The Marbella Condominium Association et al v. RSUI Indemnity Company
Filing
42
ORDER ON MOTION FOR JUDGMENT ON THE PLEADINGS granting 31 Motion for Judgment on the Pleadings. Signed by Judge Beth Bloom on 1/30/2017. (lan)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 16-cv-80987-BLOOM/Valle
THE MARBELLA CONDOMINIUM
ASSOCIATION, and NORMAN SLOANE,
Plaintiffs,
v.
RSUI INDEMNITY COMPANY,
Defendant.
_____________________________________/
ORDER ON MOTION FOR JUDGMENT ON THE PLEADINGS
THIS CAUSE is before the Court upon Defendant RSUI Indemnity Company’s
(“RSUI”) Motion for Judgment on the Pleadings, ECF No. [31] (the “Motion”). The Court has
carefully reviewed the Motion, all opposing and supporting filings, the record and the applicable
law, and is otherwise fully advised in the premises. For the reasons set forth below, the Motion
is granted.
I.
Background
Plaintiffs The Marbella Condominium Association (“Marbella”) and Norman Sloane
(“Sloane”) (together, “Plaintiffs”) initiated this action against RSUI alleging breach of an
insurance contract and seeking a declaration that Plaintiffs are covered under a Directors and
Officers Liability Policy, ECF No. [1-2] at 18-58 (the “Policy”), issued by RSUI for claims
arising from the installation of hurricane impact windows and sliding glass doors at a
condominium. See ECF No. [1-2] at 8-17 (“Complaint”). On November 5, 2013, Jack Leone
(“Leone”) and Franklyn Field (“Field”) (together, the “Underlying Plaintiffs”) filed suit in
Florida state court against Marbella, Sloane, and two other parties for the installation of non-
Case No. 16-cv-80987-BLOOM/Valle
compliant windows (the “Underlying Action”). See ECF No. [1-2] at 64-80 (the “Underlying
Complaint”). Marbella and Sloane tendered the Underlying Action to RSUI for coverage, which
RSUI denied based upon several Policy exceptions. See ECF No. [10-2]. After amending their
complaint, Underlying Plaintiffs again gave notice to RSUI. RSUI then updated its coverage
position to state that coverage also did not exist because the insured v. insured exception applied
due to Leone’s status as former association president. See ECF No. [10-3] at 4. Underlying
Plaintiffs amended their complaint again, ultimately resulting in the filing of a third amended
complaint, ECF No. [35-4] (“Third Amended Complaint”), asserting claims against Marbella and
Sloane only. Thereafter, Underlying Plaintiffs, Marbella, and Sloane entered into a mediated
settlement agreement, which settled all of the claims in the Underlying Action. See ECF No.
[35-6]. Plaintiffs now seek a declaration of their rights pursuant to the Policy, and damages for
RSUI’s failure to provide coverage for the Underlying Action.
RSUI has asserted a
counterclaim, seeking a declaration that the Policy does not provide coverage for the Underlying
Action.
II.
Legal Standard
“After the pleadings are closed – but early enough not to delay trial – a party may move
for judgment on the pleadings.” Fed. R. Civ. P. 12(c). A party may move for judgment on the
pleadings if there are no material facts in dispute.
See Palmer & Cay, Inc. v. Marsh &
McLennan Cos., 404 F.3d 1297, 1303 (11th Cir. 2005); Riccard v. Prudential Ins. Co., 307 F.3d
1277, 1291 (11th Cir. 2002). In rendering judgment, a court may consider the substance of the
pleadings and any judicially noticed facts. Cunningham v. Dist. Attorney’s Office for Escambia
Cty., 592 F.3d 1237, 1255 (11th Cir. 2010). “A motion for judgment on the pleadings is
governed by the same standard as a Rule 12(b)(6) motion to dismiss.” Guarino v. Wyeth LLC,
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823 F. Supp. 2d 1289, 1291 (M.D. Fla. 2011). As such, a complaint must provide “more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (explaining that Rule 8(a)(2)’s pleading standard “demands more than an unadorned,
the-defendant-unlawfully-harmed-me accusation”).
Nor can a complaint rest on “‘naked
assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 557 (alteration in original)). “To survive a motion to dismiss a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Id. (quoting Twombly, 550 U.S. at 570). Through this lens, the Court considers the
instant Motion.
III.
Discussion
In its Motion, RSUI argues that the Underlying Action is not covered due to several
Policy exclusions, including an insured v. insured exclusion, a prior acts exclusion, a
builder/developer exclusion, and a contract exclusion.
Plaintiffs counter that none of the
exclusions properly apply. Because the issue of whether the insured v. insured exclusion of the
Policy applies is dispositive, the Court considers it first.
The parties agree that Florida law governs the interpretation of the Policy. “Under
Florida law an insurance policy is treated like a contract, and therefore ordinary contract
principles govern the interpretation and construction of such a policy. As with all contracts, the
interpretation of an insurance contract is a question of law to be determined by the court.”
