Mid-Continent Cas. Co. v. Royal Crane, LLC
| Decision Date | 10 June 2015 |
| Docket Number | No. 4D13–3496.,4D13–3496. |
| Citation | 169 So.3d 174 |
| Parties | MID–CONTINENT CASUALTY COMPANY, an Oklahoma corporation, Appellant, v. ROYAL CRANE, LLC d/b/a Hunter Crane, as assignee of action from Cloutier Brothers, Inc., W.F. Roemer Insurance Agency, Inc., a Florida corporation, and Florida Home Builders Insurance, Inc., Appellees. |
| Court | Florida District Court of Appeals |
169 So.3d 174
MID–CONTINENT CASUALTY COMPANY, an Oklahoma corporation, Appellant
v.
ROYAL CRANE, LLC d/b/a Hunter Crane, as assignee of action from Cloutier Brothers, Inc., W.F. Roemer Insurance Agency, Inc., a Florida corporation, and Florida Home Builders Insurance, Inc., Appellees.
No. 4D13–3496.
District Court of Appeal of Florida, Fourth District.
June 10, 2015.
Rehearing En Banc Denied Aug. 4, 2015.
James H. Wyman, Ronald L. Kammer, and Edward T. Sylvester of Hinshaw & Culbertson LLP, Coral Gables, for appellant.
David P. Herman, Michael G. Shannon, and Rollin M. Smith of Murray, Morin & Herman, P.A., Coral Gables, for appellee, Royal Crane, LLC d/b/a Hunter Crane, as assignee of action from Cloutier Brothers, Inc.
Opinion
GROSS, J.
In this case, a crane rental agreement contained an indemnification clause requiring the lessee to indemnify the lessor for all damages arising from the use of the crane. An accident occurred and the victim sued the lessor, who sought indemnification from the lessee. The main issue in this case is whether the lessee's liability under the lease indemnification provision gave rise to a duty to defend and provide coverage under the lessee's insurance policy. We hold that the insurer had neither the duty to defend the lessee nor to provide coverage and reverse the final judgment.
The Underlying Lawsuit
In April 2006, Robert Damiano sustained injuries while working on a construction project when a truss fell from a crane. The project's shell contractor, Cloutier Brothers, Inc., leased both the crane and its operator from appellee Royal Crane, LLC d/b/a Hunter Crane, a company that rented construction cranes and
operators to perform hoisting services. Cloutier executed a rental agreement (“Rental Agreement”) with Hunter Crane, which contained the following indemnity clause:
RESPONSIBILITY FOR USE: Lessee [ (Cloutier) ] agrees to indemnify, defend and hold harmless Lessor [ (Hunter Crane) ], its employees, operators and agents from any and all claims for damage to property, damage to the work or bodily injury (including death) resulting from the use, operation, or possession of the crane and operator whether or not it be claimed or found that such damage or injury resulted in whole or in part from Lessor's negligence, from a defective condition of the crane or operator or from any act, omission or default of Lessor.
In June 2009, Damiano sued Hunter Crane and the crane operator asserting negligence, strict liability, and gross negligence. The complaint briefly mentioned Cloutier, stating that Cloutier retained Hunter Crane's services “as a vendor to provide a crane, as needed, for use by subcontractors working on construction of the residence.” Relying upon the Rental Agreement's indemnity clause, Hunter Crane tendered its defense of the lawsuit to Cloutier. Cloutier declined the tender at the behest of its insurer—appellant Mid–Continent Casualty Company (“the Insurer”).
As a result, Hunter Crane brought a third party action against Cloutier, seeking contractual indemnification and breach of the Rental Agreement. In its third party complaint, Hunter Crane alleged:
4. Defendant/Third Party Plaintiff, HUNTER, has been sued by Plaintiff, ROBERT DAMIANO, for damages arising from injuries [he] allegedly suffered while working at a residential construction site in Port St. Lucie, Florida....
5. In the Underlying Lawsuit Plaintiff, ROBERT DAMIANO, alleges that HUNTER's employee negligently operated a crane at the residential construction site and allegedly injured [him.]
