Great Divide Insurance Company v. Amerisure Insurance Company et al
Filing
140
MEMORANDUM OPINION Signed by Judge Robin L. Rosenberg on 5/18/2018. (ail) NOTICE: If there are sealed documents in this case, they may be unsealed after 1 year or as directed by Court Order, unless they have been designated to be permanently sealed. See Local Rule 5.4 and Administrative Order 2014-69.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
FT. PIERCE DIVISION
CASE NO: 2:17-CV-14271-RLR
GREAT DIVIDE INSURANCE COMPANY,
for itself and on behalf of Aventura Construction
Corporation,
Plaintiff,
v.
AMERISURE INSURANCE COMPANY and
DRAWDY CONCRETE CONSTRUCTION, LLC,
Defendants.
MEMORANDUM OPINION
On April 23, 2018, this Court held a one-day bench trial on GREAT DIVIDE
INSURANCE COMPANY’s (“Great Divide”) breach of contract claim against DRAWDY
CONCRETE CONSTRUCTION, LLC (“Drawdy”). See DE 1 (Count III of the Complaint for
Declaratory Relief and Damages). The Court, having otherwise disposed of Great Divide’s other
claims,1 issues the following findings of fact and conclusions of law on Great Divide’s breach of
1
On March 14, 2018, this Court entered an Order Granting in Part and Denying in Part
Plaintiff’s Motion for Summary Judgment and Granting in Part and Denying in Part Defendants’
Motion for Summary Judgment. See DE 86-1. In sum, the Order held that AMERISURE
INSURANCE COMPANY (“Amerisure”), Drawdy’s insurer, “did not breach its contractual
duty to defend or to indemnify when it disclaimed coverage” because Amerisure did not issue
insurance for completed operations and that “Drawdy did not have a duty to obtain additional
insured insurance for completed operations and, therefore, did not breach the contract due to its
failure to secure additional insurance.” Id. at 10-11.
contract claim against Drawdy for failing to indemnify Aventura Construction Corp.
(“Aventura”), Great Divide’s insured.2
FINDINGS OF FACT
1.
Master Contract. Aventura was the general contractor hired by Cumberland
Farms, Inc. (“Cumberland Farms”) to build a convenience store located in Sebastian, Florida (the
“Project”). See Master Contract, Defendant’s Exhibit No. 26. Under the Master Contract,
Aventura was responsible for constructing the Project in accordance with drawings, plans, and
specifications. Id. at 2 (“Scope of Work”). Aventura was not responsible for the design of the
Project, and had no inspection responsibilities. Id; see also Trial Transcript at 19:9-14.3
2.
Subcontract. Aventura subcontracted all of the concrete work to Drawdy,
including all work related to A.D.A. ramps and A.D.A. curb ramp flares. See Subcontract,
Plaintiff’s Exhibit No. 1; see also TT at 20:1-3; 205:17 to 206:6. Pursuant to the Subcontract,
Drawdy was required to “[p]rovide all labor, material, equipment, and supervision necessary to
perform all CONCRETE work as per plans and specifications.” Exhibit No. 1 at 1. The
Subcontract also states that Drawdy is to “[p]rovide/coordinate all inspections as necessary to
achieve sign-offs.” Id.
2
Great Divide has pursued a breach of contract action against Drawdy on behalf of its insured,
Aventura, pursuant to an assignment contained in the underlying insurance policy. See DE 86 at
6 (rejecting Defendants’ standing argument, recognizing that Great Divide’s “insurance policy
with Aventura includes an assignment of Aventura’s rights under the policy to Great Divide” that
“states that ‘[i]f the insured has rights to recover all or part of any payment we have made under
this policy, those rights are transferred to us’”, and holding that “Aventura transferred its rights
to Great Divide, Great Divide has standing, and Defendants … motion for summary judgment as
to the issue of standing is denied.”); see also Liberty Mut. Fire Ins. Co. v. Wal-Mart Stores East,
LP, 269 F. Supp. 3d 1254, 1261-62 (M.D. Fla. 2017) (insurer entitled to pursue breach of
contract and contractual indemnity claims under an assignment from its insured).
3
All citations to the Trial Transcript are (TT at Page: Lines.)
Page 2 of 20
3.
Referenced and incorporated into the Subcontract were the Project’s plans and
drawings, including plans and drawings related to a concrete A.D.A. ramp and A.D.A. curb ramp
flare located at the outside entrance of the convenience store. Id. at 13 (Plan CFG9.1), 15 (Plan
A0.4). Under the “DETAIL NOTES”, the plans stated that the A.D.A. ramp and A.D.A. curb
flare are to be constructed “PER A.D.A. STANDARDS … AND FLORIDA BUILDING CODE
STANDARDS”. Id. at 13 (Plan CFG9.1).
4.
The Subcontract also contains an “Indemnification” clause that states that Drawdy
“expressly agrees to indemnify and save harmless Aventura … from all claims, demands,
suits, costs or expenses because of bodily injury … sustained by any person(s) … arising out
of his operations, work or materials under this Subcontract…..” Id. (emphasis added).
5.
Underlying Personal Injury Lawsuit. A little over a month after the
Cumberland Farms opened to the public, Bruce Henkle (“Henkle”), a customer, allegedly tripped
on a concrete A.D.A. curb flare, fell, and seriously injured himself. DE 86 at 3-4 (the Project was
substantially completed on October 7, 2014 and Mr. Henkle allegedly tripped and fell on
November 13, 2014); see also Complaint, Plaintiff’s Exhibit No. 2.
