Opinion
CASE NO. 8:11-CV-77-T-17TGW
02-29-2012
AMERISURE MUTUAL INSURANCE COMPANY, Plaintiff, v. SUMMIT CONTRACTORS, INC., et al., Defendants.
ORDER
This cause is before the Court on:
Dkt. 25 Motion for Partial Summary Judgment
Dkt. 36 Response - Summit Contractors, Inc.
Dkt. 37 Response - Crum and Forster
Dkt. 45 Reply
Dkt. 46 Reply
In the Complaint, Plaintiff Amerisure Mutual Insurance Company ("Amerisure") seeks entry of a declaratory judgment pursuant to 28 U.S.C. Sec. 2201 against Defendants Summit Contractors, Inc. ("Summit") and Crum & Forster Specialty Insurance Company ("C & F").
Amerisure issued primary policy number GL 2005207030004 to Defendant Summit, which was effective from 12/31/2004 to 9/20/2005. Amerisure also issued policy number CR 1316446 to Defendant Summit, which was effective from 12/31/2004 to 9/20/2005. The primary policy was a commercial general liability insurance policy. The second policy provided umbrella coverage.
In the Complaint, Plaintiff Amerisure requests entry of a declaratory judgment in its favor and against Defendants, declaring that:
1. the Crum & Forster primary CGL policies, and any accompanying SIR (self-insured retention) obligations, must be exhausted prior to Amerisure's Umbrella Policy being called upon to defend or indemnify Summit in connection with the underlying lawsuits (the "Oxford lawsuit" and "Bordeaux lawsuit");
2. that Amerisure, under the Amerisure Umbrella Policy, has no present duty to defend or indemnify Summit in connection with the damages asserted against Summit in the underlying lawsuits insofar as available, primary insurance (Crum & Forster's CGL policies), and any accompanying SIRs, remain unexhausted;
3. the costs of initiating this suit; and
4. any other appropriate relief.
Defendant/Counterplaintiff Summit has filed a Counterclaim for declaratory relief. (Dkt. 15). Defendant Summit seeks a declaration:
1. that Counterdefendant Amerisure owes a duty to defend and indemnify Summit against the underlying actions under Amerisure policy number 2005207030004 until its limits are properly exhausted;I. Standard of Review
2. that upon exhaustion of Amerisure policy number 2005207030004, Amerisure owes a duty to defend and indemnify Summit against the underlying actions under Amerisure policy number CU 1316446;
3. that attorney's fees, legal assistant fees and costs are available to Summit pursuant to Ch. 627.428 and Ch. 57.104, Florida Statutes; and
4. any other appropriate relief.
Summary judgment should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).
"The plain language of Rule 56(c) mandates the entry of summary judgment after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."Celotex Corp. v. Catrett, 477 U.S. 317 (1986).
The appropriate substantive law will guide the determination of which facts are material and which facts are...irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). All reasonable doubts about the facts and all justifiable inferences are resolved in favor of the non-movant. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." See Anderson, 477 U.S. at 248. But, "[i]f the evidence is merely colorable...or is not significantly probative...summary judgment may be granted." Id. at 249-50. II. Statement of Facts
1. In the Oxford Place lawsuit, Case No. 10-CA-009364, Hillsborough County Circuit Court, the Oxford Place Condominium Association has sued the developer, architect, inspector and professional engineer as well as Summit Contractors, Inc. in twelve Count Complaint. Oxford Place Condominium Association sues Summit Contractors, Inc. in Count VII for violation of Ch. 553.84, Florida Statutes, violation of the State Minimum Building Code, and in Count VIII for negligence, alleging that Summit, by itself and through its agents, servants and employees, breached its duty to the Oxford Place Condominium Association to construct, supervise, inspect and approve the Condominium's buildings and improvements in accordance with the applicable State Minimum Building Code, proper and approved plans and specifications, and proper design, engineering and construction practices. The Complaint further alleges that Summit was negligent in constructing the Condominium's buildings and improvements with various specified defects and deficiencies. The Complaint alleges that the breach caused resulting damages to the Condominium's buildings and improvements, and separate damages to the contents and other property of the individual Unit Owners, necessitating repairs to the resulting damage.
Counts VII and VIII incorporate paragraph 23 by reference, which states:
The existence or case of the defects and deficiencies set forth in Exhibit "A" are not such as are recognizable by persons who lack special knowledge or training or they are hidden by building components or finishes, and they are latent defects and deficiencies to unit owners who, in the exercise of reasonable diligence, did not discover the existence or cause of such defects or deficiencies until after the purchase and occupancy of the Condo minium units.
