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Florida Ins. Guar. Ass'n v. Somerset Homeowners Ass'n, Inc.

Florida Court of Appeal, Fourth District

December 21, 2011

FLORIDA INSURANCE GUARANTY ASSOCIATION, a Florida not-for-profit corporation, Appellant,
v.
SOMERSET HOMEOWNERS ASSOCIATION, INC., a Florida not-for-profit corporation, Appellee.

Page 851

Jeffrey T. Kuntz, Philip E. Ward, Roland E. Schwartz and Evan D. Appell of GrayRobinson, P.A., Fort Lauderdale, for appellant.

Ernest P. Wagner of Childress Duffy, Ltd., Illinois, and Christopher N. Mammel of Childress Duffy, Ltd., Miami, for appellee.

DAMOORGIAN, J.

Florida Insurance Guaranty Association (" FIGA" ) appeals from a final judgment confirming an appraisal award arising out of an insurance policy between FIGA and Somerset Homeowners Association, Inc. (" Somerset" ). FIGA raises a number of issues on appeal. FIGA argues, among other things, that the trial court erred by awarding Somerset replacement cost value (" RCV" ) benefits. We agree and reverse on that one issue, but affirm the final judgment in all other respects.

By way of background, the Somerset condominium buildings sustained extensive damage due to two hurricanes. Somerset was covered by an insurance policy, the obligations for which were assumed by FIGA after the original carrier was placed in receivership. Somerset submitted claims for coverage, and both the former carrier and FIGA made partial payments on the claims. However, believing that more was owed, Somerset instituted suit to enforce the appraisal process.

While the suit was pending, the parties agreed to submit the dispute over the amount of the claim of loss to the appraisal process set forth in the policy. The appraisal process provided a series of steps, none of which are relevant to our discussion. Ultimately, the claim was submitted to an independent umpire who entered an award which set the RCV of the loss at $12,581,471.43 and the actual cash value (" ACV" ) of the loss at $11,630,208.55. " ‘ As replacement cost policies are intended to operate, following a loss, both actual cash value and the full replacement cost are determined. The difference between those figures is withheld as depreciation until the insured actually repairs or replaces the damaged structure.’ " Goff v. State Farm Fla. Ins. Co., 999 So.2d 684, 690 (Fla. 2d DCA 2008) (citation omitted).

FIGA neither timely paid nor disputed the award. Somerset moved to confirm the appraisal award, prompting FIGA to move to vacate it. The court entered a final judgment in the amount of $6,262,339.83, which reflected a deduction of $5,026,539.25 in prior payments and a deductible of $1,292,592.35.

On appeal, FIGA argues that contrary to the express terms of the policy, the appraisal award included $951,262.88 attributed to depreciation. Somerset counters that it was entitled to depreciation under the doctrine of prevention of performance because FIGA failed to timely pay the appraisal award.

Our analysis of this issue necessarily requires us to turn to the plain language of the policy. See State Farm Mut. Auto. Ins. Co. v. Menendez, 70 So.3d 566, 569 (Fla.2011) (" In interpreting an insurance contract, we are bound by the plain meaning

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of the contract's text." ); see also Prudential Prop. & Cas. Ins. Co. v. Swindal, 622 So.2d 467, 470 (Fla.1993) (" Insurance contracts are construed in accordance with the plain language of the policies as bargained for by the parties." ). The policy provided:

d. We will not pay on a replacement cost basis for any loss or damage:
(1) Until the lost or damaged property is actually repaired or replaced; and
(2) Unless the repairs or replacement are made as soon as reasonably possible ...

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