Opinion
CASE NO: 19-cv-81706-MIDDLEBROOKS
05-29-2020
ORANGE & BLUE CONSTRUCTION, INC., et al., Plaintiffs, v. EVANSTON INSURANCE COMPANY, Defendant.
ORDER
THIS CAUSE comes before the Court upon the Parties' Cross Motions for Summary Judgment and Defendant Evanston's Motion to Stay. (DE 45; DE 47; DE 53; DE 64). The Motions have been extensively briefed. (DE 49; DE 50; DE 59; DE 60; DE 66; DE 67; DE 68; DE 70; DE 82; DE 84; DE 86; DE 93; DE 94; DE 96). For the following reasons, Plaintiff Amerisure Insurance Company's ("Plaintiff" or "Amerisure") Motion (DE 47) is stricken, Plaintiff Orange & Blue Construction Inc.'s ("Plaintiff" or "Orange & Blue") Motion (DE 45) is granted, Defendant Evanston Insurance Company's ("Defendant" or "Evanston") Motion (DE 53) is denied, and Defendant Evanston's Motion to Stay (DE 64) is granted.
BACKGROUND
Orange & Blue initiated this action seeking a declaration that Evanston is obligated to defend and indemnify Orange & Blue, and that Evanston breached its contractual obligations by failing to do so. (DE 1). This simple posture is complicated by a hierarchy of contractors, subcontractors, and insurers. At the top of this hierarchy is AGC, the general contractor hired to build the allegedly deficient apartment building in question, Altis ("Altis" or the "Project"). AGC then hired Orange & Blue as a subcontractor. (DE 40-5 at 3 ¶ 9, Underlying Lawsuit Complaint). Orange & Blue is insured by Amerisure. Orange & Blue then hired multiple sub-subcontractors, including R.N. Iron Works ("R.N.") (DE 40-1). R.N. is insured by Evanston. (See, e.g., DE 40-2).
Apparently, the Altis building was not properly constructed. (DE 40-5). As a result, AGC initiated an action in state court alleging damages as a result of deficient construction (the "Underlying Lawsuit"). (See generally DE 40-5). AGC initially named Orange & Blue and other defendants, but later amended the complaint to name R.N. and other Orange & Blue sub-subcontractors as defendants. (Id. at ¶¶ 15, 17; DE 40-6; DE 40-7). This action is ongoing in state court.
Thus far, Amerisure has been funding Orange & Blue's defense against AGC in the state court action, albeit under a reservation of rights. (DE 9 at ¶ 4). However, Orange & Blue is seeking a declaration in this action that Evanston has an obligation to provide for Orange & Blue's defense and to indemnify it against any judgment AGC may obtain. Amerisure previously moved to intervene in this action seeking "a declaration that Evanston owes all future defense costs for Orange & Blue on a primary basis, and, correspondingly, a primary indemnification obligation, of Orange & Blue in the AGC Lawsuit." (Id. at ¶ 7). Still, Amerisure maintained that it and not Orange & Blue is entitled to reimbursement for fees incurred while defending Orange & Blue in the underlying lawsuit. (See id. at ¶ 9).
Upon review of the Motion, I informed Amerisure that I was not inclined to expand the scope of the litigation in the manner requested. I specifically informed Amerisure that any claims between it and Orange & Blue regarding who is entitled to damages for Evanston's alleged breach is outside the scope of this lawsuit. (DE 28). However, because Amerisure has an interest in obtaining a judgment finding that Evanston had a duty to defend and indemnify Orange & Blue, I informed the Parties that I was inclined to add Amerisure as a Plaintiff. (Id.). No party objected to this idea and, with this understanding, I subsequently granted Amerisure's motion to intervene. (DE 39).
Presently before the Court are the Parties' Cross Motions for Partial Summary Judgment. Orange & Blue moves for a judgment finding that Evanston breached its duty to defend Orange & Blue in the Underlying Lawsuit and that Evanston is responsible for damages naturally occurring from that breach. (DE 45). Amerisure's Motion similarly seeks this finding. (DE 47). However, in defiance of my prior Orders, Amerisure's Motion charters into forbidden territory—it seeks a finding that Amerisure and not Orange & Blue is entitled to reimbursement for damages arising out of Evanston's breach of its duty to defend Orange & Blue in the Underlying Lawsuit. (Id.). Defendant Evanston, of course, moves for a judgment finding that it had no duty to defend Orange & Blue. (DE 50).
