Southern-Owners Ins. Co. v. Galati Yacht Sales, LLC
| Decision Date | 17 January 2023 |
| Docket Number | 8:21-cv-2567-VMC-MRM |
| Parties | SOUTHERN OWNERS INSURANCE COMPANY, Plaintiff, v. GALATI YACHT SALES, LLC, JEFFCO MARINE SERVICES, INC., and JEFFERSON FORAKER, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
This matter comes before the Court upon consideration of Plaintiff Southern Owners Insurance Company's Motion for Summary Judgment (Doc. # 93), and Defendant Galati Yacht Sales LLC's Motion for Summary Judgment. (Doc. # 92). Galati responded to Southern Owners' Motion (Doc. # 100), and Southern Owners has replied. (Doc. # 102). Southern Owners has responded to Galati's Motion for Summary Judgment. (Doc. # 99). For the reasons that follow, Southern Owners' Motion is denied, and Galati's Motion is granted to the extent stated herein.
This case involves an insurance dispute and an underlying tort lawsuit between Jefferson Foraker and Galati.
Jeffco Marine Services was incorporated under Florida law on December 22, 2008. (Doc. # 93-2). Mr. Foraker was its owner and served as its President at all relevant times. (Id.). Mr. Foraker, through Jeffco, performed services for Galati from 2007 to 2020. (Doc. # 93-11 at 7:19-21).
In October 2009, Jeffco and Galati entered into a Subcontractor Agreement. (Doc. # 93-3). The Subcontractor Agreement stated that it is “attached to and forms a part of every work order or change order executed by the parties.” (Id. at 1). The Subcontractor Agreement also provided that Galati would be “named as an Additional Insured on all of the Subcontractor's policies of insurance (except workers compensation) and the policies shall provide insurance coverage, on a primary basis, to Galati, and shall not require Galati's policies to contribute in the event of a loss.” (Id. at 2). Payments for Mr. Foraker's work were always issued to Jeffco (Doc. # 93-20). Mr. Foraker was compensated by the job, not by the amount of time he worked (Doc. # 93-11 at 82:21-83:1; Doc. # 93-13). Galati did not provide standard employee benefits like health insurance (Doc. # 93-11 at 30:613).
Galati created work orders containing the description of the work it offered to Jeffco. (Doc. # 93-11 at 23:23-24:7). Jeffco reviewed the work orders and had a right of first refusal for all detail work. (Id. at 92:18-93:15). The work orders included tasks such as painting, detailing, and washing boats that were in Galati's control. (Doc. # 93-13). Mr. Foraker reviewed the orders every day. (Doc. # 93-11 at 35:9-23). Galati would place the work orders in order of priority. (Id. at 65:14-19). Mr. Foraker performed the tasks in the order in which Galati placed the work orders. (Id. at 23-24). Jeffco performed work on boats Galati owned and boats that belonged to Galati's customers. (Doc. # 93-14). Galati dictated the priority of Mr. Foraker's work each day (Doc. # 93-11 at 65:20-25), and Galati managers and employees “would look at [his] work when it was completed.” (Id. at 37:10-11) .
Jeffco did not secure workers compensation insurance for 2020. (93-5 at 30:12-14). Neither Jeffco nor Mr. Foraker applied for a Notice of Election to be Exempt through the Department of Financial Services, Division of Workers' Compensation. (Doc. # 93-4).
Southern Owners issued a Garage Liability Policy (the “Policy”) to Jeffco that was effective from March 25, 2020, until March 25, 2021. (Doc. # 93-6). The Policy contains an Additional Insured Endorsement, stating that Galati is an additional insured under the Policy “but only with respect to liability arising out of [Jeffco's] work for that insured by or for [Jeffco].” (Doc # 79-1 at 21). The Policy provides that Southern Owners “will pay those sums that you become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies.” (Id. at 28).
The Policy also contains an Employer's Liability exclusion, which excludes from coverage “Bodily injury to: (a) [a]n employee of any insured arising out of and in the course of employment by any insured.” (Id. at 32).
Finally, the Policy also contains a Workers Compensation exclusion, which provides that the insurance policy does not apply to “[a]ny obligations that would be payable under . . . worker's compensation law[.]” (Id. at 30).