6.
Mr. Henkle initiated a lawsuit against Cumberland Farms, Aventura, and others.4
See Complaint, Plaintiff’s Exhibit No. 2. As to the claims against Aventura, Mr. Henkle alleged
4
By way of background, Mr. Henkle initially filed suit against Cumberland Farms only in state
court, however, the suit was removed to federal court on June 23, 2016. See Case 2:16-cv-14248DMM, DE 1-1 (alleging that he “tripped and fell over a curb”). On November 4, 2016, Mr.
Henkle filed an Amended Complaint that added Aventura, Core States Group, the civil engineer
of the Project, and Allevato Architects, the architect of the Project. See Case 2:16-cv-14248DMM, DE 33 (alleging that he “tripped and fell over a ‘flared curb” … immediately adjacent to
an ADA entrance ramp”); see also TT at 18:17-24. Mr. Henkle filed a Second Amended
Complaint, which was substantively identical to the Amended Complaint and just corrected the
corporate name of Aventura. See Case 2:16-cv-14248-DMM, DE 79 (“ENDORSED ORDER”
permitting Mr. Henkle to “file a Second Amended Complaint that changes only Defendant
Deymeyer Aventura Construction Corp.’s name”).
Page 3 of 20
that he “was injured” when he “tripped and fell over a ‘flared’ curb … located immediately
adjacent to an ADA entrance ramp.” Id. at ¶ 20. He further alleged that Aventura, “through its
agents, servants, and/or employees” was negligent “[i]n constructing … the premises in violation
of applicable building codes, statutes and ordinances.” Id. at ¶ 21.5
7.
In terms of damages, Mr. Henkle claimed to incur over $300,000 in past medical
bills and expenses, future medical expenses estimated at over $400,000 (due to the need for
future surgeries), and significant pain and suffering damages. See TT at 30:22 to 31:2. Overall
exposure was estimated to be in excess of one million dollars. Id. at 30:16-18.
8.
Liability Theories Advanced In Underlying Personal Injury Lawsuit. Mr.
Henkle retained Ronald Bertone, a licensed architect, to provide expert opinions related to the
subject concrete “ADA Curb Ramp” located at the Project. See Affidavit of Bertone, Plaintiff’s
Exhibit No. 9 at 2 (¶¶ 2-3); see also Photographs Identifying the Subject A.D.A. Curb Flare,
Plaintiff’s Exhibit No. 8.6 According to Mr. Bertone’s affidavit and expert report, he offered
three expert opinions related to liability. See Affidavit of Bertone, Plaintiff’s Exhibit No. 9.
9.
First, the slope of the concrete A.D.A. curb flare “at the location where [Mr.
Henkle] tripped and fell … was not uniform” and “exceeded and violated the maximum
allowable slope requirement of 10% [as] set forth in Florida’s Accessibility Code For Building
Construction….” Id. at 4 (¶ 4(k)). In support of this opinion, Mr. Bertone took photographs that
showed that the concrete A.D.A. curb flare violated A.D.A. Standards and the Florida Building
5
The parties have stipulated that Mr. Henkle “tripped over the curb, in part, because it was not
properly constructed.” DE 99 at 6 (¶ 5 (e)). It is further undisputed that the concrete A.D.A. ramp
and A.D.A. curb flare were constructed by Drawdy pursuant to the Subcontract. See Subcontract,
Plaintiff’s Exhibit No. 1; see also TT at 48:5-15; 205:17 to 206:15.
6
Mr. Bertone’s affidavit was also filed in the underlying case. See Case 2:16-cv-14248-DMM,
DE 138-10.
Page 4 of 20
Code. Id. at 23-27. Ultimately, Mr. Bertone concluded that the concrete A.D.A. ramp and A.D.A.
curb flare contained “multiple violations of the Florida Accessibility Code for Building
Construction.” Id. at 5 (¶ 4(o)).
10.
Second, the concrete A.D.A. curb flare was not painted. Id. at 3 (¶ 4(g)) (“the top
surface of the curb should have been painted ‘safety yellow’”).
11.
Third, the A.D.A. Access Aisle was too wide, painted to be eight feet instead of
five feet. Id. at 5 (¶ 4(n)).
12.
Aventura Tenders To Drawdy. On April 13, 2017, approximately three months
after first receiving notice of Mr. Henkle’s claims, Aventura tendered the defense of the Henkle
suit to Drawdy and demanded indemnification from Mr. Henkle’s claims. See Tender Letter,
Plaintiff’s Exhibit No. 6 at 3 (“demand is hereby made upon Drawdy … to defend and indemnify
Aventura”); see also TT at 54:5-23. The tender letter cited to the “Indemnity” clause of the
Subcontract and explained that the request for indemnification was due to the fact that Mr.
Henkle’s claims arose out of Drawdy’s operations and work. See Tender Letter, Plaintiff’s
Exhibit No. 6 at 2.
13.
Drawdy received notice of the tender and was afforded the opportunity to
participate in litigation and settlement of the underlying personal liability claim; however,
Drawdy never responded and refused to indemnify Aventura in any way. Id.; see also Pre-Trial
Stipulation, ¶ 5(g) (DE 99); TT at 8:20-23; 82:7-14.
14.
Settlement Of Underlying Personal Injury Lawsuit. On June 29, 2017,
Aventura settled the underlying case for $150,000.00,7 which was paid by Great Divide, who
initiated the instant contractual indemnity action to recover the settlement amount paid, and
7
See Settlement Agreement, Defendant’s Exhibit No. 32.