6. At the time of the accident, and all times material, HUNTER leased the crane and its operator to Third Party Defendant, CLOUTIER, pursuant to a written contract....
7. Pursuant to the express terms of that contract, CLOUTIER agreed to indemnify and defend HUNTER from claims for damage or bodily injury resulting from the use of its crane....
...
9. Third Party Defendant breached its indemnity agreement by failing to provide HUNTER with an indemnity despite due demand therefore.
Facing significant exposure, Cloutier notified the Insurer of Hunter Crane's claims and requested that a defense be provided pursuant to its commercial general liability insurance policy (“the Policy”). The Policy defined the extent of Cloutier's coverage as follows:
We [ (the Insurer) ] will pay those sums that the insured [ (Cloutier) ] becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no[ ] duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which the insurance does not apply.
The Policy exempted from coverage “bodily injury” or “property damage” Cloutier was “obligated to pay ... by reason of the assumption of liability in a contract or agreement.” There were two exceptions to this “contractual” exemption
from coverage: (1) where Cloutier would have been liable “in the absence of the contract or agreement” or (2) where Cloutier “[a]ssumed” the liability “in a contract or agreement that is an ‘insured contract’, provided the ‘bodily injury’ or ‘property damage’ occurs subsequent to the execution of the contract or agreement.” Regarding the second exception, the Policy defined an “insured contract” as:
That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for “bodily injury” or “property damage” to a third person or organization, provided the “bodily injury” or “property damage” is caused, in whole or in part, by you or by those acting on your behalf. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement .
(Emphasis added).
In requesting a defense, Cloutier asserted the Rental Agreement was an “insured contract” falling under the exemption's second exception. The Insurer countered that it had no duty to defend or indemnify.
Left to its own devices, Cloutier proceeded with its defense. Ultimately, Hunter Crane settled with Damiano for $100,000 and moved for summary judgment against Cloutier based upon the Rental Agreement's indemnity clause. To protect its assets, Cloutier entered into a Coblentz1 settlement agreement with Hunter Crane, wherein it stipulated to a $263,746.53 consent judgment—comprised of the $100,000 settlement with Damiano plus $163,746.53 for Hunter Crane's attorney's fees and costs—and assigned to Hunter Crane its claims against the Insurer. In exchange, Hunter Crane agreed not to execute the judgment against Cloutier's assets or its principals.
Enforcement of the Coblentz Agreement
Hunter Crane, as Cloutier's assignee, instituted the instant action by filing a two-count complaint against the Insurer. The first count was for breach of contract predicated on the Insurer's wrongful failure to defend or indemnify Cloutier. The second count sought a declaratory judgment, which would establish, among other things, that the Insurer was required to defend and indemnify Cloutier as a result of the third party action.
Duty to Defend and to Indemnify
Following discovery, Hunter Crane moved for partial summary judgment on the issues of coverage and the Insurer's duty to defend, acknowledging that to “enforce” the Coblentz agreement it would need to prove “(1) coverage, (2) a wrongful refusal to defend, and (3) that [Hunter Crane's] settlement with Cloutier was reasonable and made in good faith.”
Hunter Crane contended its third party complaint against Cloutier alleged sufficient facts to trigger the Insurer's duty to defend, in that it established (1) that “Cloutier assumed Hunter Crane's liability for a bodily injury claim arising from Cloutier's use of Hunter Crane's crane and operator,” and (2) that the Rental Agreement “was in effect at the time of Damiano's accident.” Since an insurer's duty to defend arises solely from the allegations of the complaint, Hunter Crane asserted the Insurer breached its contractual duty.
The Insurer responded with a cross-motion for summary judgment. It argued, among other things, that Hunter Crane's claims were barred by the Policy's contractual liability exclusion, since (1) Cloutier “would have no liability in the absence of the” Rental Agreement and (2) the Rental Agreement was not an “insured contract,” because it assumed tort liability that would not have been “imposed by law in the absence of...
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