Also before the Court is Evanston's Motion to Stay. (DE 64). Evanston asserts that once the duty to defend issue is resolved, this case should be stayed pending the resolution of the Underlying Lawsuit.
I have reviewed the extensive briefing on these Motions, the record as a whole, and the governing law. For the following reasons, Orange & Blue's Motion for Partial Summary Judgment is granted, Amerisure's Motion for Partial Summary Judgment is stricken, Evanston's Motion for Partial Summary Judgment is denied, and Evanston's Motion to Stay is granted.
LEGAL STANDARDS
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "Genuine disputes are those in which the evidence is such that a reasonable jury could return a verdict for the non-movant." Ellis v. England, 432 F.3d 1321, 1325-26 (11th Cir. 2005). "For factual issues to be considered genuine, they must have a real basis in the record." Id. at 1326 (internal citation omitted). "For instance, mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion." Id. (internal citation omitted). "Moreover, statements in affidavits that are based, in part, upon information and belief, cannot raise genuine issues of fact, and thus also cannot defeat a motion for summary judgment." Id. (internal citations omitted).
The movant "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)(1)(A)). "When the nonmoving party has the burden of proof at trial, the moving party is not required to 'support its motion with affidavits or other similar material negating the opponent's claim,' in order to discharge this 'initial responsibility.'" United States v. Four Parcels of Real Prop. in Greene & Tuscaloosa Ctys. in State of Ala., 941 F.2d 1428, 1437-38 (11th Cir. 1991). "Instead, the moving party simply may 'show'—that is, point out to the district court—that there is an absence of evidence to support the nonmoving party's case." Id. at 1438 (citation omitted). "Alternatively, the moving party may support its motion for summary judgment with affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial." Id. (citation omitted). "If the moving party shows the absence of a triable issue of fact by either method, the burden on summary judgment shifts to the nonmoving party, who must show that a genuine issue remains for trial." Id. (citation omitted). "If the nonmoving party fails to 'make a sufficient showing on an essential element of her case with respect to which she has the burden of proof,' the moving party is entitled to summary judgment." Id. (citation omitted). At the summary judgment stage, courts construe the facts in the light most favorable to the non-movant, and any doubts should be resolved against the moving party. Davis v. Williams, 451 F.3d 759, 761 (11th Cir. 2006); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).
Although this summary judgment standard applies in duty to defend cases, these cases are ordinarily decided by a court as a matter of law. That is because "[t]he interpretation of an insurance contract is a question of law for the Court to decide." Weitz Co. v. Trans. Ins. Co., No. 08-23183, 2009 WL 10669040, at *3 (S.D. Fla. May 21, 2009) (citing Graber v. Clarendon Nat'l Ins. Co., 819 So. 2d 840, 842 (Fla. 4th DCA 2002)). And the issue presented is whether the insurance contract requires the insurer to defend the insured in an underlying lawsuit.
ANALYSIS
I. Plaintiffs Should not File Cross Motions Against Each Other
As an initial matter, I must address the elephant in the room—all Parties have filed cross motions for partial summary judgment against one another. This means that Plaintiff Orange & Blue and Plaintiff Amerisure have filed competing motions for partial summary judgment against Defendant Evanston. More troubling, Amerisure has responded in opposition to Orange & Blue's Motion for Partial Summary Judgment and has filed a competing Motion for Partial Summary Judgment. (DE 47; DE 49). Although I thought it went without saying, Plaintiff Orange & Blue and Plaintiff Amerisure are not adverse parties in this action, and therefore it is not appropriate for each to move for summary judgment against the other. I must therefore address how best to handle this procedural oddity. To do so, I first briefly summarize how we ended up here.
On December 23, 2019, Orange & Blue initiated what appeared to be a straight forward duty to defend and indemnify lawsuit. Specifically, Orange & Blue claimed that Evanston (as the insurer of Orange & Blue's sub-subcontractor R.N.) had a duty to defend and indemnify Orange & Blue in the Underlying Lawsuit brought by the general contractor, AGC in connection with the alleged faulty construction of Atlis. (See generally DE 1).
