Chartis Prop. & Cas. Co. v. Jassy

• Decision Date: 04 November 2013
• Docket Number: Case No: 8:12-cv-2087-T-30MAP
• Court: U.S. District Court — Middle District of Florida
• Parties: CHARTIS PROPERTY & CASUALTY COMPANY and AMERICAN HOME ASSURANCE COMPANY, Plaintiffs, v. JOHN D. JASSY, KAREN K. JASSY, JASON KUHN and COURTNEY MCDERMOTT, Defendants.

CHARTIS PROPERTY & CASUALTY COMPANY and AMERICAN HOMEASSURANCE COMPANY, Plaintiffs, v. JOHN D. JASSY, KAREN K. JASSY, JASON KUHN andCOURTNEY MCDERMOTT, Defendants.

Case No: 8:12-cv-2087-T-30MAP

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

DONE: November 4, 2013

ORDER

THIS CAUSE comes before the Court upon Plaintiffs' Motion for Summary Judgment (Dkt. #30), Defendants John D. Jassy and Karen K. Jassy's Dispositive Motion for Summary Judgment (Dkt. #53), Defendants Jason Kuhn and Courtney McDermott's Cross-Motion for Summary Judgment (Dkt. #45) and the Responses and Reply filed in opposition thereto (Dkts. #44, #45, #50, #51, #59). It is the Court's conclusion that the Plaintiff's Motion should be granted.

Background

Chartis Property & Casualty Company ("Chartis") and American Home Assurance Company ("American Home") filed this lawsuit for a declaratory judgment to determine whether they have a duty to defend and indemnify John D. Jassy and Karen K. Jassyagainst allegations in a state court action styled Kuhn v. Chris Campbell Builder, LLC f/k/a Chris Campbell Builder, Inc., et. al., Hillsborough County Circuit Court Case No. 12-CA-13029 (the "Underlying Action"). The Underlying Action arose out of the Jassys sale of their home to Defendants Jason Kuhn and Courtney McDermott. The Underlying Action contains five different causes of action against the Jassys, Count XI for breach of contract, Count XII for breach of covenant of good faith and fair dealing, Count XIII for negligent misrepresentation, Count XIV for negligence and Count XV for fraudulent misrepresentation.

The Jassys entered into a contract with Chris Campbell Builders, Inc., to construct a home. The builder acquired "Chinese Drywall" and installed it into the home. The Jassys occupied the home for three years before selling it to Kuhn and McDermott. They allege in their Second Amended Complaint that upon moving into the home, they noticed the "corrosive effect of exposure to Chinese Drywall and have suffered damage to personal and real property as a result of Defendants' conduct."

The Jassys had two homeowner's insurance policies and one personal excess liability policy that were cumulatively effective from June 5, 2010, to August 10, 2012. American Home issued the original homeowner's insurance policy effective from June 5, 2010, to June 5, 2011. The Jassys renewed that policy through Chartis effective from June 5, 2011, to June 5, 2012. The policy was cancelled on September 1, 2011, upon the sale of the property to Kuhn and McDermott. American Home issued a policy to the Jassys effective from November 12, 2011, to November 12, 2012; the Jassys cancelled that policy on August 10, 2012. These policies are collectively referred to as the"homeowner's insurance policies." The homeowner's insurance policies provide both property protection and liability protection to the Jassys. Additionally, Chartis issued a personal excess liability policy to the Jassys effective from June 5, 2010, to June 5, 2011. The Second Amended Complaint does not allege specific dates for the alleged property damage.

The homeowner's insurance policies contain the same relevant language; they provide that the insurer "will pay the costs to defend an insured person against any suit seeking covered damages for personal injury or property damage, even if the suit is false, fraudulent or groundless." The policies also provide that the insurer will indemnify the Jassys and "pay damages an insured is legally obligated to pay for personal injury or property damage caused by an occurrence covered by this policy...." The policies define "occurrence" to mean a "loss or accident" or an "offense" occurring during the policy period and "property damage" to mean "physical injury to, destruction of, or loss of use of tangible property and the resulting loss of its use." The only applicable exclusion in the homeowner's insurance policies' liability protection is for intentional acts as provided below:

Intentional Acts

Personal injury or property damage resulting from any criminal, willful, intentional or malicious act or omission by any person. We also will not cover claims for acts or omissions of any person which are intended to result in, or would be expected by a reasonable person to cause, property damage or personal injury. This exclusion applies even if the injury or damage is of a different kind or degree, or is sustained by a different person, than expected or intended. This exclusion does not apply to bodily injury if the insured person acted with reasonable force to protect any person or property.

