IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA

IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY, FLORIDA
CIVIL DIVISION
VERIMARK HOSPITALITY GROUP INC., a Delaware corporation,
Plaintiff,
v.
Case No. 2022-CA-031547
Hon. Catherine Embry
IRONCLAD INDEMNITY CORPORATION, a Connecticut corporation; PINNACLE SURPLUS LINES INC., a Texas corporation; MONTCLAIR ASSURANCE COMPANY, a New York corporation; and SOVEREIGN RE LTD., a Bermuda corporation,
Defendants.
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING THE NAMED WINDSTORM SUB-LIMIT
Filed: November 1, 2023
TABLE OF CONTENTS
TABLE OF AUTHORITIES
Cases
Statutes and Rules
Secondary Sources
I. PRELIMINARY STATEMENT
Plaintiff Verimark Hospitality Group Inc. ("VHG") respectfully moves this Court for partial summary judgment on a single, dispositive legal issue: whether the Ironclad Indemnity Corporation ("Ironclad") primary all-risk property and business-interruption policy, Policy No. IIC-PRP-2022-07541, for the policy period July 1, 2022 through July 1, 2023, contains a $15 million named-windstorm sub-limit applicable to VHG's business-interruption claim arising from Hurricane Callista. It does not. The undisputed evidence compels that conclusion as a matter of law.
The significance of this issue cannot be overstated. VHG's total business-interruption losses from Hurricane Callista, which struck the Florida Keys and Southwest Florida coastline as a devastating Category 4 hurricane on September 18, 2022, amount to approximately $60 million across VHG's three luxury resort properties: $31.4 million for the Verimark Grand Key Resort in Marathon, Florida; $18.7 million for the Verimark Harborview Hotel & Conference Center in Fort Myers Beach, Florida; and $9.9 million for the Verimark Sunset Shores in St. Pete Beach, Florida. VHG purchased an insurance tower with an aggregate limit of $60 million above a $500,000 deductible — precisely to protect against catastrophic hurricane losses of this magnitude. That tower, consisting of primary and three excess layers, should respond in full to VHG's claim. But Ironclad has attempted to cap VHG's named-windstorm business-interruption recovery at a mere $15 million, invoking a sub-limit that was expressly negotiated away during the July 2022 policy renewal.
VHG's position is straightforward and supported by undisputed evidence: The $15 million named-windstorm sub-limit that existed in the prior policy year (2021–2022) was expressly deleted during the July 2022 renewal negotiations between Ironclad's underwriting department and VHG's broker of record, Tidewater Risk Advisors LLC ("Tidewater"), through its account executive Franklin Orde. VHG paid a substantial premium increase — with the primary layer premium rising to $980,000 — as consideration for the deletion of the sub-limit. The renewal binder issued by Ironclad in connection with the July 2022 renewal does not reference any windstorm sub-limit. And the deposition testimony of Mr. Orde, taken on August 28, 2023, unequivocally confirms that Ironclad agreed to delete the sub-limit and communicated that agreement in writing to Tidewater.
Thus, the full $25 million primary layer limit — and the excess layers above it, totaling $60 million in aggregate tower limits above a $500,000 deductible — apply to VHG's Hurricane Callista business-interruption losses without reduction by any windstorm sub-limit.
Even if this Court were to conclude that the evidence does not definitively establish deletion of the sub-limit — and VHG submits that it does — the policy language is, at a minimum, ambiguous on the question of whether the windstorm sub-limit was retained for the 2022–2023 policy year. The issued policy contains an endorsement schedule that references a prior-year named-windstorm sub-limit endorsement, but does not contain a clear, express endorsement adding, retaining, or applying a $15 million windstorm sub-limit for the current policy period. Nor does the policy contain an express deletion endorsement. This ambiguity — created entirely by Ironclad's own failure to issue clean endorsement language reflecting the negotiated terms — must, under settled Florida law, be construed against the insurer-drafter and in favor of coverage. See Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000); Swire Pac. Holdings, Inc. v. Glenrock Assurance Ins. Co., 845 So. 2d 161, 165 (Fla. 2003).
The undisputed record upon which VHG relies includes: (1) the July 2022 renewal binder issued by Ironclad; (2) the policy endorsement history and schedule for Policy No. IIC-PRP-2022-07541; (3) the deposition testimony of Franklin Orde, Tidewater's account executive, taken August 28, 2023; (4) the deposition testimony of Victor Haddon, Ironclad's Senior Vice President of Claims, taken July 10, 2023; (5) the declaration of Sandra Pellegrini, VHG's Vice President of Risk Management, submitted concurrently herewith; and (6) the contemporaneous broker-underwriter correspondence exchanged during the renewal negotiations. Taken together, this evidence establishes VHG's entitlement to judgment as a matter of law on the windstorm sub-limit issue.
Resolution of this issue at the partial summary judgment stage is both proper and urgently needed. Ironclad's assertion of the $15 million sub-limit was a central basis for its February 3, 2023 formal denial of VHG's claim. Defendant Pinnacle Surplus Lines Inc. ("Pinnacle"), the first excess layer carrier, followed Ironclad's denial on a "follow form" basis, relying on the same sub-limit rationale. Defendants Montclair Assurance Company ("Montclair") and Sovereign Re Ltd. ("Sovereign Re"), the second and third excess layer carriers, have asserted that their layers would never be reached if the sub-limit applied — an assertion that is true only if the sub-limit is in force. If this Court rules, as the undisputed evidence warrants, that the sub-limit does not apply, all four layers of VHG's insurance tower are exposed, and the parties can proceed to address the remaining coverage disputes (period of restoration, concurrent causation/flood exclusion, and duty to mitigate) with clarity regarding the available limits.
II. STATEMENT OF FACTS
A. The Parties
Plaintiff Verimark Hospitality Group Inc. VHG is a Delaware corporation, publicly traded on the Nasdaq Stock Market under the ticker symbol VMRK, with its principal executive offices located at 1900 Brickell Avenue, Suite 3200, Miami, Florida 33129. (Declaration of Sandra Pellegrini ("Pellegrini Decl."), ¶ 3, Ex. A.) VHG is a luxury hospitality and real estate company that owns and operates upscale resort properties along the Florida coastline. (Pellegrini Decl. ¶ 4.) The company is led by Marcus Ellsworth, Chief Executive Officer, who has served in that capacity since 2018. (Id. ¶ 5.) VHG's other relevant officers include Diane Calder, Chief Financial Officer; Nathaniel Driscoll, General Counsel; and Sandra Pellegrini, Vice President of Risk Management. (Id. ¶¶ 5–6.) For fiscal year 2021, VHG reported total revenue of approximately $412 million and EBITDA of approximately $78 million. (Deposition of Diane Calder ("Calder Dep."), Aug. 8, 2023, at 14:8–15:3, Ex. B.) VHG's three Florida resort properties — the Verimark Grand Key Resort, the Verimark Harborview Hotel & Conference Center, and the Verimark Sunset Shores — represent the company's core assets and principal revenue generators. (Pellegrini Decl. ¶ 7.)
