Auto-Owners Insurance Company v. Elite Homes, Inc.

Filing

Opinion issued by court as to Appellant Elite Homes, Inc.. Decision: Affirmed. Opinion type: Non-Published. Opinion method: Per Curiam. The opinion is also available through the Court's Opinions page at this link http://www.ca11.uscourts.gov/opinions.

Case: 16-10996

Date Filed: 01/23/2017

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-10996
Non-Argument Calendar
________________________
D.C. Docket No. 3:14-cv-01182-TJC-MCR
AUTO-OWNERS INSURANCE COMPANY,
Plaintiff-Appellee,

versus
ELITE HOMES, INC.,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(January 23, 2017)
Before HULL, MARCUS, and JORDAN, Circuit Judges.
PER CURIAM:

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Elite Homes, Inc. appeals the district court’s grant of summary judgment in
favor of Auto-Owners Insurance Company, arguing that Auto-Owners has a duty
to defend it in an underlying state court action. After review of the record and
consideration of the parties’ briefs, we affirm.
I
We first review the underlying litigation that gave rise to Elite Homes’ claim
for a defense, and then set out the terms of the relevant policy.
A
On March 21, 2007, Joseph and Emily Crozier entered into a written
contract with Elite Homes for the construction of a single-family residence.
Shortly after construction was completed in June of 2008, the Croziers began
experiencing problems due to water intrusion from the property’s windows. Elite
Homes made several repairs over the subsequent years, but they proved to be
ineffective. Around January of 2014, the Croziers obtained inspection and testing
reports which revealed elevated levels of toxic mold and opined that construction
and installation defects caused the active water intrusion. In compliance with
Chapter 558 of the Florida Statutes, the Croziers gave Elite Homes notice and a
final opportunity to cure the problems with the property. The Croziers were not
satisfied with Elite Homes’ proposed plan to remedy the problem, and sued Elite
Homes in state circuit court, asserting claims for breach of contract and negligence.
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Elite Homes then notified its insurer, Auto-Owners, of the Croziers’ lawsuit, which
remains pending. See Croziers v. Elite Homes, Inc., Case No. 16-2014-CA-003913
(Fla. Duval Cir. Ct. 2014).
B
Auto-Owners issued a Commercial General Liability Policy to Elite Homes
on October 15, 2007. The policy provides the following coverage for “[p]roperty
damage”:
a. We will pay those sums that the insured becomes legally obligated
to pay as damages because of . . . “property damage” to which this
insurance applies. We will have the right and duty to defend the
insured against any “suit” seeking those damages.
D.E. 1-2 at 3. “Property damage” is defined as:
a. Physical injury 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 shall be deemed to occur at the time of the “occurrence” that
caused it.
Id. at 22. The policy excludes from coverage damage to “[y]our work,” id.
at 8, which is defined as:
(1) Work or operations performed by you or on your behalf; and
(2) Materials, parts or equipment furnished in connection with such
work or operations.
Id. at 23. “Your work” includes:

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(1) Warranties or representations made at any time with respect to the
fitness, quality, durability, performance or use of “your work”; and
(2) The providing of or failure to provide warnings or instructions.
Id.
II
After being notified of the Croziers’ lawsuit, Auto-Owners defended Elite
Homes under a reservation of rights. On September 29, 2014, Auto-Owners filed
this federal action seeking a declaratory judgment that it did not have a duty to
defend or a duty to indemnify Elite Homes in the Croziers’ lawsuit.1
Auto-Owners contended that Elite Homes’ policy did not cover the damages
claimed by the Croziers. Auto-Owners and Elite Homes filed cross-motions for
summary judgment.
The district court granted Auto-Owners’ motion for summary judgment.
The district court stated that, based on the agreement of Elite Homes and AutoOwners at oral argument, the sole issue before it was whether the Amended
Complaint in the underlying action sufficiently alleged damage to “other property”
so that the claims would not be barred by the policy’s “Damages To Your Work”
1

