Southern-Owners Insurance Company v. Wiggins et al
Filing
103
ORDER denying 87 Motion for summary judgment; granting 89 Motion for summary judgment. The parties are directed to notify the Court, on or before February 15, 2012, if there are any claims, counterclaims, or crossclaims that remain pending following the entry of this Order. Signed by Judge Roy B. Dalton, Jr. on 2/9/2012. (VMF)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION
SOUTHERN-OWNERS INSURANCE
COMPANY,
Plaintiff,
vs.
Case No. 3:10-cv-390-J-37MCR
DEBORAH LANE WIGGINS, as Personal
Representative of the Estate of ROBERT
LANE WIGGINS, SUNSHINE MART, INC.,
VENKAT KANDALA, GIANT
JACKSONVILLE, LLC, GIANT OIL, INC.,
BP PRODUCTS NORTH AMERICA, INC.,
MOHAMMED TAUHIDUL KHAN, DAVID
SOHM, DEBORAH SOHM, and SRINIVAS
BIKKUMANLA,
Defendants.
ORDER
This cause is before the Court on the following:
1.
Defendants/Counterclaim/Crossclaim Plaintiffs Giant Jacksonville, LLC and
Giant Oil, Inc.'s Motion for Summary Judgment (Doc. No. 87), filed October
17, 2011;
2.
Appendix of Documents in Support of Defendants/Counterclaim/Crossclaim
Plaintiffs Giant Jacksonville, LLC and Giant Oil, Inc.'s Motion for Summary
Judgment (Doc. No. 88), filed October 17, 2011;
3.
Plaintiff, Southern-Owners Insurance Company's Motion for Summary
Judgment (Doc. No. 89), filed October 17, 2011, and its separately filed
exhibits (Doc. Nos. 90, 91);
4.
Notice of Filing Redacted Document to Appendix (Doc. No. 92), filed October
18, 2011;
5.
Southern-Owners' Response in Opposition to Giant Oil's and Giant
Jacksonville's Motion for Summary Judgment (Doc. No. 93), filed October 31,
2011;
6.
Response of Defendant, Deborah Lane Wiggins, as Personal Representative
of the Estate of Robert Lane Wigging, to Plaintiff's Motion for Summary
Judgment (Doc. No. 94), filed October 31, 2011;
7.
Defendants/Counterclaim/Crossclaim Plaintiffs Giant Jacksonville, LLC and
Giant Oil, Inc.'s Response in Opposition to Plaintiff Southern-Owners
Insurance Company's Motion for Summary Judgment (Doc. No. 95), filed
November 3, 2011;
8.
Defendants/Counterclaim/Crossclaim Plaintiffs Giant Jacksonville, LLC and
Giant Oil, Inc.'s Notice of Filing (Doc. No. 100), filed November 9, 2011; and
9.
Southern-Owners' Reply (Doc. No. 101), filed November 15, 2011.
BACKGROUND
Plaintiff Southern-Owners Insurance Company (the "Insurer" or "Insurance
Company") brought this action against the parties in a state court lawsuit which arose from
the events leading to the death of Robert Wiggins. In the state court action, Mr. Wiggins'
estate brought wrongful death claims against Sunshine Mart, Inc., Venkat Kandala, Giant
Jacksonville, LLC, Giant Oil, Inc., BP Products North America, Inc., Mohammed Tauhidul
Khan, and Srinivas Bikkumanla based on Sunshine Mart's sale of liquor to a minor, which
was in violation of state law. (Doc. No. 91, pp. 2-34.)
Prior to Mr. Wiggins' death, the Insurance Company issued a commercial general
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liability policy (the "Policy") to Defendant Sunshine Mart, Inc. ("Sunshine Mart").1
Defendants Giant Jacksonville, LLC and Giant Oil, Inc. (the "Giant Defendants") were
additional insureds under the Policy.2 After the state court action was filed, the Insurance
Company agreed to defend Sunshine Mart and Kandala under a reservation of rights.
(Doc. No. 88-13.) Giant Jacksonville then made a demand from the Insurance Company
for coverage and a defense, which the Insurance Company denied. (Doc. Nos. 88-16, 8817.)
In this lawsuit, the Insurance Company seeks a declaration that the commercial
general liability insurance policy (the "Policy") it issued to Sunshine Mart does not require
it to insure, indemnify or defend Sunshine Mart or the other insureds under the Policy. The
Giant Defendants assert counterclaims and crossclaims alleging that the Policy does
provide such coverage. The parties filed cross motions for summary judgment, which are
fully briefed and ripe for adjudication.