Page 5 of 20
attorneys’ fees and costs incurred in defending the underlying action8 and in prosecuting the
instant indemnity suit9.
15.
Reasonableness Of Settlement. The parties stipulated to the fact that Aventura’s
underlying settlement of Mr. Henkle’s case in the amount of $150,000 was reasonable. DE 99 at
6 (¶ 5(h)); see also TT at 19:22 to 20:19.
16.
Potential Liability. Frank DeMeyer, the President of Aventura, testified that he
worked closely with defense counsel in the underlying personal injury case to understand
plaintiff’s liability theories, assisted counsel in understanding technical construction issues, and
independently analyzed his own company’s potential liability. See TT at 31:17 to 32:8. In doing
so, he reviewed the underlying complaints filed by Mr. Henkle, pleadings and motions filed in
the case, orders entered in the case, and the affidavit executed by Mr. Henkle’s expert. Id. at
26:19 to 28:1; 31:21 to 33:1. He ultimately concluded that Mr. Henkle’s claim created significant
exposure in excess of one million dollars, and that Mr. Henkle was seeking to hold his company,
Aventura, vicariously liable for the allegedly improper work completed by his subcontractor,
Drawdy. Id. at 27:23 to 28:15; 30:16-18.
17.
In terms of Mr. Henkle’s liability theories, Mr. DeMeyer testified that the only
liability theory advanced by Mr. Henkle in the underlying personal injury case that created the
potential for liability to be placed on his company, Aventura, was Mr. Henkle’s claim that the
concrete A.D.A. curb flare “at the location where [Mr. Henkle] tripped and fell … was not
8
The costs and expenses incurred in defending the underlying action totaled $80,169.43. See
Defense Invoices, Plaintiff’s Exhibit No. 16; see also Answers to Interrogatories, Defendants
Exhibit No. 29; see also TT at 81:15-22.
9
The issue of Great Divide’s entitlement to attorneys’ fees and costs incurred in prosecuting the
instant indemnity suit was not before the Court at the bench trial and, if claimed, would be the
subject of post-trial motions.
Page 6 of 20
uniform” and “exceeded and violated the maximum allowable slope requirement of 10% [as] set
forth in Florida’s Accessibility Code For Building Construction….” TT at 41:19 to 43:25; see
also Affidavit of Bertone, Plaintiff’s Exhibit No. 9 at 4 (¶ 4(k)). He further testified that the
evidence gathered and submitted by Mr. Henkle’s expert was significant and compelling in that
it included photographs that depicted violations of A.D.A. Standards and the Florida Building
Code.10 See TT at 61:9-15; see also Affidavit of Bertone, Plaintiff’s Exhibit No. 9 at 23-27.
18.
As for Mr. Henkle’s other liability theories, Mr. DeMeyer testified that they did
not create the potential for liability to be placed on his company, Aventura. See TT at 53:11-24.
19.
With respect to the A.D.A. curb flare not being painted, Mr. DeMeyer explained
that the painting of the A.D.A. curb flare was not included in Aventura’s scope of work as set
forth in the Master Contract, that the plans and drawings did not state that painting was required,
and that the concrete A.D.A. curb flare was not required to be painted under the A.D.A.
Standards or the Florida Building Code. TT at 49:24 to 51:4. In other words, the work was
completed according to the plans and drawings and complied with the A.D.A. Standards and the
Florida Building Code. Id. at 50:11 to 51:4. As such, this liability theory did not create the
potential for liability to be placed on Aventura.11 Id. at 53:16-18. Drawdy did not put forth any
evidence to contradict this assertion.
10
It should also be noted that Aventura’s own liability expert in the underlying personal injury
action confirmed that Mr. Henkle’s expert correctly measured the slope of the concrete A.D.A.
curb flare and admitted that the slopes were greater than 10%. See MC Report, Defendant’s
Exhibit No. 31 at 7 (“MC’s measurements were consistent with those contained within the
Robson Report”). The best Aventura’s expert could opine is that the slopes were “within
construction tolerances”. Id.
11
According to Mr. DeMeyer, the design decision to not paint the curb could have created the
potential for liability to be placed on the designer of the Project, however, Aventura had no
design responsibilities under the Master Contract. See TT at 50:11-16; 198:19 to 199:2.
Page 7 of 20
20.
With respect to the A.D.A. Access Aisle being “too wide”, painted to be eight feet
instead of five feet, Mr. DeMeyer explained that the painting of the A.D.A. Access Aisle was
included in Aventura’s scope of work as set forth in the Master Contract. TT at 51:5 to 53:10.
However, he demonstrated that plans and drawing provided by Cumberland Farms stated that the
A.D.A. Access Aisle was to be eight feet wide. Id. at 51:25 to 52:5; see also Subcontract,
Plaintiff’s Exhibit No. 1 at 12 (Plan CFG4.0). Mr. DeMeyer explained that although the standard
notes on the plans mention a five-foot A.D.A. Access Aisle, a five-foot width is a minimum
requirement under the A.D.A. Standards and that the width noted in the actual plans and
drawings would govern construction. TT at 52:10-17. Even more, he explained that the parking
space located next to the A.D.A. Access Aisle was a twelve-foot-wide “van-accessible parking
space” and that under A.D.A. Standard 502.2, an eight-foot A.D.A. Access Aisle is required
when adjacent to a “van-accessible parking space”. Id. at 51:16-24. In other words, the work was
completed according to the plans and drawings and complied with the A.D.A. Standards and the
Florida Building Code. Id. at 53:3-10. As such, this liability theory did not create the potential
for liability to be placed on Aventura. Id. at 53:22-24. Drawdy did not put forth any evidence to
contradict this assertion.