2. In the Bordeaux lawsuit, Case No. 2009-CA-27435, Orange County Circuit Court, the Bordeaux Condominium Association sues Summit Contractors, Inc. and the developer. The Bordeaux Condominium Association sues Summit Contractors, Inc. in Count I, Violation of Ch. 553.84, Florida Statutes, for violation of the State Minimum Building Code, alleging damage in specified ways to condominium buildings and surrounding civil drainage, landscaping, irrigation, pavements and hardscapes, and alleging that the code violations are the legal and factual cause of the damage. The Bordeaux Condominium Association sues Summit Contractors, Inc. in Count V for negligence, alleging breach of the duty to exercise reasonable care to design, develop, construct and inspect the Subject Property free from defect or deficiency, and safe for habitation. The Complaint also alleges a breach of the duty to use due care and perform in competent and workmanlike manner all work activity to which Summit agreed to and was required to perform. The Complaint alleges that Summit negligently, carelessly, wrongfully and recklessly designed, constructed, inspected and converted the Subject Property in a defective and deficient manner as specified, breached the duty of care, and violated building and construction codes and ordinances in force to protect the Association and its members from the injury caused by the defects and deficiencies. The Complaint alleges that all defects which were in existence at the time of completion of the Subject Property were latent and/or concealed, and the damages are continuous and progressive over time.
3. Amerisure Primary Policy No. GL 2005207030004, a CGL policy which provided coverage to the named insured Summit Contractors, Inc. from 12/31/2004 to 12/31/2005, having general policy limit of $2,000,000, a products completed limit of $2,000,000 and per occurrence limit of $1,000,000, provides:
Coverage A BODILY INJURY AND
PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result.
b. This insurance applies to "bodily injury" and "property damage" only if:
(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";
(2) The "bodily injury" or "property damage" occurs in the policy period; and
(3) Prior to the policy period, no insured listed under Paragraph 1. of Section II-Who is An Insured and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the "bodily injury" or "property damage" had occurred, in whole or in part. If such a listed insured or authorized "employee" knew, prior to the policy period, that the "bodily injury" or "property damage" occurred, then any continuation, change or resumption of such "bodily injury" or "property damage" during or after the policy period will be deemed to have been known prior to the policy period.
....
4. Other Insurance
If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows:
a. Primary Insurance
This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in c. below.
b. Excess Insurance
(1) Any of the other insurance, whether primary, excess, contingent or on any other basis:
(a) That is Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for "your work";
.....
(2) Any other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement.
When this insurance is excess, we will have no duty under Coverages A or B to defend the insured against any "suit" if any other insurer has a duty to defend the insured against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers.
When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of:
(1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and
(2) The total of all deductible and self-insured amounts under all that other insurance.
We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not brought specifically to apply in excess of the Limits of Insurance shown in the Declarations of this Coverage Part.
(c) Method of Sharing
If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first.
If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this
method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers.
....
17. "Property damage" means:
a. physical damage to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it.....
The premium for the above Policy was $616,579. (Dkt. 1-2, p. 2).
4. The Amerisure Primary policy was cancelled effective 9/20/2005.
5. Amerisure's Umbrella Policy No. CU 1316446, covering Summit Contractors, Inc. from 12/31/2004 to 12/31/2005, with policy limits of $5,000,000 provides:
A. Coverages
1. Insuring Agreement
a. We will pay on behalf of the insured those sums that the insured becomes legally obligated to pay as damages which exceed the limit of "underlying liability insurance " or the "self-insured retention" because of:
(1) "Bodily injury",
(2) "Property damage" or
(3) "Personal and advertising injury"
Caused by an "occurrence" to which this insurance applies.
....
f. We have no duty to defend any claim or "suit" that any other insurer has a duty to defend. If we elect to join the defense of such claims or "suits" we will pay all expenses we incur.
....
D. Conditions
....
10. Other Insurance
This insurance is excess over all other policies except:
a. When the other policy was purchased to be in excess of this policy, or
b. When the terms of this policy and the other policy coincide to provide excess coverage for the same loss.
When this policy provides excess coverage coinciding with coverage provided under another policy, the method of sharing will be as follows:
(1) If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first.
(2) If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers.
If a policy listed in the Schedule of Underlying Insurance is excess over any other valid and collectable primary or excess insurance policy available to the insured, the insurance provided by this policy shall be in excess of all
such policies.
....
17. Loss Payable
We will not pay any amount of loss due to an "occurrence" until the underlying liability insurer has paid the loss for the "occurrence" under the provisions of the "underlying liability insurance" or the insured has paid the "self-insured" retention, whichever applies.
The premium for the above Policy was $239,392.00. (Dkt. 1-6, p. 2).
6. Pursuant to the Amerisure Umbrella Policy, "Self-insured retention" is:
20. "Self-insured retention" means the amount you must pay in damages when "underlying liability insurance" is:
a. Not subject to condition 11. Maintenance of Underlying Insurance;
b. Not carried by you.
The "self-insured retention" amount is shown in item 3.(c) of the Declarations.
Your obligation under the "self-insured retention" is from the first dollar of loss.