Defendant Ironclad Indemnity Corporation. Ironclad is a Connecticut-domiciled stock insurance company with its principal offices at 55 Constitution Boulevard, Hartford, Connecticut 06103. (Answer of Ironclad Indemnity Corp. ("Ironclad Answer"), ¶ 5, Apr. 15, 2023.) Ironclad is assigned NAIC Number 20537 and is licensed to transact property and casualty insurance in all fifty states and the District of Columbia. (Id. ¶ 6.) Ironclad served as the lead carrier and primary layer insurer under VHG's all-risk property and business-interruption insurance program for the policy period July 1, 2022 through July 1, 2023. (Pellegrini Decl. ¶ 12.) Victor Haddon, Senior Vice President of Claims at Ironclad, was the senior claims executive responsible for the handling of VHG's Hurricane Callista claim. (Deposition of Victor Haddon ("Haddon Dep."), July 10, 2023, at 8:15–9:2, Ex. C.) Ironclad is represented in this action by Gregory Stanton, Esq. and Meredith Liang, Esq. of Fendowell Rourke & Stanton LLP.
Defendant Pinnacle Surplus Lines Inc. Pinnacle is a Texas-domiciled surplus-lines insurer with its principal offices at 200 Congress Avenue, Suite 1400, Austin, Texas 78701. (Answer of Pinnacle Surplus Lines Inc. ("Pinnacle Answer"), ¶ 5, Apr. 15, 2023.) Pinnacle is assigned NAIC Number 38214. (Id. ¶ 6.) Pinnacle issued the first excess layer policy in VHG's insurance tower, providing $15 million in coverage excess of the $25 million Ironclad primary layer. (Pellegrini Decl. ¶ 14.) Pinnacle's excess policy is a "follow form" policy, meaning it follows the terms, conditions, definitions, and exclusions of the Ironclad primary policy, subject to its own stated limits and certain specified variations. (Id. ¶ 15.) As a surplus-lines carrier, Pinnacle's policy was procured through Tidewater in compliance with the requirements of the Florida Surplus Lines Law, Florida Statutes § 626.913 et seq. (Id. ¶ 16.) Pinnacle is also represented by Fendowell Rourke & Stanton LLP as part of a joint defense arrangement with Ironclad.
Defendant Montclair Assurance Company. Montclair is a New York-domiciled admitted carrier with its principal offices at 1 Liberty Plaza, 38th Floor, New York, New York 10006. (Answer of Montclair Assurance Co. ("Montclair Answer"), ¶ 5, Apr. 15, 2023.) Montclair is assigned NAIC Number 15692 and issued the second excess layer policy in VHG's insurance tower, providing $10 million in coverage excess of $40 million (i.e., excess of the combined Ironclad and Pinnacle layers). (Pellegrini Decl. ¶ 17.) Montclair is represented in this action by Patricia Kraus, Esq. and Raymond Cho, Esq. of Delvecchio & Kraus LLP.
Defendant Sovereign Re Ltd. Sovereign Re is a Bermuda-domiciled reinsurer and excess carrier with its principal offices at 14 Front Street, Hamilton HM 11, Bermuda. (Answer of Sovereign Re Ltd. ("Sovereign Re Answer"), ¶ 5, Apr. 15, 2023.) Sovereign Re issued the third and final excess layer in VHG's insurance tower, providing $10 million in coverage excess of $50 million (i.e., the top of the tower). (Pellegrini Decl. ¶ 18.) Sovereign Re is also represented by Delvecchio & Kraus LLP.
B. VHG's Insurance Program and the Tower Structure
VHG's all-risk property and business-interruption insurance program was placed by Tidewater Risk Advisors LLC ("Tidewater"), VHG's broker of record, which maintains its principal office at 2600 S. Bayshore Drive, Suite 800, Miami, Florida 33133. (Pellegrini Decl. ¶ 10.) Franklin Orde served as the Tidewater account executive primarily responsible for managing VHG's account, including the placement and renewal of the insurance program. (Deposition of Franklin Orde ("Orde Dep."), Aug. 28, 2023, at 10:5–11:12, Ex. D.) Mr. Orde had served as the Tidewater account executive for VHG's property program since 2019. (Orde Dep. at 11:14–22.)
For the policy period July 1, 2022 through July 1, 2023, VHG's insurance program consisted of a four-layer tower structure designed to provide aggregate coverage of $60 million above a $500,000 deductible for all-risk property losses, including business-interruption losses, at VHG's Florida resort properties. (Pellegrini Decl. ¶ 11.) The tower was structured as follows:
Primary Layer — Ironclad Indemnity Corporation. Ironclad issued Policy No. IIC-PRP-2022-07541, providing $25 million in all-risk property and business-interruption coverage, subject to a $500,000 per-occurrence deductible. (Pellegrini Decl. ¶ 12; Ironclad Policy, Ex. E.) The annual premium for the primary layer was $980,000. (Pellegrini Decl. ¶ 13.)
First Excess Layer — Pinnacle Surplus Lines Inc. Pinnacle issued Policy No. PSL-XS1-2022-3390, providing $15 million in excess coverage, attaching at $25 million (i.e., excess of the Ironclad primary layer). (Pellegrini Decl. ¶ 14; Pinnacle Policy, Ex. F.) The Pinnacle policy is follow-form with the Ironclad primary policy. (Id. ¶ 15.) The annual premium for the first excess layer was $410,000. (Id. ¶ 14.)
Second Excess Layer — Montclair Assurance Company. Montclair issued Policy No. MAC-XS2-2022-09817, providing $10 million in excess coverage, attaching at $40 million (i.e., excess of the combined Ironclad and Pinnacle layers). (Pellegrini Decl. ¶ 17; Montclair Policy, Ex. G.) The annual premium for the second excess layer was $265,000. (Pellegrini Decl. ¶ 17.)
Third Excess Layer — Sovereign Re Ltd. Sovereign Re issued Policy No. SRL-XS3-2022-5102, providing $10 million in excess coverage, attaching at $50 million (i.e., the top of the tower). (Pellegrini Decl. ¶ 18; Sovereign Re Policy, Ex. H.) The annual premium for the third excess layer was $185,000. (Pellegrini Decl. ¶ 18.)
In the aggregate, VHG's four-layer tower provided $60 million in coverage above a $500,000 deductible, for a total annual premium of $1,840,000. (Pellegrini Decl. ¶ 19.) The program was specifically designed to provide catastrophic hurricane coverage for VHG's three coastal Florida resort properties. (Id. ¶ 20.) As Ms. Pellegrini attested, "The entire purpose of the program was to ensure that VHG had sufficient coverage to withstand a major hurricane event affecting multiple properties simultaneously." (Pellegrini Decl. ¶ 20.)
