Analysis and Interpretation by Michael A. Cassel

On February 23, 2018, the Fifth District Court of Appeals released their decision in Hugh Hicks v. American Integrity Insurance Company of Florida (hereinafter " Hicks").  The Hicks opinion discusses the ambiguities inherent in the oft relied upon constant or repeated seepage exclusionary provision which is contained within most property insurance policies in the State of Florida.  

Background and Facts

In September 2012, a water supply line began leaking while Hicks was out of town.  The leak started slowly and steadily increased in volume.  By the time Hicks returned home in October 2012, water was being discharged at almost one thousand gallons a day.  Hicks filed a claim with his carrier, American integrity Insurance Company (hereinafter "AIIC").  AIIC's expert determined that the pipe was leaking for five (5) weeks or more and, as such, AIIC denied the claim, quoting the following provision of the policy: "We do not insure... for loss... [c]aused by... [c]onstant or repeated seepage or leakage of water... over a period of 14 or more days" (hereinafter the "constant/repeated seepage provision"). [1]

During the course of litigation, AIIC filed a motion for summary judgment alleging that the constant/repeated seepage provision excluded the loss as the leak undisputedly occurred for more than 14 days.  Hicks also filed a motion for summary judgment asserting, in pertinent part, that Hicks was entitled to coverage for the damage sustained during the first 13 days of the leak occurring.

The trial court ruled in favor of AIIC.  In its ruling, the court stated, "Basically, you're asking [this court] to say whether the policy covered the loss in the first 13 days... It might, but I'm not so sure that the time frame of these particular facts would allow for that determination." [2]   This appeal followed.

5th DCA Opinion

The 5th DCA stated "[i]t is not unambiguously clear that a provision excluding losses  caused by  constant leakage of water over a period of fourteen or more days likewise excludes losses  caused by  constant leakage of water over a period of  less than  fourteen days." [3]   As such, the  Hicks  court ultimately determined that the constant/repeated seepage provision was ambiguous as it is susceptible to more than one meaning. [4]

Analysis, Impact, and Effect

Hicks  is not the first time a constant repeated seepage exclusion was challenged as ambiguous.  It is, however, the first time a patent ambiguity was determined to exist. 

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There are two (2) types of ambiguities that may be present in contracts: latent ambiguities and patent ambiguities.  "[P]atent ambiguities are on the face of the document, while latent ambiguities do not become clear until extrinsic evidence is introduced and requires parties to interpret the language in two or more possible ways." [5]    Courts have expanded on the definition of a latent ambiguity stating that "[a] latent ambiguity… arises 'where the language employed is clear and intelligible and suggests but a single meaning, but some extrinsic fact or extraneous evidence creates a necessity for interpretation or a choice among two or more possible meanings.'" [6]   "A latent ambiguity is thus brought to light when extraneous circumstances reveal 'an insufficiency in the contract not apparent from the face of the document.'" [7] 

In  Hoey v. State Farm , [8]  a similar constant or repeated seepage provision was upheld. [9]   At trial, it was determined that "the water bills demonstrated that water usage had increased gradually from zero to twenty six gallons a day in September, two hundred forty gallons a day in October, and four hundred twenty gallons a day in November" and that the leak could have started as early as July. [10]   The trial court and, subsequently, the appellate court, agreed that these facts constituted "continuous or repeated seepage or leakage of water… over a period of time…" thereby excluding coverage. [11]   The appellate court further stated that "[t]he remaining issues raised, including the contention that the exclusion is ambiguous, do not merit discussion." It is, however, unclear what ambiguity argument was raised and subsequently brushed aside. [12]