7. The Amerisure Umbrella Policy was cancelled effective 9/20/2005.
8. The C & F Policy number GLO 090899 , a CGL policy covering the named insured Summit Contractors, Inc. from 9/20/2005 to 9/20/2006, with general policy limits of $2,000,000 and per occurrence limit of $1,000,000, provides:
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally
obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result.
....
b. This insurance applies to "bodily injury" and "property damage" only if:
....
(2) The "bodily injury" or "property damage" occurs during the policy period; and
(3) Prior to the policy period, no insured listed under Paragraph 1. of Section II-Who is An Insured and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the "bodily injury" or "property damage" had occurred, in whole or in part. If such a listed insured or authorized "employee" knew, prior to the policy period, that the "bodily injury" or "property damage" occurred, then any continuation, change or resumption of such "bodily injury" or "property damage" during or after the policy period will be deemed to have been known prior to the policy period.
....
4. Other Insurance
If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows:
a. Primary Insurance
This insurance is primary except when b. below applies. If
this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in c. below.
b. Excess Insurance
This insurance is excess over:
(1) Any of the other insurance, whether primary, excess, contingent or on any other basis:
(a) That is Fire, Extended Coverage, Builder's Risk, Installation Risk or similar coverage for "your work";
....
(2) Any other primary insurance available to you covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement.
When this insurance is excess, we will have no duty under Coverages A or B to defend the insured against any "suit" if any other insurer has a duty to defend the insured against that "suit". If no other insurer defends, we will undertake to do so, but we will be entitled to the insured's rights against all those other insurers.
When this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of:
(1) The total amount that all such other insurance would pay for the loss in the absence of this insurance; and
(2) The total of all deductible and self-insured amounts under all that other insurance.
We will share the remaining loss, if any, with any other insurance that is not described in this Excess Insurance provision and was not bought specifically to apply in excess of the Limits of Insurance shown in the Declarations of this
Coverage Part.
9. An endorsement changes the "Other Insurance" in Section 4 (above), and provides:
4. Other Insurance
This insurance is excess of all other insurance except insurance specifically purchased to apply in excess of this insurance, and shall not contribute with any other insurance. This insurance is in excess of the Self Insured Retention in all circumstances. The Self Insured Retention can only be reduced or exhausted by your payment of settlements or judgments for damages which would otherwise be covered under the terms of this insurance. It cannot be reduced or exhausted by other insurance that may be available to you unless the other insurance was purchased by you for the specific purpose of reducing or replacing the Self Insured Retention.
The premium for the above Policy was $690,000.00. (Dkt. 1-12, p. 2).
10. The Declarations of the C & F Policy establishes that the Self-Insured Retention applies on a per claim basis. (Dkt. 1-12, p. 2). The Self-Insured Retention endorsement of the C & F Policy (Dkt. 1-13, p. 25) provides:
2. The above Limits apply as follows:
....
Per Claim Basis: If the Self Insured Retention limit indicated in the Schedule is on a Per Claim Basis, the Self Insured Retention applies as follows:
1. Under Bodily Injury and/or Property Damage Liability and Medical Payments, combined, to all damages and medical expenses sustained by any one person or organization because of "bodily injury" and "property damage" , combined, as the result of any one "occurrence";
....
3. Our obligation to pay damages and defend claims or "suits" under this policy applies only when the amount of the Self Insured Retention has been exhausted by the insured's payment of damages or "Claims Expense" that would be covered by policy but for the application of the Self Insured Retention.
The Insured shall have the obligation to provide, at his own expense, proper defense and investigation of any claim or "suit" and to accept any reasonable offer of settlement within the Self Insured Retention. The Insured's obligation to provide for his own defense is terminated upon exhaustion of the Self-Insured Retention referenced above. Compliance with this clause is a condition precedent for coverage under this policy. In the event of the failure of the insured to comply with this clause, no loss, cost or expense shall be payable by the Company.
....
6. We shall have the right in all cases, but not the obligation, to assume control of the investigation, defense and/or settlement of any claim or "suit" and upon written request from us the Insured shall pay directly any expense or loss incurred by us in the investigation, defense, settlement and/or satisfaction of judgment of any claim or "suit" within the Self-Insured Retention.
11. The C & F Policy includes the "Continuous or Progressive Injury and Damage Exclusion" as an endorsement to the C & F Policy. (Dkt. 1-12, p. 33).
12. On May 25, 2010, Plaintiff Amerisure agreed to provide Defendant Summit with a defense in the Oxford Place lawsuit, subject to a full reservation of rights to withdraw its defense and/or indemnity. On August 24, 2010, Plaintiff Amerisure notified Defendant Summit that the aggregate limit of coverage under the Amerisure Primary Policy had been exhausted by the payment of and resolution of other claims. On November 8, 2010, Plaintiff Amerisure again notified Defendant Summit that the policy limits on Amerisure's Primary Policy had been exhausted, and also notified Defendant Summit that Amerisure's Umbrella Policy was not implicated in relation to the Oxford Place lawsuit.
