New Hampshire Insurance Company v. Hill et al

Filing 50

MEMORANDUM OPINION & ORDER GRANTING Plf's 21 Motion for Summary Judgment as set out. Signed by Judge Callie V. S. Granade on 8/23/2012. (tot)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
NEW HAMPSHIRE INSURANCE
COMPANY,
Plaintiff,
v.
GAYLE HILL, et al.,
Defendants.

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CIVIL ACTION NO. 11-414-CG-B

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Plaintiff’s Motion for Summary Judgment
(Doc. 21). Upon consideration of the parties’ briefs and evidentiary submissions
(Docs. 21, 21-1 to 21-3, 29, 30-1 to 30-10, 32, 37, 37-1, 41, 41-1 and 44), Plaintiff’s
motion is due to be GRANTED.
I.

FACTUAL BACKGROUND

Plaintiff New Hampshire Insurance Company (“NHIC”), a New Hampshire
corporation, brings this declaratory judgment action to determine its rights and
obligations under a commercial crime, garage and property policy issued to its
former policyholder, Leisure Tyme RV, Inc. (“Leisure Tyme”), regarding claims
asserted in a handful of lawsuits1 arising from Leisure Tyme’s alleged failure to

Wachovia Dealer Serv., Inc. v. Nat’l City Bank et al., No. 2009-CA-007327-S (Fla. Cir. Ct.,
Okaloosa Cnty.); Garwood v. Leisure Tyme RV Ctr. et al., No. CV-2009-901466.00 (Ala. Cir. Ct.,
Baldwin Cnty.); McNally v. Leisure Tyme RV Ctr. et al., No. CV-2010-900511.00 (Ala. Cir. Ct.,
Baldwin Cnty.); and Cammauf v. Leisure Tyme RV Ctr. et al. CV-2010-900510.00 (Ala. Cir. Ct.,
Baldwin Cnty.) (collectively, the “Underlying Litigations”).
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retire loans extended to Defendants John A. Pankratz, Garwood C. and Janet R.
Wolfe, Rodney I. Cammauf, and James H. McNally (collectively, the “Purchaser
Defendants”).2 The facts are largely not in dispute.
The Purchaser Defendants were owners of recreational vehicles (“RVs”), who,
between June 2008 and January 2009, contracted with Leisure Tyme to trade in
their used RVs toward the purchase price of new RVs. (Doc. 1 at 3.) As a condition
of each Purchaser Defendant’s purchase of a new RV, Leisure Tyme agreed to pay
the remaining loan balance the Purchaser Defendant owed on the trade-in. (Id. at
4.) The Purchaser Defendants allege that they executed the paperwork necessary
for Leisure Tyme to satisfy the remaining loan balances owed on their trade-ins
(id.), but that Leisure Tyme deposited into its own operating account the funds
intended to pay off the loans and used those funds for operating expenses. (See Doc.
1 at 4; Doc. 29 at 6.) At the time they commenced the Underlying Litigations, each
of the Purchaser Defendants owed a balance on his or her new RV ranging from
$30,000 to $290,000.3 (Doc. 29 at 6.) Leisure Tyme ultimately filed for bankruptcy
on March 13, 2009. (Doc. 1 at 4.) Four months later, the United States Bankruptcy
Court for the Northern District of Florida modified the automatic bankruptcy stay
to allow the Purchaser Defendants to collect on their claims to the extent any bond
Former defendants Brian Hannon, Terry Drake, Eva N. and Charles Cortese, Donald R. and
Jane M. McBrier, and James L. Heitman were dismissed from this action. Docs. 14, 27, and 34.

