Key v. Allstate Ins. Co., 95-3210

Citation90 F.3d 1546
Decision Date01 August 1996
Docket NumberNo. 95-3210,95-3210
PartiesEsther KEY, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, a foreign corporation, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Robert J. Mayes, Louis K. Rosenbloum, Troy A. Rafferty, Levin, Middlebrooks, Mabie, Thomas, Mayes & Mitchell, Pensacola, Florida, Russell R. Winer, Tampa, Florida, for Appellant.

Darryl L. Gavin, Rumberger, Kirk & Caldwell, Orlando, Florida, for Appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before COX and BARKETT, Circuit Judges, and BRIGHT *, Senior Circuit Judge.

BARKETT, Circuit Judge:

Appellant-plaintiff Esther Key brought this suit against Appellee-defendant Allstate Insurance Co. seeking insurance coverage for a bodily injury claim resulting from an accident involving one of her vehicles. The district court granted summary judgment in favor of Allstate, and Key appeals. We reverse the decision of the district court.

Background

In May 1990, Key owned two cars: a Hornet, which was insured by Underwriters Guarantee Insurance Company ("Underwriters"), and an Astro, which was insured by Allstate. In January 1991, Key sold her Hornet, and purchased a Fiesta on January 19, 1991. The Fiesta replaced the Hornet under her Underwriters' policy, which covered personal injury and property damages; however, she did not purchase bodily injury coverage from Underwriters. On January 23, 1991, the Fiesta was involved in an accident in which Norma Rowe was injured and the Fiesta was totaled. Norma Rowe sued Key and in April 1994 the jury awarded Rowe $465,404.25. On March 6, 1991, Key added the Fiesta to her Allstate policy effective March 5, 1991, and she subsequently incurred a premium increase of $20.10 for the period March 5, 1991 to April 16, 1991.

The Allstate policy on her Astro includes a "newly acquired ownership" provision, which reads:

Additional four wheel private passenger or utility autos you acquire ownership of during the premium period. This auto will be covered if we insure all other private passenger or utility autos you own. You must, however, notify us within 60 days of acquiring the auto and pay any additional premium.

Key sought coverage from Allstate for the bodily injury damages, claiming that on the day of the accident her Fiesta was a "newly acquired vehicle" pursuant to her Allstate policy. Allstate denied coverage. Key subsequently sued Allstate seeking damages, interest, costs and attorney's fees resulting from Allstate's refusal to defend, negotiate, settle, and provide coverage on Norma Rowe's claim against her.

On appeal, Key argues that according to the plain language of Allstate's "newly acquired automobile" provision, an automobile is covered under the policy if four criteria are met: (1) the automobile at issue was acquired during the policy's premium period; (2) Allstate insured all other autos owned by the insured at the time of acquisition; (3) the insured notified Allstate within 60 days of acquiring the new automobile; and (4) the insured pays any additional premium. Key argues that these four elements were met with respect to the Fiesta, and therefore, her Allstate policy covered the Fiesta at the time of the accident.

Allstate argues that the Fiesta was not covered in light of the purpose of the contract provision and the intent of the parties. Allstate contends that the purpose of the "newly acquired automobile" clause is to afford an insured a temporary, reasonable opportunity to acquire specific coverage upon purchase of a new vehicle. According to Allstate, as soon as Key obtained specific insurance coverage for the Fiesta with Underwriters, the Fiesta lost its status as a "newly acquired automobile" and became a "described automobile," i.e., an automobile described in some insurance policy. Thus, the Fiesta was not covered by Allstate at the time of the accident. Moreover, Allstate contends that when Key purchased insurance from Underwriters she manifested her intent to forgo coverage under the Allstate policy. In the alternative, Allstate argues that even if coverage is determined by the four criteria discussed above, Key failed to meet conditions (2) and (4).