13. On September 21, 2009, Plaintiff Amerisure agreed to provide Defendant Summit with a defense in the Bordeaux lawsuit, subject to a full reservation of rights to withdraw its defense and/or indemnity. On August 24, 2010, Plaintiff Amerisure informed Defendant Summit that the aggregate limit of coverage under the Amerisure Primary Policy had been exhausted by payment and resolution of other claims. On November 8, 2010, Plaintiff Amerisure against notified Defendant Summit that Plaintiff's Primary Policy limits were exhausted, and notified Defendant Summit that Plaintiff's Umbrella Policy was not implicated in relation to the Bordeaux lawsuit. III. Discussion
Plaintiff Amerisure seeks entry of partial summary judgment that the Amerisure Umbrella policy is in excess to the Crum & Forster Primary policy, and that the Amerisure Umbrella policy need not respond until all available primary insurance has been exhausted. Plaintiff Amerisure argues that Defendant C & F has acknowledged its duty to defend Defendant Summit in the Underlying Lawsuits following Summit's exhaustion of its self-insured retention. A. Response - Defendant Summit
Defendant Summit argues that the Amerisure Umbrella policy does not call for horizontal exhaustion, and Defendant Crum & Forster's CGL policy covers a different time period than the Amerisure Umbrella policy, and therefore insures different risks. Defendant Summit argues that if property damage actually occurred between 12/31/2004 and 9/20/2005, the underlying Amerisure primary policy would be triggered. If the Amerisure CGL coverage was exhausted, the Amerisure Umbrella policy would provide coverage, there being no other underlying policy in effect when the property damage occurred.
Defendant Summit argues that if property damage occurred after Amerisure's policy period but between 9/20/2005 and 9/20/2006 (Crum & Forster's policy period), neither Amerisure policy would provide coverage, but the primary Crum & Forster CGL would be triggered. Should it become exhausted, the umbrella/excess policy in effect for that policy period, 9/20/2005 to 9/20/2006, would then be triggered.
Defendant Summit argues that the issue controlling the determination of Plaintiff Amerisure's Motion is not ripe for decision, as discovery in neither of the underlying cases has revealed the dates upon which the property damage occurred. Defendant Summit argues that Plaintiff's Motion for Partial Summary Judgment should be denied. B. Response - Defendant Crum & Forster
Defendant Crum & Forster argues that Plaintiff's Motion should be denied because: 1) under Florida law, a "manifestation" trigger rather than an "injury in fact" trigger applies; 2) Plaintiff has not established that Florida courts would apply the "injury in fact" trigger; and 3) disputed issues of material fact, including the date of the property damage, remain pending, precluding the entry of summary judgment for Plaintiff Amerisure. C . Plaintiff's Replies
Plaintiff Amerisure argues that, according to the Umbrella Policy, Plaintiff Amerisure has no duty to defend any claim or "suit" any other insurer has a duty to defend, and Defendant C & F has acknowledged its duty to defend Summit in connection with the underlying lawsuits. Plaintiff Amerisure further argues that Plaintiff has no duty to defend Summit until such time as the C & F policy is exhausted. The Umbrella Policy's "Other insurance" provision states that the policy is excess over all other policies except policies purchased in excess of the Amerisure Umbrella Policy, or where the Amerisure Umbrella Policy and another umbrella policy coincide to provide excess coverage. Plaintiff Amerisure argues that this language has been held to be unambiguous and applicable in requiring horizontal, underlying exhaustion. See Allstate Insurance Company v. Executive Car and Truck Leasing, 494 So.2d 487, 489 (Fla. 1986); see also Towne Realty, Inc. v. Safeco Insurance Company of America, 854 F.2d 1264, 1268-69 (11th Cir. 1988). D. Analysis
Plaintiff Amerisure contends that, pursuant to the terms of Amerisure's Umbrella Policy, Plaintiff's Umbrella Policy is not implicated because it is excess to other available primary insurance, the C & F Primary Policy, which includes a $50,000 Self Insured Retention Endorsement. Defendant Summit has made a demand for coverage for the Oxford Place and Bordeaux lawsuits. 1. Choice of Law
The basis of jurisdiction is diversity. The Court applies the choice of law rules of the forum state to determine which substantive law governs the action. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). The named insured, Summit Contractors, Inc. is a Florida corporation which performed work on two job sites in Florida, as stated in the complaints in the Underlying Lawsuits. The Amerisure Primary Policy provided CGL coverage for work on Florida job sites; the Amerisure Umbrella Policy provided excess coverage for the work on the Florida job sites. The Amerisure policies were countersigned by Amerisure's authorized representative in Florida. The C & F Primary Policy provided CGL coverage to Summit Contractors, Inc. for work on Florida job sites. The C & F policy was countersigned by C & F's authorized representative in Florida. The parties do not dispute that Florida law applies. The Court will apply Florida law. State Farm Mut. Auto. Ins. Co. v. Roach, 945 So.2d 1160 (Fla. 2006)(lex loci contractus applies to insurance contracts). 2. General Principles
