Allied World Nat'l Assurance Co. v. Md. Cas. Co., CASE NO. 13-cv-62502-GAYLES

• Decision Date: 12 February 2019
• Docket Number: CASE NO. 13-cv-62502-GAYLES
• Citation: 357 F.Supp.3d 1181
• Court: U.S. District Court — Southern District of Florida
• Parties: ALLIED WORLD NATIONAL ASSURANCE COMPANY, as Subrogee of Doctor's Associates, Inc., Plaintiff/Counter-Defendant, v. MARYLAND CASUALTY COMPANY, Defendant/Counter-Plaintiff.

357 F.Supp.3d 1181

ALLIED WORLD NATIONAL ASSURANCE COMPANY, as Subrogee of Doctor's Associates, Inc., Plaintiff/Counter-Defendant,

v.MARYLAND CASUALTY COMPANY, Defendant/Counter-Plaintiff.

CASE NO. 13-cv-62502-GAYLES

United States District Court, S.D. Florida.

Signed February 12, 2019

Jennifer Anderson Hoffman, Marlow Connell Abrams Adler Newman & Adler, Coral Gables, FL, for Plaintiff.

Dustin Craig Blumenthal, Goldberg Segalla, West Palm Beach, FL, Gary I. Khutorsky, Morgan Fairthorne Spector, John R. Catizone, Litchfield Cavo LLP, Fort Lauderdale, FL, Troy Beecher, Goldberg Segalla, LLP, Orlando, FL, for Defendant.

Justin J. Garcia, Pro Hac Vice, Raymond A. Garcia, Pro Hac Vice, Garcia & Milas, P.C., New Haven, CT, Kimberly Cannon Hirschman, Daniels Kashtan, Maximo Alexander Santiago Gaebe Mullen Antonelli Esco & Dimatteo Coral Gables, FL for Cross Defendant.

ORDER

DARRIN P. GAYLES, UNITED STATES DISTRICT JUDGE

THIS CAUSE comes before the Court on Defendant/Counter-Plaintiff Maryland Casualty Company's ("Maryland Casualty") Motion for Summary Judgment ("Motion"). [ECF No. 133]. The Court has reviewed the Motion, the record, arguments of counsel, and is otherwise fully advised. For the reasons that follow, Maryland Casualty's Motion is GRANTED .

BACKGROUND

I. The Policies

This dispute centers on the proper construction of an insurance policy. According to the allegations in the Amended Complaint, Plaintiff/Counter-Defendant Allied World National Assurance Company ("Allied World") is an insurance company. Allied World insured Doctor's Associates, Inc., ("DAI") under a general liability umbrella policy (the "Allied World Policy"). There is no dispute that DAI was covered under the terms of the Allied World Policy at all relevant times. For the purposes of this litigation, Maryland Casualty contends (and Allied World does not dispute in its Response) that Allied World is properly considered a subrogee of DAI. See [ECF No. 133, at 7 (citing Nat'l Ins. Co. of Hartford v. Fortune Constr. Co. , 320 F.3d 1260, 1270 n. 13 (11th Cir. 2003) ].¹

DAI is the national franchisor of Subway brand restaurants. During the relevant period, DAI granted several Subway franchises to Florida entities, who subsequently assigned or ran their franchises pursuant to DAI's franchise agreements.² DAI also entered into a business relationship with Family Development Partners ("FDP") under the terms of a "Development Agreement." Under the Development Agreement, FDP would provide consulting services to DAI for operation of South Florida Subway franchises. The Development Agreement expressly stated that FDP was not an employee or partner to DAI; it was an independent contractor employed specifically to develop and service Subway restaurants. The Development Agreement also required that FDP purchase general liability insurance and name DAI as an additional insured.

Defendant/Counter-Plaintiff Maryland Casualty insured FDP under policy no. PAS 04964476 (the "Maryland Casualty Policy"). The Maryland Casualty Policy contained a commercial general liability coverage form agreeing to "pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ " when the insurance applied. [ECF No. 132-2, at 159]. Section II designates who is an insured, as follows:

SECTION II – WHO IS AN INSURED

* * *

2. Each of the following is also an insured:

* * *

e. Any person or organization with whom you agree, because of a written contract, to provide insurance such as is afforded under the policy, but only with respect to liability arising out of your operations, "your work" or facilities owned or used by you.

This provision does not apply:

(1) To any vendor, concessionaire, lessor of leased equipment, grantor of a franchise, engineer, architect or surveyor;

or

(2) Unless the contract has been signed prior to the date of "bodily injury", "property damage", or "personal or advertising injury."

[ECF No. 132-3, at 84]. The Maryland Casualty Policy goes on to state that those FDP contracted with would be included as insureds "only in connection with liability arising out of the operation of [its] business; [and] only to the extent that coverage is afforded to that person or organization by ‘underlying insurance....’ " [ECF No. 132-3, at 168].

The parties dispute how or if each of these contracts—the Allied World Policy, the Maryland Casualty Policy, and the Development Agreement—provide coverage for the Subway franchises and their employees.