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John Pankratz owed an estimated $290,000 on his trade-in (Doc. 30-3 at 4); Garwood and Janet
Wolfe were in debt for approximately $102,000 (Doc. 30-4 at 5); Rodney Cammauf owed
approximately $82,000 (Doc. 30-6 at 3); and James McNally was in debt for over $30,000. (Doc. 30-5
at 7.)
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or insurance coverage was available. (Id.) The Purchaser Defendants sued Leisure
Tyme4 (id. at 4; Doc. 29 at 2), and their claims were compelled to arbitration in
Mobile County, Alabama.5 (Doc. 1 at 4.) NHIC has, up until this point, defended
Leisure Tyme and Gayle Hill pursuant to a reservation of rights. (Doc. 21 at 5; Doc.
29 at 2.)
The Policy
NHIC issued insurance policy number 01-LX-009349860-0/000 (the “Policy”)
to Leisure Tyme for the period from June 1, 2008 through June 1, 2009. (Doc. 21-1
at 5.) The policy was issued and delivered to Leisure Tyme in Mary Esther, Florida,
where Leisure Tyme maintains its principal place of business. (Id. at 2, ¶3). NHIC
and the Purchaser Defendants dispute whether the Policy covers Leisure Tyme and
Leisure Tyme’s president, Defendant Gayle Hill, for the claims and damages alleged
by the Purchaser Defendants in the Underlying Litigations. (Doc. 1 at 10, ¶25; Doc.
9 at 2, ¶25; Doc. 42 at 3, ¶25.)
The Policy provides that NHIC “will pay all sums an ‘insured’ legally must
pay as damages because of ‘bodily injury’ or ‘property damage’ to which this
insurance applies caused by an ‘accident’ and resulting from ‘garage operations’

Purchaser Defendants Pankratz and Garwood and Janet Wolfe also named Leisure Tyme’s
president, Gayle Hill, as a defendant.

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At this time, only James McNally’s claims have been resolved through arbitration. After a
hearing held on June 11 and 12, 2012, the arbiter dismissed McNally’s claim of misrepresentation.
(Doc. 41-1 at 2.) The arbiter found that McNally had proved his claims of negligence and breach of
contract and awarded a total award of $82,717.60 to McNally. (Id. at 3.) The arbiter dismissed the
remaining claims with prejudice. (Id.)
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other than the ownership, maintenance or use of covered ‘autos.’” (Doc. 21-2 at 44.)
For the Policy to apply, the “accident” must occur in the coverage territory defined
by the Policy,6 and the “bodily injury” or “property damage” must occur during the
policy period. (Id.) The relevant definitions from the Policy are below:
SECTION VI—DEFINITIONS
A.

“Accident” includes continuous or repeated exposure to the
same conditions resulting in “bodily injury” or “property
damage.”

B.

“Auto” means a land motor vehicle, “trailer” or semitrailer.

C.

“Bodily injury” means bodily injury, sickness or disease
sustained by a person including death resulting from any of
these . . . .

H.

“Garage operations” means the ownership, maintenance or
use of locations for garage business and that portion of the
roads or other accesses that adjoin these locations. “Garage
operations” includes the ownership, maintenance or use of the
“autos” indicated in Section 1 of this Coverage Form as
covered “autos.”
Garage Operations” also include all
operations necessary of incidental to a garage business . . . .

L.

“Loss” means direct and accidental loss or damage. But for
Garagekeepers Coverage only, “loss” also includes any
resulting loss of use . . . .

O.

“Property damage” means damage to or loss of use of tangible
property.

Doc. 21-2 at 57-59.

The coverage territory includes, but is not limited to, the United States of America, the
territories and possessions of the United States of America, Puerto Rico, and Canada. (Doc. 21-2 at
56).

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The Policy also sets forth a range of conduct that, if engaged in by the
insured, precludes recovery. According to Section II.B’s exclusionary provisions of
the Policy:
This insurance does not apply to any of the following:
1.

“Bodily injury” or “property damage” expected or intended
from the standpoint of the “insured.”

2.

Liability assumed under any contract or agreement.

6.

“Property damage” to . . . Property in the “insured’s” care,
custody or control

14.