By agreement of the parties, these two issues were bifurcated, and the duty to indemnify
portion of the case was abated pending the outcome of the underlying case. The duty to defend
is “separate and apart from the duty to indemnify and the insurer may be required to defend a suit
even if the later true facts show there is no coverage.” Trizec Props., Inc. v. Biltmore Constr.
Co., Inc., 767 F.2d 810, 812 (11th Cir. 1985). As such, an insurer’s duty to defend is “of greater
breadth than the insurer’s duty to indemnify.” Jones v. Fla. Ins. Guar. Ass’n, Inc., 908 So. 2d
435, 443 (Fla. 2005).
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exclusion. Auto-Owners’ position was that the damages alleged in the underlying
action fell solely within the policy’s exclusion provisions. Elite Homes’ position
was that the allegations in the Croziers’ amended complaint sufficiently alleged
damages that were covered under the policy, thereby requiring Auto-Owners to
provide a defense.
The district court reviewed three allegations in the amended complaint with
respect to damage: there was “extensive damage to other property includ[ing] the
frame subsurface, sheathing, insulation, drywall, and interior finishes,” D.E. 16 at
24, ¶ 14; there was “damage to interior portions of the home,” id. at 28, ¶ 32; and
there was “damage to other property including, but not limited to, exterior wood
framing, wood substrate, vapor barriers, insulation, drywall, and interior finishes,”
id. at 28, ¶ 33. The district court reasoned that, to the extent the damage in the
underlying action was to the structure of the property and Elite Homes’ defective
work, such damage was excluded under the “Damages To Your Work” provision
of the policy. Further, the district court stated that “conclusory buzz words” and
inferences were insufficient to bring the allegations of damage within coverage
since even under the “most liberal and broadest of readings” of the underlying
amended complaint, it did not contain allegations of damage to personal property
or property other than the home itself.

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The district court concluded that the allegations of damage in the underlying
action related only to the structure of the property itself, which both Auto-Owners
and Elite Homes conceded were excluded under the policy. Accordingly, the
district court held that Auto-Owners had no duty to defend Elite Homes in the
Croziers’ action. Elite Homes now appeals.
III
We review a district court’s grant of summary judgment de novo. See State
Farm Fire and Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004).
Summary judgment is appropriate when the evidence, viewed in the light most
favorable to the nonmoving party, presents no genuine issue of material fact. See
Thrasher v. State Farm Fire & Cas. Co., 734 F.2d 637, 638 (11th Cir. 1984). The
parties agree that Florida law governs.
A
We determine whether Auto-Owners has a duty to defend Elite Homes in the
underlying action by looking only at the allegations in the Croziers’ amended
complaint. See, e.g., Jones, 908 So. 2d at 443. The duty to defend an entire action
arises when the underlying complaint alleges “facts that fairly and potentially bring
the suit within policy coverage.” Id. at 442–43 (emphasis added). Further, if “the
complaint alleges facts partially within and partially outside the scope of coverage,
the insurer is obligated to defend the entire suit.” Trizec Props., Inc., 767 F.2d at
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811–12. Any doubts about whether the duty to defend is triggered are resolved in
favor of the insured. Jones, 908 So. 2d at 443.
An insurer has no duty to defend if the complaint shows the applicability of
a policy exclusion. See Keen v. Fla. Sheriffs’ Self-Insurance Fund, 962 So. 2d
1021, 1024 (Fla. 4th DCA 2007) (ruling that insurer had no duty to defend because
allegations in the complaint fell within the policy exclusion).

