Essex Builders Group, Inc. v. Amerisure Ins. Co.

• Decision Date: 21 September 2005
• Docket Number: No. 6:04CV1838ORL22JGG.,6:04CV1838ORL22JGG.
• Citation: Essex Builders Group, Inc. v. Amerisure Ins. Co., 429 F.Supp.2d 1274 (M.D. Fla. 2005)
• Parties: ESSEX BUILDERS GROUP, INC., Plaintiff, v. AMERISURE INSURANCE COMPANY and OneBeacon Insurance Company, Defendants.
• Court: U.S. District Court — Middle District of Florida

429 F.Supp.2d 1274

ESSEX BUILDERS GROUP, INC., Plaintiff, v.AMERISURE INSURANCE COMPANY and OneBeacon Insurance Company, Defendants.

No. 6:04CV1838ORL22JGG.

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

September 21, 2005.

Brenton Neil Ver Ploeg, Stephen A. Marino, Jr., Ver Ploeg & Lumpkin, P.A., Miami, FL, Robert Patrick Major, Winderweedle, Haines, Ward & Woodman, P.A., Orlando, FL, for Plaintiff.

E.A. "Seth" Mills, Jr., Brett D. Divers, Mills Paskert Divers, P.A., Tampa, FL, for Intervenor-Plaintiff, Travelers Casualty and Surety Co.

John Bond Atkinson, Rebecca Ann Brownell, Atkinson & Brownell, P.A., Miami, FL, Jeffrey Russell Davis, Stuart J. Freeman, Brasfield, Fuller, Freeman, & O'Hern, P.A., St. Petersburg, FL, for Defendants.

ORDER

CONWAY, District Judge.

I.INTRODUCTION

This cause comes before the Court for consideration of the following motions filed in this insurance coverage dispute: DefendantOneBeacon Insurance Company's Motion for Partial Summary Judgment(Doc. 37);Defendant OneBeacon Insurance Company's Motion to Dismiss Count II of Amerisure's Third-Party Claims and Cross-Claim and Demand for Attorneys' Fees Under Florida Statute§ 627.428 (Doc. 72);PlaintiffEssex Builders Group, Inc.'s Notice of Partial Joinder in OneBeacon's Motion to Dismiss, etc. (Doc. 88); DefendantAmerisure Insurance Company's Motion to Stay/Abate Plaintiff's Claim for "Bad Faith" Damages Pending Resolution of Insurance Coverage Dispute (Doc. 84); and Third-Party DefendantNational Union Fire Insurance Company of Pittsburgh, PA's Motion to Dismiss Count II of the Third-Party Complaint (Doc. 97).After carefully considering these motions and associated filings, the Court issues the rulings set forth herein.

II.BACKGROUND AND PROCEDURAL HISTORY

In March 1999, PlaintiffEssex Builders Group, Inc.("Essex") entered into an agreement to act as general contractor on an apartment construction project.Intervenor-PlaintiffTravelers Casualty & Surety Company's predecessor, Reliance Insurance Company, issued a performance bond on behalf of Essex.Following project completion, the owner experienced water damage to the apartment buildings.After incurring substantial costs in remedying the problem, the owner demanded reimaursernenc from Essex.The owner also made a claim against the bond.Essex's commercial general liability ("CGL") insurers, DefendantsOneBeacon Insurance Company("OneBeacon") and Amerisure Insurance Company("Amerisure"), received notice of the claim against Essex, but did not pay it.Ultimately, Travelers paid the project owner $6.25 million to resolve the owner's claim.

In the present lawsuit, Essex sues One-Beacon and Amerisure for breach of the CGL insurance contracts.Essex seeks the amount due under the policies, damages incurred by Essex in defending against the owner's claim, consequential damages, pre- and post-judgment interest, and attorneys' fees and costs pursuant to Fla. Stat. § 627.428.Travelers has intervened as a plaintiff, based on its subrogation rights obtained through Essex.Travelers seeks the first $6.25 million allegedly due under OneBeacon's and Amerisure's CGL policies, along with attorneys' fees and other expenses.

In turn, Amerisure has filed third-party claims against Liberty Mutual Fire Insurance Company("Liberty Mutual"); National Union Fire Insurance Company of Pittsburgh, PA ("National Union"); Maryland Casualty Company("Maryland Casualty"); Great American Insurance Company("Great American"); Assurance Company of America ("Assurance"); National Trust Insurance Company("National Trust"); and St. Paul Fire & Marine Insurance Company("St.Paul"); as well as a cross-claim against OneBeacon.¹Amerisure asserts that Essex was an additional insured under primary and/or umbrella liability policies these other insurers issued to subcontractors on the apartment construction project.Apart from these subcontractor policies, Amerisure asserts thac One Beacon issued a policy directly to Essex, and that Essex was also covered by a policy issued by Great American.Amerisure maintains that if its CGL policy issued to Essex is found to cover the claims of the project owner and Travelers, then these other insurance policies also afford coverage for such claims.Accordingly, Amerisure seeks a declaratory judgment concerning whether, and to what extent, all of these policies cover the claims asserted by the project owner and Travelers, which of these policies are responsible for defense costs, and the manner in which the various policies interact with each other.Additionally, Amerisure asserts a claim for equitable contribution and equitable and contractual subrogation against these other insurers.

