Luciano v. Congar Int'l Corp.
| Decision Date | 30 March 2018 |
| Docket Number | Civil No. 16-2008 (ADC) |
| Parties | MIGUEL SIERRA LUCIANO, et al., Plaintiffs, v. CONGAR INTERNATIONAL CORPORATION, et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Before the Court are two motions for summary judgment. Crossclaim defendant Twin City Fire Insurance Company ("Twin City") moved for summary judgment against crossclaim plaintiff Congar International Corporation ("Congar"). ECF No. 66. Congar cross-moved for summary judgment against Twin City. ECF No. 73. For the reasons explained below, the Court GRANTS Twin City's motion and DENIES Congar's motion.
This case arises from an employment discrimination suit filed by a group of former-Congar employees who were terminated on or around October 5, 2015 (the "employmentdispute"). ECF Nos. 66-2 at 1-2; 73-3 at 1; 73-4 at 1. The employees individually filed charges of discrimination with the Anti-Discrimination Unit of the Department of Labor ("ADU") and the Equal Employment Opportunity Commission ("EEOC") on October 8, 2015; December 15, 2015; December 18, 2015; and January 12, 2016.2 ECF Nos. 66-2 at 2; 73-3 at 1. Congar, through its General Counsel, became aware of the employees' discrimination claims on February 4, 2016. ECF Nos. 66-2 at 2; 73-3 at 3. Congar informed its insurer, Twin City, of the employment dispute by a letter dated July 20, 2016. ECF Nos. 66-2 at 3; 73-3 at 3; 73-7. Twin City denied Congar's request for coverage in a letter dated January 4, 2017.3 ECF Nos. 73-4 at 5; 73-9.
The employees ultimately filed the underlying lawsuit against Congar and its then-unknown insurance company on June 1, 2016, and they filed an amended complaint on October 26, 2016, identifying Twin City as an additional defendant. ECF Nos. 1, 21. Congar asserted a crossclaim for breach of contract and declaratory judgment against Twin City based on TwinCity's failure or refusal to indemnify and defend Congar in the employment dispute. ECF No. 34 at 41-44. At the time Congar filed its crossclaim, Twin City had not formally denied coverage. Twin City responded to Congar's crossclaim with a counter crossclaim, seeking declaratory relief concerning its obligation to provide coverage for Congar for the claims asserted in the employment dispute and in separate state court proceedings related to Congar's October 5, 2015 reduction in force. ECF No. 37 at 6-13. Congar responded, refuting Twin City's assertions and arguing that Twin City waived any defense against coverage when it failed to provide timely notice of its denial of coverage, taking until January 4, 2017, "more than five months" from Congar's notice of claim, to formally deny coverage under Florida's Claims Administration Statute, Fla. Stat. § 627.426. ECF Nos. 44 at 9-10; 73 at 5.
Congar and the plaintiffs settled the underlying employment dispute out of court and stipulated to dismiss the plaintiffs' amended complaint with prejudice as to all defendants. ECF Nos. 55, 57, 60. Congar's crossclaim and Twin City's counter crossclaim are the only remaining claims before the Court. 4 Twin City subsequently filed for summary judgment, which Congar disputed and cross-moved for summary judgment. ECF Nos. 66, 73.
At the heart of the parties' competing summary judgment motions is their disagreement over which policy applies to the employment dispute and whether Congar satisfied the applicable policy's notice requirements. Twin City argues that the 2015 policy applies because Congar's insurance claim arose in 2015, when the first of its former employees filed EEOC and ADU discrimination charges on October 8, 2015. ECF No. 66 at 12. Twin City asserts that it is not obligated to indemnify Congar in the employment dispute because Congar failed to timely notify Twin City of the insurance claim pursuant to the terms of its 2015 policy. Id. at 12-13. According to Twin City, the 2015 policy required Congar to inform Twin City of its insurance claim within sixty days of the policy's January 31, 2016 expiration, i.e., by April 1, 2016. Id. at 4, 13. Although Congar's General Counsel became aware of the employment dispute within that reporting time frame, on February 4, 2016, Congar did not notify Twin City of the employment dispute until July 20, 2016. Id. at 5. Accordingly, Twin City asserts it properly denied coverage under the terms of the applicable policy.
Congar responded and cross-moved for summary judgment on the basis that the 2016 insurance policy controls, not the 2015 policy, because Congar, through its General Counsel, first learned of the claim in 2016. ECF No. 73 at 3-4. Moreover, according to Congar, its notice to Twin City was timely under the 2016 policy because the policy bases the time for notice on when the General Counsel becomes aware of the claim. Id. at 4. Thus, Congar argues, under either policy Twin City wrongfully withheld coverage. In addition, Congar asserts application of the Florida Claims Administration Statute and the notice-prejudice rule as bars to Twin City's coverage defense that Congar's notice under the 2015 policy, to the extent that policy applies, was untimely. Id. at 5-6.
