Hartford Ins. Co. v. BellSouth Telecommunications, Inc.

• Decision Date: 24 July 2002
• Docket Number: No. 4D01-3859.,4D01-3859.
• Citation: 824 So.2d 234
• Parties: HARTFORD INSURANCE COMPANY OF THE MIDWEST, Hartford Insurance Company of the Southeast, and Hartford Casualty Insurance Company, Appellants, v. BELLSOUTH TELECOMMUNICATIONS, INC., and Cotton Construction, Inc., Appellees.
• Court: Florida District Court of Appeals

824 So.2d 234

HARTFORD INSURANCE COMPANY OF THE MIDWEST, Hartford Insurance Company of the Southeast, and Hartford Casualty Insurance Company, Appellants, v. BELLSOUTH TELECOMMUNICATIONS, INC., and Cotton Construction, Inc., Appellees.

No. 4D01-3859.

District Court of Appeal of Florida, Fourth District.

July 24, 2002.

Rehearing Denied September 4, 2002.

Gina E. Caruso of Hinshaw & Culbertson, Fort Lauderdale, for appellants.

John R. Hargrove and Robert C. Weill of Heinrich Gordon Hargrove Weihe & James, P.A., Fort Lauderdale, for appellees.

HAZOURI, J.

On August 8, 2000, BellSouth Telecommunications, Inc. ("BellSouth") and Cotton Construction, Inc. ("Cotton"), (collectively, "Plaintiffs") filed suit against Hartford Insurance Company of the Midwest ("Midwest"), Hartford Casualty Insurance Company ("Casualty") and Hartford Insurance Company of the Southeast ("Southeast"), (collectively, "Hartford") for breach of an insurance coverage contract and bad faith. The claim for bad faith was abated, pending resolution of the insurance coverage claim. The parties filed cross-motions for summary judgment on the insurance coverage claim.

Plaintiffs contend that Midwest and Southeast issued two separate policies, one with $1 million in coverage for automobile liability and one with $1 million in coverage for general liability, for a total of $2 million in coverage. Hartford contends that Midwest and Southeast issued one single multi-flex¹ policy with two coverage parts for a total of $1 million in coverage. Midwest and Southeast are wholly-owned subsidiaries of Hartford Financial Services Group.

The underlying facts indicate that Plaintiffs entered into a contract, whereby Cotton agreed to perform utility construction for BellSouth in the Florida Keys. Pursuant to the contract, Cotton agreed to indemnify, defend and hold BellSouth harmless for any and all claims or suits incident to performance of the work contemplated by the contract. Cotton's indemnification obligation for BellSouth's own negligence was limited to $1 million. Cotton also agreed to obtain both commercial general liability insurance and automobile liability insurance, naming BellSouth as an additional insured.

As a result, Cotton obtained the policy at issue from Hartford. It is a special multi-flex policy, number 21UENPG2367. The policy includes a "Common Policy Declarations" section, which states, "This special multi-flex policy consists of the Common Policy Declaration Page, the Policy Jacket, Common Policy Conditions, Coverage Parts and any other Forms and Endorsements issued to be a part of this policy." It lists the coverage parts as the Commercial Auto Coverage Part ("Auto Part") and the Commercial General Liability Coverage Part ("CGL Part"). It further indicates a premium of $15,898 for the Auto Part and a premium of $18,587 for the CGL Part. Cotton is the named insured, while BellSouth is an additional insured. The parties do not dispute that Cotton paid the separate premiums for the Auto Part and the CGL Part. The Auto Part was issued by Midwest. The CGL Part was issued by Southeast.

The Common Policy Conditions section sets forth conditions which apply to all Coverage Parts. The included clauses deal with cancellation, changes, examination of books and records, inspections and surveys, premiums and transfer of rights and duties.

The Auto Part follows and includes the following: the Business Auto Coverage Form, Endorsement for Florida Personal Injury Protection, Florida Uninsured Motorists Coverage Non Stacked and Endorsement for Florida Changes. The Business Auto Coverage Form includes a table of contents and the following Sections: Covered Autos, Liability Coverage, Physical Damage Coverage, Business Auto Conditions and Definitions. The Liability Coverage Section provides:

We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies caused by an "accident" and resulting from the ownership, maintenance or use of a covered "auto."

The limit of liability is $1 million for each "accident." The Business Auto Conditions Section contains a clause, which prohibits the stacking of liability limits under subheading B. General Conditions²:

8. TWO OR MORE COVERAGE FORMS OR POLICIES ISSUED BY US

If this Coverage Form and any other Coverage Form or policy issued to you by us or any company affiliated with us apply to the same "accident," the aggregate maximum Limit of Insurance under all the Coverage Forms or policies shall not exceed the highest applicable Limit of Insurance under any one Coverage Form or policy issued by us or an affiliated company specifically to apply as excess insurance over this Coverage Form.

The Auto Part does not contain any clauses referencing the CGL Part.