C. The July 2022 Renewal and the Windstorm Sub-Limit Deletion
The windstorm sub-limit issue at the heart of this motion arises from the July 2022 renewal of VHG's insurance program. During the prior policy year (July 1, 2021 through July 1, 2022), the Ironclad primary policy contained a named-windstorm sub-limit of $15 million for business-interruption coverage. (Pellegrini Decl. ¶ 21; Prior-Year Ironclad Policy, Policy No. IIC-PRP-2021-06387, Ex. I.) This sub-limit capped VHG's recovery for business-interruption losses arising from a named windstorm (as designated by the National Hurricane Center) at $15 million, regardless of the $25 million policy limit. (Id. ¶ 22.)
VHG recognized that the $15 million sub-limit represented a significant gap in its hurricane protection. (Pellegrini Decl. ¶ 23.) In the spring of 2022, as the renewal process for the July 1, 2022 policy period commenced, Ms. Pellegrini instructed Tidewater to negotiate the deletion of the windstorm sub-limit as a priority for the renewal. (Id. ¶ 24.) Ms. Pellegrini testified in her declaration:
"I specifically directed Franklin Orde at Tidewater to make the removal of the named-windstorm sub-limit a non-negotiable condition of the July 2022 renewal. Given the hurricane exposure of our three Florida resort properties, I considered it essential that VHG have the full $25 million primary limit available for business-interruption losses caused by a named windstorm. I made clear to Mr. Orde that VHG was willing to pay a higher premium to achieve this result."
(Pellegrini Decl. ¶ 24.)
Mr. Orde carried out those instructions. During the renewal negotiations, which took place primarily between April and June 2022, Mr. Orde engaged in extensive discussions with Ironclad's underwriting department regarding the terms of the July 2022 renewal. (Orde Dep. at 34:6–36:18.) Mr. Orde testified that he communicated VHG's instruction to Ironclad's underwriter — identified in the record as James Thorburn, Assistant Vice President of Underwriting at Ironclad — and negotiated the deletion of the sub-limit in exchange for an increased premium. (Orde Dep. at 37:2–39:14.)
The critical portions of Mr. Orde's testimony on this point are unequivocal:
"Q. Did you negotiate the deletion of the named-windstorm sub-limit with Ironclad during the July 2022 renewal?
A. Yes, I did.
Q. And what was the result of those negotiations?
A. Ironclad agreed to delete the named-windstorm sub-limit for the 2022-2023 policy year. They agreed to it in exchange for an increased premium on the primary layer.
Q. How was that agreement communicated to you?
A. James Thorburn — he was the underwriter at Ironclad — he sent me a written confirmation. I believe it was an email. It confirmed that the named-windstorm sub-limit would be removed from the renewal policy and that the premium for the primary layer would be adjusted upward accordingly.
Q. Did you communicate that confirmation to VHG?
A. Absolutely. I called Sandra Pellegrini and told her that the sub-limit had been deleted. I also sent her a written summary of the renewal terms, which reflected the deletion."
(Orde Dep. at 39:16–41:8.)
Consistent with the agreed-upon deletion, the renewal binder issued by Ironclad for the July 2022 renewal does not reference any named-windstorm sub-limit. (Ironclad Renewal Binder, dated June 28, 2022, Ex. J.) The binder identifies the policy limit as $25 million per occurrence, subject to a $500,000 deductible, without any reference to a windstorm sub-limit or any other sub-limit on business-interruption coverage for named windstorm events. (Id.) The primary layer premium is stated as $980,000 — an increase from the prior-year premium, consistent with VHG's agreement to pay a higher premium in exchange for the deletion of the sub-limit. (Pellegrini Decl. ¶ 26; Orde Dep. at 42:3–15.)
However, the final issued policy — Policy No. IIC-PRP-2022-07541, which was not delivered to VHG until approximately August 15, 2022, some six weeks after the July 1, 2022 inception date — contains ambiguous endorsement language regarding the windstorm sub-limit. (Pellegrini Decl. ¶ 28; Ironclad Policy, Ex. E, Endorsement Schedule.) Specifically, the policy's endorsement schedule references a "Named Windstorm Sub-Limit Endorsement" that appears to carry over from the prior policy year. (Id.) The endorsement schedule does not clearly indicate whether this endorsement has been added, retained, deleted, or superseded for the 2022–2023 policy period. (Id.) There is no express deletion endorsement in the final policy form that would document the removal of the sub-limit. (Id. ¶ 29.) Equally, there is no new, clearly worded endorsement that expressly adds or retains a $15 million named-windstorm sub-limit for the current policy period. (Id.)
This discrepancy between the negotiated terms of the renewal — under which the windstorm sub-limit was unambiguously agreed to be deleted — and the ambiguous language of the issued policy is the core of the dispute before this Court. As set forth in the Argument section below, this discrepancy creates, at a minimum, an ambiguity that must be resolved against Ironclad as the policy drafter under Florida's well-established contra proferentem doctrine.
D. Hurricane Callista and VHG's Losses
On September 12, 2022, the National Hurricane Center ("NHC") designated Tropical Storm Callista as a named tropical cyclone in the central Caribbean Sea. (Pellegrini Decl. ¶ 31.) Over the ensuing days, Hurricane Callista intensified rapidly as it tracked northward through the warm waters of the Caribbean and the Florida Straits. (Id.) On September 18, 2022, at approximately 1:30 PM Eastern Daylight Time, Hurricane Callista made landfall as a Category 4 hurricane in the Lower Florida Keys, near Big Pine Key, with maximum sustained winds of 145 miles per hour. (Id. ¶ 32.) The storm produced catastrophic storm surge of 8 to 14 feet in Monroe County and 6 to 10 feet in Lee County, along with destructive winds and torrential rainfall across a wide swath of Southwest Florida. (Id.)
In advance of the storm, mandatory evacuation orders were issued for Monroe County on September 16, 2022, and for Lee County on September 17, 2022. (Pellegrini Decl. ¶ 33.) VHG's three resort properties were directly in the path of Hurricane Callista and sustained catastrophic damage, resulting in extended closures and massive business-interruption losses. The losses at each property are summarized below.
Verimark Grand Key Resort (Marathon, Florida). The Grand Key Resort is a 312-room luxury resort and marina complex located at Mile Marker 48 on the Overseas Highway in Marathon, Monroe County, Florida 33050. (Pellegrini Decl. ¶ 34.) Prior to Hurricane Callista, the resort maintained an average daily rate ("ADR") of $389 and an average occupancy rate of 82%. (Id. ¶ 35.) The resort sustained severe wind and storm-surge damage, including destruction of the marina, flooding of the ground-floor public areas and approximately 40% of the guest rooms, and significant roof damage to the main building. (Id. ¶ 36.) The Grand Key Resort was forced to close entirely on September 18, 2022, and did not reopen until March 15, 2023 — a closure period of 178 days. (Id. ¶ 37.) The estimated business-interruption loss for the Grand Key Resort is $31.4 million. (Expert Report of Dr. Helen Vasquez ("Vasquez Report"), dated Sept. 15, 2023, at 24–31, Ex. K.)