APPLICABLE STANDARDS
This Court "shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter
of law." Fed. R. Civ. P. 56(a); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
1
The Policy is attached to the Amended Complaint (Doc. No. 17) as Exhibit A.
Plaintiff contends Exhibit A is a copy of the complete policy. No party has suggested
otherwise. Therefore, the Court will deem (for the purposes of this Order) Exhibit A as the
insurance policy in effect during the events giving rise to this lawsuit. In this Order,
citations to pages contained in Doc. No. 17-1 as Ins. Policy, Part A, p. XX, and citations to
pages contained in Doc. No. 17-2 as Ins. Policy, Part B, p. XX.
2
The parties have stipulated that the Giant Defendants are additional insureds
under the Policy. This stipulation was necessary because the "additional insured"
endorsement names "Giant LLC" as the name of the organization which qualifies as an
additional insured under the policy. (See Ins. Policy, Part A, p. 12.)
3
(1986); Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir. 2004). An issue
of fact is "material" under the applicable substantive law if it might affect the outcome of the
case. Hickson Corp., 357 F.3d at 1259. An issue of fact is "genuine" if, taken as a whole,
the record could lead a rational trier of fact to find for the nonmoving party. Id. at 1260.
The 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." Id.; Anderson, 477 U.S. at 251–52.
The party moving for summary judgment has the burden of proving (1) there is no
genuine issue as to any material fact, and (2) it is entitled to judgment as a matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In determining whether the moving
party has satisfied its burden, the Court considers all inferences drawn from the underlying
facts in the light most favorable to the party opposing the motion and resolves all
reasonable doubts against the moving party. Anderson, 477 U.S. at 255.
The court may not weigh conflicting evidence or weigh the credibility of the parties.
Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 919 (11th Cir. 1993). If a reasonable fact
finder could draw more than one inference from the facts and that inference creates an
issue of material fact, the court must not grant summary judgment. Id. Summary judgment
must be granted, however, "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 the party
will bear the burden of proof at trial." Celotex Corp., 477 U.S. at 322. In addition, when a
claimant fails to produce "anything more than a repetition of his conclusory allegations,"
summary judgment for the movant is "not only proper but required." Morris v. Ross, 663
F.2d 1032, 1034 (11th Cir. 1981).
4
ANALYSIS
The determinative question in this lawsuit is whether the events alleged in the state
court action are excluded from coverage under the Policy by its liquor liability exclusion.3
Before construing the Policy, the Court will discuss the standards for the interpretation of
an insurance contract under Florida law. The Court then construes the Policy in two steps.
First, the Court determines how the Policy describes and delineates the parties and their
interests. Second, after considering the ordering of interests under the Policy, the Court
determines the applicability of the Policy's liquor liability exclusion.
A.
Interpretation of the Insurance Contract
"The interpretation of an insurance contract is a question of law." Kattoum v. N.H.
Indem. Co., 968 So. 2d 602, 604 (Fla. 2d DCA 2007). It is undisputed that Florida law
governs the interpretation of the Policy at issue in this case. "Florida law provides that
insurance contracts are construed in accordance with the plain language of the policies as
bargained for by the parties." Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla.
2000) (internal citation omitted). As such, the Court will construe the scope and extent of
insurance coverage in this case in accordance with the plain language of the Policy.
If the Court is unable to discern a single plain meaning of a Policy provision because
the Policy language is susceptible to more than one reasonable interpretation, then the
3
According to a leading treatise on insurance law, "Standard commercial general
liability policies generally exclude bodily injury or property damage arising from the
insured's manufacture distribution, or sale of alcoholic beverages." 9A Steven Plitt, et al.,
Couch on Insurance Third § 129:32 (2005). Insurance companies exclude this liability from
general policies so that "those who want such coverage must specifically request it and pay
corresponding additional premiums, thereby allowing the insurer to assess the specific risks
based on the nature and location of the business, as well as the general character and
history of the insured." Id.
5
Court must adopt the interpretation that favors the insured and provides coverage. Swire
Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 165 (Fla. 2003) (internal citation
omitted). However, the Court will not adopt "a strained and unnatural construction" of the
Policy's language "in order to create an uncertainty or ambiguity." Health Options, Inc. v.