21.
There was also no evidence put forth that Mr. Henkle’s claims arose out of
Aventura’s actions or inactions, nor was there any evidence that Aventura’s independent actions
or inactions created the potential for liability in the underlying case. TT at 123:3-15. In fact, the
evidence put forth by Aventura demonstrated that when independent inspectors identified slope
issues with the concrete A.D.A. ramp and A.D.A. curb flare, Aventura immediately put Drawdy
on notice of the issue and requested that they remedy any issues before the Project would be
opened to the public. See Punchlist E-Mail, Plaintiff’s Exhibit No. 11 (inspector’s issuance of
Page 8 of 20
punchlist to Aventura, which states in relevant part, “The curb ramp appears to be non-ADA
complaint.”); Punchlist Letter, Plaintiff’s Exhibit No. 3;12 Punchlist Request to Drawdy,
Plaintiff’s Exhibit No. 4 (Aventura’s request that Drawdy complete all punchlist items); see also
TT at 71:22 to 72:10; 179:7-14. In response, Drawdy advised Aventura that the concrete A.D.A.
ramp and A.D.A. curb flare issues were resolved and issued a warranty to Aventura. See
Warranty, Plaintiff’s Exhibit No. 5; see also TT at 74:16-22; 182:2-16.
CONCLUSIONS OF LAW
“[W]hen a settlement is paid, the party seeking indemnification has the burden to show
that the settlement, or portions thereof, fell within the coverage of the indemnity clause.”
Bankers Ins. Co. v. Am. Team Managers, Inc., 2012 WL 2179117, at *6 (M.D. Fla. June 13,
2012) (citing Metro. Dade County v. Florida Aviation Fueling Co., Inc., 578 So. 2d 296, 298
(Fla. 3d DCA 1991)). In such a case, “the indemnitee is entitled to indemnity upon proof of its
potential liability to the original plaintiff and the reasonableness of the settlement.” Id. at *9; see
also Camp, Dresser & McKee, Inc. v. Paul N. Howard Co., 853 So. 2d 1072, 1079 (Fla. 5th
DCA 2003) (“courts generally agree that a party seeking indemnification must establish that the
settlement was made based on his potential liability to the plaintiff.”). Accordingly, “[t]he
indemnitee may settle for a reasonable amount and then recover that amount from the indemnitor
by showing it was not liable on any theory outside the indemnity agreement and was potentially
liable on a theory covered by the agreement.” Id. at 1080.
12
This punchlist explicitly referenced issues with both the concrete A.D.A. ramp and the
concrete A.D.A. curb flares: “ADA ramp at primary entrance exceeds maximum allowable path
of travel slope. Observed 8.6 to 9 percent slopes, confirm flares meet maximum allowable
slopes, provide compliant slopes.” (emphasis added).
Page 9 of 20
I.
The Indemnity Clause At Issue – Scope Of Coverage
“In Florida, courts construe indemnity contracts according to ordinary rules of contract
construction.” Fid. & Guar. Ins. Co. v. Ford Motor Co., 707 F. Supp. 2d 1300, 1313 (M.D. Fla.
2010). The intent of the parties and the scope of the indemnification provision are derived from
the language of the contract and the circumstances in which it was made. Id. The duty to
indemnify must be measured by the facts developed through discovery taken in the underlying
action. Farrer v. U.S. Fid. & Guar. Co., 809 So. 2d 85, 88 (Fla. 4th DCA 2002).
The “Indemnification” clause of the Subcontract that states that Drawdy “expressly
agrees to indemnify and save harmless Aventura … from all claims, demands, suits, costs or
expenses because of bodily injury … sustained by any person(s) … arising out of his
operations, work or materials under this Subcontract…..” See Findings of Fact at ¶ 4.
(emphasis added). Accordingly, Drawdy is contractually required to indemnify Aventura from
all bodily injury claims or suits “arising out of [its] operations, work, or materials….” Id.
The contractual use of the term “arising out of” has been extensively analyzed by the
courts. See Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528, 532-546 (Fla. 2005)
(analyzing the contractual construction of this term in Florida and throughout the country). In
sum, the term is “not ambiguous and should be interpreted broadly.” Florida. HC Waterford
Properties, LLC v. Mt. Hawley Ins. Co., 2009 WL 2600431, at *6 (S.D. Fla. Aug. 21, 2009);
James River Ins. Co. v. Ground Down Eng’g., Inc., 540 F.3d 1270, 1275 (11th Cir. 2008); see
also Gen. Star Indem. Co. v. Driven Sports, Inc., 80 F. Supp. 3d 442, 451 n. 6 (E.D. N.Y. 2015).
In interpreting the term “arising out of”, courts have held that the term is broader in meaning
than the terms “caused by” or “as a result of” and are understood to be “very broad, general, and
comprehensive” terms that mean “originating from,” “incident to,” “having its origin in,”
Page 10 of 20
“growing out of,” “flowing from,” or “having connection with.” Taurus Holdings, Inc., 913 So.
2d at 539; Fed. Ins. Co. v. Am. Home Assur. Co., 639 F.3d 557, 568 (2d Cir. 2011); see also
Raymond Corp. v. Nat’l Union Fire Ins. Co. of Pittsburg, PA, 6 A.D.3d 788, 790 (2004);
Raymond Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 5 N.Y.3d 157 (2005); Innovative
BioDefense, Inc. v. VSP Techs., Inc., 2013 WL 3389008, at *4 (S.D. N.Y. July 3, 2013).
