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

Filing 51

OPINION AND ORDER granting in part and denying in part 48 Motion for summary judgment. The Clerk shall enter judgment in favor of Plaintiff Mid-Continent Casualty Company and against Defendant Hansen Homes of South Florida, Inc. in the amount of $305,000, terminate all pending motions and deadlines as moot, and close the file. All motions for attorney's fees shall be filed no later than 14 days from the entry of judgment. Signed by Judge John E. Steele on 7/1/2015. (RKR)

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 Plaintiff's Motion for
Summary Judgment (Doc. #48) filed on June 3, 2015. Defendant filed
a Response (Doc. #50) on June 17, 2015.

For the reasons set forth

below, the motion is granted in part and denied in part.
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.

The relevant undisputed facts are as

follows:
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.

The Policies include three categories of coverage:

“bodily

injury

liability,”

“bodily

injury

liability

combined.”

“property
and/or

damage

property

liability,”
damage

and

liability

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 endorsement 1 which
specifies the deductible applicable to each coverage category:

1

This excerpt is taken from Policy No. 04-GL-000736013 (Doc. #268), which lists a $5,000 per claim deductible. The other Policies
have different deductible amounts.
For the purposes of this
litigation, Mid-Continent has agreed that a $5,000 deductible, the
lowest amount listed in the Policies, will apply to each eligible
claim. (Doc. #48, p. 2.)

2

(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.)

3

“property

damage”

Pursuant to the 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 consolidated into a multidistrict litigation (the
Multidistrict Litigation).

On March 15, 2013, the judge presiding

over the Multidistrict Litigation approved a settlement (the MDL
Settlement) of the consolidated claims.

In pertinent part, the

MDL Settlement placed 95% of the settlement funds into a pool for
“Repair and Relocation Damages,” which the parties agree falls
under the Policies’ property damage coverage.

(Doc. #24-6.)

The

remaining 5% of the settlement funds was divided equally between
pools for “Bodily Injury” damages and “Other Losses.”

(Id.)

MDL

Plaintiffs accessed the settlement funds by filing separate claim
forms for the applicable damage pool(s).

(Doc. #48-5, ¶ 5.)

The

Special Master administering the MDL Settlement reviewed these
applications and dispersed funds from the various damage pools
accordingly.

(Id. at ¶ 6.)

Following

the

MDL

Settlement,

Mid-Continent

sought

to

recoup from Hansen deductible payments for the settled claims.
Hansen disagreed that it owed deductibles and refused to pay.

As

a result, Mid-Continent filed suit alleging that Hansen is in
breach of the Policies.

On February 6, 2015, the Court issued an

Opinion and Order (Doc. #39) (the Partial Summary Judgment Order)

4

granting Mid-Continent’s motion for partial summary judgment.

In

that Order, the Court held that a settled claim which asserted
only property damage is subject to the $5,000 deductible, while a
claim which asserted bodily injury damage alone, or both bodily
injury

damage

deductible.

and

property

damage,

is

not

subject

to

any

Applying that conclusion to the MDL Settlement, the

Court further held that the claims resolved by the MDL Settlement
must be analyzed independently to determine whether Hansen must
pay a deductible.

Accordingly, the Court concluded that if an

individual MDL Plaintiff was awarded compensation solely via the
MDL Settlement’s Repair and Relocation Damages pool, Hansen owed
a deductible.

If an MDL Plaintiff was awarded compensation via

the MDL Settlement’s Bodily Injury Pool, or via both the Repair
and Relocation Damages pool and the Bodily Injury pool, the Court
concluded that no deductible is owed.
Mid-Continent now moves for summary judgment, seeking a final
determination of the total amount owed by Hansen.

According to

Mid-Continent, Hansen owes a $5,000 deductible for 89 (or, in the
alternative, 61) claims settled by Mid-Continent.

Hansen agrees

that it owes a $5,000 deductible for each qualifying claim, but
contends that there are only 48 such claims.
II.
Summary

judgment

is

appropriate

only

when

the

Court

is

satisfied that “there is no genuine issue as to any material fact

5

and that the moving party is entitled to judgment as a matter of
law.”