Loss of use of other property not physically damaged if caused
by . . . [a] delay or failure by [Leisure Tyme] or anyone acting
on Leisure Tyme’s behalf to perform a contract or agreement
in accordance with its terms.

Id. at 46, 47, 49.
II.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 56(a) provides that summary judgment shall
be granted “if the movant shows that there is no genuine dispute as to any material
fact and that the movant is entitled to judgment as a matter of law.” The district
court’s function is not “to weigh the evidence and determine the truth of the matter
but to determine whether there is a genuine issue for trial.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986). “The mere existence of some evidence to
support the non-moving party is not sufficient for denial of summary judgment;
there must be ‘sufficient evidence favoring the nonmoving party for a jury to return
a verdict for that party.’” Bailey v. Allgas, Inc., 284 F.3d 1237, 1243 (11th Cir. 2002)
(quoting Anderson, 477 U.S. at 249). “If the evidence is merely colorable, or is not
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significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at
249-50 (internal citations omitted).
The basic issue before the court on a motion for summary judgment is
“whether the evidence presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must prevail as a matter of law.”
See id. at 251-52. The moving party bears the burden of proving that no genuine
issue of material fact exists. O’Ferrell v. United States, 253 F.3d 1257, 1265 (11th
Cir. 2001). In evaluating the argument of the moving party, the court must view all
evidence in the light most favorable to the non-moving party, and resolve all
reasonable doubts about the facts in its favor. Burton v. City of Belle Glade, 178
F.3d 1175, 1187 (11th Cir. 1999). “If reasonable minds might differ on the
inferences arising from undisputed facts, then [a court] should deny summary
judgment.” Hinesville Bank v. Pony Exp. Courier Corp., 868 F.2d 1532, 1535 (11th
Cir. 1989) (citing Mercantile Bank & Trust Co. v. Fid. & Deposit Co., 750 F.2d 838,
841 (11th Cir. 1985)).
Once the movant satisfies his initial burden under Rule 56(a), the nonmoving party “must make a sufficient showing to establish the existence of each
essential element to that party’s case, and on which that party will bear the burden
of proof at trial.” Howard v. BP Oil Co., 32 F.3d 520, 524 (11th Cir. 1994) (citing
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). Otherwise stated, the nonmovant must “demonstrate that there is indeed a material issue of fact that
precludes summary judgment.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608
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(11th Cir. 1991). The non-moving party “may not rely merely on allegations or
denials in its own pleading; rather, its response must . . . set out specific facts
showing a genuine issue for trial.” Vega v. Invsco Group, Ltd., 432 F. App’x. 867,
870 (11th Cir. 2011) (quoting Fed. R. Civ. P. 56(e)(2)). “A mere ‘scintilla’ of evidence
supporting the [non-moving] party’s position will not suffice; there must be enough
of a showing that the jury could reasonably find for that party.” Walker v. Darby,
911 F.2d 1573, 1577 (11th Cir. 1990) (citation omitted). “[T]he nonmoving party
may avail itself of all facts and justifiable inferences in the record taken as a whole.”
Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998 (11th Cir. 1992). “Where the
record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation and citation
omitted).
III.