Verimark Harborview Hotel & Conference Center (Fort Myers Beach, Florida). The Harborview Hotel is a 224-room hotel with a 40,000 square-foot conference facility located at 1400 Estero Boulevard, Fort Myers Beach, Lee County, Florida 33931. (Pellegrini Decl. ¶ 38.) Prior to Hurricane Callista, the property maintained an ADR of $295 and an average occupancy rate of 74%. (Id. ¶ 39.) The hotel sustained extensive storm-surge and wind damage, including flooding of the entire first floor, destruction of the conference facility's interior finishes, and structural damage to the pool complex and outdoor event spaces. (Id. ¶ 40.) The Harborview was closed from September 18, 2022 through January 31, 2023 — a closure period of 135 days. (Id. ¶ 41.) The estimated business-interruption loss for the Harborview Hotel is $18.7 million. (Vasquez Report at 32–38.)
Verimark Sunset Shores (St. Pete Beach, Florida). The Sunset Shores is a 186-room boutique resort located at 7200 Gulf Boulevard, St. Pete Beach, Pinellas County, Florida 33706. (Pellegrini Decl. ¶ 42.) Prior to Hurricane Callista, the property maintained an ADR of $342 and an average occupancy rate of 79%. (Id. ¶ 43.) Although located further north than the Grand Key and Harborview properties, the Sunset Shores sustained significant wind damage and localized storm-surge damage, particularly to its beachfront amenities and ground-floor suites. (Id. ¶ 44.) The resort was fully closed from September 18, 2022 through November 30, 2022 (73 days of full closure), and thereafter operated at reduced capacity through February 2023, with full capacity not restored until February 28, 2023. (Id. ¶ 45.) The estimated business-interruption loss for Sunset Shores is $9.9 million. (Vasquez Report at 39–44.)
VHG's total claimed business-interruption loss from Hurricane Callista across all three properties is $60 million ($31.4 million + $18.7 million + $9.9 million). (Pellegrini Decl. ¶ 46; Vasquez Report at 45.) This amount equals the full aggregate limit of VHG's four-layer insurance tower.
E. The Claims Process and Denial
September 22, 2022. VHG submitted its initial notice of loss to Ironclad, as the primary layer carrier, on September 22, 2022, four days after Hurricane Callista's landfall. (Pellegrini Decl. ¶ 47; Notice of Loss, Ex. L.) The notice identified all three affected properties and provided preliminary estimates of the physical damage and anticipated business-interruption losses. (Id.)
October 5, 2022. Ironclad retained Arbor Claims Services LLC ("Arbor") as the independent adjuster for the claim. Denise Whitford, Arbor's lead adjuster, inspected all three properties on October 5, 2022. (Deposition of Denise Whitford ("Whitford Dep."), July 24, 2023, at 15:8–17:3, Ex. M.) Ms. Whitford's inspection reports documented extensive damage at each property and confirmed that the damage was caused by Hurricane Callista. (Id. at 18:4–22:11.)
October 12, 2022. Ironclad issued a reservation of rights letter to VHG, dated October 12, 2022. (Ironclad Reservation of Rights Letter, Ex. N.) Among other reservations, the letter asserted for the first time that the Ironclad primary policy contains a $15 million named-windstorm sub-limit applicable to VHG's business-interruption claim. (Id. at 2.) The reservation of rights letter stated, in relevant part:
"Ironclad reserves all of its rights under the Policy, including but not limited to its right to assert that the Named Windstorm Sub-Limit Endorsement limits the Insured's recovery for business-interruption losses arising from Hurricane Callista to $15,000,000."
(Ironclad Reservation of Rights Letter, Ex. N, at 2.)
November 15, 2022. VHG submitted its sworn statement in proof of loss to Ironclad, claiming total business-interruption losses of $60 million. (Sworn Statement in Proof of Loss, Ex. O.)
February 3, 2023. After a prolonged adjustment process, Ironclad issued a formal denial of coverage, dated February 3, 2023. (Ironclad Denial Letter, Ex. P.) The denial was based on four grounds: (1) the $15 million named-windstorm sub-limit; (2) disputes regarding the period of restoration; (3) the concurrent causation doctrine and the flood exclusion; and (4) VHG's alleged failure to mitigate its losses. (Id. at 2–6.) The sub-limit was listed as the first and principal basis for denial. (Id. at 2.) Of particular relevance to this motion, Ironclad's denial letter did not address or acknowledge the July 2022 renewal negotiations in which the sub-limit was deleted. (Id.)
February 10, 2023. Pinnacle issued its own denial letter, dated February 10, 2023, following Ironclad's denial on a follow-form basis. (Pinnacle Denial Letter, Ex. Q.) Pinnacle stated that because its policy follows the terms and conditions of the Ironclad primary policy, and because Ironclad had determined that the $15 million named-windstorm sub-limit applies, Pinnacle's first excess layer would not be reached. (Id. at 1–2.)
Montclair and Sovereign Re. Montclair and Sovereign Re did not issue formal denial letters but reserved their rights in correspondence to VHG's counsel, asserting that their excess layers would not be triggered because the sub-limit would cap VHG's recovery below the attachment points of their respective policies. (Montclair Reservation of Rights Letter, dated Feb. 20, 2023, Ex. R; Sovereign Re Reservation of Rights Letter, dated Feb. 22, 2023, Ex. S.)
F. Procedural History
On March 1, 2023, VHG filed its complaint in this Court, initiating the present action under Case No. 2022-CA-031547. (Complaint, Dkt. 1.) The complaint asserts claims for breach of contract, declaratory judgment, and bad faith against all four defendant insurers. (Id.) VHG seeks a declaration that the $15 million named-windstorm sub-limit does not apply, that all four layers of the insurance tower are fully exposed, and that VHG is entitled to recover the full $60 million in business-interruption losses (less the $500,000 deductible), together with interest, attorneys' fees, and costs. (Id. ¶¶ 82–114.)
On April 15, 2023, all four defendants filed answers and affirmative defenses. (Ironclad Answer, Dkt. 8; Pinnacle Answer, Dkt. 9; Montclair Answer, Dkt. 10; Sovereign Re Answer, Dkt. 11.) Among Ironclad's twenty-three affirmative defenses, the third asserts that VHG's business-interruption recovery is limited by the $15 million named-windstorm sub-limit endorsement. (Ironclad Answer ¶ 126.)
On May 1, 2023, the Court held a case management conference and entered a scheduling order establishing the discovery schedule. (Case Management Order, Dkt. 15.) Fact discovery was set for the period of June 1 through September 30, 2023.
During the fact discovery period, the parties conducted the following key depositions: Victor Haddon, Ironclad's SVP of Claims (July 10, 2023); Denise Whitford, Arbor's lead independent adjuster (July 24, 2023); Marcus Ellsworth, VHG's CEO (August 7, 2023); Diane Calder, VHG's CFO (August 8, 2023); Sandra Pellegrini, VHG's VP of Risk Management (August 14, 2023); and Franklin Orde, Tidewater's account executive (August 28, 2023). (Pellegrini Decl. ¶ 52.)
