RLI Ins. Co. v. Coastline Title of Pinellas, LLC
| Docket Number | Case No. 8:20-cv-0786-KKM-CPT |
| Decision Date | 08 March 2022 |
| Citation | 591 F.Supp.3d 1182 |
| Parties | RLI INSURANCE COMPANY, Plaintiff, v. COASTLINE TITLE OF PINELLAS, LLC, and Antoni Kruk, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
Sina Bahadoran, Michele A. Vargas, Clyde & Co US, LLP, Miami, FL, for Plaintiff.
Robert Vernon Potter, Johnson, Pope, Bokor, Ruppel & Burns, LLP, Clearwater, FL, for Defendant Coastline Title of Pinellas, LLC.
Antoni Kruk bought some property in the summer of 2016 and Coastline Title of Pinellas, LLC, served as the closing agent on the sale. Afterward, Kruk filed a class action lawsuit against Coastline, alleging that it wrongly charged him $300 instead of the seller. Coastline in turn filed a claim with its insurer, RLI Insurance Company, asking it to defend and indemnify Coastline against Kruk's lawsuit. RLI denied the claim and filed this declaratory judgment action against Coastline and Kruk, seeking a declaration from this Court that RLI had no duty to defend or indemnify Coastline. Both RLI and Coastline now move for summary judgment. The Court grants RLI's motion, denies Coastline's, and enters judgment for RLI.
In July 2016, Kruk agreed to purchase real estate from Mark and Julie Coleman. (Doc. 45 at 3; Doc. 47-1 at 3.) The purchase agreement required the Colemans to designate the closing agent for the deal, and they chose Coastline. (Doc. 19-1 ¶¶ 12, 16.) The purchase agreement also obligated the Colemans to pay for the owner's "title policy premium, title search[,] and closing services," collectively known as "Owner's Policy and Charges." (Id. ¶ 12.) The agreement obligated Kruk to "pay the premium for [his] lender's policy and charges for closing services related to the lender's policy, endorsements and loan closing." (Id. ) Because Kruk agreed to pay with cash, he had no lender to pay. (Doc. 45 at 3; Doc. 19-1 ¶ 15.) Coastline nevertheless charged Kruk a "Closing Services Fee" of $300. (Doc. 45 at 3.)
Kruk, viewing this charge as a violation of his purchase agreement, which he thought obligated the seller to bear sole responsibility for the closing services fee, sued Coastline in state court on November 26, 2019. Complaint, Antoni Kruk v. Coastline Title of Pinellas, LLC , No. 19-007844-CI (Fla. Cir. Ct. Nov. 26, 2019). On behalf of himself and others similarly situated, Kruk brought claims for gross negligence, negligence, breach of fiduciary duty, and unjust enrichment and alleged that he and the putative class members were damaged by paying fees "they should not have paid." (Id. ¶¶ 59, 67, 82, 92.) Kruk based his claims on Coastline's alleged failure to adhere to Kruk's purchase agreement. Both the negligence claims and the breach of fiduciary duty claim alleged that Coastline breached its duty of care to Kruk by failing to adhere to the contractual requirements. (Id. ¶¶ 55–57, 64–66, 75–77.) And Kruk's unjust enrichment claim alleged that Coastline received a benefit it was not entitled to because the fee was not "authorized in the Contract." (Id. ¶ 88.)
After Kruk filed suit against Coastline, Coastline filed a claim with its insurer, RLI, requesting RLI to defend it and to indemnify it against any damages from Kruk's lawsuit. (Doc. 67-1 at 2.) RLI denied the claim, asserting that the insurance policy neither obligated it to defend the lawsuit nor to indemnify Coastline. (Id. ) In issuing the policy, RLI assumed the "duty to defend any Claim to which [the insurance policy] applies." (Id. at 6 (emphasis omitted).) The policy defined a "Claim" as a "demand for money as compensation for a Wrongful Act" or a lawsuit against the insured that sought to hold the insured "responsible for a Wrongful Act." (Id. at 7–8 (emphasis omitted).) And it defined a "Wrongful Act" as "any actual or alleged error, omission or negligent act, committed solely in the rendering of or failure to render Professional Services by an Insured." (Id. at 9 (emphasis omitted).) The policy also covered "Claim Expenses," which were those "legal fees and expenses incurred by the Insurer or by any attorney designated by the Insurer to defend any Insured" as well as "all other fees[or] costs ... resulting from the investigation, adjustment, defense and appeal of a Claim." (Id. at 8 (emphasis omitted).)