Under Florida law, the issue of an insurer's duty to defend a lawsuit against its insured is governed by the terms of the policy and the allegations of the complaint. See Nat'l Union Fire Ins. Co. v. Lenox Liquors, Inc., 358 So.2d 533, 536 (Fla. 1977) ("The allegations of the complaint govern the duty of the insurer to defend."); McCreary v. Fla. Residential Prop. & Cas. Joint Underwriting Ass'n, 758 So.2d 692, 695 (Fla. 4th DCA 2000) ("'[t]he duty of an insurer to defend is determined solely by the allegations of the complaint against the insured' and 'an insurer has no duty to defend a suit against an insured if the complaint on its face alleges a state of facts that fails to bring the case within the coverage of the policy.'") (emphasis in original) (quoting Marr Invs., Inc. v. Greco, 621 So.2d 447, 449 (Fla. 4th DCA 1993)); Baron Oil Co. v. Nationwide Mut. Fire Ins. Co., 470 So.2d 810, 813 (Fla. 1st DCA 1985) ("The rule is firmly established in Florida that a liability insurer's obligation to defend a claim made against its insured must be determined from the allegations in the complaint."); C.A. Fielland, Inc. v. Fid. & Cas. Co., 297 So.2d 122, 127 (Fla. 2d DCA 1974) ("The duty to defend, in the first instance, is determined from the allegations of the complaint."). This rule is called the "eight corners rule," a reference to the four corners of the policy and the four corners of the complaint. See Colony Ins. Co. v. Barnes, 410 F.Supp.2d 1137 (N.D. Fla. 2005). If the complaint alleges any claim that, if proven, might come within the insurer's indemnity obligation, the insurer must defend the entire action. Id. at 1139.
The construction of an insurance policy is a question of law for the court. Jones v. Utica Mutual Ins. Co., 463 So.2d 1153, 1157 (Fla. 1985); Roberts v. Florida Lawyer's Mutual Ins. Co., 839 So.2d 843, 845 (Fla. 4th DCA 2003). When construing insurance policies, courts are to read the policy as a whole and attempt to give every provision its full meaning and operative effect. See Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla. 2000). Any ambiguities in an insurance policy are to be interpreted liberally and in favor of the insured and strictly against the insurer. See Flores v. Allstate Ins. Co., 819 So.2d 740, 744 (Fla.2002); Anderson, 756 So.2d at 34; McCreary v. Fla. Residential Prop. & Cas. Joint Underwriting Ass'n, 758 So.2d 692, 694-95 (Fla. 4th DCA 1999). A policy is ambiguous when the language is subject to "more than one reasonable interpretation, one providing coverage and the [sic] another limiting coverage...." Anderson, 756 So.2d at 34. Under Florida law, an insured bears the burden of proving that a claim is covered within an insurance policy. LaFarge Corp. v. Travelers Indem. Co., 118 F.3d 1511, 1516 (11th Cir.1997) (internal citations omitted). The burden of proving an exclusion to coverage is, however, on the insurer. Id. 3. Primary Coverage and Excess Coverage
Umbrella policies take effect only after all underlying primary coverage[s] have been exhausted because "umbrella coverages...are regarded as true excess over and above any type of primary coverage, excess provisions arising in regular policies in any manner, or escape clauses." See Grant v. New Hampshire Ins. Co., 613 So.2d 466 (Fla. 1993)(citing Allstate Insurance Co. v. Executive Car and Truck Leasing, Inc., 494 So.2d 487, 489 (Fla. 1986).
Excess insurers are able to provide relatively inexpensive insurance with high policy limits because they require the insured to contract for underlying primary coverage with another carrier. The primary carrier provides a much lower amount of coverage but must insure against what is likely to be a greater number of claims and must provide a defense. Harville v. Twin City Fire Ins. Co., 885 F.2d 276, 278 (5th Cir. 1989). The premiums charged are a reflection of the risks undertaken. Because the primary insurer's duty to defend extends to covered claims without regard to their amount, an excess insurer's duty to defend is not typically invoked merely because a claim has been asserted against the insured in excess of the policy limits. 4. CGL Coverage for Property Damage
The Court notes that, under Florida law, CGL policies are intended to cover property damage caused by the completed product, but not for replacement or repair of the product. In LaMarche v. Shelby Mutual Ins. Co., 390 So.2d 325 (Fla. 1980), the Florida Supreme Court stated:
Rather than coverage and payment for building flaws or deficiencies, the policy instead covers damages caused by those flaws. We agree with the explanation as stated by the Supreme Court of New Jersey in Weedo v. Stone-E-Brick, 81 N.J. 233, 405 A.2d 788 (1979), in which it said:405 A.2d at 791-92. The court in Weedo wrote an exhaustive opinion on this issue, discussing the majority and minority views. We fully agree with its logic and reasoning
An illustration of this fundamental point may serve to mark the boundaries between "business risks" and occurrences giving rise to insurable liability. When a craftsman applies stucco to an exterior wall of a home in a faulty manner and discoloration, peeling and chipping result, the poorly performed work will perforce have to be replaced or repaired by the tradesman or surety. On the other hand, should the stucco peel and fall from the wall, and thereby cause injury to the homeowner or his neighbor standing below or to a passing automobile, an occurrence of harm arises which is the proper subject of risk sharing as provided by the type of policy before us in this case.
