United States Court of Appeals,
Eleventh Circuit.
No. 94-2951.
GAS KWICK, INC., Plaintiff-Appellant,
v.
UNITED PACIFIC INSURANCE COMPANY, Defendant-Appellee.
July 21, 1995.
Appeal from the United States District Court for the Middle
District of Florida. (No. 93-807-CIV-T-21A), Ralph W. Nimmons, Jr.,
Judge.
Before DUBINA and BLACK, Circuit Judges, and COHILL*, Senior
District Judge.
DUBINA, Circuit Judge:
Plaintiff-Appellant Gas Kwick, Inc. ("Gas Kwick") appeals the
district court's grant of summary judgment in favor of
defendant-appellee United Pacific Insurance Company ("United
Pacific") in this declaratory judgment action regarding an
insurance contract. We affirm.
I. STATEMENT OF THE CASE
A. Facts
United Pacific issued a policy that provided insurance
coverage to Gas Kwick for a number of commercial properties. After
suffering a fire loss at one of the properties, Gas Kwick sought a
declaratory judgment that the policy issued to it provided
insurance coverage for such a loss.
In April of 1991, Gas Kwick submitted an application for
*
Honorable Maurice B. Cohill, Jr., Senior U.S. District
Judge for the Western District of Pennsylvania, sitting by
designation.
insurance to United Pacific listing properties to be covered by the
policy. One of the listed properties was an "Oper. Bulk Plant and
Warehouse" located at 30th Street and 8th Avenue in Tampa, Florida.
The premises was owned by Gas Kwick and leased by it to a third
party. At that location were several above-ground storage tanks
(the bulk plant) and a warehouse building. The lessee used the
storage tanks to store reclaimed oil, but did not use the
warehouse, which was empty.
United Pacific issued a binder for insurance to Gas Kwick
dated September 12, 1991. The effective date of the binder was
September 15, 1991, and the expiration date was October 15, 1991.
The policy period shown on the binder was September 15, 1991, to
September 15, 1992. The binder included a provision that "[t]he
insurance is subject to the terms, conditions, and limitations of
the policy(ies) in current use by the company." The policy was
typed on September 29, 1991, and presumably mailed sometime
thereafter.
On September 25, 1991, the warehouse at 30th Street and 8th
Avenue burned to the ground. Gas Kwick's agent, Nick Capitano
("Capitano"), reported the fire loss to United Pacific on the day
of the fire. Capitano and Abbey Sierra ("Sierra"), Gas Kwick's
vice president, gave a recorded statement to United Pacific the day
after the fire acknowledging that the warehouse was empty at the
time of the fire and had not been used for over a year.
On March 9, 1992, United Pacific denied Gas Kwick's insurance
claim on the warehouse, citing paragraph 10 of page 5 of the
policy. That paragraph provides:
PROPERTY NOT COVERED
We will not pay for:
10. Loss to building or personal property if the building
where loss or damage occurs has been vacant or unoccupied for
more than sixty (60) consecutive days before that loss or
damage. (Emphasis added).
B. Procedural History
Gas Kwick filed an action for declaratory judgment seeking a
declaration that: (1) United Pacific's policy exclusion for loss
to a building vacant for more than 60 days was timed from the date
of the policy issuance; and (2) coverage should, therefore, be
provided for the loss to a building where a fire occurred 13 days
after the issuance of a blanket binder and 10 days after the
effective date of the policy even though the building itself had
been vacant for more than 60 days.
United Pacific moved for summary judgment, claiming that the
loss was excluded under the terms of the insurance policy. United
Pacific argued that the insurance policy did not provide coverage
for damage to the property, since the property was vacant for more
than 60 consecutive days prior to the fire loss. In response, Gas
Kwick argued that the 60-day period referred to in the exclusionary
clause started to run from the issue date of the insurance policy,
and that since the loss occurred less than 60 days after the policy
was issued, recovery was proper under the terms of the policy.
The district court granted United Pacific's motion for summary
judgment, finding that recovery for the fire loss was excluded by
the vacancy provision. Gas Kwick then perfected this appeal.
II. ISSUES
(1) Whether a 60-day exclusion for vacant buildings under an
insured's policy runs prospectively from the effective date of the
policy or retrospectively from the date of the loss.
(2) Whether a policy to take effect on September 15, 1991, but
not written or issued until September 29, 1991, after the loss
occurs, can be the basis for excluding coverage under the loss.
(3) Whether there is coverage for loss of a vacant building
where the insurer did not inspect or demand disclosure of vacancy
and did not provide notice of its 60-day vacancy exclusion until
after the loss.