Moreover, courts have broadly construed the term “arising out of” in an “indemnity
analysis” to find that an obligation to indemnify exists. See Natco, L.P. v. Moran Towing of Fla.,
Inc., 267 F.3d 1190, 1194 (11th Cir. 2001) (“The phrase ‘arising out of, or in any way
contributed to’ clearly evidences an intent that the indemnification provision be construed
broadly.”) see also Mut. Employees Trademart, Inc. v. Armour Service of Fla., Inc., 170 So.2d
64, 65 (Fla. 3d DCA 1964) (finding that indemnitee’s potential liability arose out of indemnitor’s
operations).
Here, Drawdy’s obligation to indemnify Aventura was triggered by Mr. Henkle’s claim
that he was injured when he tripped and fell on work completed by Drawdy because this was a
“claim” of “bodily injury … arising out of” Drawdy’s “operations, work or materials”.13
Specifically, in the underlying case, Mr. Henkle alleged that he tripped on work completed by
Drawdy. Even more, Mr. Henkle advanced a substantive liability theory that Drawdy’s work was
defective and caused him to trip and fall. See Findings of Fact at ¶ 8; see also Farrer, 809 So. 2d
at 88 (holding that the duty to indemnify must be measured by the facts developed through
discovery taken in the underlying action).
13
Here, Mr. Henkle alleged that Aventura, “through its agents, servants, and/or employees” was
negligent “[i]n constructing … the premises in violation of applicable building codes, statutes
and ordinances.” See Findings of Fact at ¶ 6. Such an allegation includes potential claims for
Aventura’s direct negligence, but also its vicarious liability for Drawdy’s negligence. Metro.
Dade County v. CBM Indus. of Minnesota, Inc., 776 So. 2d 937, 939 (Fla. 3d DCA 2000).
Page 11 of 20
In order to prove that Mr. Henkle’s claim falls within the scope of the Subcontract’s
“Indemnity” clause, Great Divide does not need to actually prove that Drawdy’s work was
defective or otherwise improper. 14 Am. Jur. Pl. & Pr. Forms Indemnity § 2 (“In an action to
recover indemnity under an express contract, the burden is on the indemnitee to prove that the
liability for which he or she has been charged is within the scope of the agreement.”). That is
not a requirement under the law, nor is it a requirement contained in the “Indemnity” clause.
Misener Marine Constr. Co. v. Southport Marine, Inc., 377 So.2d 757, 758 (Fla. 2d DCA 1979)
(“In interpreting an indemnity agreement, courts are to look to ‘the logical meaning and intent of
the contract.’”) (citations omitted).14 Instead, Great Divide need only prove that the claim arose
out of Drawdy’s “operations, work or materials”, which is supported by the evidence put forth at
the bench trial15 and the parties’ stipulations.16 Even Drawdy acknowledges that it must
indemnify Aventura if “bodily injury arises out of its operations or materials.” See TT at 221:24
to 222:4 (“There has to be proof, and the plaintiff has the burden of proof to establish that there
was a failure to follow and carry out the subcontract or any act or omission by Drawdy, or that
there was bodily injury arising out of the operation, work, or materials of Drawdy.”)
(emphasis added); DE 138 at 9, ¶ 9.
14
To the extent Drawdy relies on authorities addressing common law indemnity, they are
inapplicable, as the terms of the contract will govern the scope of Drawdy’s indemnity
obligations, not common law principles. See, e.g., GAB Bus. Svcs., Inc. v. Syndicate 627, 809
F.2d 755 (11th Cir. 1987) (suit for common law indemnity between agent and principal); Amisub
of Fla., Inc. v. Billington, 560 So. 2d 1271 (Fla. 3d DCA 1990) (common law indemnity claim).
15
It is undisputed that the concrete A.D.A. ramp and A.D.A. curb flare were constructed by
Drawdy pursuant to the Subcontract. See Findings of Fact at ¶ 2. It is further undisputed that Mr.
Henkle put forth a substantive claim that Drawdy’s improper work caused him to fall and injure
himself. See Findings of Fact at ¶ 8.
16
The parties have stipulated that Mr. Henkle “tripped over the curb, in part, because it was not
properly constructed.” See Findings of Fact at ¶ 6, n.5.
Page 12 of 20
II.
The Extent To Which Drawdy Must Indemnify Aventura
Because the underlying personal injury claim was resolved via settlement,17 Great Divide
need only establish that the settlement, or portions thereof, fall within the ambit of the indemnity
clause. See Metro Dade Cty v. Fla. Aviation Fueling Co., Inc., 578 So. 2d 296, 298 (Fla. 3d DCA
1991). Further, in terms of the burden of proof,18 Great Divide need only prove that Drawdy’s
allegedly improper work, as claimed by Mr. Henkle, created the “potential for liability” to be
placed on Aventura. Camp, Dresser & McKee, Inc., 853 So. 2d at 1080 (“The issue as to whether
an indemnitee must establish ‘actual liability’ to the plaintiff or only ‘potential liability’ based
notice given to the indemnitor is a question for the court to decide.”) (citations omitted). “Only if
the indemnitor is not given notice and an opportunity to assume responsibility for the claim must
the settling indemnitee show that it was actually liable to the plaintiff.” Id. Since Drawdy was
given notice and an opportunity to assume responsibility for the claim, only a showing of
potential liability is required. See Liberty Mut. Ins. Co. v. Byerly, 299 F. Supp. 213, 216-17 (E.D.