Vozzcom, Inc. v. Great Am. Ins. Co. of N.Y., 666 F. Supp. 2d 1332, 1336 (S.D. Fla. 2009)
(quoting Fabricant v. Kemper Indep. Ins. Co., 474 F. Supp. 2d 1328, 1330 (S.D. Fla. 2007)),
aff'd, 374 F. App’x 906 (11th Cir. 2010); see also Camico Mut. Ins. Co. v. Rogozinski, 2012 WL
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4052090, at *6 (M.D. Fla. Sept. 13, 2012) (“Summary judgment is appropriate in declaratory
judgment actions seeking a declaration of coverage when the insurer’s duty, if any, rests solely
on the applicability of the insurance policy, the construction and effect of which is a matter of
law.”) (quoting Northland Cas. Co. v. HBE Corp., 160 F. Supp. 2d 1348, 1358 (M.D. Fla.
2001)). Florida law requires that “in construing insurance policies, courts should read each
policy as a whole, endeavoring to give every provision its full meaning and operative effect.”
United States Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 877 (Fla. 2007). Additionally,
“Florida courts have said again and again that insurance contracts must be construed in
accordance with the plain language of the policy.” Vozzcom, 666 F. Supp. 2d at 1336 (quoting
Siegle v. Progressive Consumers Ins. Co., 819 So. 2d 732, 735 (Fla. 2002)). Indeed, “[i]n
construing terms appearing in 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) (per curiam).
The Policy defines several key terms relevant to the present issue as follows:
G. Insured means any Insured Organization and/or any Insured
Person.1
I. Insured Person means any past, present or future director,
officer, trustee, Employee, or any committee member of a duly
constituted committee of the Insured Organization.
Policy at 49. Furthermore, the Policy contains an Insured v. Insured exclusion at Section IV. ¶ 7,
which provides:
The Insurer shall not be liable to make any payment for Loss in
connection with any Claim made against any Insured:
7. Brought by or on behalf of any Insured, except:
1
The parties do not dispute that Marbella is an Insured Organization or that Sloane is an Insured Person.
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d. Any Claim brought by any past director, officer,
trustee, manager or equivalent executives of the Insured
Organization who have not served as a director, officer,
trustee, manager or equivalent executive for at least
three (3) years prior to the date such Claim is first
made, and if the Claim is brought and maintained
totally independent of and without the solicitation,
assistance, active participation or intervention of the
Insured Organization or any Insured Person not
described in this paragraph 7.d.
Id. at 36, 51. Therefore, the Policy does not provide coverage for claims brought by an Insured
against another Insured, which includes both Insured Persons and an Insured Organization.
Central to the application of this exclusion is whether Field or Leone, the Underlying Plaintiffs,
are Insured under the terms of the policy.
“Under Florida law, when a term in an insurance policy is ambiguous, the court must
construe it in favor of the insured and against the insurer.” Wendt, 205 F.3d at 1261-62 (citing
Gas Kwick, Inc. v. United Pac. Ins. Co., 58 F.3d 1536, 1539 (11th Cir.1995)) (emphasis added).
Here, the parties do not dispute that Field was not an Insured under the policy. See ECF No. [35]
(“Response”) at 4. Plaintiffs also do not appear to dispute that Leone is an Insured as defined in
paragraph 7.d, and the parties do not argue that the provision in the Policy is ambiguous or
unclear. Given the lack of ambiguity, the plain meaning of the terms control irrespective of their
exclusionary or limiting effect on the Policy’s coverage. See Vozzcom, 666 F. Supp. 2d at 1339
(“[W]hile it is true that ambiguous insurance policy provisions must be construed in favor of the
insured, there is simply no ambiguity in this case.”); Bond Safeguard Ins. Co. v. Nat'l Union Fire
Ins. Co. of Pittsburgh, Pa., 628 F. App’x 648, 653 (11th Cir. 2015) (“Exclusionary provisions
that are clear and unambiguous must be enforced according to their terms, and ‘courts may not
rewrite contracts, add meaning that is not present, or otherwise reach results contrary to the
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intentions of the parties.’”) (quoting Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d
528, 532 (Fla. 2005)).
RSUI argues that with the presence of an Insured (Leone) making a claim against another
Insured (Marbella and Sloane) in the Underlying Action, the Insured v. Insured exclusion applies
to bar coverage for the entire Underlying Action. Plaintiffs argue that the presence of Field as an
Underlying Plaintiff prevents the Insured v. Insured exclusion from applying; and furthermore,
that the differences between the damages alleged by Field and Leone in the Underlying Action
make their claims individual and distinct, therefore triggering the application of the Policy’s
allocation clause.2 Plaintiffs’ arguments are unavailing based upon two cases, which inform the
Court’s analysis: PowerSports, Inc. v. Royal & Sunalliance Insurance Company, 307 F. Supp. 2d
1355 (S.D. Fla. 2004) and Sphinx International, Inc. v. National Union Fire Insurance Company
of Pittsburgh, Pennsylvania, 412 F.3d 1224 (11th Cir. 2005).
