AIG Premier Ins. Co. v. Rli Ins. Co.

• Decision Date: 15 September 2011
• Docket Number: Case No. 6:10–cv–712–Orl–22KRS.
• Citation: 812 F.Supp.2d 1315,23 Fla. L. Weekly Fed. D 62
• Parties: AIG PREMIER INSURANCE COMPANY, Plaintiff, v. RLI INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Florida

23 Fla. L. Weekly Fed. D 62

812 F.Supp.2d 1315

AIG PREMIER INSURANCE COMPANY, Plaintiff,

v.RLI INSURANCE COMPANY, Defendant.

Case No. 6:10–cv–712–Orl–22KRS.

United States District Court, M.D. Florida,Orlando Division.

Sept. 15, 2011.

Philip Glatzer, Aaron Leviten, Marlow Connell Abrams Adler Newman & Lewis, Coral Gables, FL, for Plaintiff.

Sina Bahadoran, Eric A. Hiller, Hinshaw & Culbertson, LLP, Miami, FL, for Defendant.

Order

ANNE C. CONWAY, District Judge.

This cause comes before the Court for consideration of Plaintiff AIG Premier Insurance Company's (“AIG”) Amended Motion for Summary Judgment (Doc. No. 37) and Defendant RLI Insurance Company's (“RLI”) Cross–Motion for Summary Judgment. (Doc. No. 38.) RLI opposes AIG's motion (Doc. No. 38) and AIG opposes RLI's cross-motion. (Doc. No. 45.) RLI filed a Reply (Doc. No. 52) and a Sur–Reply (Doc. No. 56) in support of its Cross–Motion, and AIG filed a Response to RLI's Sur–Reply. (Doc. No. 57.) For the reasons set forth below, the Court will grant RLI's Cross–Motion for Summary Judgment and deny AIG's Motion for Summary Judgment.

I. BACKGROUND

This is a declaratory judgment action arising out of an insurance coverage dispute. The parties do not dispute the following facts. Scott Philip Johnson filed a Complaint in the Circuit Court of Volusia County, Florida seeking damages for bodily injuries suffered when his motorcycle collided with a vehicle operated by Kenneth Johnson. (Doc. No. 21 ¶ 5; Doc. No. 25 ¶ 1.) At the time of the accident, Kenneth Johnson maintained a primary automobile liability insurance policy issued by Geico, which provided bodily injury liability limits of $300,000.00. (Doc. No. 21 ¶ 6; Doc. No. 25 ¶ 2.) Additionally, Kenneth Johnson maintained (1) a “Personal Umbrella Liability Policy” issued by RLI (the “RLI Policy”), which provided $1,000,000.00 of coverage in excess of the underlying automobile policy limits and (2) a “Group Personal Umbrella” policy issued by AIG to the Partners and Principals of PricewaterhouseCoopers, LLP (the “AIG Policy”), which provided $5,000,000.00 of coverage in excess of the underlying automobile policy limits.¹ (Doc. No. 21 ¶¶ 7, 9; Doc. No. 25 ¶¶ 4, 5). The underlying lawsuit by Scott Phillip Johnson settled for $750,000.00, and Geico tendered its $300,000.00 policy limit. (Doc. No. 21 ¶ 14; Doc. No. 25 ¶ 11.) Pursuant to the terms of a settlement agreement, RLI funded the remaining $450,000.00 and reserved its right to seek partial reimbursement from AIG. (Doc. No. 21 ¶ 14; Doc. No. 25 ¶ 11.)

Both the AIG Policy and RLI Policy are denominated “Umbrella Policies” and contain excess “other insurance” clauses. (Doc. Nos. 31–1 & 39–2.) AIG filed a Second Amended Complaint for Declaratory Relief to obtain a judgment declaring that AIG has no duty to contribute any coverage and thus no duty to reimburse RLI. (Doc. No. 21.) In its counterclaim for declaratory relief, RLI seeks a judgment declaring that the RLI and AIG policies are “mutually repugnant” and must contribute on a pro rata basis according to their respective policy limits, such that AIG must reimburse RLI in the amount of $375,000.00. (Doc. No. 25.) Alternatively, in its sur-reply RLI argues that under Florida law the mutual repugnancy rule does not apply and its policy should provide coverage only after AIG's policy limits are exhausted. (Doc. No. 56.) The “mutual repugnancy” rule is summarized as follows:

Where there is no incompatibility among other insurance provisions, they are to be enforced by their terms. Difficulties arise when two policies contain the same other insurance provision. For example, where two policies both have excess clauses, there is no direct way to determine which should be treated as excess simply by reference to the policies. In such cases, each policy provides that it does not attach until the other policy has paid its limits. If a court were to give literal effect to each of the excess clauses, each policy would be cancelled out and the final result would depend upon which policy was read first.

Courts have, therefore, developed what is known as the rule of mutual repugnancy. Under that rule, where two policies cover the same occurrence and both contain other insurance clauses, the excess insurance provisions are mutually repugnant and must be disregarded. Each insurer is then liable for a pro rata share of the settlement or judgment.