On February 5, 2020, Amerisure (Orange & Blue's insurer) moved to intervene in this lawsuit as a defendant and a cross-plaintiff. (DE 9). Amerisure moved to intervene because it has been defending Orange & Blue in the underlying lawsuit under a reservation of rights. (Id. at 2). Amerisure claimed that Evanston has a primary duty to defend Orange & Blue in the underlying lawsuit. (Id.). That is because, according to Amerisure, Evanston's policy with R.N. covers Orange & Blue as an additional insured and the policy indicates that the insurance coverage is primary and Evanston "will not seek contribution from any other insurance available to an additional insured under [R.N.'s] policy." (DE 40-4 at 41). It also claimed that Evanston is required to reimburse Amerisure for fees it has expended on Orange & Blue's defense in the Underlying Lawsuit. (DE 9 at 2-4).
On March 3, 2020, I entered an order requiring additional briefing on Amerisure's motion to intervene. (DE 28). In the Order, I stated:
Based on Amerisure's stated interest and a preliminary review of the Parties' briefing, it appears that it is most appropriate to allow Amerisure to be added as a Plaintiff in this action, rather than as a Defendant and Cross-Plaintiff. To the extent that Orange & Blue and Amerisure have claims against one another, those claims are outside of the scope of this lawsuit and should appropriately be brought in a separate action.(Id. at 1). Amerisure subsequently "agree[d] with the Court that it could be designated as a Plaintiff in this action." (DE 30). With this understanding, I granted the motion and added Amerisure to this lawsuit as a Plaintiff. (DE 39).
Although Amerisure agreed to be added as a Plaintiff, it has responded in opposition to its co-plaintiff's (Orange & Blue) motion for summary judgment. (DE 45; DE 49). Amerisure has also filed a cross motion for summary judgment against its co-Plaintiff Orange & Blue. (DE 47). These co-Plaintiffs' competing summary judgment motions agree that Defendant Evanston has a duty to defend Orange & Blue in the underlying action. (DE 45; DE 47). However, Orange & Blue and Amerisure seemingly disagree as to who is entitled to recovery for Evanston's alleged breach. (Compare DE 45 at 18, with DE 47 at 14). As I explicitly stated in the Order Requiring Additional Briefing (DE 28), this dispute between Orange & Blue and Amerisure is outside the scope of this lawsuit. Accordingly, Plaintiff Amerisure's Motion for Summary Judgment (DE 47) is stricken.
Although I strike the Motion, in the interest of fairness, I will consider any arguments Amerisure has made regarding whether Evanston has a duty to defend Orange & Blue in the underlying lawsuit.
The issue of whether Evanston has a duty to defend Orange & Blue in the Underlying Lawsuit will be resolved upon consideration of Orange & Blue's and Evanston's cross motions for partial summary judgment. This Order now considers the merits of those motions.
II. Orange & Blue's Status under the Evanston Policies
Before determining whether Evanston has a duty to defend Orange & Blue, it is important to determine whether Orange & Blue qualifies as an additional insured under Evanston's policies issued to R.N. Iron Works , and, if so, the extent to which the policies cover Orange & Blue.
A. Orange & Blue is an Additional Insured
The Underlying Lawsuit relates to the construction of a condominium building in Boca Raton. (DE 40-5 at 3 ¶ 9, Underlying Lawsuit Complaint). AGC was hired to serve as the general contractor for the Project and AGC subcontracted certain work to Orange & Blue. (Id.). Orange & Blue then subcontracted work to multiple other contractors, including R.N. Iron Works. (DE 40-1). R.N. was hired to perform reinforcing steel placement (among other things) on the Project. (DE 66-20 at 2).
Under its contract with Orange & Blue, R.N. was required to obtain insurance naming Orange & Blue as an additional insured. (DE 40-1 at 7). In this regard, the subcontract explicitly states that "[t]he coverage must be endorsed to name Orange & Blue Construction, Inc., as an 'additional insured.'" (Id. at 8). This insurance was intended to be "primary without rights of contribution from any other insurance available to the 'additional insureds' and the amount of the company's liability under th[e] policy [was] not [intended to] be reduced by the existence of such other insurance." (Id.).