DISCUSSION

NHIC asserts that summary judgment should be granted in its favor because
(1) the Purchaser Defendants have not alleged violations of Truth in Lending Act, a
federal or state consumer credit act, or other similar statute, law or ordinance as
required by the Policy’s Garage Policy Extension Endorsement; (2) the damages
alleged by the Purchaser Defendants do not constitute “bodily injury” or “property
damage” arising out of an “accident” as those terms are contemplated in the Garage
Coverage Form section of the Policy; and (3) the Policy’s Contractual Liability
Exclusion, Care Custody or Control Exclusion, Loss of Use Exclusion, and Expected
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or Intended Injury Exclusion preclude coverage under the Garage Coverage Form.
The Court will address each argument.
A. Governing Law
Pursuant to Alabama conflict of laws principles, this Court will apply Florida
law to determine the scope of coverage under the Policy and NHIC’s duty to defend
Leisure Tyme and Gayle Hill for the claims brought by the Purchaser Defendants.
“A federal court in a diversity case is required to apply the laws, including
principles of conflict of laws, of the state in which the federal court sits.” O’Neal v.
Kennamer, 958 F.2d 1044, 1046 (11th Cir. 1992) (citing Goodwin v. George Fischer
Foundry Sys., Inc., 769 F.2d 708, 711 (11th Cir. 1985)). Adhering to the principle of
lex loci contractus, Alabama courts hold that contract claims are governed by the
laws of the state in which the contract was made, unless the contracting parties
chose a particular state’s laws to govern their agreement. Cherry, Bekaert &
Holland v. Brown, 582 So. 2d 502, 506 (Ala. 1991). Insurance policies are
“essentially like all other contracts,” Hartford Fire Ins. Co. v. Shapiro, 117 So. 2d
348, 352 (Ala. 1960), and are therefore subject to the lex loci contractus doctrine.
Because this dispute involves an interpretation of an insurance policy issued in the
State of Florida, Florida law must govern.7

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Though Purchaser Defendants do not dispute that Florida substantive law controls the
interpretation of the policy, they argue that, under the principle of lex loci delicti, “Alabama tort law
will determine the substantive issues, including what remedies are available.” (Doc. 29 at 13).
Whereas the matter currently before the Court is a contract dispute, Florida law shall control the
interpretation of the Policy and the terms therein. See Prudential Prop. & Cas. Ins. Co. v. Swindal,
622 So. 2d 467, 470 (Fla. 1993) (“Florida law has long followed the general rule that tort law
principles do not control judicial construction of insurance contracts.”).

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B. Duty To Defend and Duty To Indemnify
“Florida law provides that insurance contracts are construed in accordance
with the plain language of the policies as bargained for by the parties.” AutoOwners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000). The duty to defend is
determined by the allegations in the complaint. Jones v. Fla. Ins. Guar. Ass’n, 908
So. 2d 435, 443 (Fla. 2005). “[A]n insurer’s duty to defend its insured against a
legal action arises when the complaint [in the underlying case] alleges facts that
fairly and potentially bring the suit within policy coverage.” Id. at 442-43. “[T]he
duty to indemnify is narrower than the duty to defend and thus cannot exist if there
is no duty to defend.” WellCare of Fla., Inc. v. Am. Int’l Specialty Lines Ins. Co., 16
So. 3d 904, 906 (Fla. Dist. Ct. App. 2009). “[U]nder Florida law an insurer’s duty to
indemnify is determined by analyzing the policy coverages in light of the actual
facts of the underlying case.” Am. Home Assurance Co. v. Vreeland, 2006 WL
1037111, at *1 (M.D. Fla. Apr. 19, 2006). Therefore, the Court must look to the
allegations in the Underlying Litigations as compared with the coverage afforded
under Leisure Tyme’s insurance policy to determine whether NHIC has any duty to
defend or indemnify Leisure Tyme. See Gen. Fid. Ins. Co. v. Foster, 808 F. Supp. 2d
1315, 1319 (S.D. Fla. 2011).
C. Coverage Under the Policy
1. Garage Policy Extension Endorsement
In an apparent effort to anticipate the Purchaser Defendants’ arguments,
NHIC first asserts that it owes no coverage to Leisure Tyme under the Garage
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Policy Extension Endorsement (the “GPEE”), which affords coverage for “the
unintentional violation of any Federal or State Consumer Credit Act including but
not limited to the Truth in Lending Act, or other similar statute, law or ordinance . .
. .” (Doc. 21-2 at 90.) However, in responding to NHIC’s motion for summary
judgment, the Purchaser Defendants rely exclusively on Garage Coverage Form for
coverage, (Doc. 29 at 8-18), and therein is where the dispute lies.8 Accordingly, the
Court’s analysis will concentrate whether NHIC has a duty to defend and indemnify
Leisure Tyme under the Garage Coverage Form portion of the Policy.
2. Garage Coverage Form
a.