Kabeller, 932 So. 2d 416, 420 (Fla. 2d DCA 2006). Finally, the Court must interpret the
Policy's terms in the context of the Policy as a whole and it will not consider "an isolated
sentence in a Policy as determinative on the question of coverage." Ellenwood v. S. United
Life Ins. Co., 373 So. 2d 392, 395 (Fla. 1st DCA 1979); see also Fla. Stat. § 627.419(1)
("Every insurance contract shall be construed according to the entirety of the terms and
conditions as set forth in the policy and as amplified, extended, or modified by any
application therefor or any rider or endorsement thereto.").
B.
What are the Interests of the Parties under the Policy?
In order to construe the liquor liability exclusion, the Court must first consider how
the Policy describes and delineates between the parties and their interests.
The
contracting parties obviously each have tangible interests. Florida law requires every
insurance policy name the parties to the contract. See Fla. Stat. § 627.413. Here, the
declarations identify the Insurance Company and Sunshine Mart, which is identified as the
"insured." (Ins. Policy, Part A, p. 5.)
The part of the Policy describing liability coverage, which is entitled "Commercial
General Liability Coverage Form" (the "General Liability Form"), also identifies various
individuals with interests under the Policy. (See Ins. Policy, Part B, pp. 52-72.) In its
preamble, the General Liability Form notes:
Throughout this policy the words "you" and "your" refer to the Named Insured
shown in the Declarations, and any other person or organization qualifying
6
as a Named Insured under this policy. The words "we", "us" and "our" refer
to the company providing this insurance.
The word "insured" means any person or organization qualifying as such
under Section II - Who is An Insured.
(Id. at 52.) The preamble, therefore, sets out a distinction between a "Named Insured" and
someone who is an "insured."
The Policy does not define who is a "Named Insured." However, in various
provisions, the Policy places that term in context by using phrases such as "the Named
Insured shown in the Declarations" (id.); "[a]ny organization you newly acquire or form . .
. will qualify as a Named Insured . . ." (id. at 63); ". . . that is not shown as a Named Insured
in the Declarations" (id. at 64); and "[a]t the close of each audit period we will . . . send
notice to the first Named Insured" (id. at 66-67). Since Sunshine Mart purchased the Policy
and was the only insured identified in the Policy's declaration, the Court concludes that the
plain and reasonable interpretation of the Policy is that Sunshine Mart is a Named Insured.
But who, in contrast, is an "insured" under the Policy? As noted above, the
preamble to the General Liability Form states, "The word 'insured' means any person or
organization qualifying as such under Section II - Who is An Insured." (Id. at 52.) Thus,
the Court turns to Section II of the General Liability Form (hereinafter just "Section II").
Section II consists of four numbered paragraphs, each of which has several
subparagraphs.
(Id. at 62-64.)
The first numbered paragraph begins, "If you are
designated in the Declarations as . . . ", and continues in five alternative subparagraphs,
each of which begins by describing the Named Insured (i.e., "you") as an individual,
business entity or trust. (Id. at 62-63.) The first sentence of each subparagraph notes that
the Named Insured is "an insured." (Id.) The remaining portions of each subparagraph
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describe other individuals who are insured: the Named Insured's spouse, in the case of an
individual (id. at 62); the members or partners, and their spouses, of a partnership or joint
venture (id.); the members and managers of a limited liability company (id.); the "executive
officers," directors, and stockholders of other business organizations (id. at 62-63); and, if
the Named Insured is a trust, its trustee(s) (Id. at 63). Section II's remaining numbered
paragraphs similarly describe classes of individuals who may qualify as an insured under
the Policy or, in the case of the fourth paragraph, the circumstances under which newly
acquired or formed organizations "qualify as a Named Insured." 4 (Id.).
Not only does the Policy distinguish between a "Named Insured" and an "insured,"
but it also uses a severability clause to distinctly define the interests of a "Named Insured"
and an "insured." The clause, which is entitled "Separation Of Insureds," provides as
follows:
Except with respect to the Limits of Insurance, and any rights or duties
specifically assigned in this Coverage Part to the first Named Insured, this
insurance applies:
a.
As if each Named Insured were the only Named Insured; and
b.
Separately to each insured against whom claim is made or
"suit" is brought.
(Ins. Policy, Part B, p. 67.)
In Florida, a severability clause such as this operates to create separate insurable
interests in each insured. Mactown, Inc. v. Cont'l Ins. Co., 716 So. 2d 289 (Fla. 3d DCA
1998); Premier Ins. Co. v. Adams, 632 So. 2d 1054 (Fla. 5th DCA 1994); Liberty Mutual
Ins. Co. v. Sentry Ins. Co., 288 So. 2d 556 (Fla. 2d DCA 1974). Thus, the Court must
4
The format of Section II reinforces the distinction between a "Named Insured" and
an "insured."