The excess liability policy has very similar language and limits coverage to damages that are in excess of damages covered by an underlying insurance policy or where underlying insurance exists but coverage does not apply for a particular occurrence. The excess liability policy also has a slightly different exclusion clause specifically excluding coverage for acts:

Arising out of any criminal, willful, fraudulent, dishonest, intentional or malicious act or omission by any person, or the gaining of any profit or advantage to which an insured person is not entitled. We will not cover any amount for which the insured person is not financially liable or which are without legal recourse to the insured person. We also will not cover claims for acts or omissions of any person which are intended to result in, or would be expected by a reasonable person to cause, property damage or personal injury.

This exclusion applies even if the injury or damage is of a different kind or degree, or is sustained by a different person, than expected or intended. This exclusion does not apply to bodily injury if the insured person acted with reasonable force to protect any person or property.

Chartis and American Home argue that Kuhn and McDermott's causes of action, as alleged against the Jassys in the Underlying Action are either not covered by the policies or qualify for the intentional act exclusions. They therefore argue that they have no duty to defend or indemnify.

Discussion

I. Summary Judgment Standard

Motions for summary judgment should only be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show there is no genuine issue as to any material fact and that the movingparty is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The existence of some factual disputes between the litigants will not defeat an otherwise properly supported summary judgment motion; "the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original). The substantive law applicable to the claimed causes of action will identify which facts are material. Id. Throughout this analysis, the court must examine the evidence in the light most favorable to the non-movant and draw all justifiable inferences in its favor. Id. at 255. Under Florida law, when assessing an insurance dispute, the insured has the burden of proving that a claim against it is covered by the policy, and the insurer has the burden of proving an exclusion to coverage. Great Am. Assur. Co. v. Elliott, 846 F. Supp. 2d 1258 (M.D. Fla. 2012) aff'd, 511 Fed. Appx. 868 (11th Cir. 2013).

II. The Interpretation and Construction of Insurance Contracts in Florida

In diversity cases, a federal court applies the law of the forum in which it sits. Cambridge Mut. Fire Ins. Co. v. City of Claxton, 720 F.2d 1230, 1232 (11th Cir. 1983). Thus, in resolving the motions, the Court looks to Florida law. "Florida adheres to the rule that the legal effects of terms of the insurance policy and rights and obligations of persons insured thereunder are to be determined by the law of the state where the policy was issued." See LaTorre v. Conn. Mut. Life Ins. Co., 38 F.3d 538, 540 (11th Cir. 1994) (citing Wilson v. Ins. Co. of N. Am., 415 So. 2d 754, 755 (Fla. 3d DCA 1982)). Theparties agree that Florida law governs this insurance dispute since the policies were issued to the Jassys in Florida.

The interpretation and construction of an insurance contract is a question of law to be decided by the Court using generally accepted rules of contract construction. U.S. Fire Ins. Co. v. J.S. U.B., Inc., 979 So. 2d 871, 877 (Fla. 2007). In Florida, insurance provisions granting coverage are to be construed broadly, while exclusions are to be read narrowly. Westmoreland v. Lumbermens Mut. Cas. Co., 704 So. 2d 176, 179 (Fla. 4th DCA 1997). Insurance contracts are to be interpreted and construed in a manner that is "reasonable, practical, sensible, and just." Doctors Co. v. Health Mgmt. Assocs., Inc., 943 So. 2d 807, 809 (Fla. 2nd DCA 2006). Terms are to be given their plain and ordinary meaning and the language of the policy will control unless such language is ambiguous. Bethel v. Sec. Nat'l Ins. Co., 949 So. 2d 219, 222 (Fla. 3d DCA 2006).

An insurer's duty to defend is to be determined from the allegations in the complaint against the insured. National Union Fire Ins. Co. v. Lenox Liquors, Inc., 358 So. 2d 533 (Fla. 1977). The insurer must defend if the allegations in the complaint could bring the insured within the policy provisions of coverage. State Farm Mutual Auto. Ins. Co. v. Universal Atlas Cement Co., 406 So. 2d 1184 (Fla. 1st DCA 1981), rev. denied, 413 So. 2d 877 (Fla. 1982). See also Pioneer Nat'l Title Ins. Co. v. Fourth Commerce Props. Corp., 487 So. 2d 1051, 1054 (Fla. 1986) (a liability insurance carrier must defend the insured only when the initial pleadings fairly bring the case within the scope of coverage). If the complaint alleges facts partially within and partially outside the coverage of the policy, the insurer is obligated to defend the entire suit. Tropical Park,Inc. v. United...