Twin City Fire Ins. Co. v. Fireman's Fund Ins. Co., 386 F.Supp.2d 1272, 1278 (S.D.Fla.2005) (citations and quotations omitted). Therefore, the Court must determine whether the AIG and RLI policies are mutually repugnant, such that RLI and AIG must fund the remaining $450,000.00 on a pro rata basis, or whether either the RLI or AIG policy must be exhausted first.

II. SUMMARY JUDGMENT STANDARD

Before the court grants summary judgment, the movant must show “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). The Court draws all inferences from the evidence in the light most favorable to the non-movant and resolves all reasonable doubt in the non-movant's favor. Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir.2006). This standard is not changed by cross motions for summary judgment. See Ernie Haire Ford, Inc. v. Universal Underwriters Ins. Co., 541 F.Supp.2d 1295, 1297 (M.D.Fla.2008) (citations and quotations omitted). Finally, “[s]ummary 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.” Id.

III. ANALYSIS

A. Choice of Law

The parties dispute whether the court should apply Florida law or New York law to resolve this issue.² A federal court sitting in diversity applies the choice of law rules of the forum state. Rando v. Govt. Emps. Ins. Co., 556 F.3d 1173, 1176 (11th Cir.2009) (quoting McGow v. McCurry, 412 F.3d 1207, 1217 (11th Cir.2005)). In Florida, the lex loci contractus choice-of-law rule determines the law governing an insurance contract. Id. (quoting State Farm Mut. Auto. Ins. Co. v. Roach, 945 So.2d 1160, 1163 (Fla.2006)). Pursuant to this rule, “the law of the jurisdiction where the contract was executed governs the rights and liabilities of the parties in determining an issue of insurance coverage.” Id. “When the contract deals with an insurance policy, the locus contractus is generally the state where the insured executed the insurance application.” Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1060 (11th Cir.2007). The delivery of the policy can constitute the “last act” necessary to execute a contract. See, e.g., Bloch v. Berkshire Ins. Co., 585 So.2d 1137, 1138 (Fla. 3d DCA 1991) (“As to the choice of law issue, we agree with the trial court that this insurance contract, which was delivered to [plaintiff] in New York where he then resided, was regulated by New York, rather than Florida, law.”). However, “[t]he determination of where a contract was executed is fact-intensive, and requires a determination of ‘where the last act necessary to complete the contract [wa]s done.’ ” Prime Ins. Syndicate, Inc. v. B.J. Handley Trucking, Inc., 363 F.3d 1089, 1092–93 (11th Cir.2004) (quoting Pastor v. Union Cent. Life Ins. Co., 184 F.Supp.2d 1301, 1305 (S.D.Fla.2002)) (upholding the district court's conclusion that the communication of an oral binder constituted the acceptance of an offer to purchase insurance and therefore was the last act necessary to complete the contract).

RLI contends that the last act to execute both the RLI Policy and the AIG Policy occurred in Florida. (Doc. No. 38 p. 4.) Conversely, AIG contends that New York law governs the AIG Policy. (Doc. No. 37 p. 6.) AIG does not argue that New York law governs the interpretation of the RLI Policy. Instead, AIG argues that RLI does not establish that its policy was executed in Florida. (Doc. No. 45 p. 19.)

1. The AIG Policy

AIG submits the affidavit of Anna Brusco, an AIG policy underwriter, who avers that the AIG Policy “was issued and delivered in New York to named insured, Price Waterhouse Coopers, L.L.P.” and that the binder for the AIG Policy “was issued in the state of New York prior to issuance of the final version of the policy, which ... was also issued in New York.” (Doc. Nos. 32 & 44.) Thus, the affidavit establishes that the “last act” necessary to execute the AIG Policy occurred in New York. As discussed below, the arguments advanced by RLI to establish Florida as the place of execution of the AIG Policy are not persuasive.

RLI primarily relies on the affidavit of Kenneth Johnson as evidence that the AIG Policy was delivered in Florida. Kenneth Johnson avers that the “Certificate of Insurance Declarations for the AIG policy was delivered to me at my permanent address in Florida.” (Doc. No. 50–1 ¶ 6.) However, “[i]t is well-settled that a certificate of insurance is not part of an insurance contract” and thus does not bear on the court's choice of law determination. ³ Bailey v. Netherlands Ins. Co., 615 F.Supp.2d 1332, 1336–37 (M.D.Fla.2009) (citing Boseman v. Conn. Gen. Life Ins. Co., 301 U.S. 196, 203, 57 S.Ct. 686, 81 L.Ed. 1036 (1937)). Therefore, Kenneth Johnson's affidavit does not establish Florida as the state in which the “last act” occurred because delivery of the certificate is not legally dispositive. ⁴

RLI also argues the “last act” occurred in Florida because the AIG Policy required Kenneth Johnson to procure underlying personal automobile insurance, and he obtained it through Geico in Florida. (Doc. No. 38 p. 22.) For support, RLI relies on Fioretti v. Mass. Gen. Life Ins. Co, in which the Eleventh Circuit reasoned that the insured's execution of a Statement of Good Health constituted the “last act” necessary to complete a life insurance policy. 53 F.3d 1228, 1236 (11th Cir.1995). However, the insurance...