“Accident”

The Policy covers “damages because of ‘bodily injury’ or ‘property damage’ to
which this insurance applies caused by an ‘accident’ . . . .” (Doc. 21-2 at 44.)
Confusingly, though the Policy defines “accident,” both parties argue that the term
is undefined and that a resort to a judicially constructed definition is necessary.
(See Doc. 21 at 16; Doc. 21-3 at 21; Doc. 29 at 5, 9.) Because the parties ignore that
“accident” is a defined term, neither NHIC nor Purchaser Defendants offers any
arguments as to how the Policy’s definition is to be interpreted. The meaning of the
Policy’s definition – “‘accident’ includes continuous or repeated exposure to the same
conditions resulting in ‘bodily injury’ or ‘property damage’” (Doc. 21-2 at 57) – is far

Because coverage under the GPEE is not at issue, the Court need not address NHIC’s argument
that Mr. Cammauf’s deceptive trade practices claim alleges an unintentional violation of a consumer
credit statute.

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from self-evident, and briefing would have been useful. However, the Court need
not dwell on this shortcoming because, as explained below, summary judgment is
due to be granted to Plaintiff notwithstanding the meaning of “accident” because 1)
the record establishes that the Purchaser Defendants have not suffered any bodily
injury as defined by the Policy and as understood under Florida law and 2) any
property damage suffered by the Purchaser Defendants is expressly excluded from
coverage.
b.

“Bodily Injury”

The Policy defines “bodily injury” as “bodily injury, sickness or disease
sustained by a person including death resulting from any of these.” (Doc. 21-2 at
57). NHIC claims that Purchaser Defendants’ claims of mental anguish do not
constitute “bodily injury” because Florida’s “impact rule” applies. (Doc. 21 at 12-13).
The impact rule requires that a plaintiff suffer a physical impact before recovering
for emotional distress caused by the negligence of another. See R.J. v. Humana of
Fla., Inc., 652 So. 2d 360, 362 (Fla. 1995). The rule operates as “a means for
‘assuring the validity of claims for emotional or psychic damages.’” Hagan v. CocaCola Bottling Co., 804 So. 2d 1234, 1236 (Fla. 2001) (quoting R.J., 652 So. 2d at
363). “Florida’s version of the impact rule has more aptly been described as having
a ‘hybrid’ nature, requiring either impact upon one’s person or, in certain situations,
at a minimum the manifestation of emotional distress in the form of a discernible
physical injury or illness.” Gracey v. Eaker, 837 So. 2d 348, 355 (Fla. 2002) (citing
Kush v. Lloyd, 616 So. 2d 415, 422 (Fla. 1992)).
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If the plaintiff has not suffered an impact, there are two possible methods to
recovery. One is that the complained-of mental anguish be “manifested by physical
injury,” the plaintiff must be “involved” in the incident by seeing, hearing, or
arriving on the scene as the traumatizing event occurs, and the plaintiff must suffer
the complained-of mental distress and accompanying physical impairment “within a
short time” of the incident. Willis v. Gami Golden Glades, LLC, 967 So. 2d 846, 850
(Fla. 2007). The second applies “in a certain very narrow class of cases in which the
foreseeability and gravity of the emotional injury involved, and lack of
countervailing policy concerns, have surmounted the policy rationale undergirding
the application of the impact rule.”9 Fla. Dep’t of Corr. v. Abril, 969 So. 2d 201, 206
(Fla. 2007) (quoting Rowell, 850 So. 2d at 478).
Purchaser Defendants argue that their claims against Leisure Tyme satisfy
the impact rule because they suffered physical injuries – namely, significant
pecuniary losses, damage to their credit-worthiness, and other financial
consequences. (Doc. 29 at 12.) However, these injuries do not constitute a physical
injury to their person. See Eagle-Picher Indus., Inc. v. Cox, 481 So. 2d 517 (Fla.
Dist. Ct. App. 1985) (“The essence of impact . . . is that the outside force or
substance . . . touch or enter into the plaintiff’s body.”). Here, the injury or impact