III. STANDARD OF REVIEW
We review de novo the district court's grant of a motion for
summary judgment. Edwards v. Wallace Community College, 49 F.3d
1517, 1520, (1995). Summary judgment is appropriate only where
there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. Beal v. Paramount
Pictures Corp., 20 F.3d 454, 458 (11th Cir.), cert. denied, ---
U.S. ----, 115 S.Ct. 675, 130 L.Ed.2d 607 (1994). This court
reviews the facts in the light most favorable to the non-movant and
resolves all factual disputes in favor of the non-movant. Smith v.
Jefferson Pilot Life Ins. Co., 14 F.3d 562, 566 (11th Cir.), cert.
denied, --- U.S. ----, 115 S.Ct. 57, 130 L.Ed.2d 15 (1994).
IV. DISCUSSION
A. The Vacancy Exclusion
The policy provides that no coverage is afforded for a loss
to a building if the building has been vacant or unoccupied for
more than 60 consecutive days before that loss or damage.
Nevertheless, Gas Kwick argues that the 60-day vacancy period began
to run from the effective date of the insurance policy, so recovery
for the loss was not barred by the vacancy exclusion. United
Pacific argues that the policy is unambiguous, precluding coverage
for a loss where the property has been vacant for 60 days
immediately preceding the loss.1 Under Florida law, interpretation
of an insurance contract is a matter of law to be decided by the
court. Gulf Tampa Drydock Co. v. Great Atlantic Ins. Co., 757 F.2d
1172, 1174 (11th Cir.1985). Furthermore, courts must construe an
insurance contract in its entirety, striving to give every
provision meaning and effect. Dahl-Eimers v. Mutual of Omaha Life
Ins. Co., 986 F.2d 1379, 1382 (11th Cir.1993). When a term in an
insurance policy is ambiguous, however, the court is required to
construe it in favor of the insured and against the insurer. Davis
v. Nationwide Life Ins. Co., 450 So.2d 549, 550 (Fla.App. 5th
Dist.1984). An insurance contract is deemed ambiguous if it is
susceptible to two or more reasonable interpretations that can
fairly be made. Dahl-Eimers, 986 F.2d at 1381. Courts may not,
however, rewrite contracts or add meaning to create an ambiguity,
and an ambiguity is not invariably present when a contract requires
interpretation. Id.
Despite Gas Kwick's citation of authority to the contrary, the
vacancy exclusion precluded recovery in this case, and the district
court properly granted summary judgment for United Pacific. The
1
According to United Pacific, "[t]he occupancy status of
property is material to underwriting in evaluating the acceptance
of the risk and determining the premium rate. Vacant or
unoccupied property is rated differently and usually the premium
rate is much higher if the property is vacant or unoccupied."
Appellee's Brief at 18 (citations omitted).
cases relied upon by Gas Kwick in its brief concerning this issue
are factually distinguishable from the instant case. For instance,
in Thomas v. Industrial Fire and Casualty Co., 255 So.2d 486
(La.Ct.App.1971), the court indeed construed "the sixty-day vacancy
provision as running from the issuance date of the policy." Id. at
488. However, the language of the vacancy provision at issue in
Thomas is significantly different from the language of the policy
in this case. The vacancy clause in Thomas excluded coverage for
buildings that are "vacant or unoccupied beyond a period of sixty
days." Id. at 488 n. 1. In contrast, the United Pacific policy
excludes coverage for a building that " has been vacant or
unoccupied for more than 60 days before that loss or damage."
(Emphasis added). Thus, as the district court reasoned, "[t]he
exclusion clause in United Pacific's policy clearly defines the
vacancy period in retrospective terms—the period is to be measured
by looking back from the date of the loss; the vacancy provision
is not defined in prospective terms, whereby it would be measured
by looking forward from the issuance date of the policy." District
Court's Order at 7.
As in Thomas, the other cases cited by Gas Kwick involved
policies employing prospective language distinguishable from the
vacancy exclusion in the present case. See, e.g., Old Colony
Insurance Co. v. Garvey, 253 F.2d 299, 302 (4th Cir.1958)
(addressing prospective policy and stating that "[i]f it had been
intended that existing vacancy be taken into account, language to
that effect should have been used ..."); Bledsoe v. Farm Bureau
Mut. Ins. Co., 341 S.W.2d 626, 629 (Mo.App.1960) (provision that
company not liable for loss occurring while building "is vacant or
unoccupied beyond a period of sixty consecutive days"); Home Mut.
Fire Ins. Co. v. Pierce, 240 Ark. 845, 402 S.W.2d 672 (1966)
(exclusion for vacancy "beyond a period of thirty days").
Accordingly, the cases relied upon by Gas Kwick as persuasive
authority are all distinguishable from the present case.