In furtherance of satisfying its contractual obligations, R.N. obtained three insurance policies from Evanston, which were in effect from February 2015 until February 2018. (DE 40-2, Policy for February 2015-February 2016); (DE 40-3. Policy for February 2016-February 2017); (DE 40-4, Policy for February 2017-February 2018). The policies contain two "additional insured" clauses, one for ongoing operations and one for completed operations. The first clause provides that a party is as an additional insured if a contract exists between R.N. and that party, which requires the party to be an additional insured. (DE 40-4 at 42) ("Name of Additional Insured[:] . . . [a]s required by written contract executed by both parties prior to loss."). In the event such a contractual agreement existed, the additional insured was added as an insured to the policies. (Id.). However, the additional insured was insured
Although I cite to a single policy, each of the three policies contain similar "additional insured" clauses.
only with respect to liability for "bodily injury," "property damage" or "personal and advertising injury" caused, in who or in part, by: 1. [R.N.'s] acts or omissions; or 2. [t]he acts or omissions of those acting on your behalf; in the performance of
your ongoing operation for the additional insured(s) at the location(s) designated above.(Id.). The latter clause, the completed operations clause, contains similar provisions regarding who qualifies as an additional insured and the scope of the insurance. (Id. at 43).
In line with R.N.'s contractual obligation to Orange & Blue, the Evanston policies also indicate that the insurance issued to R.N. is primary. In other words, the insurance explicitly states that it was "primary to and will not seek contribution from any other insurance available to an additional insured under [R.N.'s] policy." (Id. at 41). This clause, however, is conditioned upon a finding that (1) "the additional insured is a named insured under such other insurance" and (2) R.N. "agreed in writing in a contract or agreement that this insurance would be primary and would not seek contribution from any other insurance available to the additional insured." (Id.).
In light of R.N.'s contractual obligation to obtain insurance naming Orange & Blue as an additional insured and the language within the Evanston policies, I conclude that Orange & Blue qualifies as an additional insured under the policies. I next discuss the scope of the insurance coverage.
B. Scope of Evanston's Duty to Defend
As discussed, Orange & Blue qualifies as an additional insured under the Evanston policies. Such insurance covers bodily injury, property damage, and personal and advertising injuries caused by R.N.'s acts or omissions. AGC initiated the underlying lawsuit due to property damage caused by Orange & Blue, R.N., and other subcontractors. (See generally DE 40-6). Therefore, the issue is whether the underlying lawsuit raises allegations that R.N.'s work caused "property damage" to the Project.
While that issue is the ultimate issue before the Court, at this point, it is necessary to explain what qualifies as "property damage," as Evanston's duty to defend Orange & Blue is dependent upon whether the property damage alleged in the underlying lawsuit could be construed to be caused by R.N.—even in part. "As the Supreme Court of Florida has noted, 'there is a difference between a claim for the costs of repairing or removing defective work, which is not a claim for 'property damage,' and a claim for the costs of repairing damage caused by the defective work, which is a claim for 'property damage' . . . ." Carithers v. Mid-Continent Cas. Co., 782 F.3d 1240, 1250 (11th Cir. 2015) (quoting U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 879 (Fla. 2007)). In other words, an insurance company is only liable to defend an insured when the underlying lawsuit seeks recovery for damage to property caused by the insured's defective work and not for cost associated with replacing the defective work.
In sum, Orange & Blue qualifies as an additional insured under the Evanston policies. These policies require Evanston to defend Orange & Blue in any lawsuit alleging "property damage" caused by R.N.
III. Evanston Had a Duty to Defend Orange & Blue
This Order has already established that Evanston has a duty to defend Orange & Blue (as an additional insured) to the extent Orange & Blue is sued for property damage caused by R.N.'s defective work. The issue now becomes whether, under Florida law, the allegations within the amended complaint in the underlying lawsuit triggered Evanston's duty to defend Orange & Blue.
Florida law applies to this dispute. See State Farm Mut. Auto. Ins. Co. v. Roach, 945 So.2d 1160 (Fla. 2006); see also Scott, Blane, and Darren Rec., LLC v. Auto-Owners Ins. Co., 727 F. App'x 625, 631 (11th Cir. 2018). --------
A. Legal Standard
"Under Florida law, an insurance provider's duty to defend an insured party 'depends solely on the facts and legal theories alleged in the pleadings and claims against the insured.'" Stephens v. Mid-Continent Cas. Co., 749 F.3d 1318, 1323 (11th Cir. 2014) (quoting James River Ins. Co. v. Ground Down Eng'g, Inc., 540 F.3d 1270, 1275 (11th Cir. 2008)); see also Scott, Blane, and Darren Recover, LLC v. Auto-Owners Ins. Co., 727 F. App'x 625, 631 (11th Cir. 2018) ("Under Florida law, an insurer's duty to defend 'arises from the 'eight corners' of the complaint and the policy.'" (quoting Mid-Continent Cas. Co. v. Royal Crane, LLC, 169 So. 3d 174, 182 (Fla. 4th DCA 2015))).