Summary judgment is appropriate "if the movant shows 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). "A 'genuine' issue is one that could be resolved in favor of either party, and a 'material fact' is one that has the potential of affecting the outcome of the case." Calero-Cerezo v. United States Dept. of Justice, 355 F.3d 6, 19 (1st Cir. 2004). Here, the parties do not dispute the underlying facts. Rather, their dispute centers on the proper interpretation and application of the insurance policies.
Next, the Court must determine which state's laws guide its interpretation of the disputed contractual provisions. "It is a black-letter rule that state substantive law supplies the rules of decision for a federal court sitting in diversity jurisdiction." Lexington Ins. Co. v. General Accident Ins. Co. of Am., 338 F.3d 42, 46 (1st Cir. 2003) (citing Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). "Thus, the initial question involves which source of law should guide our interpretive efforts." Id. To determine what state law is relevant, the federal court applies the forum state's choice of law framework. Id; accord In re Volkswagen & Audi Warranty Extension Litig., 692 F.3d 4, 14 (1st Cir. 2012). In Puerto Rico, "the laws of the jurisdiction with the most significant contacts to the disputed issues will apply." Allstate Ins. Co. v. Occidental Int'l, Inc., 140 F.3d 1, 3 (1st Cir. 1998) (citation and internal quotation marks omitted); accord Rodríguez-Miranda v. Benin, 829 F.3d 29, 43 n.18 (1st Cir. 2016). "'Among the contacts to consider are the parties' place of incorporation and of business, the place where the injurious conduct occurred, the place where the injury materialized, and the place where the relationship between the parties is centered.'" Rodríguez-Miranda, 829 F.3d at 43 n. 18 (quoting Goya Foods, Inc. v. Unanue-Casal, 982 F.Supp. 103, 107 (D.P.R. 1997) (JAF)).
Although the parties cite both Florida and Puerto Rico law, the parties identify Florida law as the appropriate choice of law to the extent there is a conflict. ECF Nos. 66 at 6-7; 73 at 11-12. The parties note that Florida law applies because the insured entity—Congar's parent corporation, ITG Holdings—is located in Ft. Lauderdale, Florida, where the policies were negotiated and issued. ECF Nos. 66 at 7; 73 at 11. Neither the 2015 policy nor the 2016 policy contain a choice of law provision, but each policy incorporates several endorsements purportedly executed pursuant to Florida law, such as the "Florida Amendatory Endorsement," "Amend Mailing Address for Notice Endorsement Florida," "Florida Cancellation and Nonrenewal Endorsement," and "Florida Rule 69O-166.040" for "Availability of Consultative Services." ECF Nos. 67 at 116, 121, 122, 125; 73-6 at 54, 59, 61, 64. However, the underlying injurious conduct is founded in a reduction in force that occurred in Puerto Rico and against Puerto Rican employees. But, the claims asserted by the employees are no longer part of the case. Thus, the only remaining "injury" arises from the paperwork enacted in Florida by a parent corporation based in Ft. Lauderdale, Florida. Accordingly, the Court agrees with the parties that Florida contract law governs this dispute.
"Generally, under Florida law, 'in construing insurance policies, courts should read each policy as a whole, endeavoring to give every provision its full meaning and operative effect.'" Penzer v. Transportation Ins. Co., 545 F.3d 1303, 1306 (11th Cir. 2008) (per curiam) (quoting Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla. 2000)). "Policy terms are given their plain and ordinary meaning and read in light of the skill and experience of ordinary people." Id. (citing Bethel v. Security Nat'l Ins. Co., 949 So.2d 219, 222 (Fla. Dist. Ct. App. 2006)). "'[I]f the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and the [other] limiting coverage, the insurance policy is considered ambiguous.'" Id. (quoting Auto-Owners, 756 So.2d at 34) (second alteration in original). "Ambiguities are construed against the insurer." Id. (citing State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So.2d 1072, 1076 (Fla. 1998)).
VI. Analysis
The parties agree that the plaintiffs' underlying employment dispute substantively falls within the scope of the "Employment Practices Liability Coverage" for either insurance policy. See ECF Nos. 66 at 2; 73 at 6, 13. Their disagreement lies in identifying when the plaintiffs' employment dispute presented an insurance claim and, in turn, in identifying which policy governs. The 2015 policy period ran from January...
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