Pub. Risk Mgmt. of Fla. v. One Beacon Ins. Co., Case No: 6:13-cv-1067-Orl-31TBS

• Decision Date: 18 October 2013
• Docket Number: Case No: 6:13-cv-1067-Orl-31TBS
• Parties: PUBLIC RISK MANAGEMENT OF FLORIDA, Plaintiff, v. ONE BEACON INSURANCE CO., Defendant.
• Court: U.S. District Court — Middle District of Florida

PUBLIC RISK MANAGEMENT OF FLORIDA, Plaintiff, v. ONE BEACON INSURANCE CO., Defendant.

Case No: 6:13-cv-1067-Orl-31TBS

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

Date: October 18, 2013

ORDER

This matter is before the Court, without oral argument, on Defendant OneBeacon Insurance Co.'s ("OneBeacon") Motion to Dismiss or, In the Alternative, Motion for Summary Judgment ("Motion") (Doc. 13), Plaintiff Public Risk Management of Florida's ("PRM") Response in Opposition to the Motion ("Response") (Doc. 20), and OneBeacon's Reply in Support of the Motion (Doc. 26).

I. Background

This insurance coverage dispute arises out of underlying litigation between the City of Winter Garden, Florida ("Winter Garden"), and Dewitt Excavating, Inc. ("Dewitt") (the underlying lawsuit is the "Dewitt Action"). Simply put, PRM issued insurance coverage to Winter Garden and OneBeacon issued reinsurance for PRM's coverage of Winter Garden—PRM believes the Dewitt Action fell within its duty to defend Winter Garden, OneBeacon does not. The dispute before this Court is whether OneBeacon must reimburse PRM for funds expended defending Winter Garden in the Dewitt Action.

This basis of the dispute began when Winter Garden contracted Dewitt to relocate utilities within the right of way along Florida State Road 50 (the contract is the "Construction Contract," the project is the "FDOT Project"). The FDOT Project was supposed to begin January 4, 2010 and conclude by late 2010. The Construction Contract recorded Winter Garden's agreement to exchange certain amounts of money for Dewitt completing FDOT Project within the established timeframe. The Construction Contract was, however, subject to modifications for increased time and expense. Dewitt encountered various increased expenses beyond its control, such as delays not attributable to Dewitt and incorrect information about the scope of the work involved. At the completion of the FDOT Project, Winter Garden withheld additional money that Dewitt claimed was due under the terms of the Construction Contract. Thereafter, Dewitt filed the Dewitt Action asserting two counts, one for breach of contract and one for violation of Florida's Sunshine Statutes.

During the relevant timeframe PRM insured against Winter Garden's public officials' errors and omissions ("PRM Policy"). The relevant portion of the PRM Policy covers sums "for which the MEMBER [(i.e. Winter Garden)] is legally liable by reason of a WRONGFUL ACT." (Doc. 2-2 at 68). PRM secured reinsurance from OneBeacon that covered losses due to Winter Garden's public officials' errors and omissions covered under the PRM Policy (OneBeacon's policy is the "OneBeacon Treaty"). In other words, where PRM became obligated to pay for Winter Garden because of the PRM Policy, PRM could submit a claim for reimbursement from OneBeacon pursuant to the OneBeacon Treaty.

The Dewitt Action proceeded through litigation with PRM funding Winter Garden's defense. The Dewitt Action ultimately settled before trial with Winter Garden agreeing to payDewitt an additional $1.35 million based on the FDOT Project.¹ PRM claims that because it was obligated to defend Winter Garden, then OneBeacon must reimburse PRM for the $286,941.07 in defense costs in excess of the OneBeacon Treaty's $200,000 retention.

There are two questions presented to this Court: (1) whether the Dewitt Action set forth claims that could fairly be seen as falling within the PRM Policy thus invoking PRM's duty to defend Winter Garden and (2) whether the allegations in the Complaint can set forth a claim for equitable estoppel under Florida law.

II. Standard

a. Motion to Dismiss

In ruling on a motion to dismiss, the Court must view the complaint in the light most favorable to the Plaintiff, see, e.g., Jackson v. Okaloosa County, Fla., 21 F.3d 1531, 1534 (11th Cir. 1994), and must limit its consideration to the pleadings and any exhibits attached thereto. Fed. R. Civ. P. 10(c); see also GSW, Inc. v. Long County, Ga., 999 F.2d 1508, 1510 (11th Cir. 1993). The Court will liberally construe the complaint's allegations in the Plaintiff's favor. Jenkins v. McKeithen, 395 U.S. 411, 421 (1969). However, "conclusory allegations, unwarranted factual deductions or legal conclusions masquerading as facts will not prevent dismissal." Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003).