"The duty to defend 'arises when the relevant pleadings allege facts that fairly and potentially bring the suit within policy coverage.'" Id. (citing Lawyers Title Ins. Corp. v. JDC (Am.) Corp., 52 F.3d 1575, 1580 (11th Cir. 1995); U.S. Fire Ins. Co. v. Hayden Bonded Storage Co., 930 So. 2d 686, 691 (Fla. 4th DCA 2006)). "'Thus, an insurer is obligated to defend a claim even if it is uncertain whether coverage exists under the policy.'" Id. (quoting Mid-Continent Cas. Co. v. Am. Pride Bldg. Co., LLC, 601 F.3d 1143, 1149 (11th Cir. 2010)) (quoting First Am. Title Ins. Co. v. Nat'l Union Fire Ins. Co., 695 So. 2d 475, 476 (Fla. 3d DCA 1997)). "'When the actual facts are inconsistent with the allegations in the complaint, the allegations in the complaint control in determining the insurer's duty to defend.'" Id. (quoting Jones v. Florida Ins. Guar. Ass'n, Inc., 908 So. 2d 435, 443 (Fla. 2005)). Accordingly, "there generally is no need for a declaratory action in respect to the insurer's obligation to defend." Higgins v. State Farm Fire & Cas. Co., 894 So. 2d 5, 10 (Fla. 2004).
"Florida law places on the insured the burden of proving that a claim against it is covered by the insurance policy." LaFarge Corp. v. Travelers Indem. Co., 118 F.3d 1511, 1516 (11th Cir. 1997). "[A]n insurer has no duty to defend a suit against an insured if the complaint upon its face alleges a state of facts that fails to bring the case within the coverage of the policy." McCreary v. Florida Residential Prop. & Cas. Joint Underwriting Ass'n, 758 So.2d 692, 695 (Fla. 4th DCA 1999) (quotation omitted). "But if the relevant pleadings allege facts that ' fairly and potentially bring the suit within policy coverage,' the insurer's duty to defend is triggered." Scott, Blane, and Darren Recovery, 727 F. App'x at 631-32 (quoting Lime Tree Village Cmty. Club Ass'n, Inc. v. State Farm Gen. Ins. Co., 980 F.2d 1402, 1405 (11th Cir. 1993)) (emphasis added). "Moreover, the insurer must defend the entire lawsuit, even if the complaint 'alleges facts partially within and partially outside the scope of coverage.'" Addison Ins. Co. v. 4000 Island Blvd. Condo. Ass'n, 721 F. App'x 847, 854 (11th Cir. 2017) (quoting Trizec Prop., Inc. v. Biltmore Constr. Co., Inc., 767 F.2d 810, 811-12 (11th Cir. 1985)). "Any doubt about whether an insurer is under the duty to defend is resolved in favor of the insured. " Scott, Blane, and Darren Recovery, 727 F. App'x at 632.
Thus, to show that Evanston had a duty to defend Orange & Blue, Orange & Blue must show that the injury alleged in the underlying lawsuit "fairly and potentially" fell under the policies' coverage for "property damage."
B. Analysis
1. Analysis — "Eight Corners" Rule
I begin my analysis by considering whether the "Eight Corners" of the Evanston policies and the amended complaint filed in the Underlying Lawsuit triggered Evanston's duty to defend Orange & Blue in the Underlying Lawsuit.
In its Motion, Orange & Blue argues that Evanston had a duty to defend Orange & Blue once Orange & Blue provided Evanston with a copy of the amended complaint from the Underlying Lawsuit. (DE 45 at 13-14); (see also DE 59 at 4, Orange & Blue's Reply). On October 4, 2017, Orange & Blue notified R.N. that R.N.'s insurer, Evanston, had a duty to defend Orange & Blue in the underlying lawsuit. (DE 66-20). R.N. later notified Evanston of its duty to defend and Evanston acknowledged receipt of Orange & Blue's request for additional coverage on November 9, 2017. (DE 45 at 7 ¶ 13, Orange & Blue Statement of Material Facts); (DE 51 at 3 ¶ 13, Evanston's Response to Orange & Blue's Statement of Material Facts).