Wisc. 1969) (notice to indemnitor three months before trial was considered sufficient notice);
17
Under the “vouching in rule”, “an indemnitor who has notice of the suit filed against the
indemnitee by the injured party and who is afforded an opportunity to appear and defend it is
bound” by the settlement of the underlying claim. Camp, Dresser & McKee, Inc., 853 So. 2d at
1079. Here, the Court has found that Drawdy had notice of the Henkle lawsuit and that it was
afforded an opportunity to participate in the litigation and settle the underlying claim. See
Findings of Fact at ¶¶ 12-13. It refused to do so. Id. at ¶ 13. Accordingly, it cannot now
challenge the settlement. Camp, Dresser & McKee, Inc., 853 So. 2d at 1079. Additionally, the
Court notes that the parties stipulated to the reasonableness of the settlement that Aventura
reached with Mr. Henkle. See Findings of Fact at ¶ 15.
18
To be clear, Plaintiff “has the burden of proving their breach of contract claim by a
preponderance of the evidence”. Ulloa v. Fancy Farms, Inc., 285 F. Supp. 3d 1326, 1336 (M.D.
Fla. 2018). However, that is the evidentiary burden that is in turn applied to Plaintiff’s burden of
proving “potential liability.” In other words, Plaintiff must prove, by a preponderance of the
evidence, the extent to which Drawdy’s allegedly improper work, as claimed by Mr. Henkle,
created the potential for liability to be placed on Aventura.
Page 13 of 20
Acceptance Ins. Co. v. SDC, Inc., 952 F. Supp. 644, 647 (E.D. Mo. 1997) (tender of claim to
indemnitor one month before trial was sufficient notice).19
Accordingly, the issue before the Court is to what extent20 Drawdy’s allegedly improper
work, as claimed by Mr. Henkle, created the potential for liability to be placed on Aventura, not
whether Drawdy was actually negligent21 or if the subject concrete A.D.A. curb flare did, in fact,
19
Drawdy contends that it was not given sufficient notice of the settlement itself, citing GAB
Bus. Svcs., Inc., 809 F.2d at 755. Aside from the fact that Drawdy never objected to the
settlement, or that GAB did not involve an indemnity claim based on a written instrument, the
authorities the Eleventh Circuit relied on clearly held that an indemnitee that provides notice of
the settlement or provides an opportunity to assume control of the claim, need only establish its
potential liability. GAB, 809 F.2d at 760-61, n.8 (citing Parfait v. Jahncke Service, Inc., 484 F.2d
296, 304–05 (5th Cir. 1973) and Burke v. Ripp, 619 F.2d 354, 357 (5th Cir. 1980)). Drawdy did
not dispute receiving notice of the lawsuit and demand for indemnification several months before
the case ultimately settled and, if fact, admitted that they received notice of the lawsuit and the
demand, investigated the issues, and even contacted their insurance carrier. See TT at 186:6-15:
Q. Well, we issued a tender letter in this case. You received that, correct?
A. I turned them over. Whatever pictures I have, I have given them. We did an asbuilt of it because we got served with these papers, so we were trying to see what
was wrong with it.
Q. Sure, sure. And so when you got served with these papers and there was
allegations that your company did something wrong, did you give those
photographs to your lawyers?
A. I have turned over all of my pieces of paper.
20
It is jurisprudential law that a contractual indemnity clause can serve to protect the indemnitee
on the basis of comparative indemnification – requiring a proportional or partial indemnification.
41 Am. Jur. 2d Indemnity § 19 (citing Delle Donne & Associates, LLP v. Millar Elevator Serv.
Co., 840 A.2d 1244, 1253 (Del. 2004) (holding that the trial court properly awarded
“proportional” or “partial indemnity”). Courts typically refer to this type of indemnification
clause as a “comparative indemnity clause”. Here, as discussed above, the allocation is based
upon the extent to which Drawdy’s allegedly improper work created the potential for liability to
be placed on Aventura.
21
The Court anticipated that, at trial, Drawdy would argue that any negligence associated with
the construction of the curb originated from Aventura—not Drawdy—because if Aventura were
negligent it would be precluded, under Florida law, from recovery in this case. See Fla. Stat. §
725.06. The Court’s anticipation was premised on the basis for the Court’s denial of summary
Page 14 of 20
violate A.D.A. Standards or the Florida Building Code. Camp, Dresser & McKee, Inc., 853 So.
2d at 1079-80 (“a party seeking indemnification must establish that the settlement was made
based on his potential liability to the plaintiff”) (emphasis added); see also Parfait v. Jahncke
Serv., Inc., 484 F.2d 296, 304 (5th Cir. 1973) (holding that “proof of actual liability” in the
underlying case is not required). As the Parfait Court explained, the burden of only proving
potential liability avoids the “awkward possibility of having to prove the original plaintiff’s case
against himself, the original defendant”. Parfait, 484 F.2d at 304-305.
Here, the underlying plaintiff put forth three theories of liability.22 See Findings of Fact at
¶¶ 9-11. At the bench trial, Aventura established that the only liability theory that created the
potential for liability to be placed on Aventura was Mr. Henkle’s claim that the A.D.A. curb
flare, which was constructed by Drawdy, “was not uniform” at the “location where [Mr. Henkle]
tripped and fell”, and “exceeded and violated the maximum allowable slope requirement of 10%
[as] set forth in Florida’s Accessibility Code For Building Construction….” See Findings of Fact
at ¶ 17.23
judgment in Plaintiff’s favor on this issue—the Court identified a dispute of fact pertaining to
whether Aventura’s construction at other areas of the site caused Drawdy to make certain
alterations to the curb. DE 86 at 12-13. Nonetheless, Drawdy made it very clear to the Court, at
the conclusion of trial, that it was not arguing that Aventura was negligent. DE 128 at 230.
