provide Exception To Exclusion (2001).
It is acknowledged that the subject policy includes an anti-concurrent causation clause. Presumably based on this clause the county court concluded there is no coverage for mold-related damages even if occurring sequential to the damage caused by water. The policy under review, like many home insurance policies, contains an anti-concurrent causation clause which purports to exclude coverage if any part of the damage-causing chain of events involves an excluded peril. Specifically, the pending policy contains the following provision which appears to shift the risk and liability from the insurer to the insured:
GENERAL EXCLUSIONS
1. We do not insured for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.
(The Record, at 90, i.e., Insurance Policy, page 4 – General Exclusions, columns 1 and 2).
Therefore, a plain reading of the above provision suggests that the insurer is relieved of any obligation for a loss resulting from any of the perils listed as an excluded peril if the excluded peril combined with a covered peril indirectly, concurrently or in any sequence damaged the property.
However, as a general rule, insurance coverage is to be broadly construed in favor of the insured, while exclusions must be narrowly construed against the insurer. Flores v. Allstate Ins. Co., 819 So. 2d 740, 744 (Fla.2002) [27 Fla. L. Weekly D2533b] (“Policy provisions that tend to limit or avoid liability are interpreted liberally in favor of the insured and strictly against the drafter who prepared the policy, and exclusions to coverage are construed even more strictly against the insurer than coverage clauses.”); Hudson v. Prudential Prop. & Cas. Ins. Co., 450 So. 2d 565, 568 (Fla. 2d DCA 1984) (“This harmonizes with the law in Florida that insurance coverage must be construed broadly and its exclusions narrowly.”). Additionally, exclusions are to be read in conjunction with other policy provisions. Union Am. Ins. Co. v. Maynard, 752 So. 2d 1266, 1268 (Fla. 4th DCA 2000) [25 Fla. L. Weekly D648a]; State Farm Fire & Cas. Co. v. Castillo, 829 So. 2d 242, 245 (Fla. 3d DCA 2002) [27 Fla. L. Weekly D1845a]. In this case, applying the anti-concurrent clause would conflict with and render meaningless the ensuing loss clause which is intended to address instances where a loss may ultimately stem from even an uncovered peril. It would also render superfluous judicial and public policy which requires insurance policy provisions to be construed against the insurer and in favor of the policy holder when the policy tends to avoid liability or is drafted on a take-it-or-leave-it basis. Therefore, the anti-concurrent clause should not be enforceable to the extent it subverts the policy holder’s reasonable expectations or limits the insurer’s liability when the covered peril was a cause of the loss in the chain of causation.
Aside from the policy implications, the practical implications of the anti-concurrent and exclusionary policy provisions suggest that a court would be required to make certain factual determinations as to whether the damages ultimately sustained are attributable to a covered or uncovered event, and which events occurred sequentially, simultaneously, or in an unbroken chain of events. At this stage of the litigation, such a determination is inappropriate when the facts have yet to be developed.
Our Ruling
In sum, this Court concludes that the County Court erred in its analysis of the policy’s mold exclusion clause, and presumably in its interpretation and application of the anti-concurrent clause. If, as alleged in the complaint, the event triggering the growth of mold is from a covered peril under the policy, such as a water event, then when taken as true, the policy should be interpreted to include coverage for the cost of testing for mold. Consequently, the Appellant should be regarded as successfully alleging a cognizable legal claim. Moreover, granting a motion to dismiss is only appropriate when the failure to state a claim is conclusively applicable from the face of the complaint. Whether there is coverage for mold requires an inquiry into causation, which is traditionally deemed a fact-specific question appropriate for trial and seldomly resolved in a motion to dismiss. In this case, the County Court inappropriately exceeded the bounds of the motion to dismiss and ruled on an ultimate fact in dispute. For these reasons, accordingly, the County Court’s dismissal is reversed and this matter is remanded for further proceedings. (MUIR and SANCHEZ-LLORENS, JJ., concur.)