Orange & Blue advanced this belief because according to it, the allegations within the amended complaint from the Underlying Lawsuit "fairly and potentially" fell under Evanston's insurance policies. In other words, Orange & Blue advances the theory that the allegations within the amended complaint "fairly and potentially" encompass damages caused by R.N.'s defective work, meaning that upon notification of the suit, Evanston had a duty to defend Orange & Blue. (DE 45 at 13-14); (see also DE 59 at 4, Orange & Blue's Reply). Orange & Blue attached a copy of the amended complaint to its letter. (Id.).
To determine whether the Underlying Lawsuit's amended complaint triggered Evanston's duty to defend Orange & Blue, I turn to the allegations in the amended complaint. As expected, AGC's amended complaint describes alleged defective construction work completed at the Project and seeks compensation for damages caused by such defective work. (See generally DE 40-6). AGC entered into a contract with Orange & Blue in which Orange & blue agreed to provide "concrete/masonry shell-related labor, services and/or material for the Project." (Id. at 5 ¶ 15). In the underlying lawsuit, AGC alleges that Orange & Blue breached their contractual obligation by:
(i) failing to properly perform the Work on the Project free from defects and/or deficiencies, including without limitation, O&B's failure to properly install the concrete balconies on the Project . . .; (ii) failing to timely perform the Work on the Project; and (iii) failing to cure defects in the Work, including the Deficient Concrete Balconies, as required by the Subcontract.(Id. at 5 ¶ 16). AGC further alleges that Orange & Blue's defective work damaged other property at the Project. (Id. at 5 ¶ 17). AGC seeks to hold Orange & Blue liable for the damage caused by the defective work completed by Orange & Blue, "itself and through its agents, servants and employees[.]" (Id. at 8 ¶¶ 32-33).
Evanston essentially argues that the amended complaint did not trigger a duty to defend because R.N. is not mentioned anywhere in the complaint. (DE 50 at 9). In this regard, Evanston asserts: "[a]bsent from AGC's Amended Complaint, however, is any reference to R.N. or to R.N.'s scope of work being the basis of the liability asserted against [Orange & Blue] or that R.N.'s acts, omissions or work caused 'property damage.'" (Id.).
I reject this argument. Any conclusion to the contrary would substantially alter Florida's law regarding the duty to defend. It would seemingly endorse a view that the duty to defend is only triggered when an insurer is provided with a complaint that unequivocally alleges conduct covered by its insurance policy. However, as discussed, the duty to defend is broad. It is triggered anytime a complaint "fairly and potentially" raises claims covered under the applicable insurance policy. See, e.g., Scott, Blane, and Darren Recovery, 727 F. App'x at 631-32. Here, the Underlying Lawsuit's amended complaint discusses defective work completed by Orange & Blue, whether by itself or through its agents, and notes that such defective work damaged other property at the Project. Cumulatively these allegations "fairly and potentially" raise a claim covered by the Evanston Policies. In other words, upon receipt of the Underlying Lawsuit's amended complaint, Evanston was on notice that it had a duty to defend Orange & Blue as an additional insured on the policies issued to R.N. This conclusion is further supported by the idea that "[a]ny doubt about whether an insurer is under the duty to defend is resolved in favor of the insured." Scott, Blane, and Darren Recovery, 727 F. App'x at 632.
In sum the allegations contained in the Underlying Lawsuit's amended complaint, triggered Evanston's duty to defend Orange & Blue, which was an "additional insured" on the policies which Evanston issued to R.N.
2. Analysis — Exception to the "Eight Corners" Rule
Moreover, even if Evanston's duty to defend is not triggered by the Evanston policies and amended complaint from the Underlying Lawsuit, i.e., the "eight corners," I would still conclude that Evanston had a duty to defend Orange & Blue. The "eight corners" rule is not as rigid as Evanston suggests. While the general rule may be that the "duty to defend, in the first instance, is determined from the allegations of the complaint, if it later becomes apparent that claims not originally within the scope of the pleadings are being made which are within the insurance coverage, the insurance carrier upon notification would then become obligated to defend." Broward Marine, Inc. v. Aetna Ins. Co., 459 So.2d 330, 331 (Fla. 4th DCA 1984); Grissom v. Comm. Union Ins. Co., 610 So. 2d 1299, 1307 (Fla. 2d DCA 1992) (adopting the rule advanced in Broward Marine); see also ABC Distributing, Inc. v. Lumbermens Mut'l Ins. Co., 646 F.2d 207, 209 (5th Cir. 1981) ("[T]he insurance company's duty to defend would arise when [an] alternate and arguably covered theory is advanced." (applying Florida law)).