Fed. R. Civ. P. 56(a).

“An issue of fact is ‘genuine’ if

the record taken as a whole could lead a rational trier of fact to
find for the nonmoving party.”

Baby Buddies, Inc. v. Toys “R” Us,

Inc., 611 F.3d 1308, 1314 (11th Cir. 2010).

A fact is “material”

if it may affect the outcome of the suit under governing law.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

“A

court must decide ‘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.’”
Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th
Cir. 2004) (citing Anderson, 477 U.S. at 251).
In ruling on a motion for summary judgment, the Court views
all evidence and draws all reasonable inferences in favor of the
non-moving party.

Scott v. Harris, 550 U.S. 372, 380 (2007); Tana

v. Dantanna’s, 611 F.3d 767, 772 (11th Cir. 2010).

However, “if

reasonable minds might differ on the inferences arising from
undisputed facts, then the court should deny summary judgment.”
St. Charles Foods, Inc. v. America’s Favorite Chicken Co., 198
F.3d 815, 819 (11th Cir. 1999) (quoting Warrior Tombigbee Transp.
Co. v. M/V Nan Fung, 695 F.2d 1294, 1296-97 (11th Cir. 1983)
(finding summary judgment “may be inappropriate even where the
parties agree on the basic facts, but disagree about the factual
inferences that should be drawn from these facts”)).

6

“If a

reasonable fact finder evaluating the evidence could draw more
than one inference from the facts, and if that inference introduces
a genuine issue of material fact, then the court should not grant
summary judgment.”

Allen v. Bd. of Pub. Educ., 495 F.3d 1306,

1315 (11th Cir. 2007).
III.
The Court finds that there are no genuine issues as to any
facts material to the Court’s determination of the number of claims
for which Hansen owes deductibles.
parties

agree

that

qualifying claim.

Hansen

owes

a

As an initial matter, the
$5,000

deductible

for

each

The parties also agree that there were 48 MDL

Plaintiffs who were compensated via the MDL Settlement’s Repair
and Relocation Damages pool, none of whom were also compensated
via the Bodily Injury pool.

Hansen concedes that it owes a $5,000

deductible for these 48 claims.

(Doc. #50, p. 3.)

According to

Hansen, its deductible obligations are limited to those 48 claims.
Under a strict reading of the Court’s Partial Summary Judgment
Order, Hansen is correct, as there are no additional MDL Plaintiffs
compensated via the Repair and Relocation Damages pool.

However,

in light of testimony from Jacob Woody (Woody), an employee of the
Special Master administering the MDL Settlement, the categories of
claims for which Hansen owes deductibles must be expanded.
The necessary expansion concerns the portion of the MDL
Settlement set aside to compensate MDL Plaintiffs for “Other

7

Losses.”

In his affidavit (Doc. #48-5), Woody explains that

compensation

for

“Other

Losses”

consisted

of

multiple

sub-

categories, three of which are relevant here: (1) “Foreclosure or
Short

Sale”

compensation;

(2)

“Lost

Rent,

Use

or

Sales”

compensation; and (3) “Alternative Living Expenses” compensation.
(Id.

at

¶¶

12-18.)

To

receive

“Foreclosure

or

Short

Sale”

compensation, the claimant was required to show that a foreclosure
or short sale arose from the reduced value of the affected property
“as a result of property damage caused by Chinese Drywall.”
#48-5, ¶ 12.)

(Doc.

To receive “Lost Rent, Use or Sales” compensation,

the claimant was required to show an inability to use, rent or
sell the affected property “as a result of property damage caused
by Chinese Drywall.”

(Id. at ¶ 14.)

To receive “Alternative

Living Expenses” compensation, the claimant was required to show
losses arising from the need to vacate the affected property prior
to remediation “as a result of property damage caused by Chinese
Drywall.”

(Id. at ¶ 18.)

As explained in detail in the Partial Summary Judgment Order,
the Court concluded that Hansen owes deductibles for all MDL
Plaintiffs who were compensated for property damage, provided that
those MDL Plaintiffs were not also compensated for bodily injury.
When the Court applied this determination to the MDL Settlement,
it was under the assumption that only source of property damage
compensation was the Repair and Relocation Damages pool.