Expert reports were served on September 15, 2023. VHG's damages expert, Dr. Helen Vasquez of Meridian Forensic Economics LLC, submitted a comprehensive report opining that VHG's total business-interruption losses from Hurricane Callista exceed $60 million. (Vasquez Report, Ex. K.) Defendants' damages expert, Dr. Warren Birk of Graystone Consulting Group LLC, submitted a report that disputes the quantum of VHG's claimed losses based on differing assumptions regarding the period of restoration and VHG's mitigation efforts. (Expert Report of Dr. Warren Birk ("Birk Report"), dated Sept. 15, 2023, Ex. T.) Rebuttal expert reports were served on October 2, 2023. (Pellegrini Decl. ¶ 53.) Expert depositions of Dr. Vasquez and Dr. Birk were conducted on October 16, 2023 and October 23, 2023, respectively. (Id. ¶ 54.)
VHG now files the instant motion for partial summary judgment on the windstorm sub-limit issue.
III. LEGAL STANDARD
A. Florida Summary Judgment Standard
Under Florida Rule of Civil Procedure 1.510, as amended effective May 1, 2021, summary judgment is appropriate when the movant shows that "there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fla. R. Civ. P. 1.510(a). The 2021 amendments to Rule 1.510 adopted the federal summary judgment standard articulated in Celotex Corp. v. Catrett, 477 U.S. 317 (1986), and its progeny. See In re Amendments to Fla. R. Civ. P. 1.510, 317 So. 3d 1045, 1047 (Fla. 2021).
The moving party bears the initial burden of demonstrating the absence of any genuine dispute of material fact by citing to "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials." Fla. R. Civ. P. 1.510(c). A fact is "material" if it "might affect the outcome of the suit under the governing law." Fla. Farm Bureau Cas. Ins. Co. v. Cox, 967 So. 2d 815, 819 (Fla. 2007). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
Once the moving party satisfies its initial burden, the burden shifts to the non-moving party to "come forward with specific facts showing a genuine issue for trial." Moonlit Waters Apartments, Inc. v. Cauley, 666 So. 2d 898, 900 (Fla. 1996). The non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Allstate Ins. Co. v. Orthopedic Specialists, 212 So. 3d 973, 978 (Fla. 2017). Conclusory assertions, speculation, and the mere existence of a scintilla of evidence in support of the non-moving party's position are insufficient to defeat summary judgment. See Hegel v. First Liberty Ins. Corp., 778 F.3d 1214, 1220 (11th Cir. 2015) (applying Florida law).
When considering a motion for summary judgment, the court must view all evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Lawyers Title Ins. Corp. v. JDC (Am.) Corp., 52 F.3d 1575, 1580 (11th Cir. 1995) (applying Florida law). However, the court is not required to accept unreasonable inferences or unsupported conclusions. Id.
B. Florida Standards for Partial Summary Judgment
Partial summary judgment under Rule 1.510 is appropriate when a single, discrete legal issue can be resolved as a matter of law, even if other issues remain for trial. Cox, 967 So. 2d at 820. The purpose of partial summary judgment is to narrow the issues for trial and to eliminate the need for unnecessary litigation over issues that can be conclusively resolved on the existing record. Id.
Here, the question of whether the $15 million named-windstorm sub-limit applies to VHG's business-interruption claim is a pure issue of insurance policy interpretation. This Court can and should resolve it on summary judgment. The interpretation of an insurance policy is a question of law for the court. Swire Pac. Holdings, 845 So. 2d at 165. Where the relevant facts are undisputed — as they are here — the court may properly determine the meaning and applicability of policy language as a matter of law. Id. The remaining coverage issues in this case (period of restoration, concurrent causation/flood exclusion, and duty to mitigate) are independent of the sub-limit question and can proceed to further proceedings after this Court resolves the threshold sub-limit issue.
IV. ARGUMENT
A. The Undisputed Evidence Establishes That the $15 Million Named Windstorm Sub-Limit Was Deleted at the July 2022 Renewal
1. The Renewal Negotiations.  The undisputed evidence demonstrates that the $15 million named-windstorm sub-limit was expressly negotiated away during the July 2022 renewal of VHG's insurance program. The critical facts are established by the deposition testimony of Franklin Orde, Tidewater's account executive, and are corroborated by the contemporaneous documentary evidence.
The renewal process for the policy period commencing July 1, 2022 began in the spring of 2022. (Orde Dep. at 28:4–12.) Mr. Orde testified that VHG, through its Vice President of Risk Management Sandra Pellegrini, communicated a clear instruction to Tidewater: the $15 million named-windstorm sub-limit in the prior-year Ironclad primary policy must be deleted as a condition of the renewal. (Orde Dep. at 30:7–31:15.) Mr. Orde described this instruction as "unambiguous" and stated that Ms. Pellegrini "made it very clear that VHG was not going to renew the program with the windstorm sub-limit in place." (Orde Dep. at 31:3–8.)
Acting on VHG's instructions, Mr. Orde engaged in negotiations with James Thorburn, Assistant Vice President of Underwriting at Ironclad, regarding the deletion of the sub-limit. (Orde Dep. at 34:6–36:18.) Mr. Orde testified that the negotiations took place over a series of telephone calls and email exchanges between approximately April and June 2022. (Id. at 34:14–22.) Mr. Thorburn initially indicated that Ironclad would consider deleting the sub-limit but that the premium would need to be adjusted upward to reflect the increased exposure. (Id. at 35:3–16.)
Mr. Orde testified that by mid-June 2022, the parties had reached agreement: Ironclad would delete the named-windstorm sub-limit in exchange for an increased premium on the primary layer. (Orde Dep. at 37:2–39:14.) The premium for the primary layer was increased to $980,000, up from the prior year's premium. (Id. at 42:3–15.) Mr. Orde testified that this premium increase "specifically reflected the additional exposure Ironclad was assuming by removing the windstorm sub-limit." (Id. at 42:12–15.)
Critically, Mr. Orde received written confirmation of the deletion from Ironclad's underwriter. He testified:
"Q. Did you receive written confirmation from Ironclad that the windstorm sub-limit would be deleted?
A. Yes, I did. James Thorburn sent me — I believe it was an email — confirming that the named-windstorm sub-limit would be removed from the policy for the 2022-2023 renewal. That was sometime in mid-to-late June 2022, before the July 1 inception date.
Q. What did you do with that confirmation?
A. I communicated it to Sandra Pellegrini at VHG. I called her and told her that the sub-limit had been successfully deleted, and I sent her a written summary of the final renewal terms that reflected the deletion."
(Orde Dep. at 43:5–44:2.)
Mr. Orde further testified that the renewal binder issued by Ironclad on June 28, 2022 was consistent with the agreed-upon deletion: the binder identifies the policy limit as $25 million per occurrence, subject to a $500,000 deductible, and does not reference any named-windstorm sub-limit. (Orde Dep. at 45:8–46:11; Ironclad Renewal Binder, Ex. J.) Mr. Orde stated that had the renewal binder contained a reference to the windstorm sub-limit, he "would have immediately raised the issue with Ironclad's underwriter because it would have been inconsistent with what we had agreed upon." (Orde Dep. at 46:14–19.)
