Mid-Continent Casualty Company v. Hansen Homes of South Florida, Inc.

Filing 39

OPINION AND ORDER denying 32 Defendant's Second Motion for Judgment on the Pleadings; and granting 34 Plaintiff's Motion for Partial Summary Judgment. See Opinion and Order for details. Signed by Judge John E. Steele on 2/6/2015. (MAW)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
MID-CONTINENT
COMPANY,
a
corporation,

CASUALTY
foreign

Plaintiff,
v.

Case No: 2:14-cv-35-FtM-29CM

HANSEN
HOMES
FLORIDA, INC.,
corporation,

OF
SOUTH
a Florida

Defendant.

OPINION AND ORDER
This matter comes before the Court on the following motions:
(1) Defendant’s Second Motion for Judgment on the Pleadings (Doc.
#32) filed on November 3, 2014 and Plaintiff’s Response (Doc. #33)
filed on November 20, 2014; and (2) Plaintiff's Motion for Partial
Summary

Judgment

(Doc.

#34)

filed

on

November

21,

2014

and

Defendant’s Response and Cross-Motion for Summary Judgment (Doc.
#38) filed on January 20, 2015.

For the reasons set forth below,

Defendant’s motions are denied and Plaintiff’s motion is granted.
I.
This case involves a dispute between Plaintiff Mid-Continent
Casualty Company (Mid-Continent) and Defendant Hansen Homes of
South Florida, Inc. (Hansen) regarding the proper interpretation
of insurance policies.
follows:

The relevant undisputed facts are as

Between 2005 and 2009, Hansen installed Chinese drywall in
homes it built in Cape Coral, Florida.

After the homes were

completed, the homeowners sued Hansen for injuries that occurred
as a result of the Chinese drywall.

During the same time period,

Hansen purchased four insurance policies (the Policies) from MidContinent.

Pursuant

to

Policies,

Mid-Continent

defended

the

Chinese drywall claims on behalf of Hansen.

Mid-Continent settled

a portion of the claims in November 2011.

The remaining federal

claims

were

proceeding.
multidistrict

consolidated

into

a

multidistrict

litigation

On March 15, 2013, the judge presiding over the
litigation

approved

a

Settlement) of the consolidated claims.

settlement

(the

MDL

In total, Mid-Continent

paid in excess of $1.3 million to settle the Chinese drywall cases
brought against Hansen.
Mid-Continent then sought to recoup from Hansen deductible
payments for the settled claims.
deductibles and refused to pay.

Hansen disagreed that it owed
As a result, Mid-Continent filed

suit alleging that Hansen is in breach of the Policies.

Mid-

Continent

owes

seeks

(1)

a

declaratory

judgment

that

Hansen

deductible payments; and (2) damages for Hansen’s alleged breach
of contract.

In response, Hansen brought a counterclaim seeking

a declaratory judgment that no deductibles are owed.

Both parties

now move for partial summary judgment as to Hansen’s obligation to
pay deductibles for the claims resolved by the MDL Settlement.

2

Summary judgment is appropriate only when the Court is satisfied
that “there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
II.
As with all contracts, the interpretation of an insurance
contract is a question of law to be decided by the Court.

Feaz v.

Wells Fargo Bank, N.A., 745 F.3d 1098, 1104 (11th Cir. 2014); Vitas
Healthcare Corp. v. Evanston Ins. Co., 303 F. App'x 856, 857 (11th
Cir. 2008).

“Under Florida law, if the terms of an insurance

contract are clear and unambiguous, a court must interpret the
contract in accordance with its plain meaning, and, unless an
ambiguity exists, a court should not resort to outside evidence or
the complex rules of construction to construe the contract.”

Key

v. Allstate Ins. Co., 90 F.3d 1546, 1549 (11th Cir. 1996).
There are no material facts in dispute.
that the Policies are unambiguous.1

Both parties agree

Both parties also agree that

Mid-Continent resolved numerous Chinese drywall claims pursuant to
the MDL Settlement.

The parties simply disagree as to whether the

1

To be sure, the parties advance competing interpretations of the
Policies.
However, “ambiguity does not exist simply because a
contract requires interpretation . . . .” Key v. Allstate Ins.
Co., 90 F.3d 1546, 1549 (11th Cir. 1996).

3

Policies require Hansen to pay deductibles for those resolved
claims.
The Policies include three categories of coverage:

“bodily

injury liability,” “property damage liability,” and “bodily injury
liability

and/or

property

damage

liability

combined.”

The

Policies define “Bodily Injury” to mean “bodily injury, sickness
or disease sustained by a person, including death resulting from
any of these at any time.”

(Doc. #26-8, p. 24.)

The Policies

define “Property damage” to mean: “(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 cause 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.”

(Id. at 26.)

The Policies also contain the following endorsement2 which
specifies the deductible applicable to each coverage category:

2

This excerpt is taken from Policy No. 04-GL-000736013 (Doc. #268). With the exception of the amount of the “PER CLAIM” Property
Damage Liability deductible, the other Policies are identical.
The pending motions concern only the applicability of the
deductible, not its amount. To avoid confusion, the Court will
treat the Policies as identical for the purposes of the pending
motions. Thus, any reference to a “$5,000 deductible” should be
understood to mean “the deductible amount specified by the Policy
applicable to the individual claim in question.”
4

(Doc. #26-8, p. 11.)

The Endorsement states:

“Our obligation

under the Bodily Injury Liability and Property Damage Liability
Coverages to pay damages on your behalf applies only to the amount
of damages in excess of any deductible amounts stated in the
Schedule above as applicable to such coverages.”

(Id.)

The

Endorsement further states that if the deductible amount is on a
per claim basis, that deductible applies as follows:
a.