Second, Gas Kwick appears to misapprehend the issue in the
case. According to Gas Kwick, the issue is whether the vacancy
period "began to run" from the effective date of the insurance
policy or from the prior date the building became vacant. On the
contrary, the question of when the vacancy began to run appears to
be irrelevant in light of the retrospective focus of the vacancy
clause. That is, under the vacancy exclusion, when a loss occurs,
the inquiry is whether the building has been vacant for the 60
consecutive days immediately preceding the loss. If so, recovery
is precluded. There is no reference to the date of issuance of the
policy, and there is no inquiry as to when the vacancy began. The
only relevant question is whether the building was vacant for 60
days prior to the loss.
We see no ambiguity in the language of the vacancy exclusion.
The policy clearly precludes coverage where the building has been
vacant for 60 consecutive days before the loss. Moreover, the
cases relied upon by Gas Kwick involve an exclusion where a
building has been vacant "beyond 60 consecutive days," defining the
vacancy prospectively. Conversely, the vacancy exclusion in the
present case is retrospective and unambiguous. For these reasons,
it is our view that the district court properly granted summary
judgment on this issue.
B. Whether Policy Issued After Loss Could Preclude Coverage
Gas Kwick contends that if we find that the 60-day period is
computed retrospectively from the date of the loss, we should hold
the vacancy exclusion inapplicable because the policy was not
delivered to Gas Kwick until after the fire loss. Gas Kwick states
that it "was unable to predict its own risk and conform its
behavior to satisfy coverage under the policy due to the conduct of
the defendant." Appellant's Brief at 25. This argument is not
persuasive.
The binder issued to Gas Kwick on September 12, 1991, provided
that "THIS BINDING IS A TEMPORARY INSURANCE CONTRACT SUBJECT TO THE
CONDITIONS SHOWN ON THE REVERSE SIDE OF THIS FORM.... The
insurance is subject to the terms, conditions, and limitations of
the policy(ies) in current use by the company." United Pacific
issued its policy to Gas Kwick with effective dates of September
15, 1991, through September 15, 1992. Clearly, Gas Kwick seeks the
benefit of this effective date of September 15, 1991, since the
fire occurred on September 25. Quite simply, Gas Kwick wants the
policy's coverage to be effective September 15, 1991, but not its
conditions or exclusions (such as the vacancy provision).
While it does seem somewhat inequitable to use an exclusion in
the policy to deny coverage when the policy was issued after the
loss, it would be difficult to fashion an exception for this
situation. Insured parties benefit from having an early effective
date while the policy is in the process of being issued. The
exception argued by Gas Kwick would seemingly place insurers in the
situation of providing blanket coverage for all losses without
exception until the policy (with its exclusions) is delivered to
the insured. We refuse to create such an exception and affirm the
district court on this issue.
C. Knowledge of Vacancy
Finally, Gas Kwick argues that because the district court
determined that there were no material misrepresentations or
omissions in the application, United Pacific should not be able to
issue a policy on a vacant building and then exclude it from
coverage because it is a vacant building. Basically, Gas Kwick
contends that United Pacific should not be able to claim a
violation of the vacancy exclusion that it took no steps to
discover. In support of this argument, Gas Kwick cites Poland v.
Phillips, 371 So.2d 1053, 1056 (Fla.App. 3d Dist.1979), where the
court stated that "[a]n insurance policy may not be issued on a
vacant building and then be excluded from coverage because it is a
vacant building." As the district court noted, however, it appears
essential to the holding in that case that the insurer knew that
the building was vacant when the policy was issued. Id. Thus,
"[t]he justification for not enforcing the vacancy provision, which
was present in the Poland case, is absent here...." District
Court's Order at 8. In fact, Gas Kwick now seems to be making the
opposite argument from that in Poland: because United Pacific did
not know the property was vacant, it cannot use the vacancy
exclusion. This contention is confusing and unpersuasive.2
2
Gas Kwick asserts that it was incumbent upon United Pacific
"to investigate to determine if, in fact, the premises was vacant
or, at the very least, make an inquiry to Gas Kwick to determine
V. CONCLUSION
For the foregoing reasons, we affirm the district court's
grant of summary judgment in favor of United Pacific and against
Gas Kwick.
AFFIRMED.3
if it were a vacant building." Appellant's Brief at 28. As
United Pacific notes, however, Gas Kwick had superior knowledge
of the status of the property. In addition, there were 185
properties to be insured under the contract, rendering it
impractical for United Pacific to inspect all of the properties
prior to the issuance of the policy.
3
We considered certification of the first issue presented in
this appeal to the Florida Supreme Court. While the Florida
courts apparently have not precisely addressed the vacancy
exclusion issue, in our view, it is not worthy of certification.
The issue is narrow and specific to the language of each
individual contract, and the question has arisen in only a few
reported cases in several decades in courts across the United
States. Accordingly, certification would serve no valid purpose.
Gas Kwick, Inc. v. United Pacific Insurance
Court: Court of Appeals for the Eleventh Circuit
Date filed: 1995-07-21
Citations: 58 F.3d 1536
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