There is no evidence in the record contradicting Mr. Orde's testimony. No Ironclad underwriter has testified that the sub-limit was intended to be retained. No contemporaneous document from Ironclad's underwriting department states that the sub-limit was to remain in effect. To the contrary, the entire record of the renewal negotiations — the broker-underwriter correspondence, the renewal binder, and the premium adjustment — uniformly supports the conclusion that the sub-limit was deleted.
2. VHG's Reasonable Expectation.  VHG's understanding, based on Tidewater's representations and the premium increase VHG paid, was that the named-windstorm sub-limit had been removed from the renewed policy. (Pellegrini Decl. ¶¶ 24–27.) Ms. Pellegrini attested in her declaration that she "specifically directed Franklin Orde at Tidewater to negotiate the deletion of the named-windstorm sub-limit as a priority for the July 2022 renewal," that "Mr. Orde confirmed to me, both orally and in writing, that the deletion had been accomplished and that Ironclad had agreed to remove the sub-limit in exchange for the increased premium," and that "VHG paid the increased premium of $980,000 for the primary layer in reliance on Tidewater's confirmation that the sub-limit had been deleted." (Pellegrini Decl. ¶¶ 24–26.)
Florida courts have long recognized the reasonable expectations doctrine in the context of insurance policy interpretation. Under this doctrine, an insured's objectively reasonable expectations regarding the scope of coverage are given effect, particularly where those expectations are supported by the representations of the insured's broker or agent and by the premium charged. See Deni Assocs. of Fla., Inc. v. State Farm Fire & Cas. Ins. Co., 711 So. 2d 1135, 1140 (Fla. 1998) (noting that "insurance contracts should be construed to give effect to the reasonable expectations of the insured"); Lindheimer v. St. Paul Fire & Marine Ins. Co., 643 So. 2d 636, 638 (Fla. 3d DCA 1994) (holding that the insured's reasonable expectations, as informed by its broker, are relevant to policy interpretation).
The reasonable expectations doctrine is particularly applicable here because VHG's expectation that the sub-limit had been deleted was not merely subjective hope — it was objectively grounded in concrete facts. VHG's broker of record negotiated the deletion, received written confirmation from the insurer, and communicated that confirmation to VHG. VHG paid a substantial premium increase as consideration for the deletion. The renewal binder issued by Ironclad was consistent with the deletion. Under these circumstances, VHG's expectation that the full $25 million primary limit applied to named-windstorm business-interruption losses was eminently reasonable — indeed, it was the only reasonable interpretation of the parties' agreement.
As the Florida Supreme Court explained in Deni Associates, the reasonable expectations of the insured are given effect where "the insured's interpretation of the coverage is reasonable," even if "the insurer's interpretation is also reasonable." 711 So. 2d at 1140. Here, VHG's interpretation is not merely reasonable; it is the only interpretation consistent with the undisputed evidence. But even under the more lenient standard of Deni Associates, where two reasonable interpretations exist, the insured's reasonable expectations prevail. See also Windham v. Prudential Ins. Co. of Am., 161 So. 2d 20, 22 (Fla. 3d DCA 1964) (holding that the insured's understanding of the scope of coverage, as conveyed by the insured's agent, was entitled to consideration in interpreting the policy).
3. Victor Haddon's Testimony.  The deposition testimony of Victor Haddon, Ironclad's Senior Vice President of Claims, further supports VHG's position. Mr. Haddon was deposed on July 10, 2023 and was questioned extensively about the basis for Ironclad's assertion that the $15 million named-windstorm sub-limit applies. His testimony reveals a critical deficiency in Ironclad's position: Ironclad's claims department asserted the sub-limit based solely on the face of the issued policy, without consulting the underwriting file or the renewal correspondence that would have revealed the agreed-upon deletion.
Mr. Haddon testified as follows:
"Q. Mr. Haddon, were you personally involved in the underwriting negotiations for the July 2022 renewal of VHG's policy?
A. No, I was not. I am in the claims department. I was not involved in the underwriting process.
Q. When you made the decision to assert the named-windstorm sub-limit in the reservation of rights letter and the denial letter, did you consult the underwriting file for the July 2022 renewal?
A. I reviewed the issued policy and the endorsement schedule. That is the standard practice in my department.
Q. But my question was whether you consulted the underwriting file — the file maintained by the underwriting department that would contain the correspondence between the Ironclad underwriter and VHG's broker regarding the renewal negotiations.
A. I did not personally review the underwriting file. My decision was based on the language of the issued policy as it was provided to me.
Q. Is it possible that the underwriting file contains correspondence reflecting an agreement to delete the named-windstorm sub-limit?
A. I cannot speak to what is or is not in the underwriting file. I can only speak to what I reviewed, which was the issued policy."
(Haddon Dep. at 55:10–57:8.)
Mr. Haddon's testimony is significant for several reasons. First, he acknowledged that he was not involved in the underwriting negotiations and had no personal knowledge of what was agreed upon during the renewal process. (Id. at 55:10–14.) Second, he admitted that his assertion of the sub-limit was based solely on the language of the issued policy — the very language that VHG contends is ambiguous — without any consideration of the underwriting history or renewal correspondence. (Id. at 56:2–12.) Third, and most tellingly, he conceded that he could not rule out the possibility that the underwriting file contains documentation reflecting an agreement to delete the sub-limit. (Id. at 57:4–8.)
Mr. Haddon's testimony thus confirms that Ironclad's claims department acted in a vacuum, asserting the sub-limit without investigating whether its own underwriting department had agreed to delete it. This is precisely the type of disconnect between underwriting and claims that frequently gives rise to coverage disputes — and it is precisely the type of situation in which the contra proferentem doctrine, the reasonable expectations doctrine, and the rules governing the insurer's burden of proof operate to protect the insured from the consequences of the insurer's own administrative failures.
4. The Policy Endorsements Are Ambiguous.  Even setting aside the undisputed extrinsic evidence of the deletion, the language of the issued policy is, at a minimum, ambiguous on the question of whether the $15 million named-windstorm sub-limit applies for the 2022–2023 policy period. This ambiguity alone entitles VHG to judgment as a matter of law under Florida's contra proferentem doctrine, as discussed in Section IV.B below.
The issued policy — Policy No. IIC-PRP-2022-07541 — includes a schedule of endorsements. (Ironclad Policy, Ex. E, Endorsement Schedule.) The endorsement schedule lists various endorsements by number and title. Among the endorsements listed is one titled "Named Windstorm Sub-Limit Endorsement." (Id.) However, the endorsement schedule does not clearly indicate the status of this endorsement for the 2022–2023 policy period. The schedule does not state whether the endorsement has been newly added, carried over from the prior year, modified, or deleted. (Id.) There is no express language in the endorsement schedule or elsewhere in the policy stating that a $15 million named-windstorm sub-limit applies to business-interruption coverage for the 2022–2023 policy period.