III.ONEBEACON'S MOTION FOR PARTIAL SUMMARY JUDGMENT

A.Procedural Background

In its initial summary judgment filing, OneBeacon argued that it had no obligation to indemnify Essex in connection with a state lawsuit filed by Travelers.However, this Court noted that "Essex seeks damages resulting from OneBeacon's failure to respond to and make payment on the apartment owner's claim, not indemnification from liability in the pending [state] action brought by Travelers."Doc. 82at 2.Accordingly, the Court deemed Essex's initial argument to be meritless.Id. at 3.The Court adheres to that ruling here.OneBeacon's initial summary judgment argument simply does not confront the allegations of Essex's complaint.Accordingly, on this point, One-Beacon has failed to demonstrate its entitlement to judgment as a matter of law.

The inquiry does not end here, though.After Travelers and Essex filed responses to OneBeacon's summary judgment motion, OneBeacon was granted permission to file a reply brief.In its reply, OneBeacon "introduced for the first time the argument that the `legally obligated to pay' clause in the insurance policy negates coverage for a breach of contract claim, which is how OneBeacon characterizes the project owner's original claim."Doc. 82at 3.The Court determined that this argument warranted further analysis, and therefore required Essex and Travelers to file surreplies.Id.Travelers has complied; Essex has not.

B.The Policy Language

The "Insuring Agreement"section of the CGL policy OneBeacon issued Essex provides: "We will pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies."Commercial General Liability Coverage Form (attached as Ex. "A" to Doc. 1), § I.A.1.a.The policy further states: "This insurance applies to `bodily injury' and `property damage' only if ... [t]he `bodily injury' or `property damage' is caused by an `occurrence' that takes place in the `coverage territory', and ... [t]he `bodily injury' or `property damage' occurs during the policy period."Id., § I.A.1.b(1) & (2).The "definitions"section of the policy defines "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."Id., § V.12.However, the policy does not define the word "accident."

C.The Parties' Positions

At the outset, the Court observes that OneBeacon's motion is "partial" in the sense that it seeks summary judgment only regarding the duty to indemnify, not the separate duty to defend.

Distilled to its essence, OneBeacon's summary judgment argument is that the policy's "legally obligated to pay" language refers only to tort liability, rather than contract-based liability.OneBeacon contends that since the underlying claims of the apartment project owner against Essex essentially represent an attempt to recover economic loss stemming from a breach of a construction contract, OneBeacon's CGL policy does not afford coverage for such claims.OneBeacon contends that while Florida courts have not directly addressed the issue of whether a contractual claim by a construction project owner against a contractor is covered under the contractor's CGL policy, "this argument has been soundly rejected by other courts across the country."Doc. 59at 3.Additionally, OneBeacon asserts that "Florida courts have universally recognized that general liability policies do not cover contractual liabilities of its [sic] insured."Id.

In response, Travelers maintains that the pertinent issue "is not whether Essex's claims sound in tort; it is whether there was an `occurrence' under the Policy."Doc. 114at 6.Travelers contends that recent decisions of the Florida Supreme Court and a Florida intermediate appellate court confirm that the events which gave rise to the project owner's claim against Essex constitute an "occurrence," resulting in coverage under the policy.Travelers further asserts that OneBeacon's interpretation of the "legally obligated to pay" clause would render other policy provisions meaningless, in contravention of Florida law.

D.Analysis

OneBeacon cites non-Florida authority for the proposition that "[c]ourts across the country universally have interpreted the `legally obligated to pay' coverage provision, identical to the phrase at issue here, as referring to liability sounding in tort, not in contract."Doc. 59at 3(footnote omitted)(citing, e.g., Data Specialties, Inc. v. Transcontinental Ins. Co.,125 F.3d 909, 911(5th Cir.1997)).However, in this diversity jurisdiction case, this Court's task is to ascertain and apply Florida law.Mindful of that premise, OneBeacon also relies on the Florida Supreme Court decision of LaMarche v. Shelby Mut. Ins. Co.,390 So.2d 325(Fla.1980).

In LaMarche, homeowners made a claim against their general contractor's insurer, seeking damages for alleged defective materials and workmanship.The Florida Supreme Court did not directly confront the meaning of "legally obligated to pay" as that phrase is used in a CGL policy.Rather, the question presented was whether "the coverage provided to general contractors by a comprehensive liability policy . . ....