In reviewing a complaint on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), "courts must be mindful that the Federal Rules require only that the complaint contain 'a short and plain statement of the claim showing that the pleader is entitled to relief.' " U.S. v. Baxter Intern., Inc., 345 F.3d 866, 880 (11th Cir. 2003) (citing Fed. R. Civ. P. 8(a)). This is aliberal pleading requirement, one that does not require a plaintiff to plead with particularity every element of a cause of action. Roe v. Aware Woman Ctr.for Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001). However, a plaintiff's obligation to provide the grounds for his or her entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554-555 (2007). The complaint's factual allegations "must be enough to raise a right to relief above the speculative level," Id. at 555, and cross "the line from conceivable to plausible." Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1950-1951 (2009).

OneBeacon attached the complaint in the Dewitt Action ("Dewitt Complaint") to its Motion, which may be considered by this Court under the standard for a motion to dismiss. See Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005) ("[The Eleventh Circuit] held that [a district court] may consider a document attached to a motion to dismiss without converting the motion into one for summary judgment if the attached document is (1) central to the plaintiff's claim and (2) undisputed. In this context, "undisputed" means that the authenticity of the document is not challenged."). Insurance coverage under the respective policies rises or falls on the allegations in the Dewitt Complaint, further, PRM has not disputed the authenticity of the Dewitt Complaint. Therefore, the Dewitt Complaint is properly before this Court on Defendant's Motion without the need to apply the summary judgment standard.

III. Analysis

a. Breach of Contract

Under Florida law, if the terms of the two insurance contracts are not ambiguous, the Court may determine whether OneBeacon is obligated to reimburse PRM for the cost to defend the Dewitt Action. See Lampliter Dinner Theater, Inc. v. Liberty Mut. Ins. Co., 792 F.2d 1036, 1040 (11th Cir. 1986) (affirming dismissal where district court held that party did not breach terms of unambiguous insurance policy); State Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004) ("Florida courts start with the plain language of the policy, as bargained for by the parties. If that language is unambiguous, it governs." (citations and internal quotations omitted)).

Further, the question of whether PRM had a duty to defend Winter Garden turns on whether the factual allegations in the Dewitt Complaint fairly bring it within the PRM Policy. See U.S. Fire Ins. Co. v. Mikes, 576 F. Supp. 2d 1303, 1325 (M.D. Fla. 2007) aff'd sub nom. U.S. Fire Ins. Co. v. Freedom Vill. of Sun City Ctr., Ltd., 279 F. App'x 879 (11th Cir. 2008) (under Florida law, "an insurer has to defend its insured whenever it ascertains facts from the complaint that show potential liability within the policy's coverage"). "If the allegations of the complaint leave any doubt as to the duty to defend, the question must be resolved in favor of the insured." Id. However, whether PRM had a duty to defend is determined by the Dewitt Complaint taken as a whole—the determination cannot be based on individual paragraphs from the Dewitt Complaint analyzed in a vacuum. See W. World Ins. Co., Inc. v. Cigna Corp., 718 F. Supp. 1518, 1521-22 (S.D. Fla. 1989) (evaluating complaint as a whole and determining that, despite individual allegations that indicated covered actions, the whole document showed the alleged breach was intentional, thus not covered under the policy).

The parties appear to be in agreement that if PRM had no duty to defend under the PRM Policy, then OneBeacon had no duty to reimburse PRM under the OneBeacon Treaty.² Accordingly, whether PRM's first count is tenable may be determined on the terms of the PRM Policy and the allegations in the Dewitt Complaint.

i. The PRM Policy

PRM agreed to insure Winter Garden from damages due to wrongful acts by Winter Garden's public officials. Specifically, the PRM Policy states: "[PRM] agrees, subject to the Coverage Document limitations, exclusions, terms and conditions to pay on behalf of the MEMBER for all sums which the MEMBER is legally liable by reason of a WRONGFUL ACT." (Doc. 2-2 at 68 (emphasis in bold added)). Wrongful acts were defined in the PRM Policy as: "Wrongful Act means any actual or alleged error or miss-statement, omission, act or neglect or breach of duty due to misfeasance, malfeasance, and nonfeasance . . . ." (Id. at 15). Additionally, the PRM Policy excluded intentional breaches of contract. (Id. at 70).

ii. The Dewitt Complaint

In this case, the Complaint and the Plaintiff's briefing focus on two specific allegations in the Dewitt Complaint which PRM contends invoked its duty to defend. Those paragraphs are:³

19. Performance of Dewitt's work was far more time-consuming and costly than Dewitt reasonably could have anticipated at the time of contracting as a result of errors and omissions in the City's plans and specifications and the City's engineer's gross under-estimate of quantities of various items, Dewitt would be required to furnish.

24. Dewitt would have timely completed its Work but for the City's misleading information about the utility locations, errors

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