At the same time, there is no express deletion endorsement — no endorsement that states, in clear terms, that the named-windstorm sub-limit has been removed or that it does not apply. (Id.) The absence of a deletion endorsement is the basis for Ironclad's position, but the absence cuts both ways: the mere listing of an endorsement title in a schedule, without clear language specifying the endorsement's terms or confirming its applicability to the current policy period, does not constitute an unambiguous statement that the sub-limit is in effect.
This silence and ambiguity are compounded by the fact that the endorsement schedule appears to have been carried over, at least in part, from the prior policy year's endorsement schedule without the careful updating that would have been necessary to reflect the changes negotiated during the July 2022 renewal. (Pellegrini Decl. ¶ 29.) The policy form used for the 2022–2023 period appears to be substantially similar to the prior year's form, and there is no indication that the endorsement schedule was specifically reviewed and updated by Ironclad's underwriting department to reflect the agreed-upon deletion of the sub-limit. (Id. ¶ 30.)
As the leading insurance treatise notes, "Where a policy schedule or endorsement list is inconsistent with the actual agreements reached during the underwriting process, the ambiguity created by such inconsistency is to be resolved against the insurer." 2 Couch on Insurance § 22:30 (3d ed. 2023). The rationale is straightforward: the insurer is the drafter of the policy and is responsible for ensuring that the issued policy accurately reflects the terms agreed upon during the underwriting process. When the insurer fails in that responsibility — as Ironclad failed here — the insured should not bear the consequences of the insurer's administrative error.
The Florida Supreme Court has applied this principle consistently. In Swire Pacific Holdings, Inc. v. Kestrel Specialty Insurance, the Court held that where policy language is "susceptible to two reasonable interpretations," the interpretation favoring coverage must be adopted. 845 So. 2d at 165. Here, the endorsement schedule is susceptible to at least two reasonable interpretations: (1) that the named-windstorm sub-limit endorsement was carried over from the prior year and applies to the 2022–2023 policy period, or (2) that the endorsement was listed in the schedule as a vestige of the prior year's form but was no longer in effect following the agreed-upon deletion. Under Swire Pacific and the long line of Florida cases applying the contra proferentem doctrine, this ambiguity must be resolved in VHG's favor.
B. Under Florida Law, Ambiguities in Insurance Policies Are Construed Against the Insurer
1. The Contra Proferentem Doctrine.  The contra proferentem doctrine is one of the most firmly established principles of Florida insurance law. Under this doctrine, ambiguities in an insurance policy are construed against the insurer and in favor of coverage for the insured. Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000); Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528, 532 (Fla. 2005); Geico Gen. Ins. Co. v. Virtual Imaging Servs., Inc., 141 So. 3d 147, 154 (Fla. 2013). The doctrine is grounded in the recognition that insurance policies are contracts of adhesion, drafted by the insurer and presented to the insured on a take-it-or-leave-it basis. Anderson, 756 So. 2d at 34. Because the insurer controls the drafting process, the insurer "bears the consequences of unclear or contradictory language." Id.
The Florida Supreme Court has repeatedly affirmed the application of this doctrine. In State Farm Mutual Automobile Insurance Co. v. Menendez, the Court reiterated that "insurance contracts are to be construed most strongly against the insurer and liberally in favor of the insured." 70 So. 3d 566, 571 (Fla. 2011). In Excelsior Insurance Co. v. Pomona Park Bar & Package Store, the Court explained that the rationale for the doctrine is "to protect the insured from the insurer's superior bargaining position and drafting expertise." 369 So. 2d 938, 940 (Fla. 1979). And in Washington National Insurance Corp. v. Ruderman, the Court held that "where a policy provision is susceptible to two interpretations, one providing coverage and the other limiting coverage, the provision will be construed in favor of the insured." 117 So. 3d 943, 949 (Fla. 2013).
The doctrine applies with particular force in the context of policy endorsements. As this Court is aware, endorsements are modifications to the base policy form that add, delete, or alter specific provisions. When an endorsement is unclear, inconsistent with the base policy, or susceptible to multiple interpretations, the ambiguity is resolved against the insurer, because the insurer drafted both the base policy and the endorsement. See Swire Pac. Holdings, 845 So. 2d at 165; Anderson, 756 So. 2d at 34.
Florida Statutes § 627.419 codifies these interpretive principles, providing that "[e]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy, and as amplified, extended, or modified by any application therefor, any endorsement thereto, or any rider thereof." Fla. Stat. § 627.419(1). This statute requires the court to read the policy as a whole, considering all endorsements in context. Where the endorsement schedule is ambiguous — as it is here — the court must apply the interpretive rules that favor the insured.
The leading insurance treatise confirms this approach. As Couch on Insurance states, "Where an endorsement or schedule of endorsements creates an ambiguity in the policy, the ambiguity will be resolved in favor of the insured, because the insurer had the ability and the obligation to draft clear, unambiguous policy language." 2 Couch on Insurance § 22:30 (3d ed. 2023). Similarly, Applemanman's treatise notes that "[t]he insurer, as the party with sole control over the policy drafting process, bears the risk of any failure to clearly express the terms of coverage." 1 Applemanman on Insurance Law and Practice § 7401 (rev. ed. 2023).
2. Application to the Windstorm Sub-Limit.  Application of the contra proferentem doctrine to the facts of this case compels a ruling in VHG's favor. The ambiguity at issue is created entirely by Ironclad's own failure to issue a clear endorsement reflecting the agreed-upon deletion of the $15 million named-windstorm sub-limit. Ironclad had complete control over the drafting of the policy and the endorsement schedule. If Ironclad intended to retain the sub-limit, it bore the burden of expressly stating so in the issued policy through an unambiguous endorsement. If it intended to delete the sub-limit — as the undisputed renewal negotiations confirm — it bore the burden of issuing a clear deletion endorsement.
Ironclad did neither. Instead, it issued a policy with an endorsement schedule that ambiguously references a "Named Windstorm Sub-Limit Endorsement" without clearly stating whether the endorsement applies, does not apply, was deleted, or was retained. This is precisely the type of ambiguity that the contra proferentem doctrine is designed to address. See Swire Pac. Holdings, 845 So. 2d at 165–66 (holding that where the insurer's policy language was "susceptible to the interpretation urged by [the insured]," the ambiguity must be resolved in the insured's favor); Anderson, 756 So. 2d at 35 (same).
The fact that the ambiguity was created by Ironclad's administrative failure — its apparent failure to update the endorsement schedule to reflect the agreed-upon deletion — does not help Ironclad. To the contrary, it reinforces the application of the contra proferentem doctrine. As the Florida Supreme Court explained in Taurus Holdings, "the insurer cannot avoid the consequences of its own drafting failures by arguing that the policy should be interpreted in its favor." 913 So. 2d at 533. The insurer had the opportunity to draft clear policy language. It failed to do so. The insured should not bear the consequences. See also 2 Couch on Insurance § 22:34 (3d ed. 2023) ("An insurer's failure to properly endorse a policy to reflect the parties' agreement is a drafting failure for which the insurer, not the insured, must bear the consequences.").