In other words, "property damage" could include physical injury to other tangible property caused by Summit's installation of a defective component or physical injury to tangible property when Summit's work was performed by a subcontractor. See United States Fire Insurance Company v. J.S.U.B., 979 So.2d 871 (Fla. 2007); Auto Owners Insurance Company v. Pozzi Window Company, 984 So.2d 1241 (Fla. 2008); Assurance Co. of Am. v. Lucas Waterproofing Co., Inc., 581 F.Supp.2d 1201, 1209 (S.D. Fla. 2008). 4. This Case
The Bordeaux Complaint specifies a substantial list of various defects within the Complaint; the Oxford Place Complaint includes an attached list of specified defects (Dkt. 1-7, pp. 21-23). Both complaints include allegations that the alleged defects and deficiencies were hidden and/or involved latent defects. Both complaints state that existence or cause of the defects was not readily discoverable by the Association or its members through reasonable inspection at the time of purchase [of individual units]. (Dkt. 1-7, par. 23; Dkt. 1-10, par. 92). The Oxford Place complaint states that the hidden defects caused damages which only became known after purchase and occupancy of the individual units. The Bordeaux complaint states that damages caused by the hidden/latent defects are continuous and progressive over time. (Dkt. 1-10, par. 92). Many of the defects specified involve water intrusion. The Court reads both Complaints to include a cause of action for negligence in the construction of buildings and improvements which caused property damage which manifested itself, or became discoverable, over a span of time, and after becoming known, continued to spread. The Court notes that neither the Oxford Place complaint nor the Bordeaux complaint alleges a specific time when the alleged property damage manifested itself, or was discovered. a. Duty to Defend
Plaintiff Amerisure provided a defense to Defendant Summit in the underlying lawsuits until the policy limits of the Primary Policy were exhausted. There is no dispute that the Primary C & F Policy is providing a defense to Defendant Summit, as the allegations of the complaints in the underlying lawsuits may be within the coverage provided to Defendant Summit under that Policy. (Dkt. 1-15, p. 3). Defendant C & F states: "...C & F acknowledges that some of the damages claimed in the complaint may be covered, others are not, and, if certain facts are developed, there may be no coverage." Defendant C & F is defending under a reservation of rights (Dkt. 1-15).
Under Florida law, the duty to defend is controlled by the allegations of the complaints in underlying lawsuits, and the terms of the insurance policies at issue. Under both the Amerisure Primary Policy, and the C &F Primary Policy, the potential for coverage exists when an occurrence results in property damage. The Complaints do not specify a time when property damage took place, or the occurrence(s) causing the property damage took place. The policies provide that, as to property damage involving physical damage to tangible property, the property damage shall be deemed to occur at the time of the physical injury that caused it.
Plaintiff Amerisure relies on Allstate Ins. Co. v. Executive Car and Truck Leasing, Inc., 494 So.2d 487 (Fla. 1986) for the principle that "umbrella coverages...are regarded as true excess over and above any type of primary coverage, excess provisions arising in regular policies in any manner, or escape clauses." That case is a discrete injury case which arose from a car accident. In determining the priority of coverage of four insurance policies, the Florida Supreme Court determined that the first layer of coverage was from the insurer of the actively negligent party, and the next layer was from the insurer of a vicariously liable party which included the actively negligent party as an additional insured. The Florida Supreme Court noted that the insurer of a vicariously liable party is entitled to indemnity if it does not insure a joint tortfeasor or the actively negligent party as an additional insured, and that policy language controls in those situations where the right to indemnity does not lie. Where two policies included "other insurance" clauses, the "other insurance" clauses cancelled each other out. The Florida Supreme Court pro-rated the coverage between those two policies. The Florida Supreme Court further determined that umbrella coverage was available only after coverage from the primary policies was exhausted.