For instance, Florida’s impact rule does not apply to recognized intentional torts that result in
predominantly emotional damages, such as defamation, invasion of privacy and intentional infliction
of emotional distress, Rowell v. Holt, 850 So. 2d 474, 478 n. 1 (Fla. 2003), nor does it apply to
“freestanding torts” that exist regardless of whether emotional damages may accompany these torts
– such as wrongful birth, Kush, 616 So. 2d at 422.
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is to the Purchaser Defendants’ bank accounts and credit scores – not to the
Purchaser Defendants themselves.
Purchaser Defendants argue alternatively that the impact rule does not
apply because their mental anguish is accompanied by manifestations of physical
symptoms. (Doc. 29 at 12.) However, there is no evidence that Purchaser
Defendants meet the three-part test in Willis, which requires not only physical
manifestations of symptoms, but also involvement in the incident “by seeing,
hearing, or arriving on the scene as the traumatizing event occurs,” and
manifestation of physical symptoms “within a short time” of the incident. Willis,
967 So. 2d at 850. Furthermore, Purchaser Defendants have offered no policy
arguments that would lead this Court to circumvent application of the impact rule,
and this Court finds that no special exception is justified under the circumstances of
this case.
Moreover, Purchaser Defendants generally fail to provide any evidence as to
when their physical symptoms developed and to connect their symptoms to the
alleged accident. Under the terms of the Policy, NHIC does not have a duty to
indemnify Leisure Tyme unless there was a bodily injury which occurred between
June 1, 2008 and March 13, 2009, the date the Policy was cancelled. (Doc. 21-2 at
44; Doc. 21-1 at 2) “Florida courts follow the general rule that the time of
occurrence within the meaning of an indemnity policy is the time at which the
plaintiff’s injury first manifests.” See Am. Motorists Ins. Co. v. S. Sec. Life Co., 80
F. Supp. 2d 1280, 1284 (M.D. Ala. 2000) (citing Travelers Ins. Co., v. C.J. Gayfer’s &
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Co., 366 So. 2d 1199, 1202 (Fla. Dist. Ct. App. 1979)). Purchaser Defendants submit
no medical records or affidavits, but rely exclusively on deposition testimony, the
majority of which fails to indicate dates when symptoms first developed. Based on
the factual record before it, the Court cannot reasonably infer that the Purchaser
Defendants’ physical symptoms manifested between June 1, 2008 and March 13,
2009. Indeed, the evidence that Purchaser Defendants have offered demonstrates
that some of their symptoms developed either before or after the Policy period. For
instance, Janet Wolfe’s heart pains and trip to the emergency room manifested in
November 2009 – eight months after the Policy was cancelled. (Doc. 30-9 at 15-16,
18.) Additionally, James McNally testified that he had been seeking medical
treatment for post-traumatic stress symptoms he suffered from serving in Vietnam
before the issues with Leisure Tyme arose, (Doc. 32 at 78-80), and the Court cannot
simply speculate that his complaints of stress, sleep deprivation, and a short temper
were caused by Leisure Tyme and not by his preexisting post-traumatic condition.
For all these reasons, the Purchaser Defendants have not made a significant
showing as to a genuine dispute of whether they suffered a “bodily injury” under
Florida law.
c.