The CGL Part follows and includes the following: Quick Reference table of contents, Declarations Pages, Commercial General Liability Coverage Form, Endorsement Florida Changes, Special Broad Form Commercial General Liability Endorsement, Endorsement—Additional Insured. The Commercial General Liability Coverage Form includes the following sections: Coverages, Who is Insured, Limits of Insurance, Commercial General Liability Conditions and Definitions. The limit of liability is $1 million for each "occurrence." The CGL Part does not contain any Forms or Endorsements with an antistacking clause or that reference the Auto Part.

During the policy period, Cotton's subcontractor was operating a boom truck when he allegedly caused an accident. As a result, a personal injury action, Torries v. BellSouth Communications, Inc., Case No. CL 94-13 AG, was filed against Plaintiffs. BellSouth filed a cross-claim against Cotton for indemnification under their contract. Hartford provided Plaintiffs in the instant case with a defense while this underlying action was pending. The case was ultimately settled. Hartford paid a total of $2 million toward the settlement on behalf of Cotton. Hartford paid $1 million under an umbrella policy issued by Hartford Casualty, which is not at issue in the instant action. Midwest paid $1 million in primary coverage toward settlement on behalf of Cotton, under the multi-flex policy, which is the subject of the instant action. Midwest and Southeast refused to pay anything further on the basis that coverage was thereby exhausted. Hartford did not obtain a release from Bell-South relating to its cross-claim for indemnification.³

At the hearing on the motions for summary judgment, Plaintiffs argued: the Auto Part and the CGL Part are two separate policies; even if the Auto Part and CGL Part are not two separate policies, the antistacking clause in the Auto Part does not apply to the CGL Part; the two parts provide distinct coverage for $1 million; the $1 million they received was paid by Midwest under the Auto Part; and, they are entitled to $1 million under the CGL Part. Hartford argued: there is just one policy as the policy contains a common policy declarations page and one policy number; the antistacking provision in the Auto Part applies to all Forms, including the Forms in the Auto Part and the Forms in the CGL Part; the policy liability limit is $1 million which has been paid; and Plaintiffs are not entitled to coverage under the Auto Part because the boom truck which allegedly caused the accident in the underlying action is not a covered vehicle.

The trial court entered a Partial Final Judgment, granting Plaintiffs' Motion for Summary Judgment, denying Hartford's Motion for Summary Judgment and ordering Southeast to pay Plaintiffs $1 million, together with pre-judgment interest of $549,999, for a total of $1,549,999.

Hartford argues the trial court erred when it determined that Plaintiffs were entitled to an additional $1 million under the multi-flex policy and granted partial summary judgment in their favor. Hartford contends that the antistacking clause in the Auto Part unambiguously applies to the CGL Part, limiting liability coverage to $1 million per accident or occurrence.⁴ We agree.

Construction of an insurance contract and the determination of whether Florida law requires the insurer to provide coverage are questions of law subject to de novo review on appeal. See Siegle v. Progressive Consumers Ins. Co., 788 So.2d 355, 357 (Fla. 4th DCA 2001),

approved, 819 So.2d 732 (Fla.2002). In Siegle, this court set forth the legal principles relied upon when interpreting an insurance policy, as follows:

We start with the basic legal principle in Florida that the scope and extent of insurance coverage is defined by the language and terms of the policy. See, e.g., Union Am. Ins. Co. v. Maynard, 752 So.2d 1266, 1268 (Fla. 4th DCA 2000)

; United States Fire Ins. Co. v. Morejon, 338 So.2d 223, 225 (Fla. 3d DCA 1976). Where the language of the policy is plain and unambiguous, "there is not need for judicial construction and the contract must be enforced as written." Fla. Power & Light Co. v. Penn Am. Ins. Co., 654 So.2d 276, 278 (Fla. 4th DCA 1995) (citing Great Global Assurance Co. v. Shoemaker, 599 So.2d 1036 (Fla. 4th DCA 1992)). Any ambiguities in insurance policy contracts are interpreted liberally in favor of the insured and strictly against the insurer. See Prudential Prop. & Cas. Ins. Co. v. Swindal, 622 So.2d 467 (Fla.1993). Lastly, we note that exclusions from coverage must be clearly defined. See Liberty Mut. Ins. Co. v. Capeletti Bros., Inc., 699 So.2d 736, 738 (Fla. 3d DCA 1997).

Id. at 359. Other than these general principles, we can find no Florida cases interpreting the "antistacking clause" involved in the instant case.

In interpreting the antistacking clause, we find the decisions in Sweeden v. Farmers Insurance Group, 71 Ark.App. 381, 30 S.W.3d 783 (2000), and Lonergan v. Nationwide Mutual Insurance Co., 663 A.2d 480 (Del.Super.Ct.1995), persuasive. In Sweeden, an Arkansas Court of Appeal found the clause prevented the stacking of coverage...