In Heritage Property & Cas. Ins. Co. v. Condominium Assoc. of Gateway House Apts. Inc. (Fla. 3d DCA 2021), the Third District considered an insurance company’s argument that the insured had not complied with all “post-loss obligations” concerning the production of its books and records for copying and inspection. The trial court found that the condo association had complied with all relevant post-loss obligations. The appellate court agreed. The court described the background:

After two of its buildings sustained hurricane-related damage, the Association filed a first-party property claim against Heritage. By means of a letter, Heritage “determined that the claimed damage was caused by [a hurricane], for which the policy provide[d] coverage,” but, the damages fell below the applicable deductible. The Association then submitted two supplemental claims and requested appraisal, as provided for in the policy.

Relying upon the following post-loss conditions, Heritage requested condominium board meeting minutes for the preceding five-year period:

3. Duties in the Event of Loss or Damages

a. You must see that the following are done in the event of loss or damage to Covered Property:

. . .

(6) As often as may be reasonably required, permit us to . . . examine your books and records . . . and permit us to make copies from your books and records.

Although the Association furnished over 2,500 pages of requested documents during the claims process, it did not produce meeting minutes.

The claims went unpaid, and over two years after reporting the initial loss, the Association filed suit in the circuit court. In a dual-count complaint, it sought to compel appraisal and recover damages for breach of the insurance contract. Heritage opposed appraisal, asserting the failure to produce meeting minutes was fatal to coverage under the policy. The Association countered by proffering its membership was comprised primarily of elderly residents. Consequently, it failed to achieve a quorum and had no meeting minutes. The trial court duly convened an evidentiary hearing on the issue, at the conclusion of which it rendered an order determining the Association’s pivotal witness was credible, the board failed to conduct meetings due to an inability to obtain quorum, no meeting minutes were recorded, and all post-loss conditions were otherwise satisfied. The insurance company appealed.

The Third District first described the law on compelling appraisal under an insurance policy:

Before a court is authorized to compel appraisal under an insurance policy, it must make a preliminary determination as to whether the demand for appraisal is ripe. Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass’n 12 Inc., 54 So. 3d 578, 581 (Fla. 3d DCA 2011). In this vein, until post-loss conditions “are met and the insurer has a reasonable opportunity to investigate and adjust the claim, there is no `disagreement’ . . . regarding the value of the property or the amount of loss” subject to appraisal. Citizens Prop. Ins. Corp. v. Galeria Villas Condo. Ass’n, Inc., 48 So. 3d 188, 191 (Fla. 3d DCA 2010).

The issue on appeal in Gateway was whether the court erred in determining the Association fully complied with its post-loss requirement to furnish its books and records for copying and inspection. Two principal sources of authority guided the court’s analysis. The first was the policy of insurance and the second was the Florida Condominium Act (the “Act”), codified in chapter 718, Florida Statutes.

It is axiomatic, noted the court, that an insurance policy is an agreement and, in the absence of an applicable statute, subject to the construction principles that apply to any other species of contract. See Principal Life Ins. Co. v. Halstead, 310 So. 3d 500, 502 (Fla. 5th DCA 2020). Thus,

The intent of the parties governs, but “[c]ourts should resort to complex rules of construction to determine coverage or the applicability of exclusions only when the language used in the policy is ambiguous or otherwise susceptible of more than one meaning. Absent such factors courts should apply the plain meaning of words and phrases used in a policy of insurance.”

State Farm Fla. Ins. Co. v. Phillips, 134 So. 3d 505, 507 (Fla. 5th DCA 2014)(citation omitted).

Under the instant policy, said the court, the insured was contractually obligated to allow the inspection and copying of its existing books and records. The plain language required no more. Heritage contended, however, that because the words “books and records” were undefined in the policy and the insured operated under a statutory duty to preserve meeting minutes, the policy provision implied such minutes had to be produced as a precondition to coverage. In support of its position, it relied upon section 718.111(12)(a)(6), Florida Statutes, which required a condominium association to maintain “[a] book or books that contain the minutes of all meetings” as part of its official records within the state for at least seven years.

The court noted:

Although the policy does not expressly reference the Act, under Florida law, “insurance policies are deemed to incorporate applicable statutes, and conflicting policy provisions must give way.” Fla. Farm Bureau Cas. Ins. Co. v. Cox, 943 So. 2d 823, 832 (Fla. 1st DCA 2006), quashed on other grounds, 967 So. 2d 815 (Fla. 2007) (citations omitted). Pursuant to “this presumption of incorporation, valid applicable laws existing at the time of the making of a contract enter into and form a part of the contract as fully as if expressly incorporated in the contract.”11 Richard A. Lord, Williston on Contracts § 30:19 (4th ed. 2021) (footnotes omitted). Contractual language is therefore interpreted in view of existing statutes, irrespective “of whether the agreement refers to the governing law.” Id. (footnote omitted).

This line of authority did not, however, displace the well-established principle that “[w]hen a policy provision remains undefined, common everyday usage determines its meaning.” Sec. Ins. Co. of Hartford v. Com. Credit Equip. Corp., 399 So. 2d 31, 34 (Fla. 3d DCA 1981) (citations omitted). Hence, the incorporation presumption “is generally applied in connection with contract `construction’ (determining the legal effect of a contract) rather than contract `interpretation’ (determining the meaning of words used in a contract),” and Heritage offered no support for the proposition that an undefined term should be construed against the insured based on a statutory “definition” that is neither incorporated into the policy nor found in any applicable insurance statute. 11 Lord, supra (footnote omitted); see also Container Corp. of Am. v. Maryland Cas. Co., 707 So. 2d 733, 736 (Fla. 1998) (Where “policy language is susceptible to differing interpretations, it. . . should be construed in favor of the insured.”) (citation omitted).

Further, reasoned the court, like the policy, the relevant portion of the Act was clear.^[1] The preservation of condominium association meeting minutes is mandated for a seven-year period. In this regard, the cited provision presupposes the existence of minutes, but is silent as to any duty to record minutes in the absence of a quorum. Thus, concluded the court, it cannot be used to engraft a post-loss obligation to produce nonexistent meeting minutes upon the policy. The court concluded, “Had Heritage wished to require the Association to record meeting minutes as a condition of coverage, it could have easily so provided.”