8

In light

of Woody’s uncontroverted testimony, the Court now recognizes that
this

assumption

was

incorrect.

It

is

indisputable

that

“Foreclosure or Short Sale” compensation, “Lost Rent, Use or Sales”
compensation, or “Alternative Living Expenses” compensation were
additional sources of property damage compensation and, therefore,
are functionally identical to compensation via the Repair and
Relocation Damages pool.

Thus, the Court concludes that Hansen

also owes deductibles for MDL Plaintiffs who received “Foreclosure
or

Short

Sale”

compensation,

“Lost

Rent,

Use

or

Sales”

compensation, and/or “Alternative Living Expenses” compensation,
provided

that

those

MDL

Plaintiffs

did

not

also

receive

compensation from the Bodily Injury Pool.
As calculated by Woody, 21 MDL Plaintiffs received such
compensation.

(Id. at Ex. B.)

However, 10 of those 21 were among

the 48 MDL Plaintiffs who received compensation from the Repair
and Relocation Damages Pool.

(Id.)

Thus, expanding the scope of

Hansen’s deductible obligations to account for the claims of MDL
Plaintiffs who received “Foreclosure or Short Sale” compensation,
“Lost Rent, Use or Sales” compensation, or “Alternative Living
Expenses” compensation results in 11 additional MDL Plaintiffs,
for a total of 59 claims for which deductibles are owed.
Mid-Continent

also

seeks

to

recover

deductibles

for

an

additional 28 MDL Plaintiffs whose claims were resolved by the MDL
Settlement but for whom no evidence exists as to the nature of

9

their claims.
Judgment

As the Court explained in the Partial Summary

Order,

Hansen

owes

deductibles

only

for

those

MDL

Plaintiffs who were compensated for property damage via the MDL
Settlement.

Mid-Continent has provided no evidence of the type of

compensation sought by these 28 additional MDL Plaintiffs. Indeed,
the records compiled by Woody suggest that these MDL Plaintiffs
did

not

apply

Settlement.

for

or

receive

any

(Doc. #48-5, Ex. B.)

compensation

from

the

MDL

Thus, the amounts paid by Mid-

Continent into the MDL Settlement pools did not compensate these
28 MDL Plaintiffs for property damage.
concludes

that

the

Policies

do

not

Accordingly, the Court
obligate

Hansen

to

pay

deductibles in connection with these MDL Plaintiffs.
Lastly, Mid-Continent argues that Hansen owes deductibles for
two state court Chinese drywall claims which Mid-Continent settled
outside of the Multidistrict Litigation.

Mid-Continent represents

that Hansen has stipulated that these two settled claims were for
property damage only.

(Doc. #48, p. 2.)

Mid-Continent also

provided its liability assessments for these two claims, which
demonstrate that the claimants did not seek compensation for bodily
injury.

(Doc. #48-2.)

Hansen offers no argument as to why

deductibles are not owed for these two claims, nor does it contest
that it has stipulated that these two claims were for property
damage only.

Accordingly, the Court concludes that these two

claims should be added to the 59 qualifying MDL Plaintiffs, for a

10

total of 61 claims for which deductibles are owed.

As detailed

above, the parties agree that Hansen owes a $5,000 deductible for
each eligible claim.

Thus, judgment shall be entered in favor of

Mid-Continent in the amount of $305,000.
Accordingly, it is now
ORDERED:
1.

Plaintiff's Motion for Summary Judgment (Doc. #48) is

GRANTED IN PART AND DENIED IN PART as set forth herein.
2.

The Clerk shall enter judgment in favor of Plaintiff

Mid-Continent Casualty Company and against Defendant Hansen Homes
of South Florida, Inc. in the amount of $305,000, terminate all
pending motions and deadlines as moot, and close the file.
3.

In accordance with M.D. Fl. R. 4.18, all motions for

costs or attorney’s fees shall be filed no later than FOURTEEN
(14) DAYS following the entry of judgment.
DONE AND ORDERED at Fort Myers, Florida, this
July, 2015.

Copies: Counsel of record

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1st

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