VHG submits that the undisputed evidence establishes deletion of the sub-limit as a matter of fact and law. But even if this Court were to find some ambiguity in the factual record — which VHG respectfully submits it should not — the contra proferentem doctrine independently requires resolution of the ambiguity in VHG's favor. Under either analysis, the result is the same: the $15 million named-windstorm sub-limit does not apply, and VHG is entitled to the full $25 million primary layer limit for its Hurricane Callista business-interruption claim.
C. Extrinsic Evidence Is Admissible to Resolve the Ambiguity and Confirms Deletion
1. Florida Law on Extrinsic Evidence in Insurance Policy Interpretation.  Under Florida law, when an insurance policy is ambiguous, courts may — and should — consider extrinsic evidence to determine the intent of the parties. Jones v. Dunmore Assurance, 463 So. 2d 1153, 1157 (Fla. 1985); Swire Pac. Holdings, 845 So. 2d at 166; Amera-Seiki Corp. v. Cincinnati Ins. Co., 507 F. App'x 878, 882 (11th Cir. 2013) (applying Florida law). The types of extrinsic evidence that may be considered include the negotiations between the parties during the underwriting and renewal process, correspondence between the broker and the underwriter, the premium charged, the circumstances surrounding the issuance of the policy, and the parties' course of dealing. Jones, 463 So. 2d at 1157; Gulf Tampa Drydock Co. v. Great Atl. Ins. Co., 757 F.2d 1172, 1175 (11th Cir. 1985) (applying Florida law).
The rationale for admitting extrinsic evidence is clear: "Where the language of a policy is ambiguous, the court must look beyond the four corners of the document to ascertain the mutual intent of the parties at the time of contracting." Jones, 463 So. 2d at 1157. As Applemanman's treatise explains, "[W]here the written instrument does not clearly and unambiguously express the agreement of the parties, the court may receive extrinsic evidence of the negotiations, correspondence, and surrounding circumstances to aid in the interpretation of the contract." 1 Applemanman on Insurance Law and Practice § 7405 (rev. ed. 2023).
In the insurance context, Florida courts have specifically held that the testimony of brokers and agents involved in the placement or renewal of a policy is admissible extrinsic evidence. See Harbor Ins. Co. v. OMNI Hotels Mgmt. Corp., 842 F.2d 1293, 1297 (11th Cir. 1988) (applying Florida law) (holding that broker's testimony regarding negotiations with insurer was admissible to resolve ambiguity in policy language); Berkshire Life Ins. Co. v. Adelberg, 698 So. 2d 828, 831 (Fla. 4th DCA 1997) (admitting agent's testimony regarding representations made during policy placement).
Here, the policy language is ambiguous, as demonstrated in Section IV.A.4 above. The endorsement schedule does not clearly state whether the named-windstorm sub-limit endorsement applies to the 2022–2023 policy period. Accordingly, this Court may properly consider extrinsic evidence — including the deposition testimony of Franklin Orde, the declaration of Sandra Pellegrini, the renewal binder, and the broker-underwriter correspondence — to determine whether the parties intended the sub-limit to apply.
2. The Broker's Evidence Is Dispositive.  When this Court considers the extrinsic evidence, the result is clear: the parties mutually intended to delete the named-windstorm sub-limit from the July 2022 renewal policy. The extrinsic evidence uniformly and unambiguously supports this conclusion.
Mr. Orde's deposition testimony is the centerpiece of the extrinsic evidence. As set forth in Section IV.A.1 above, Mr. Orde testified under oath that he negotiated the deletion of the sub-limit with Ironclad's underwriter, that Ironclad agreed to the deletion in exchange for an increased premium, and that he received written confirmation of the deletion from Ironclad's underwriter. (Orde Dep. at 37:2–44:2.) Mr. Orde's testimony is particularly probative because he was the intermediary between VHG and Ironclad during the renewal negotiations. See Gulf Tampa Drydock Co., 757 F.2d at 1175 (holding that the broker's testimony was "highly relevant" to determining the parties' intent because the broker "served as the conduit of communications between the insured and the insurer").
Mr. Orde's testimony is corroborated by multiple independent sources:
First, the premium increase. VHG paid $980,000 in premium for the primary layer — an increase from the prior year's premium. (Pellegrini Decl. ¶ 26; Orde Dep. at 42:3–15.) Mr. Orde testified that this premium increase "specifically reflected the additional exposure Ironclad was assuming by removing the windstorm sub-limit." (Orde Dep. at 42:12–15.) If the sub-limit had been retained, the premium increase would lack any explanation. The premium evidence is thus powerful corroboration of the deletion.
Second, the renewal binder. The renewal binder issued by Ironclad on June 28, 2022 does not reference any named-windstorm sub-limit. (Ironclad Renewal Binder, Ex. J.) The binder identifies the policy limit as $25 million per occurrence, subject to a $500,000 deductible, without any reference to a sub-limit. (Id.) Had the sub-limit been retained, one would expect the binder to reflect it, as the binder is the document that evidences the agreed-upon terms of the insurance contract pending issuance of the formal policy. The binder's silence on the sub-limit is consistent with — and corroborative of — the deletion.
Third, the Pellegrini declaration. Ms. Pellegrini attests that she directed Tidewater to negotiate the deletion, that Tidewater confirmed the deletion was accomplished, and that VHG paid the increased premium in reliance on the deletion. (Pellegrini Decl. ¶¶ 24–27.) Her testimony is consistent with and corroborative of Mr. Orde's account.
Against this uniform body of extrinsic evidence, Defendants cannot create a genuine issue of material fact merely by pointing to the ambiguous endorsement schedule in the issued policy. The endorsement schedule does not expressly state that the sub-limit applies. It does not override the clear extrinsic evidence of the parties' mutual intent to delete the sub-limit. To the contrary, the endorsement schedule's ambiguity is precisely what makes the extrinsic evidence admissible — and once that evidence is considered, the question of the parties' intent is resolved decisively in VHG's favor.
As the Eleventh Circuit explained in Jones v. Utica Mutual Insurance Co., "When the extrinsic evidence unanimously points to one interpretation of an ambiguous policy provision, and no extrinsic evidence supports the competing interpretation, the court may resolve the ambiguity as a matter of law." 463 So. 2d at 1158. That is precisely the situation here. The extrinsic evidence is unanimous: the sub-limit was deleted. There is no countervailing extrinsic evidence. This Court may and should resolve the ambiguity as a matter of law in VHG's favor.
D. Ironclad Bears the Burden of Proving the Applicability of a Sub-Limit, and It Cannot Meet That Burden
1. Insurer's Burden on Exclusions and Limitations.  Under Florida insurance law, the insurer bears the bu