Once we venture outside of the "eight corners," it becomes clear that Evanston had a duty to defend Orange & Blue in the underlying lawsuit. Aside from attaching the amended complaint to its letter, Orange & Blue also attached a report (the "Report") describing at length the construction defects AGC indicated formed the basis of their lawsuit. According to the Report, "[t]he GPR scans on the balcony slabs at [the Project] show that in the overwhelming majority of location, the top primary reinforcing steel was placed out of the specified tolerance." (DE 66-11 at 13) (emphasis added). Recall that R.N. was responsible for such work. Between 2017 and 2019 Orange & Blue continuously notified either R.N. or Evanston of their duty to defend and provided evidence substantiating why Evanston had a duty to defend Orange & Blue. (See, e.g., DE 82 at 7-8). For example, in a letter dated May 31, 2018, Orange & Blue provided R.N. with a second notice of its, and by extension Evanston's, duty to defend Orange & Blue in the underlying lawsuit in light of Orange & Blue's status as an additional insured under the Evanston policies. (DE 66-10). The letter again reiterated that R.N.'s scope of work had been implicated in the underlying lawsuit, as evidenced by the report provided by AGC. (Id.).
Therefore, regardless of whether Evanston's duty to defend Orange & Blue is triggered under the "Eight Corners" analysis, I still conclude that Evanston had a duty to defend Orange & Blue in the Underlying Lawsuit.
In sum, an insurance company should not be able to shirk its duty to defend simply because a complaint fails to unequivocally demonstrate that the insured's defective work is undoubtedly at issue in the underlying litigation. For the duty to defend to be triggered, the allegations made in the underlying lawsuit must only "fairly and potentially" implicate something that is covered by the applicable insurance policy. In some cases, such as this one, it is appropriate to consider documents outside of the insurance policy and complaint filed in the underlying lawsuit. That is especially true where, as here, Orange & Blue provided Evanston with specific documentation demonstrating that R.N.'s defective work was implicated in the Underlying Lawsuit. Evanston should not, and will not, be permitted to hide behind the "Eight Corners" rule considering it was provided actual evidence substantiating that R.N.'s work was at issue in the Underlying Lawsuit.
IV. Damages for Evanston's Failure to Defend
To recap, Orange & Blue qualifies as an additional insured under the Evanston policies with R.N. Because the Underlying Lawsuit implicates R.N.'s work at the Project, Evanston had a duty to defend Orange & Blue in the suit once R.N. was provided a copy of the amended complaint and Evanston acknowledged receipt of Orange & Blue's request for additional insure coverage. (See DE 50, Evanston's Cross Motion for Summary Judgment) (acknowledging that it received Orange & Blue's request for coverage).
Evanston argues that even if it has a duty to defend Orange & Blue, Orange & Blue is not entitled to reimbursement for attorney's fees expended in the underlying litigation. (DE 50 at 14-15). In its response, Orange & Blue initially clarifies that it is not presently seeking summary judgment on the amount of damages. Rather, because it disagrees with the damages standard Evanston employs, it addresses what it contends is the proper measure of damages. In so doing, Orange & Blue correctly notes that Evanston is responsible for damages naturally flowing from its breach of the duty to defend. (DE 59 at 10). As Florida's Second District Court of Appeal has stated: "If the insurer breaches its duty to defend, it—like any other party who fails to perform its contractual obligations—becomes liable for all damages naturally flowing from the breach." Carrousel Concession, Inc. v. Fla. Ins. Guar. Ass'n, 483 So. 2d 513, 516 (Fla. 3d DCA 1986). Accordingly, Orange & Blue correctly identifies the damages it may recover because of Evanston's breach of its duty to defend.