Thus, “[t]he

allegations within the complaint must state a cause of action that seeks recovery for
the type of damages covered by the insurance policy in question.” State Farm Fire
& Cas. Co. v. Tippett, 864 So. 2d 31, 35–36 (Fla. 4th DCA 2003). Conclusory
“buzz words,” like allegations that fail to allege any underlying facts that create a
duty to defend, are insufficient. See Amerisure Ins. Co. v. Gold Coast Marine
Distribs., Inc., 771 So. 2d 579, 582 (Fla. 4th DCA 2000) (holding that use of buzz
words were insufficient to trigger coverage); Steinberg, 393 F.3d at 1230
(“Conclusory buzz words unsupported by factual allegations are not sufficient to
trigger coverage.”) (internal quotation marks omitted).
B
The parties agree that Elite Homes’ own work is excluded under the
“Damages To Your Work” exclusion.

See Appellant’s Br. at 7 (“[T]he

[u]nderlying [c]omplaint need only fairly and potentially, not specifically, allege
the existence of damage to property other than that included within Elite Homes’
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scope of work.”); Appellee’s Br. at 13 (“There is no dispute that repairs to the
entirety of the Croziers’ home itself . . . are damage to general contractor Elite
Homes’ ‘work,’ and therefore, excluded from coverage.”) (emphasis added). This
is consistent with how courts in Florida have interpreted similar “Damage to Your
Work” provisions. See Nova Cas. Co. v. Willis, 39 So. 3d 434, 437 (Fla. 3d DCA
2010) (affirming lower court’s determination that “your work” exclusion applied to
work completed on private owner’s property but did not apply to work incorrectly
performed on state property); Aetna Cas. & Sur. Co. of Am. v. Deluxe Sys., Inc. of
Fla., 711 So. 2d 1293, 1297 (Fla. 4th DCA 1998) (concluding that purchase and
installation of replacement shelving components fell within “your work”
exclusion); Miranda Const. Dev., Inc. v. Mid-Continent Cas. Co., 763 F. Supp. 2d
1336, 1340 (S.D. Fla. 2010) (holding that claim was barred by “your work”
exclusion because underlying complaint only alleged damage to owner’s home).
The parties’ sole disagreement concerns whether the amended complaint
sufficiently alleged damages beyond the “Damages To Your Work” exclusion.
Specifically, the dispute is about whether the following allegations are sufficient to
allege damage beyond Elite Homes’ work: “extensive damage to other property
includ[ing] the frame subsurface, sheathing, insulation, drywall, and interior

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finishes,” D.E. 16 at 24, ¶ 14, and “damage to interior portions of the home.” Id. at
28, ¶ 32.2
Elite Homes contends that the use of those phrases sufficiently implicates
damages to “other property” that are outside of Elite Homes’ own work. We
disagree. A fair reading of the allegations of the Croziers’ amended complaint
leads us to conclude that Auto-Owners does not have a duty to defend Elite Homes
in the underlying action.3 The district court correctly concluded that the amended
complaint contains no factual allegations of damage to property other than the
work performed by Elite Homes, and that the use of conclusory phrases such as
“other property” is insufficient.
Elite Homes also argues that the district court’s holding essentially requires
the underlying complaint to specifically identify particular property damage to
trigger Auto-Owners’ duty to defend and that this level of specificity is
unnecessary. Although we agree that such a level of specificity is not required
under Florida law, in this case the language in the amended complaint is too vague
for us to assume that the Croziers alleged anything other than damages to the

2

In the summary judgment proceedings below, the parties referred to a third provision, D.E. 16
at 28, ¶ 33, in their briefs. The district court in turn relied on all three provisions when it granted
Auto-Owners’ motion for summary judgment. On appeal, however, Elite Homes only relies on
two provisions.
3
Although the Croziers amended their complaint during the pendency of this case in the district
court, the damages allegations were not amended.
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home, and therefore Elite Homes’ own work. As a result, the damage alleged falls
squarely within the “Damage to Your Work” exclusion.

IV
For the foregoing reasons, we hold that Auto-Owners has no duty to defend
Elite Homes in the underlying action, and affirm the district court’s grant of
summary judgment in favor of Auto-Owners.
AFFIRMED.

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