8
separately determine the Insurance Company's obligations with respect to each insured.
Liberty Mutual Ins. Co., 288 So. 2d at 559.
In view of the above, the Court now turns to considering the Giant Defendants'
interests under the Policy. The Giant Defendants can be either a Named Insured (or an
organization qualifying as a Named Insured) or an insured under the Policy. The Giant
Defendants are not named in the Policy declarations. They also are not newly acquired or
formed organizations that "qualify as a Named Insured" under the Policy, or otherwise
qualify as an insured under the unmodified version of Section II of the General Liability
Form.
The Policy, however, contains an endorsement which "changes the Policy." (Ins.
Policy, Part A, p. 12.) The endorsement is entitled, "Additional Insured - Managers or
Lessors of Premises." (Id.) The endorsement identifies the Giant Defendants (referred to
as "Giant LLC") as an "additional insured." (Id.) The endorsement modifies two sections
of the Policy, one of which is not relevant. To the extent it is relevant, the endorsement
amends Section II of the General Liability Form
to include as an additional insured the person or organization
shown in the Schedule [i.e., the Giant Defendants] but only
with respect to liability arising out of ownership, maintenance
or use of that part of the premises leased to you and shown in
the Schedule and subject to the following additional exclusions:
This insurance does not apply to:
1.
Any "occurrence" which takes place after you cease to
be a tenant in that premises.
2.
Structural alterations, new construction or demolition
operations performed by or on behalf of the person or
organization shown in the Schedule.
(Ins. Policy, Part A, p. 12.) Thus, the Giant Defendants' interests under the Policy are
9
created and described by the endorsement, which identifies them as "additional insureds."
The Court has considered whether the use of the term "additional insured" in the
endorsement creates an ambiguity as to whether the Giant Defendants are Named
Insureds or insureds. The Court concludes that no such ambiguity exists under a plain
reading of the Policy. The endorsement does not use the term Named Insured to refer to
the Giant Defendants; it uses the term additional insured. Further, the endorsement
modifies Section II of the General Liability Form, which specifically sets forth who qualifies
as an insured and what organizations may qualify as a Named Insured.
Moreover, the language used in the endorsement would make no sense if the Court
were to construe the endorsement as adding the Giant Defendants as Named Insureds.
The endorsement contains a qualifier limiting coverage to "liability arising out of ownership,
maintenance or use of that part of the premises leased to you." As noted above, "the
words 'you' and 'your' refer to the Named Insured shown in the Declarations, and any other
person or organization qualifying as a Named Insured under the policy." (Ins. Policy, Part
B, p. 52 (emphasis added).) This phrase – "premises leased to you" – can only refer to
Sunshine Mart leasing the premises from the Giant Defendants, not vice versa, and it
makes sense only if the Giant Defendants are insureds under the Policy, not Named
Insureds.
In sum, the Court concludes that Sunshine Mart is the only Named Insured under
the Policy, and that the Giant Defendants are insureds.
C.
Does the Liquor Liability Exclusion Apply?
With regard to the commercial general liability insurance policy at issue in this case,
the parties' dispute turns on the applicability of the Policy’s liquor liability exclusion. The
10
Policy insures generally against damages arising from bodily injuries, but it also contains
provisions excluding specific risks. (Ins. Policy, Part B, p. 52.) One of these later
provisions excludes coverage for liquor liability (the "liquor liability exclusion"). The liquor
liability exclusion provides:
This insurance does not apply to . . . "Bodily injury" or "property damage" for
which any insured may be held liable by reason of:
(1)
Causing or contributing to the intoxication of any person;
(2)
The furnishing of alcoholic beverages to a person under the legal
drinking age or under the influence of alcohol; or
(3)
Any statute, ordinance or regulation relating to the sale, gift,
distribution or use of alcoholic beverages.
This exclusion applies only if you are in the business of manufacturing,
distributing, selling, serving or furnishing alcoholic beverages.
(Id. at 53 (emphasis added).) As noted above, the "you" in the final sentence of the
exclusion does not refer to all insureds. Rather, it refers only to "the Named Insured shown
in the Declarations, and any other person or organization qualifying as a Named Insured
under the policy." (Id. at 52 (emphasis added).) Here, as discussed above, the only
Named Insured is Sunshine Mart. Thus, under a plain reading, the exclusion applies only
if Sunshine Mart is in the business of manufacturing, distributing, selling, serving or
furnishing alcoholic beverages.