Discussion

Under ordinary principals of contract interpretation, a court must first examine the natural and plain meaning of a policy's language. Dahl-Eimers v. Mutual of Omaha Life Ins. Co., 986 F.2d 1379, 1382 (11th Cir.1993). Under Florida law, if the terms of an insurance contract are clear and unambiguous, a court must interpret the contract in accordance with its plain meaning, and, unless an ambiguity exists, a court should not resort to outside evidence or the complex rules of construction to construe the contract. Rigel v. National Casualty Co., 76 So.2d 285, 286 (Fla.1954); Old Dominion Ins. Co. v. Elysee, Inc., 601 So.2d 1243, 1245 (Fla. 1 DCA 1992); Southeastern Fire Ins. Co. v. Lehrman, 443 So.2d 408, 408-09 (Fla. 4 DCA 1984); see also Dahl-Eimers, 986 F.2d at 1382; United Nat'l Ins. Co. v. Waterfront New York Realty Corp., 994 F.2d 105, 108-09 (2d Cir.1993); National Fidel. Life Ins. Co. v. Karaganis, 811 F.2d 357, 361 (7th Cir.1987); Carey v. State Farm Mutual Ins. Co., 367 F.2d 938, 941 (4th Cir.1966); Imperial Casualty & Indemnity Co. v. Relder, 308 F.2d 761, 764-65 (8th Cir.1962). This is so because the terms of a contract provide the best evidence of the parties' intent, see McGhee Interests, Inc. v. Alexander Nat'l Bank, 102 Fla. 140, 135 So. 545, 547 (1931), and where the language is plain a court should not create confusion by adding hidden meanings, terms, conditions, or unexpressed intentions, see Dahl-Eimers, 986 F.2d at 1382; Carey, 367 F.2d at 941. Moreover, in determining whether a contract is ambiguous, the words should be given their natural, ordinary meaning, Emergency Assoc. v. Sassano, 664 So.2d 1000, 1003 (Fla. 2 DCA 1995); Continental Casualty Co. v. Borthwick, 177 So.2d 687, 689 (Fla. 1 DCA 1965), and ambiguity does not exist simply because a contract requires interpretation or fails to define a term, Dahl-Eimers, 986 F.2d at 1382.

If, on the other hand, a court determines that the terms of an insurance contract are ambiguous, or otherwise not susceptible to a reasonable construction, a court may look beyond the contractual language to discern the intent of the parties in making the agreement. In general, ambiguities in contracts are construed against their drafters. Hurt v. Leatherby Ins. Co., 380 So.2d 432, 434 (Fla.1980). With respect to insurance policies in particular, which are often long, detailed, and difficult for most insureds to decipher, insurers, as drafters of insurance policies, have an obligation to state explicitly their intentions to limit coverage upon the happening of certain events or under certain circumstances. Fireman's Fund Ins. Co. v. Vordermeier, 415 So.2d 1347, 1350 (Fla. 4 DCA 1982); National Merchandise Co., Inc. v. United Service Automobile Assoc., 400 So.2d 526, 530 (Fla. 1 DCA 1981); see also Carey, 367 F.2d at 941-42. Thus, ambiguities in insurance contracts generally are construed in favor of providing coverage. Rigel, 76 So.2d at 286; Old Dominion, 601 So.2d at 1245; Lehrman, 443 So.2d at 409; Relder, 308 F.2d at 764-65.

We find no ambiguity in the "newly acquired automobile" provision, and therefore, find it unnecessary to analyze the unstated intentions of the parties or the purposes of the provision. Under the plain language and natural reading of the provision, Allstate's insurance coverage automatically extends to an automobile as long as four conditions are met: (1) ownership of the car was acquired during the premium period; (2) Allstate insured all other vehicles that the insured owned; (3) the insured notified Allstate within 60 days of acquiring the car; and (4) the insured pays any additional premium. If Allstate intended to insure such automobiles only so long as no other specific insurance was taken out on them, or only until some other event occurs, then Allstate should have stated so expressly. See Carey, 367 F.2d at 941-42.

We recognize, however, that a court is required to give effect to the terms of a contract only if doing so is reasonable and does not contravene public policy. National Merchandise Co., 400 So.2d at 530; United States Fire Ins. Co. v. Morejon, 338 So.2d 223, 225 (Fla. 3 DCA 1976). To that end, Allstate's newly acquired automobile clause does not provide coverage under circumstances that would lead to a double recovery. See Pennsylvania Nat'l Mutual Casualty Ins. Co. v. Ritz, 284 So.2d 474, 478 (Fla. 3 DCA 1973).

Allstate is liable for the bodily injury damages at issue in this case because all four conditions were met, and the Fiesta is not otherwise insured for bodily injury damage so as to afford Key a double recovery. With respect to the four criteria, compliance with conditions (1) and (3) is uncontested, and therefore need not be analyzed. We find that Key satisfied condition (2) because she owned only one other car, the Astro, at the time she acquired the Fiesta, and the Astro was insured through Allstate. We also find that Key complied with her obligation to pay additional premium pursuant to condition (4).

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