Importantly, the policy excluded "Damages [and] Claim Expenses in connection with any Claim ... in any way involving" Coastline profiting in a way it was "not legally entitled." (Id. at 9–10.) The policy also excluded "salaries, wages, overhead or benefits expenses of any Insured." (Id. (emphasis omitted).)
On April 3, 2020, after it denied Coastline's claim for coverage, RLI brought this action against both Kruk and Coastline seeking a declaratory judgment that RLI was not responsible for defending or indemnifying Coastline. (Doc. 1; Doc. 19 ¶¶ 34, 38, 42, 46, 50.) RLI's first two and final two counts alleged different reasons for why the insurance policy did not require RLI to indemnify or defend Coastline. (Doc. 19 at 6–8.) RLI's third count alleged reasons only for why the policy did not obligate RLI to indemnify Coastline. (Id. at 7.) Coastline answered, claiming that RLI was obligated to defend it and seeking to recover attorney's fees for defending against RLI's declaratory judgment action. (Doc. 31 at 10–11.)
Kruk moved to dismiss RLI's complaint because the request for a declaratory judgment on RLI's duty to indemnify was not yet ripe since the state court action remained ongoing. (Doc. 24.) The Court agreed and dismissed without prejudice RLI's request for a declaratory judgment as to indemnification but permitted the case to proceed on the claims for a declaratory judgment as to the duty to defend. (Doc. 38 at 8.) Although not specified in the order, the effect was dismissal of RLI's third count, which alleged reasons for granting declaratory judgment only as to RLI's duty to indemnify and dismissal of the other claims insofar as they requested a declaratory judgment as to indemnification. (Id. )
On December 13, 2021, RLI notified the Court that the underlying state court action was dismissed with prejudice. (Doc. 58.) As part of its notice, RLI stipulated to the dismissal with prejudice of its claims against Kruk, which the Court construed as a motion to dismiss under Rule 41(a)(2) and granted. (Doc. 61.) Both RLI and Coastline now move for summary judgment on Counts I, II, IV, and V, the remaining declaratory judgment claims concerning the duty to defend. (Doc. 45; Doc. 47.)
Summary judgment is appropriate if no genuine dispute of material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A fact is material if it might affect the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
A moving party is entitled to summary judgment when the nonmoving party "fail[s] to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The movant always bears the initial burden of informing the district court of the basis for its motion and identifying those parts of the record that demonstrate an absence of a genuine issue of material fact. Clark v. Coats & Clark, Inc. , 929 F.2d 604, 608 (11th Cir. 1991).
When that burden is met, the burden shifts to the nonmovant to demonstrate that there is a genuine issue of material fact, which precludes summary judgment. Id. The nonmoving party must "go beyond the pleadings" and point to evidence in the record that demonstrates the existence of a genuine issue for trial. Celotex , 477 U.S. at 324, 106 S.Ct. 2548. The Court reviews all the record evidence and draws all legitimate inferences in the nonmoving party's favor. See Sconiers v. Lockhart , 946 F.3d 1256, 1262 (11th Cir. 2020).
Because the Court previously dismissed the claim seeking declaratory judgment that the insurance policy did not require RLI to indemnify Coastline, the only issue remaining is whether RLI was required to defend Coastline in the state court action brought against it by Kruk. RLI and Coastline both move for summary judgment.2
RLI argues that several exclusions in the policy, each aligning with a particular count in the Amended Complaint, prevented Kruk's state court complaint from triggering RLI's duty to defend. Coastline contends that the exclusions did not apply, and the policy required RLI to defend it. The Court grants summary judgment to RLI, concluding RLI had no duty to defend Coastline against Kruk's action because Kruk alleged Coastline received remuneration it was not entitled to receive. Because the Court grants judgment on RLI's second count and the other counts request duplicative relief, the Court declines to exercise jurisdiction over them.
After RLI notified the Court that Kruk and Coastline had stipulated to dismissal with prejudice of the state court action, the Court directed the parties to brief whether it continued to have jurisdiction. (Doc. 61.) The Court noted that it was unclear what prospective injury RLI might suffer that would give it standing to bring this declaratory judgment action. (Id. at 3–4.) Coastline agreed, advancing the position that it had not yet decided whether it would file a breach of contract claim premised on RLI denying coverage. (Doc. 68.) In contrast, RLI contended the Court had jurisdiction because Coastline would not unequivocally relinquish any potential breach of contract claim against RLI and noted that, between the state and federal actions, Coastline incurred $85,349 in defending itself, implying a substantial threat of a civil action from Coastline. (Doc. 67 at 5, 12.)
A federal court has jurisdiction to decide a declaratory judgment action where the plaintiff...
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