To the contrary, the court in  Price v. Castle Key Indemnity Company [13]  found that a similar provision excluding damage caused by constant or repeated seepage [14]  was latently ambiguous based on the facts of the case.  In  Price , it was undisputed that 195,000 gallons of water flowed from a pipe going into the toilet located in an upstairs bathroom of the subject property.  This prolonged incident occurred while Mr. Price was out of town on vacation for at least a month.  Mr. Price argued that, based on the time period in which he was out of town, the water must have been flowing at a clip of over 6,000 gallons per day.  The court determined that the meaning of "seepage" and "leakage" in relation to the large amount of water that dispersed from the plumbing system and the question as to actual rate in which the water escaped created a latent ambiguity.  It does not seem as though this ambiguity argument was raised in  Hicks ; that said, the counterargument may have been raised that  Hicks  falls more factually in line with  Hoey  as the leak began slow and progressed to leaking a higher volume of water as opposed to  Price  where there was no such fact pattern presented.  

Hillary Cassel , a founding partner of Cassel & Cassel, P.A., has previously found success with a different take on the ambiguity argument raised in  Hicks .  Like  Hicks , Mrs. Cassel argued that coverage should be afforded for the first 13 days of the loss and was granted a directed verdict with regards to same.  The distinguishing factor with regards to her argument was that she argued that the constant or repeated seepage provision was ambiguous based on the use of the word "over" in relation to the time period outlined in the policy.  There are two (2) definitions of the word "over": 1) more than, or beyond, a duration of time; or 2) during  i . e ., throughout the course of a duration of time. [15]   Based on these definitions, it is unclear if a policy with any of the provisions contained in either  Hoey ,  Price , or  Hicks  provides coverage for all water damage except that which occurs over a period of time or excludes coverage during the initial period of time.  As there are two reasonable interpretations of the provision, and coverage can be found in one of them, the argument remains that any constant or repeated seepage provision using the word "over" is patently ambiguous and should construed in favor of coverage. [16]   

As always, should you have any questions about how this new law may relate to your own claim,  please do not hesitate to contact us for a free consultation.

[1] Hicks v. Am. Integrity Ins. Co. of Florida, 5d17-1282, 2018 WL 1020272, 1 (Fla. 5th DCA 2018)

[2] Id.

[3] Hicks at 2.

[4] Wash. Nat'l. Ins. v. Ruderman, 117 So.3d 943, 950 (Fla. 2013) (“[W]here, as here, one reasonable interpretation of the policy provisions would provide coverage, that is the construction which must be adopted.”)

[5] Real Estate Value Co. v. Carnival Corp., 92 So. 3d 255, 260 (Fla. 3d DCA 2012). 

[6] Mac-Gray Servs., Inc. v. Savannah Assocs. of Sarasota, LLC, 915 So. 2d 657, 659 (Fla. 2d DCA 2005) citing Ace Elec. Supply Co. v. Terra Nova Elec., Inc., 288 So. 2d 544, 547 (Fla. 1st DCA 1974).

[7] Id. citing Hunt v. First Nat'l Bank, 381 So. 2d 1194, 1197 (Fla. 2d DCA 1980).

[8] Hoey v. State Farm Florida Ins. Co., 988 So. 2d 99 (Fla. 4th DCA 2008)

[9] The Hoey provision is distinguishable in that it requires "continuous or repeated seepage or leakage of water… over a period of time…"  Id. At 100.

[10] Id. at 100-101.

[11] Id. at 101

[12] Id.

[13] Price v. Castle Key Indem. Co., 152 So. 3d 2 (Fla. 2d DCA 2014)

[14] The Price provision excluded loss caused by “[s]eepage, meaning continuous or repeated seepage or leakage over a period of weeks, months, or years, of water… from, within[,] or around any plumbing fixtures, including, but not limited to shower stalls, shower baths, tub installations, sinks[,] or other fixtures designed for the use of water or steam.”

[15] See Cambridge Dictionary – “over.” 

[16] See Taurus Holdings, Inc. v. United States Fid. & Guar. Co., 913 So. 2d 528, 532 (Fla. 2005) (“Under Florida law, insurance contracts are construed according to their plain meaning.  Ambiguities are construed against the insurer and in favor of coverage.”).