In PowerSports, as here, there existed both not insured and insured underlying plaintiffs
and the insurance policy contained a similar insured v. insured exclusion. 307 F. Supp. 2d at
2
The Predetermined Allocation endorsement in the Policy provides:
SECTION V.- CONDITIONS, F. Allocation is deleted and replaced by the following:
F. Assuming that a duty to defend has been triggered in connection with a Claim, the Insurer
shall not seek to allocate with respect to Defense Expenses incurred in connection with
such Claim and shall pay One Hundred Percent (100%) of such Defense Expenses.
If any other Loss covered under this policy and loss not covered under this policy are
jointly incurred, however, either because a Claim includes both covered and non-covered
matters or covered and non-covered causes of action or because a Claim is made against
both an Insured and any other parties not insured by this policy, then the Insured and the
Insurer shall use their best efforts to fairly and reasonably allocate payment under this
policy between covered Loss and non-covered loss based on the relative legal exposures
of the parties with respect to covered and non-covered matters or covered and noncovered causes of action.
All other terms and conditions of this policy remain unchanged.
ECF No. [1-2] at 37.
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1359. The underlying defendant who sought coverage under the policy was also an insured. Id.
at 1358. Based upon the policy exclusion, the insurance company denied coverage for the entire
underlying action. Id. Thereafter, the underlying defendant sued the insurance company making
the same arguments that Plaintiffs make here. See id. at 1359. The court in PowerSports found
that where the underlying action involves claims by both insured and not insured plaintiffs from
its inception, the plain language of the insured v. insured provision bars coverage for the entire
underlying action. Id. at 1361. Furthermore, the court expressly rejected the argument that
because the underlying plaintiffs had asserted distinct claims, a portion of the underlying action
would not fall victim to the exclusion, when read in conjunction with the policy’s allocation
clause. Id. at 1361-62. Similarly, in Sphinx, an insured brought the underlying lawsuit, and then
recruited other plaintiffs, who were not insured. 412 F.3d at 1230-31. The insurance company
denied coverage for the underlying action based upon an insured v. insured exclusion, and the
district court held that the exclusion barred coverage. Id. at 1225-26. On appeal, the Eleventh
Circuit affirmed the district court’s decision, based largely upon the fact that an insured plaintiff
initiated the underlying action. Id. at 1231.
Plaintiffs argue that the case at bar is more similar to Level 3 Communications, Inc. v.
Federal Insurance Company, 168 F.3d 956 (7th Cir. 1999), in which the court determined that an
insured v. insured exclusion did not operate to bar coverage. This Court disagrees. In Level 3,
the underlying case was initiated by persons whose claims were covered, and only later was
another plaintiff, who was an insured, permitted to join. Id. at 957. The Level 3 court reasoned
that the insured v. insured exclusion in the policy did not operate to bar coverage under those
circumstances because such an application “would produce the odd result that a claim fully
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covered when made could become fully uncovered when another plaintiff was permitted to join
it.” Id. at 960.
Those are not the facts before the Court in this case. Rather, as in PowerSports and
Sphinx, from its inception, the Underlying Action involved claims by both an insured (Leone)
and an individual not insured under the Policy (Field), and was therefore not covered from its
inception. As a result, the Insured v. Insured exclusion in this case operates to bar coverage for
the entire Underlying Action. Moreover, this Court rejects Plaintiffs’ attempt to distinguish
Underlying Plaintiffs’ claims on the basis that they sought distinct damages. A review of the
Third Amended Complaint in the Underlying Action reveals that while the measure of damages
may be different by virtue of Field and Leone owning separate units, the claims asserted were
brought on behalf of both together, and stemmed from the same installation of non-compliant
glass. As such, the allocation provision in the Policy does not apply since the duty to defend was
not triggered. See supra at n.2; see also PowerSports, Inc., 307 F. Supp. at 1362 (“Allocation
clauses only become relevant in the event that a loss involves both covered and uncovered
claims. Whereas this action involves uncovered claims only, the allocation question is moot.”).
Because the Insured v. Insured exclusion applies to completely bar coverage for the
Underlying Action, the Court need not consider the potential application of additional Policy
exclusions.
IV.
Conclusion
Based on the foregoing, the Motion, ECF No. [31], is GRANTED and the Court will
enter judgment in favor of RSUI upon its Counterclaim by separate order.
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DONE AND ORDERED in Miami, Florida this 30th day of January, 2017.
_________________________________
BETH BLOOM
UNITED STATES DISTRICT JUDGE
cc:
Counsel of Record
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