In Towne Realty, Inc. v. Safeco Ins. Co. of America, 854 F.2d 1264 (11th Cir. 1988), the Eleventh Circuit Court of Appeals looked to policy language to determine the liability of insurers of an apartment building manager in a discrete injury case in which a person delivering newspapers to an apartment complex was beaten and severely injured. The respective insurers agreed to a settlement amount of $1,000.000, with Commercial Union contributing $500,000 and Safeco contributing $500,000 to the settlement. The insurers agreed to seek a declaratory judgment to determine which insurer was primarily responsible for Towne Realty's liability. The three policies at issue included "other insurance" cases limiting the insurers' liability for a particular loss if other insurance applied. The Commercial Union policy at issue stated that it provided primary coverage, which was not to be reduced by excess insurance applicable to the same loss, and which provided for a contribution method if other insurance applied to the loss on the same basis. The Safeco policy at issue contained an "escape" clause. The Eleventh Circuit Court of Appeals, in considering the language of the three policies, recognized that, under Florida law, the "escape clause" generally preclud[ed] a finding that an insurer is primarily liable if there is other collectible insurance. Towne Realty at 1268. The Eleventh Circuit Court of Appeals further recognized that the Lexington policy, as an umbrella liability policy, extended only excess coverage if there was other collectible insurance. The Eleventh Circuit concluded that the Commercial Union policy provided $500,000 of primary coverage, and then determined that the Safeco policy provided $500,000 of coverage, as the Lexington policy was an umbrella policy, and, pursuant to Allstate Ins. Co. v. Executive Car & Truck Leasing, Inc. 494 So.2d 487 (Fla. 1986), was on a "different footing" than the two "regular" policies.
This case is not a "discrete injury" case where the property damage at issue arises from one single event but the presence of allegations of continuous property damage does not compel a new rule or a different analysis. There is no basis for the Court to allocate the duty to indemnify because the actual facts have not yet been determined. The allegations of the Complaints in the Underlying Lawsuits do support the potential of primary coverage available from Plaintiff Amerisure and Defendant C & F. The Amerisure Primary policy and the C & F Primary policy are "occurrence" policies. Both policies define "occurrence" to include an accident, including continuous or repeated exposure to substantially the same harmful conditions (Dkt. 1-2, p. 47, Dkt. 1-12, p. 26). The term "accident" is not defined in the insurance policies. Courts generally construe the term "occurrence" to include "accidental events" and "injuries or damage neither expected nor intended from the standpoint of the insured. State Farm Fire and Cas. Co. v. CTC Dev. Corp., 720 So.2d 1072, 1076 (Fla. 1998).
Florida courts follow the general rule that the time of "occurrence" within the meaning of an "occurrence" policy is the time at which the injury first manifests itself. See Travelers Insurance v. C.J. Gayfer's & Co., 366 So.2d 1199 (Fla. 1st DCA 1979). The insurance policies do not require that the negligence which results in the property damage must have occurred during the policy period, but the property damage must have occurred during the policy period. See Trizec Properties, Inc. v. Biltmore Construction Co., 767 F.2d 810, 813 (11th Cir. 1985). In this case, the Court does not know when that time is. Under Florida law, when there is doubt as the existence of coverage, that doubt must be resolved in favor of coverage. Where some facts alleged are within the coverage provided, but others are not, a carrier has a duty to defend the entire case. These rules support Defendant C & F's duty to defend.
Plaintiff has argued for the application of "horizontal exhaustion"; Defendants have argued for "vertical exhaustion." "Horizontal exhaustion" means that each primary policy triggered by a loss must indemnify the insured to the full extent of its policy limits before any excess insurer can be required to pay. "Vertical exhaustion" means that each layer of excess coverage in a given year must exhaust before the next layer must begin paying indemnity costs to the insured. Due to the nature of the property damage alleged in the Underlying Complaints, and the language of the insurance policies, the Court considered whether Amerisure owed Defendant Summit a duty to defend under the Umbrella Policy that is concurrent with Defendant C & F's duty to defend, or whether Plaintiff Amerisure has no duty to defend until the C & F Primary policy is exhausted. The Court finds that, based on the facts alleged, the defense provision of the Umbrella policy, and applying established rules, only Defendant C & F has a duty to defend. Only after the actual facts are determined could the Court apply some allocation or priority.
Florida follows a strict rule that the duty to defend is triggered solely with reference to the factual allegations of the complaints in the Underlying Lawsuits. When those allegations, taken as true and construed liberally, state a claim that may potentially come within a policy's coverage, the insurer must defend unless and until the claim is narrowed to a recovery the policy does not cover. Defendant C & F has acknowledged that the allegations of the Complaints establish the potential for coverage.