Under Bodily Injury Liability Coverage, to all
damages and allocated loss expenses sustained by
any one person because of “bodily injury”;

b.

Under Property Damage Liability Coverage, to all
damages and allocated loss expenses sustained by
any one person because of “property damage”; or

c.

Under Bodily Injury Liability and/or Property
Damage Liability Coverage Combined to all
damages and allocated loss expenses sustained by
any one person because of:
(1)

“Bodily injury;”

(2)

“Property damage;” or

(3)

“Bodily injury” and
combined . . . .”

(Id. at 11-12.)

5

“property

damage”

The Court finds no ambiguity in the Policies. The plain terms
of the Policies require Hansen to pay a deductible of $5,000 for
each claim involving “Property Damage Liability,” but to pay no
deductible

for

claims

involving

“Bodily

Injury

Liability”

or

claims involving “Bodily Injury Liability and/or Property Damage
Liability Combined.”

The issue is whether the claims resolved by

the MDL Settlement involved “Property Damage Liability” alone, and
thus had the $5,000 deductible, or were “combined” claims.
The Policies do not specifically define “combined” property
damage

and

bodily

established

that

injury
in

claims

construing

or

liability.

terms

“It

appearing

in

is

well

insurance

policies, Florida courts commonly adopt the plain meaning of words
contained in legal and non-legal dictionaries.”

Cont'l Cas. Co.

v. Wendt, 205 F.3d 1258, 1263 (11th Cir. 2000) (quotation omitted).
Though the Eleventh Circuit does not appear to have addressed the
issue,

in

U.S.

Aviation

Underwriters,

Inc.

v.

Fitchburg-

Leominster, Flying Club, Inc., the First Circuit stated that
“combined

liability

coverage

for

bodily

injury

and

property

damage” was “merely an amalgam of the risks covered by the narrower
categories . . . .”

42 F.3d 84, 85 n.2 (1st Cir. 1994).

Likewise,

the Court concludes that a “combined” claim is simply one that
includes both property damage and bodily injury in the same claim.
A claim which asserted only property damage is subject to the
$5,000 deductible; a claim which asserted bodily injury damage

6

alone, or both bodily injury damage and property damage, is not
subject to any deductible.
In pertinent part, the MDL Settlement places 95% of the
settlement funds into a pool for “Repair and Relocation Damages.”
(Doc. #24-6.)

The remaining 5% of the settlement funds is divided

equally between pools for “Bodily Injury” damages and “Other
Losses.”

(Id.)

The parties agree that “Repair and Relocation

Damages” fall under the Policies’ coverage for property damage.
Thus there is no dispute that the MDL Settlement triggered the
Policies’ coverage for both property damage and bodily injury.
Indeed, as a result of the MDL Settlement, Mid-Continent obtained
releases absolving it from further liability for both property
damage and bodily injury.

(Doc. #38-3, ¶ 10.)

However, the MDL

Settlement does not compensate the plaintiffs in the multidistrict
litigation (the MDL Plaintiffs) via a lump sum.

Instead, the MDL

Settlement funds are allocated to separate pools for property
damage, bodily injury, and other losses.
The MDL Settlement provides that MDL Plaintiffs may access
the settlement funds in the three pools by filling out claims forms
setting forth the pertinent details of their injuries.
4.)

(Doc. #26-

Once all claims forms have been received, the funds in each

pool are to be distributed to the MDL Plaintiffs according to a
formula set forth in the MDL Settlement. (Id.) Each MDL Plaintiff
must repeat this process for each pool, and the Special Master

7

tasked with allocating MDL Settlement funds makes independent
determinations for each pool.

(Id.)

For example, if an MDL

Plaintiff suffered both property damage and bodily injury, he must
make two claims: one to receive his share of the “Repair and
Relocation Damages” pool and one to receive his share of the
“Bodily Injury” pool.

Those two claims are evaluated by the

Special Master independently.

(Id.)

Assuming both claims are

approved, the MDL Plaintiff’s compensation for each claim is paid
from separate sources of funds.
Applying

the

Policies

to

(Id.)
the

MDL

Settlement,

the

Court

concludes that the claims resolved by the MDL Settlement must be
analyzed independently for the purpose of determining whether
Hansen must pay a deductible.

The fact that the MDL Settlement

resolves numerous claims at once does not mean that the claims
should be treated identically for the purposes of determining
Hansen’s obligation to pay deductibles.

To the contrary, the

claims

the

are

treated

independently

by

Special

Master

administering the MDL Settlement and successful MDL Plaintiffs
will receive compensation directly traceable to a particular type,
or types, of damages.
Therefore,

if

an

individual

MDL

Plaintiff

was

awarded

compensation solely via the MDL Settlement’s Repair and Relocation
Damages pool, Hansen owes a $5,000 deductible for that claim.

No

deductible is owed if an MDL Plaintiff was awarded compensation

8

via both the Repair and Relocation Damages pool and the Bodily
Injury pool.

Likewise, no deductible is owed if an MDL Plaintiff

was awarded compensation only from the Bodily Injury pool.
case

will

payments

now

proceed

Hansen

owes

to

determine

and

the

amount

Mid-Continent’s

of

damages

The

deductible
(if

any)

resulting from Hansen’s failure to pay.
Accordingly, it is now
ORDERED:
1.

Defendant’s Second Motion for Judgment on the Pleadings

(Doc. #32) and Cross-Motion for Summary Judgment (Doc. #38) are
DENIED.
2.

Plaintiff's Motion for Partial Summary Judgment (Doc.

#34) is GRANTED as set forth herein pending determination of the
remaining issues in the case.
DONE AND ORDERED at Fort Myers, Florida, this
February, 2015.

Copies: Counsel of record

9

6th

day of