“Property Damage”

The Purchaser Defendants contend that NHIC has a duty to defend under
the Policy’s “property damage” provision because each complaint requests
compensatory damages, “which would include the loss of use of the trade-in RVs.”
(Doc. 29 at 14.) Plaintiff disputes that the underlying complaints, when fairly read,
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allege claims for the loss of use of their old RVs. (Doc. 37 at 11.) Though the
language of the complaint need not specifically include the phrase “loss of use,” see
McCreary v. Fla. Residential Prop. & Cas. Joint Underwriting Ass’n, 758 So. 2d 692,
695 (Fla. Dist. Ct. App. 2000), it must allege facts that demonstrate potential
coverage under the policy. Jones, 908 So. 2d at 443. In any event, even assuming
that the Purchaser Defendants’ complaints in the Underlying Litigations assert
claims for the loss of use of the RVs and that such loss of use constitutes “property
damage,”10 the Policy contains two exclusions that apply to deny coverage.
First, Exclusion 6 precludes coverage for “‘[p]roperty damage’ to . . .
[p]roperty in the ‘insured’s’ care, custody, or control.” (Doc. 21-2 at 47). “Florida
holds that where the insured has possessory control of the property, the exclusion
applies.” Essex Ins. v. Rodgers Bros. Servs., Inc., 2007 WL 2298356, at *8 (M.D.
Fla. Aug. 7, 2007) (internal punctuation omitted). It is undisputed that the
Purchaser Defendants’ loss of use occurred after they traded in their RVs and that
the property was in Leisure Tyme’s possessory control. (Doc. 30-7 at 37-38; Doc. 308 at 44-45, Doc. 30-10 at 38-39; Doc. 32 at 16). Additionally, under the Policy’s Loss
The Court is mindful that “[a]ny doubts as to whether there is a duty to defend in a particular
case must be resolved against the insurer and in favor of the insured.” Category 5 Mgmt. Group,
LLC v. Companion Prop. & Cas. Ins. Co., 76 So. 3d 20, 23 (Fla. Dist. Ct. App. 2011). While none of
the complaints in the Underlying Litigations allege specifically “loss of use,” James McNally and
Rodney Cammauf arguably assert facts, which, when fairly read, assert the loss of tangible property.
McNally pleads that he “received notice from Bank of America in 2009 that the 2004 Newmar had
been sold at auction . . .” (Doc. 30-5 at 7), and Cammauf pleads that “[o]n July 7, 2009, [he] received
notice from GEMB Lending stating the 2001 Fleetwood would be sold at auction. On information
and belief, the RV was sold . . . .” Both Mr. Pankratz’s and the Wolfes’ complaint state that they
traded in their used RVs to Leisure Tyme (Doc. 30-3 at 5; Doc. 30-4 at 4-6), and that Leisure Tyme
failed to retire their loans prior to closing and filing for bankruptcy (Doc. 30-3 at 5-7; Doc. 30-4 at
5-6). When fairly read, these allegations arguably make out loss of use.
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of Use exclusion, there is no coverage for the “[l]oss of use of other property not
physically damaged if caused by . . . a delay or failure by [Leisure Tyme] or anyone
acting on [Leisure Tyme’s] behalf to perform a contract or agreement in accordance
with its terms.” (Doc. 21-2 at 49). It is unreasonable to suggest that this exclusion
does not apply when Purchaser Defendants’ claims stem from the failure of Leisure
Tyme to perform contractual obligations to satisfy the liens on the traded-in RVs.
The Purchaser Defendants do not even attempt an argument to the contrary.
Because these two provisions each work to exclude coverage, the Court need not
reach whether the Policy’s Contractual Liability Exclusion also applies.
CONCLUSION
NHIC does not have a duty to defend or indemnify Leisure Tyme or Gayle
Hill in the Underlying Litigations because the Purchaser Defendants have suffered
neither a “bodily injury” nor non-excluded “property damage” within the meaning of
the Policy. For the reasons stated above, the motion of Plaintiff for summary
judgment (Doc. 21) is GRANTED.
DONE and ORDERED this 23rd day of August, 2012.
/s/ Callie V. S. Granade
UNITED STATES DISTRICT JUDGE

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