II. The Underlying Litigation

On September 14, 2011, while the Development Agreement was in force, an employee at one of the South Florida Subway restaurants was injured during a robbery. At the time of the incident, DAI was the franchisor of that Subway, and Subway Two, Inc., ("Subway Two") was the franchisee. The employee sued to recover damages for his injuries (the "Farooq Action"). The Farooq Action carried two theories alleging DAI's liability as franchisor of Subway Two: that DAI was vicariously liable for Subway Two's negligence and that DAI was negligent for failing to provide proper security.

DAI obtained a release from the litigation after Allied World funded a settlement. The settlement, in part, provided that 75% of the funds were for the release of FDP and others to resolve DAI's vicarious liability. However, DAI was not sued on a theory of vicarious liability as to FDP and FDP was not a defendant in that action.

III. This Action

Allied World now brings this subrogation suit against Maryland Casualty, seeking to recover fees incurred in the Farooq Action, including attorney's fees and settlement funds incurred in obtaining the release for FDP. Maryland Casualty argues it had no duty to defend DAI (or Allied World) and thus is not obligated to indemnify Allied World. Maryland Casualty filed a cross-claim for declaratory relief against FDP and a counterclaim against Allied World. [ECF No. 55]. The Court previously dismissed certain claims in the Amended Complaint, leaving only (1) Allied World's Claim for Breach of Contract against Maryland Casualty; (2) Allied World's Claim for a Declaration Regarding Maryland Casualty's Duty to Defend and Indemnify; and (3) Maryland Casualty's Counter-Claim and Cross-Claim. [ECF No. 77]. The Court also dismissed other Cross-Plaintiffs/Defendants (FDP and its officers) to Maryland Casualty's Cross-Claims, leaving only Maryland Casualty and Allied World as parties to this litigation. [ECF No. 130]. Maryland Casualty now moves for summary judgment against Allied World.

ANALYSIS

I. Summary Judgment Standard

Summary judgment, pursuant to Federal Rule of Civil Procedure 56(a), "is appropriate only if ‘the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.’ " Tolan v. Cotton , 572 U.S. 650, 134 S.Ct. 1861, 1866, 188 L.Ed.2d 895 (2014) (per curiam) (quoting Fed. R. Civ. P. 56(a) ). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is "genuine" when a reasonable trier of fact, viewing all of the record evidence, could rationally find in favor of the nonmoving party in light of his burden of proof. Harrison v. Culliver , 746 F.3d 1288, 1298 (11th Cir. 2014). And a fact is "material" if, "under the applicable substantive law, it might affect the outcome of the case." Hickson Corp. v. N. Crossarm Co. , 357 F.3d 1256, 1259–60 (11th Cir. 2004). The Court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. SEC v. Monterosso , 756 F.3d 1326, 1333 (11th Cir. 2014). However, to prevail on a motion for summary judgment, "the nonmoving party must offer more than a mere scintilla of evidence for its position; indeed, the nonmoving party must make a showing sufficient to permit the jury to reasonably find on its behalf." Urquilla-Diaz v. Kaplan Univ. , 780 F.3d 1039, 1050 (11th Cir. 2015).

II. Duty to Defend/Duty to Indemnify

Whether an insurer has a duty to defend "is determined by examining the allegations in the complaint filed against the insured." Lime Tree Vill. Cmty. Club Ass'n v. State Farm Gen. Ins. Co. , 980 F.2d 1402, 1405 (11th Cir. 1993) (citing Nat'l Union Fire Ins. Co. v. Lenox Liquors Inc. , 358 So.2d 533, 536 (Fla. 1978) ). "To determine whether [the insurer] ha[s] a duty to defend [the insured], the Court looks only to the allegations in the Underlying Complaint and the terms of the Policy ." Evanston Ins. Co. v. Haven S. Beach, LLC , 152 F.Supp.3d 1370, 1374 (S.D. Fla. 2015) (emphasis added). If the Underlying Complaint "alleges facts that fairly and potentially bring the suit within policy coverage," the insurer has a duty to defend its insured. Jones v. Fla. Ins. Guar. Ass'n , 908 So.2d 435, 442–43 (Fla. 2005) (citations and internal punctuation omitted). By contrast, "[w]here the allegations in the complaint show that no coverage exists or a policy exclusion applies, no duty to defend arises." James River Ins. Co. v. Bodywell Nutrition, LLC , 842 F.Supp.2d 1351, 1354 (S.D. Fla. 2012) (citing Posigian v. Am. Reliance Ins. Co. of N.J. , 549 So.2d 751, 753 (Fla. 3d DCA 1989) ). "The allegations of the complaint govern the duty to defend even if they may be factually incorrect or without merit," Sunshine Birds & Supplies, Inc. v. U.S. Fid. & Guar. Co. , 696 So.2d 907, 910 (Fla. 3d DCA 1997), but if those allegations leave any doubt as to the duty to defend, the question must be resolved in favor of the insured, Trizec Props. Inc. v. Biltmore Const. Co. , 767 F.2d 810, 811-12 (11th Cir. 1985).

While the duty to defend "is controlled by the allegations in the complaint against the...