AMERICAN SUR. & CAS., CO. v. LAKE JACKSON PIZZA

• Decision Date: 21 June 2001
• Docket Number: No. 1D00-2053.,1D00-2053.
• Citation: 788 So.2d 1096
• Parties: AMERICAN SURETY & CASUALTY COMPANY, a Florida insurance company, now known as Sun States Insurance Group, Appellant, v. LAKE JACKSON PIZZA, INC. d/b/a Hungry Howie's, et al., Appellees.
• Court: Florida District Court of Appeals

788 So.2d 1096

AMERICAN SURETY & CASUALTY COMPANY, a Florida insurance company, now known as Sun States Insurance Group, Appellant, v. LAKE JACKSON PIZZA, INC. d/b/a Hungry Howie's, et al., Appellees.

No. 1D00-2053.

District Court of Appeal of Florida, First District.

June 21, 2001.

R. Steven Rawls and Lisa A. Oonk of Butler Burnette Pappas, Tampa, and Michael Shelley, Tallahassee, for Appellant.

Louis K. Rosenbloum of Louis K. Rosenbloum, P.A., Pensacola; Fred A. Cunningham of Slawson, Cunningham, Whalen & Stewart, P.L., Palm Beach Gardens; Donald M. Hinkle of Fonvielle, Hinkle & Lewis, Tallahassee; and Edgar C. Booth of Booth & Horton, Tallahassee, for Appellees.

PER CURIAM.

Appellant, American Surety & Casualty Company [American], seeks review of an order determining it had both a duty to defend and a duty to indemnify its insured, Lake Jackson Pizza, Inc. [LJP]. We reverse.

From June 1, 1997 through June 1, 1998, LJP was insured by a policy issued by American which provided general liability coverage. The policy contained the following insuring language:

A. COVERAGES

1. Business liability

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury"... to which this insurance applies. We will have the right and duty to defend any "suit" seeking those damages. We may at our discretion investigate any "occurrence" or offense and settle any claim or "suit" that may result.

The policy also contained the following relevant exclusion:

B. EXCLUSIONS

1. Applicable to Business Liability Coverage—

This insurance does not apply to:

. . .

g. Aircraft, Auto or Watercraft

"Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any ... "auto" ... owned or operated by or rented or loaned to any insured.

The term "arising out of" was not defined by the policy.

On August 9, 1997, LJP's employee, Richard Anderson, was involved in an automobile accident while returning from a pizza delivery. An infant in another vehicle involved in the accident was severely injured. An action was filed against Anderson and LJP seeking damages. The complaint alleged LJP's vicarious liability based on Anderson's status as LJP's employee and negligence premised on LJP's negligent hiring, supervision and training of Anderson. Relying on the automobile liability exclusion, American did not defend LJP against the underlying action. LJP ultimately entered into a consent judgment in the underlying action.

On September 2, 1999, American filed an action seeking a declaration of its rights and obligations under its policy with respect to the underlying action. American asserted there was no coverage for LJP's alleged vicarious liability or negligence because the bodily injury complained of arose from an automobile accident.¹ The parties filed motions for summary judgment. After a hearing on the motions, the trial judge entered an order finding American owed LJP both a duty to defend and a duty to indemnify against the allegations of negligent hiring, training and supervision of Anderson.

In finding American had a duty to defend and indemnify LJP, the trial judge relied on Smith v. General Accident Insurance Company of America, 641 So.2d 123 (Fla. 4th DCA 1994), and Westmoreland v. Lumbermens Mutual Casualty Company, 704 So.2d 176 (Fla. 4th DCA 1997),review dismissed, 717 So.2d 534 (Fla.1998). The trial judge also found that American had a duty to indemnify because of the application of the "concurrent cause" doctrine. The trial judge found that the efficient cause of the loss was the active negligence of LJP, and that but for the active negligence of LJP the car crash, which was the other concurring cause of the subject loss, would not have occurred.

In Smith v. General Accident Insurance Company of America, Smith was involved in a rear-end collision with a taxi and sued the taxi's owner, Captain's Cab, and the taxi driver. Smith alleged negligence in operation of the taxi, but also alleged negligent hiring because Captain's Cab knew or should have known that the driver was unfit and unqualified to operate a taxi. Captain's Cab had a general liability policy, but did not have an auto policy that covered the taxi involved. The general liability policy excluded "bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of (1) an automobile or aircraft owned or operated by or rented or loaned to any insured, or (2) any other automobile or aircraft operated by any person in the course of his employment by any insured." The insurer refused to defend. The panel on appeal determined the insurer had a duty to defend the negligent hiring claim.

In Westmoreland v. Lumbermens Mutual Casualty Company, 704 So.2d 176 (Fla. 4th DCA 1997), the engine of an unoccupied motor vehicle was left running in a closed, unventilated garage, and the air conditioning equipment—which was also located in the garage—dispersed carbon monoxide poison gasses throughout the house. All of the occupants, including the owner, died from the fumes. Several of the victims' estates sued the estate of the owner. The owner was insured by a liability insurance policy providing homeowner's coverage, which excluded bodily injury arising out of the ownership, maintenance, use, loading or unloading of motor vehicles. The complaints alleged the deaths were proximately caused by the failure of the owner to maintain the premises in a safe condition, and to warn of or correct any dangerous conditions as to which she reasonably had knowledge.² The insurer brought a declaratory judgment action seeking an adjudication that because there was no coverage under the policy for the claims, the insurer owed no duty to defend the owner's estate against these claims.

The majority of the panel on appeal in Westmoreland determined the insurer did owe a duty to defend against these claims, reading the allegations "of the complaints in the premises liability causes of action to assert that the deaths were legally or proximately caused not by the running of the engine of the motor vehicle but instead by reason of the negligent placement of the air conditioning equipment in the garage, or by the failure to open the garage door or to ventilate the garage, or by the failure to locate carbon monoxide detection devices throughout the house." The majority concluded "that a jury could theoretically find that any one of these alleged acts of negligence was the legal cause of the deaths." 704 So.2d at 187.

A contrary result was reached in Hagen v. Aetna Casualty, 675 So.2d 963 (Fla. 5th DCA), review denied, 683 So.2d 483 (Fla. 1996). Hagen owned a small retail carpet store which neither owned nor had access to a forklift. Richardson, an employee of Carpet Transport, delivered carpet to the business. It was common practice to pull the carpet out of the delivery truck with a vehicle owned by Hagen. One day, a roll of carpet fell on Richardson. An action was filed alleging the business failed to have proper equipment for the unloading of carpet. Aetna's policy excluded bodily injury arising...