The Giant Defendants contend that the use of the term "you" in the final sentence
of the liquor liability exclusion is ambiguous. The Court does not agree. The use of the
term "you" in the exclusion is consistent with how that term is defined in the preamble of
the General Liability Form. When read in context, nothing in the Policy suggests that the
term is used in the exclusion in an inconsistent manner. Thus, it is of no moment that the
11
Giant Defendants are not in the business of manufacturing, distributing, selling, serving or
furnishing alcoholic beverages. Sunshine Mart is in that business, and that is what counts.
The Giant Defendants also argue that the provisions of the Policy should be
construed such that they, as separate insureds under the Policy, do not fall within the
scope of the liquor liability exclusion. This argument relies upon the notion that the Giant
Defendants have separate insurable interests under the Policy. The case offered in
support of this argument by the Giant Defendants is inapposite, however. In Premier
Insurance Co. v. Adams, 632 So. 2d 1054 (Fla. 5th DCA 1994), the court rejected an
insurer's reliance on an intentional act exclusion to deny the defense of a negligent
supervision action against an insured parent arising out of an incident of sexual molestation
perpetrated by an insured child. Id. at 1055.
The exclusion at issue in Premier Insurance excluded coverage for claims of "bodily
injury . . . which is expected or intended by any insured.” Id. at 1055. The insurer argued
that the term "any insured" excluded all insured persons, not just the perpetrator. Id. The
policy in Premier Insurance, however, contained a severability clause which stated that the
policy applied "separately to each insured." Id. at 1056. The court relied upon the
severability clause to reject the insurer's argument, reasoning:
[W]hen an insurance policy is ambiguous or fairly susceptible to two
reasonable interpretations, one of which is in favor of the insured and one of
which is in favor of the insurer, the policy must be construed strictly against
the insurer as drafter of the policy . . . . [T]he most plausible interpretation is
that the exclusionary clause is to exclude coverage [only] for the separate
insurable interest of that insured who intentionally causes the injury.
Id. at 1057. Unlike the policy at issue in Premier Insurance, however, the Policy in this
case contains an exclusion which refers to the actions of a single Named Insured, Sunshine
Mart. It is, therefore, unambiguous.
12
Furthermore, it is of no moment that the severability clause operates to create
separate insurable interests in each insured. The Policy's liquor liability exclusion plainly
applies to bodily injuries for which any insured may be liable where the Named Insured is
"in the business of manufacturing, distributing, selling, serving or furnishing alcoholic
beverages." The exclusion, therefore, acts to extinguish all of the Insurer's liability as to
any insured where Sunshine Mart sells alcoholic beverages (which, according to the
allegations of the state court action, it did). The language used in the liquor liability
exclusion is clear, and it unambiguously applies the exclusion to the separate insurable
interests of each insured.5
* * * * *
There is no genuine, material dispute that the only Named Insured under the Policy
allegedly sold alcoholic beverages to minors. Each and every claim raised in the state
court action explicitly refers to or relies upon the sale of alcohol to minors by Sunshine
Mart, its officers, and its employees. Thus, each claim necessarily satisfies at least two of
the conditions of the liquor liability exclusion. The Insurance Company is not obligated,
therefore, to "pay those sums that the insured becomes legally obligated to pay as
damages" or to "defend the insured against" the state court action.
5
In this regard, this case is more closely analogous to the exclusion construed in
Valero v. Fla. Ins. Guar. Ass'n Inc., 59 So. 3d 1166 (Fla. 4th DCA 2011). When the
insurance contract in this case is read as a whole – like the contract in Valero – the
application of the severability clause does not create an ambiguity.
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CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED:
1.
Defendants/Counterclaim/Crossclaim Plaintiffs Giant Jacksonville, LLC and
Giant Oil, Inc.'s Motion for Summary Judgment (Doc. No. 87) is DENIED.
2.
Plaintiff, Southern-Owners Insurance Company's Motion for Summary
Judgment (Doc. No. 89) is GRANTED.
3.
The parties are directed to notify the Court, on or before February 15, 2012,
if there are any claims, counterclaims, or crossclaims that remain pending following the
entry of this Order.
DONE AND ORDERED in Chambers in Jacksonville, Florida, on February 9, 2012.
Copies:
counsel of record
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