(“We are not arguing that Aventura was negligent.”).
22
At the bench trial, the only evidence put forth established the existence of three liability
theories advanced in the underlying personal injury case. Drawdy did not dispute the existence of
these liability theories, and did not put forth any evidence of other liability theories.
23
Frank DeMeyer testified that Aventura’s decision to settle was based on the potential liability
Aventura faced as result of Drawdy’s work:
Q. And so ultimately, you ended up settling this lawsuit as to Plaintiff's claims
against Aventura?
A. Yes.
Q. And that was because of the potential liability that your company faced as a
result of Drawdy's work?
Page 15 of 20
In response, Drawdy put forth no evidence to show that other liability theories,
independent of the theory arising out of its own work, created the potential for liability to be
placed on Aventura. Instead, Drawdy argued that Aventura was required to prove that Drawdy
was actually negligent and failed to construct the concrete A.D.A. ramp and A.D.A. curb ramp
flare located at the outside entrance of the convenience store in accordance with A.D.A.
Standards and the Florida Building Code Standards. See TT at 222:5 to 223:3.24 However, that is
not the applicable burden in this case as Aventura was only required to prove potential liability.
Further, Drawdy’s reliance on the underlying trial verdict is of no significance. The only
question answered by the jury was that Cumberland Farms was not negligent. There is nothing
in this trial record to suggest that the jury found Henkle responsible for his own injuries, or that
Aventura was not negligent. The transcript of the underlying trial was not introduced as evidence
in this case and the Court cannot speculate as to what evidence the jury considered in reaching its
verdict.
A. Yes.
TT at 77:10-15.
24
After objecting to the introduction of Aventura’s expert report on hearsay grounds, Drawdy
now attempts to rely on that report to argue that Aventura’s expert found the curb flare to be in
compliance. See DE 138 at 3, ¶ 15. To the extent Drawdy now relies on the report for its truth,
then both experts’ reports concluding that the curbs exceeded the Florida Building Code and
A.D.A. maximum standards, including Bertone’s Affidavit and Aventura’s own expert (See MC
Report, Defendant’s Exhibit No. 31 at 7 (“MC’s measurements were consistent with those
contained within the Robson Report”), show evidence of actual negligence.
Page 16 of 20
Further, even if Drawdy contends that Aventura had an obligation to construct the A.D.A.
ramp and A.D.A. flared curbs in accordance with applicable building codes and A.D.A.
standards, it is undisputed that such work was solely contracted to Drawdy. TT 146:19 to 147:525
Since the record establishes that the only liability theory that created the potential for
liability to be placed on Aventura was Mr. Henkle’s claim that the work completed by Drawdy
was improper, Great Divide is entitled to the full recovery of the $150,000 settlement.26
III.
Great Divide Is Entitled To Reimbursement Of Its Defense Costs And Expenses
The “Indemnification” clause of the Subcontract that states that Drawdy “expressly
agrees to indemnify and save harmless Aventura … from all claims, demands, suits, costs or
expenses because of bodily injury … sustained by any person(s) … arising out of his
operations, work or materials under this Subcontract…..” See Subcontract, Plaintiff’s Exhibit
No. 1 at 3 (emphasis added). Additionally, Florida law has long recognized that “an indemnitee
is entitled to recover, as part of the damages, reasonable attorney’s fees, and reasonable and
proper legal costs and expenses, which he is compelled to pay as a result of suits by or against
25
Q. When you subcontract work out to a subcontractor, you assume that they are
going to do that work according to the plans and specifications that they need to
abide by in accordance with the Florida Building Code and ADA codes, correct?
A. Yes; in this case Florida Building Codes.
Q. And you rely on these subcontractors to do their work properly.
A. Yes.
Q. And in this case, you relied on you Drawdy to do their work properly, correct?
A. Yes.
26
The Court similarly rejects Drawdy’s argument that Great Divide cannot recover defense costs
it paid. The authorities relied on by Drawdy are inapplicable, because they did not involve an
indemnification provision between two parties. See Cont’l Cas. Co. v. City of S. Daytona, 807
So. 2d 91, 93 (Fla. 5th DCA 2002) (general rule that insurer may not recover defense costs does
not apply where the risk was transferred to another by an indemnity provision in the contract).
Moreover, the authorities relied on by Drawdy only apply when an insurer seeks to recover
defense costs from another co-insurer. Drawdy, however, is not an insurer. See, e.g., Camp,
Dresser & McKee, Inc., 853 So. 2d at 1073 (contractual indemnity action was brought by
indemnitee, and its insurer) (emphasis added).
Page 17 of 20
him in reference to the matter against which he is indemnified.” Fountainbleau Hotel Corp. v.
Postol, 142 So. 2d 299, 300 (Fla. 2d DCA 1962) (emphasis added). Further since the indemnity
agreement includes a “hold harmless” provision, Drawdy is obligated to reimburse Aventura’s
defense costs. See, Shannon v. Kaiser Aluminum & Chemical Corp., 749 F.2d 689, 690-91 (11th
Cir. 1985) (“Under Florida law, the general rule is that an indemnitee under an indemnification
agreement is entitled to recover reasonable attorney’s fees and legal costs which he is compelled
to pay as a result of suits brought against him relating to matters for which he is entitled to be
indemnified. … This rule is equally applicable whether the indemnitee is successful in his
defense of the suit or not.”) (citations omitted); Miller & Co. of Birmingham, Inc. v. Louisville &
Nashville R.R. Co., 328 F.2d 73, 78 (5th Cir. 1964) (“holding that a hold harmless provision
obligates indemnitor to reimburse the indemnitee’s defense costs).
