(This is one of a continuing series about insurance coverage for severe storms and other effects of climate change.)

Hurricanes wreck things. All are familiar with the multi-billion dollar costs associated with major hurricanes like Katrina and Andrew; smaller storms may not wreak as much havoc but to those in harm’s way, they can have just as much impact. Owners of buildings buy insurance for such eventualities. Things away from buildings – like trees - may have less protection.

So what is one to do if one has a lot of trees, like a golf course for instance? One would recognize the parlous nature of tree coverage and procure an endorsement. Which is what Grey Oaks Country Club in Naples, Florida did for its three championship golf courses, where it valued its trees in the millions of dollars.

Grey Oaks’ “Golf Course Outdoor Grounds Coverage Endorsement” was written in that peculiar form of English only an underwriter can create. First, the endorsement defined “golf course outdoor grounds” as “Fairways, greens, tees, rough areas, out-of-bounds areas, sand traps, driving ranges; and Land, lawns, trees, shrubs, and plants.” Then it amended the policy’s definitions of “real property” and “personal property” to establish that they DO NOT MEAN “golf course outdoor grounds.”

You can see where this is going. Should something happen to those “golf course outdoor grounds,” the real property limits ($27 million) will not be available, nor will the personal property limits ($14 million). Instead, Grey Oaks will have to look to a “$500,000 per premises” sublimit available under its Outdoor Grounds Endorsement, which may be problematic if a hurricane blows through – as Hurricane Irma did in September 2017.

For those who do not recall, Irma devastated the Caribbean as a Category 5 Hurricane leaving death and destruction in its path. It reached the United States in Florida as a Category 4 storm, and subsequently killed or contributed to the deaths of nearly 100 people and caused $50 billion of damage. Germane to our story, wind gusts reached 142 mph in Naples, the highest in Florida.

Grey Oaks was part of the devastation. Its insurer, Zurich American Insurance Company, paid $2.84 million, but, according to Grey Oaks’ lawyer, that was “millions of dollars short.” Grey Oaks sued and a decision was recently set down. Grey Oaks Country Club, Inc. v. Zurich American Insurance Company, 2019 WL 3072326 (M.D. Fla. July 15, 2019).

In the case, a critical issue was the application of that $500,000 per premises sublimit. Grey Oaks contended that there were 19 premises, based on its policy’s Schedule of Locations, which listed 19 building locations. Id. n.4. Zurich contended that there was only one premises, which was the property identified as the Grey Oaks Country Club at 2400 Grey Oaks Drive North, Naples, Florida. Id. n.3.

The Court did not like the lie of either assertion and drove into the language of the policy. The amount the carrier would pay under the Outdoor Grounds endorsement was “[not] more in any one occurrence than the applicable Limit of Insurance shown on the Declarations for such loss of or damage to Covered Property at that ‘premises.’” Premises was defined by either a street address plus the property within 1,000 feet, or a geographically described area plus possibly an additional 1,000 feet of property (the second limitation is confusing). The Court then addressed the Declarations and teed off from the Summary of Premises; there were only two addresses: 2400 Grey Oaks Drive North and, as a special condition, 1600 Estuary Drive. The Court ruled: “‘premises’ unambiguously means the area within 1,000 feet of both 2400 Grey Oaks Dr N. and 1600 Estuary Dr.”

The decision is troubling. Does anyone anywhere think you can have a championship golf course fully within 1,000 feet of a clubhouse? A single par 5 hole will explode the notion. So what part of the “Fairways, greens, tees, rough areas, out-of-bounds areas, sand traps, driving ranges; and Land, lawns, trees, shrubs, and plants” did the endorsement cover? A few par 3 holes? Some clubhouse shrubbery? Further, what are we to make of the Schedule of Locations which enumerated 19 separate locations including five restrooms and rest areas, which we presume are out on the links? The Court’s decision appears to have found that a substantial portion of the Grey Oaks golf courses’ outdoor grounds (the fairways, greens, tees, lawns, trees, etc.) simply had no coverage, notwithstanding the insured’s purchase of Golf Course Outdoor Grounds coverage.

Will there be an appeal? Notwithstanding the ruling that the policy is unambiguous, ambiguity seems a reasonable argument. Further, for many coverage lawyers, this is a clear case for the doctrine of reasonable expectations: “the insured's expectations as to the scope of coverage is upheld provided that such expectations are objectively reasonable.” Deni Associates of Florida, Inc. v. State Farm Fire & Cas. Ins. Co., 711 So. 2d 1135, 1141 (Fla. 1998). But to date, Florida does not recognize the doctrine. Id. Perhaps Grey Oaks, if it is appealed, will be the case that changes that.