Under Florida law, the intent of the parties is measured only by the language of the [insurance] policies, unless the language is ambiguous. Towne Realty, Inc. v. Safeco Ins. Co. of America, 854 F.2d 1264, 1267 (11th Cir. 1988). In the absence of an express statutory or contractual duty to defend, there is no such duty. Allstate Insurance Co. v. RJT Enters. , 692 So.2d 142, 144 (Fla. 1977). The Amerisure Umbrella Policy provides that "We have no duty to defend any claim or "suit" that any other insurer has a duty to defend." The Court accords the ordinary meaning to those words, and finds that the contractual provision is unambiguous. Defendant C & F has a duty to defend, and therefore Plaintiff Amerisure does not have a duty to defend under the Umbrella Policy.
The Court notes that majority rule, reflected in cases from other Courts, and established practice in the insurance industry, is that where an insured maintains both primary and excess policies, the excess liability insurer is not obligated to participate in the defense until the primary policy limits of all primary policies are exhausted. The smaller premiums paid for umbrella coverage reflect the reduced risk. See Texas Employers Ins. Ass'n v. Underwriting Members of Lloyd's, 836 F. Supp. 398, 404 (S.D. Tex. 1993)(quoting Couch on Insurance 2d, Sec. 51:36); see also Couch on Insurance 3d, Sec. 200:44-200:45 (1999); Harville v. Twin City Fire Ins., 885 F.2d 276, 279 (5th Cir. 1989). As the Eleventh Circuit Court of Appeals noted in Trizec Properties v. Biltmore Construction Co., Inc., 767 F.2d 810 (11th Cir. 1985), the actual facts are not pertinent to the issue of the duty to defend.
Defendant Summit obtained the C & F Policy to provide Primary Coverage to Defendant after the Amerisure Primary Policy was cancelled. The Court recognizes that property damage occurring in successive periods of coverage does not involve the same loss. "Other Insurance" clauses come into play when multiple policies cover the same loss. It remains to be seen whether it will be possible to determine when the property damage alleged in the Underlying Lawsuits occurred; in that situation courts have applied various allocation schemes, depending on the facts of the case. That issue is beyond the scope of Plaintiff's Motion. Under Florida law, the duty to defend is independent of the duty to indemnify. The Court has found that an unambiguous provision of the Amerisure Umbrella Policy resolves the issue, and it is not necessary for the Court to consider the Other Insurance clauses of the policies.
The Court relies on the provision of the Amerisure Umbrella Policy which states Plaintiff Amerisure will have no duty to defend a suit if any other insurer has a duty to defend the suit. The Court's decision is based on the status of Plaintiff's Umbrella Case No. 8:11-CV-77-T-17TGW
Policy as a "true excess" policy, which is reflected in the size of the premiums paid. Under Florida law, Plaintiff Amerisure has no duty to defend until Defendant Summit's Self Insured Retention has been paid, and the C & F Primary Policy is exhausted. See Allstate Insurance Co. v. Executive Car and Truck Leasing, Inc., 494 So.2d 487, 489 (Fla. 1986). b. Duty to Indemnify
The Court can assess the duty to indemnify prior to the conclusion of the Underlying Lawsuits only if it is clear, based on the allegations of the complaints, that the complaints' allegations could under no circumstances trigger the duty to indemnify. Northland Casualty Co. v. HBE Corp., 160 F.Supp.2d 1348, 1360 (M.D. Fla. 2001).
The Underlying Lawsuits involve complex litigation. Since Plaintiff moved for partial summary judgment, the Court understands Plaintiff's Motion to include only the duty to defend. The Court notes that, in the Motion, Plaintiff Amerisure states that "Plaintiff's Umbrella Policy, according to its unambiguous language, applies, if at all, in an excess capacity over and above all primary coverage available to Defendant Summit, including C & F Policy issued to Defendant." Plaintiff Amerisure further states that the Umbrella Policy is not implicated until such time as the C & F Policy is exhausted. Although the construction of an insurance policy is a question of law for the Court, the Court cannot construe the insurance policies in a factual vacuum. The Court recognizes that Plaintiff Amerisure has paid the policy limits of the Amerisure Primary Policy. The Umbrella Policy was purchased as excess coverage for the policy period covered by the Amerisure Primary Policy. If it is determined that none of the property damage was first recognized and deemed to occur during the policy period of the C & F policy, but was first recognized during the policy period of the Amerisure policy, it is possible that the duty to indemnify under the Amerisure Umbrella Policy would be triggered without exhausting the C & F Policy. In the event that Plaintiff is seeking a ruling on the duty to indemnify as between Plaintiff Amerisure, the excess insurer, and Defendant C & F, the primary insurer, based only on an interpretation of the insurance policies, before the actual facts have been determined, the Court denies Plaintiff's Motion. Accordingly, it is
ORDERED that Plaintiff's Motion for Partial Summary Judgment (Dkt. 25) is granted in part as to the duty to defend, and denied in part as to the duty to indemnify.
DONE and ORDERED in Chambers, in Tampa, Florida on this 29th day of February, 2012.
______________________
ELIZABETH A. KOVACHEVICE
UNITED STATES DISTRICT JUDGE
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