Here, the costs and expenses incurred by Great Divide in defending the underlying action
totaled $80,169.43. See Defense Invoices, Plaintiff’s Exhibit No. 16; see also Answers to
Interrogatories, Defendants Exhibit No. 29; see also TT at 81:15-22. At the bench trial,
Defendant argued that Plaintiff had not met its burden in proving that the defense costs were
reasonable and claimed that Plaintiff was required to hire an expert to offer an expert opinion on
the “reasonableness” of the costs and expenses. See TT at 224:13-23. However, Plaintiff has not
yet moved for the award of fees and costs in the instant action.27 Instead, Plaintiff is requesting
the award of “costs and expenses” incurred in defending the underlying personal injury lawsuit
pursuant to the “Indemnification” clause contained in the Subcontract. As such, this is an
27
It should be also be noted that in a fee application, “[t]he court ... is itself an expert on the
question and may consider its own knowledge and experience concerning reasonable and proper
fees and may form an independent judgment either with or without the aid of testimony of
witnesses as to value.” Holman v. Student Loan Xpress, Inc., 778 F. Supp. 2d 1306, 1310 (M.D.
Fla. 2011) (citing Campbell v. Green, 112 F.2d 143, 144 (5th Cir. 1940)).
Page 18 of 20
element of damages Plaintiff is seeking to recover and, therefore, independent expert testimony
was not required regarding the reasonableness of costs and expenses. Sea World of Florida, Inc.
v. Ace Am. Ins. Companies, Inc., 28 So. 3d 158, 160 (Fla. 5th DCA 2010) (“this case involves a
situation where [the plaintiff] was seeking to recover previously incurred attorney’s fees as an
element of damages in a breach of contract action. As such, [the plaintiff’s] burden of proof was
that which is required in a breach of contract action—the presentation of evidence “sufficient to
satisfy the mind of a prudent, impartial person” as to the amount of awardable damages. That is,
there must be a reasonable basis in the evidence for the amount awarded…. Although [the
plaintiff] was entitled to call an independent expert witness to corroborate the reasonableness of
[the] fees, it was not required to do so.”) (internal citations and quotations omitted).
Other than argument by Defendant’s counsel, there is no evidence in the record that the
rates charged, hours billed, or related costs are inappropriate, invalid, or otherwise unreasonable.
Further, based upon a review of the evidence submitted by Plaintiff, this Court has concluded
that the hourly rates28, hours billed29, and related costs30 are “sufficient to satisfy the mind of a
28
The hourly rates charged by the underlying defense range from $90 to $165 per hour, $90 for
paralegal work, $150 for associate work, and $165 for partner work. See Defense Invoices,
Plaintiff’s Exhibit No. 16 at 1, 43, 107. The Court notes that these rates are well within, if not
substantially less, than the current market rates recognized by courts. See e.g. MKT Reps. S.A. de
C. V v. Standard Chartered Bank Int’l, No.10-22963-CIV, 2013 WL 1289261 at *8-9 (Mar. 28,
2013) (awarding partners between $350-$500 per hour, associates $250 per hour, and paralegals
$125 per hour); Hermosilla v. Coca-Cola Company, No. 10-21418-CIV, 2011 WL 9364952, *12
(July 15, 2011) (awarding partners $425 per hour, associates $225 per hour, and paralegals $125
per hour).
29
The hours billed by the underlying defense also appear to be reasonable in light of the fact that
this case was litigated by the firm in federal court for over six month: 56.10 partner hours,
260.10 associate hours, 42.00 paralegal hours. See Defense Invoices, Plaintiff’s Exhibit No. 16 at
1, 43, 107.
30
The other costs and expenses incurred also appear to be reasonable, totaling $28,117.93. See
Defense Invoices, Plaintiff’s Exhibit No. 16 at 2-10, 126-138. Notably, this includes the cost of
retaining an expert to defend against the underlying plaintiff’s A.D.A. and Florida Building Code
Page 19 of 20
prudent, impartial person” as to the amount of awardable damages, especially in light of the fact
that all invoices were actually paid and incurred by Great Divide. Accordingly, pursuant to the
“Indemnification” clause, and consistent with Florida law, Great Divide is entitled to the full
recovery of the costs and expenses incurred in defending the underlying action.
CONCLUSION
It is ORDERED AND ADJUDGED that Judgment is entered in favor of Great Divide
Insurance Company. The Court will determine the monetary amount of this judgment upon
separate motion by Plaintiff as Plaintiff has not clearly provided record support for the total
amount sought. Plaintiff shall file a motion on damages within seven (7) days of the date of
rendition of this Order which contains detailed calculations, together with citations to the record.
The Clerk of the Court shall CLOSE THIS CASE.
DONE AND ORDERED in Chambers, Fort Pierce, Florida, this 18th day of May, 2018.
____________________________________
Robin L. Rosenberg
United States District Judge
Copies furnished to all counsel of record.
violation claims, which totaled $15,791.90. Id. at 2-4, 126-129; see also Aventura’s Expert
Report, Defendant’s Exhibit No. 31.
Page 20 of 20
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