V. Stay of Case Pending Resolution of Underlying Action
With the "duty to defend" issue and the potential damages recoverable for breaching that duty resolved, I now turn to Evanston's Motion to Stay. (DE 64). Evanston asserts that once the duty to defend issue is resolved, this case should be stayed pending the resolution of the Underlying Lawsuit. (Id.). In their responses in opposition, Amerisure and Orange & Blue argue that the Motion to Stay should be denied because the duty to defend issue should be adjudicated now. (DE 93; DE 94). It is unclear how this argument is in opposition to Evanston's position. The Motion to Stay acknowledges that the duty to defend issue should be adjudicated now (and it has now been adjudicated) but requests a stay of a ruling on damages pending the resolution on the Underlying Lawsuit. (DE 64).
I agree with Evanston that staying a ruling on damages pending the resolution of the Underlying Lawsuit is in the interest of judicial efficiency and economy. In its Amended Complaint, Orange & Blue indicates that it seeks reimbursement for costs (among other things) associated with defending itself in the Underlying Lawsuit. (DE 40 at 7). Orange & Blue continues to incur such costs and will continue to do so until the Underlying Action is resolved. Therefore, under Orange & Blue's theory of its case, the amount of damages it is entitled to is not capable of being calculated at this point and, by extension, conducting discovery on these issues would be unrealistic until the Underlying Lawsuit is resolved. Accordingly, the issue of what damages Orange & Blue is entitled to for Evanston's breach is stayed pending the resolution of the underlying action.
As for indemnification, the issue of whether Evanston should indemnify Orange & Blue for any judgment entered against it in the Underlying Lawsuit is not ripe for adjudication. The duty to indemnify issue will only become ripe to adjudicate upon resolution of the underlying action. See, e.g., Mid-Continent Cas. Co. v. Delacruz Drywall Plastering & Stucco, Inc., 766 F. App'x 768, 770 (11th Cir. 2019) ("We agree with these cases and the district court's conclusion that MCC's duty to indemnify Delacruz is not ripe for adjudication until the underlying lawsuit is resolved."). See also Allstate Ins. Co. v. Emp'rs Liab. Assur. Corp., 445 F.2d 1278, 1281 (5th Cir. 1971) ("no action for declaratory relief will lie to establish an insurer's [priority] . . . until a judgment has been rendered against the insured since, until such judgment comes into being, the liabilities are contingent and may never materialize"). Accordingly, the issue of indemnification shall be stayed pending the resolution of the Underlying Lawsuit.
CONCLUSION
In sum, Evanston had a duty to defend Evanston in the Underlying Lawsuit and Evanston breached this duty. Orange & Blue is entitled to damages naturally flowing from this breach. Because the Underlying Lawsuit is ongoing, and Orange & Blue's claimed damages relate to fees incurred in defending the Underlying Lawsuit, I will stay the issue of damages resulting from Evanston's breach until the Underlying Lawsuit is resolved. Finally, under Eleventh Circuit precedent, the issue of indemnification is not ripe for adjudication until the Underlying Lawsuit is completed. Thus, the issue of indemnification shall also be stayed pending the resolution of the Underlying Lawsuit.
Accordingly, it is ORDERED AND ADJUDGED that:
1. Plaintiff Orange & Blue's Motion for Partial Summary Judgment (DE 45) is GRANTED.
2. Plaintiff Amerisure's Motion for Partial Summary Judgment (DE 47) is STRICKEN.
3. Defendant Evanston's Motion for Partial Summary Judgment (DE 50) is DENIED.
4. Defendant Evanston's Motion to Stay (DE 64) is GRANTED.
5. The issue of (1) damages related to Evanston's breach of its duty to defend; and (2) indemnification ARE STAYED pending the resolution of the underlying action.
6. The Parties SHALL FILE a Joint Status Report on August 27, 2020, and every ninety days thereafter, apprising the Court of the status of the Underlying Lawsuit.
7. Either Party may move to lift the stay upon resolution of the Underlying Lawsuit. Such a motion should be accompanied by a status report regarding the remaining issues in this litigation and whether they may be resolved on the papers and without a jury.
8. The Clerk of Court shall administratively CLOSE THIS CASE.
9. The Clerk shall also DENY any pending motion AS MOOT.
SIGNED in Chambers at West Palm Beach, Florida, this 29th day of May, 2020.
/s/_________
Donald M. Middlebrooks
United States District Judge