The Matching Issue

The parties attempted mediation and submitted the dispute to an appraisal panel. Magnolia Lane was displeased with the award determined by the panel, arguing the appraisers had not accounted for the costs necessary to make existing, undamaged roof panels match the materials used in repairs. Rockhill denied the policy it had issued to Magnolia Lane covered mismatched materials. Each party filed a motion for summary judgment.

Magnolia Lane claimed it was owed matching coverage for three reasons: the policy was ambiguous, which required an interpretation in favor of the insured; the policy would be illusory if Rockhill were permitted to deny matching coverage; and that matching coverage was necessary based on public policy. Rockhill countered with the argument that specific policy provisions only necessitated payment for property that had actually suffered physical damage.

Policy Not Ambiguous, Illusory, or Against Public Policy

The judges recognized that, Fla. Stat. §626.9744, required making a reasonable match, even if it means replacing undamaged property, during the repair process. However, this statute specified that it applied to homeowners policies, and Magnolia Lane agreed with Rockhill and the court that the statute did not apply to its (commercial) condominium property claim.

The “R. LOSS TO A PAIR, SET OR PANEL” (emphasis omitted) clause in the Rockhill policy stated that, when a covered loss “involv[ed] part of a series of pieces or panels,” Rockhill would pay either “(a) The reasonable cost of repairing or replacing the damaged part to match the remainder as closely as possible; or (b) The reasonable cost of providing an acceptable decorative effect or utilization as circumstances may warrant.” However, the policy also warned policyholders that Rockhill “did not guarantee the availability of replacements” and “would not be liable” for mismatched materials when only part of a panel was damaged.

Magnolia Lane pointed to the first clause of the provision, when the policy stated that Rockhill would pay for “the reasonable cost of repairing or replacing the damaged part to match the remainder as closely as possible.” This clause, argued Magnolia Lane, meant Rockhill was obligated to provide matching coverage.

The judges pointed out that Magnolia Lane’s argument took the phrase out of context and flat-out ignored the remainder of the “LOSS TO A PAIR, SET, OR PANEL” clause. To begin with, the very part of the clause cited by Magnolia Lane stated that Rockhill would pay to repair or replace “the damaged part” (emphasis original) of the property with as close a match as could be found.

Even if that clause wasn’t so specific, Magnolia Lane’s argument for ambiguity would still fail. Magnolia Lane was seeking coverage to replace entire roof panels when only part of the panels had been damaged. The end of the “LOSS TO A PAIR, SET, OR PANEL” clause specifically disclaimed Rockhill’s liability for replacing an entire panel when only partial damage had occurred.

According to Magnolia Lane, however, the end of the clause specifically stating Rockhill wouldn’t be liable for replacing a whole panel in case of partial damage rendered the policy illusory. Magnolia Lane did not, however, specify exactly how it would do so.

The court noted that Magnolia Lane did not actually cite any specific case supporting its contentions of ambiguity or illusion. There was a general reliance on Ocean View Towers Ass'n, Inc. v. QBE Ins. Corp., 2011 U.S. Dist. LEXIS 147579 (S.D. Fla. 2011), but this reliance was more hurtful than helpful. The judge in Ocean View ruled an insurer was entitled to withhold matching coverage when the policy never referred to any kind of “matching” and only allowed coverage for “direct physical damage.”

Magnolia Lane’s argument that the court needed to reform the Rockhill policy because “public policy” demanded coverage for matching likewise fell flat. The judges found that this idea contradicted the plain terms of the policy, as explored above.

Conclusion

Interpreting the policy according to Magnolia Lane’s arguments would force a violation of the plain reading of the policy terms. The court granted summary judgment in favor of Rockhill and denied Magnolia Lane’s motion.

Editor’s Note: Magnolia Lane claimed its policy with Rockhill was ambiguous. A policy will only be found ambiguous if it is open to more than one reasonable interpretation. The policy clearly and explicitly stated that Rockhill “[would] not be liable, in the event of damage to or loss of a part, for the value, repair or replacement of the entire series of pieces or panels.” Magnolia Lane’s argument that the policy was not “reasonable,” when considering ambiguity, because it contradicted the plain terms of the policy. Since the policy only had one reasonable interpretation, it could not be considered ambiguous.

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The Issue of Matching

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