On October 9, 2020, Galati requested that Mr. Foraker buff the isinglass of the Red Lion, a yacht owned by one of Galati's customers. (Doc. 93-8 at 4-5). Mr. Foraker was injured while working on the yacht. (Doc. # 93-5 at 4).
Galati entered into a service agreement with the owner of the Red Lion. (Doc. # 93-9). The boat was on Galati's property as part of that agreement. (Doc. # 93-10 at 99:525, 100:1-6). The isinglass was not mentioned in the service agreement. See (Doc. # 93-9) (detailing service work to be provided). Instead, after the service work was complete, the Red Lion's captain “report[ed]” that the isinglass was scratched. (Doc. # 93-10 at 90:20). “[T]o make it go away,” Galati chose to fix the scratch. (Id.) . When asked if the “captain basically asked Galati to take care of” the scratch, Mike Galati (Galati's corporate representative) responded, “No. I think the captain was reporting [the scratch].” (Id. at 90:25-91:2). The purchase order issued for Jeffco's work shows that it was billed as an internal work order and that no customer was charged. (Doc. # 93-19; Doc. # 93-10 at 89:1320).
On August 19, 2021, Mr. Foraker sued Galati in Florida state court for negligence (the “Underlying Lawsuit”). (Doc. # 93-7). In his Underlying Complaint, Mr. Foraker alleged that, through his business, Jeffco Marine Services, Inc., he performed marine detailing work for Galati as a contractor.
(Id. at 1-2). Mr. Foraker alleges he was injured doing exactly the work he agreed to perform for Galati. See (Id. at ¶ 16) (“While Plaintiff was performing work under Defendant's orders, at the direction of Defendant, and on the vessel ‘Red Lion' which was under Defendant's ownership or control, he slipped and fell from the top of the tower/ladder”). Specifically, he alleged that he slipped due to the shoe coverings Galati required him to wear. (Id. at 3). The parties' memoranda indicate that the Underlying Lawsuit is still open and active.
Pursuant to the Additional Insured clause in the Policy, Galati sought a defense and indemnification from Southern Owners in the Underlying Lawsuit. (Id. at ¶¶ 15, 17).
In its second amended complaint, Southern Owners seeks a declaratory judgment on three points. First, Southern Owners claims that the allegations in the Underlying Lawsuit arise out of Galati's general business practices and thus are excluded from coverage under the plain language of the Policy. (Doc. # 79-1 at 5-6). Second, it argues that the Employer's Liability exclusion serves to bar coverage because Mr. Foraker was Jeffco's employee, Mr. Foraker was acting in the scope of his employment when he was injured, and Mr. Foraker was thus either Galati's “statutory employee” or actual employee for purposes of Policy coverage. (Id. at 6-7). Third, Southern Owners alleges that the Worker's Compensation exclusion bars coverage because Mr. Foraker was injured while performing work requested by Galati, Mr. Foraker was therefore Galati's statutory or actual employee, and Galati is liable under Florida's workers compensation law to Mr. Foraker. (Id. at 8-9).
Furthermore, Southern Owners seeks a declaratory judgment that (1) the Policy does not provide insurance coverage for the claims alleged in the Underlying Suit or any and all other claims arising from the incident that occurred on October 9, 2020; and (2) that Southern Owners has no duty to defend or indemnify Galati for any and all claims alleged in the Underlying Suit or any and all other claims arising from the incident that occurred on October 9, 2020. (Id. at 6, 7-8, 9).
The parties now both seek entry of summary judgment in their favor. (Doc. ## 92, 93). Each party has responded (Doc. ## 99, 100) and Southern Owners has replied. (Doc. # 102). The Motions are ripe for review.
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 factual dispute alone is not enough to defeat a properly pled motion for summary judgment; only the existence of a genuine issue of material fact will preclude a grant of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
An issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Mize v. Jefferson City Bd. of Educ., 93 F.3d 739 742 (11th Cir. 1996) (citing Hairston v. Gainesville Sun Publ'g Co., 9 F.3d 913, 918 (11th Cir. 1993)). A fact is material if it may affect the outcome of the suit under the governing law. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997). The moving party bears the initial burden of showing the court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). “When a moving party has discharged its burden, the non-moving party must then ‘go beyond the pleadings,' and by its own affidavits, or by ‘depositions, answers to interrogatories, and admissions on file,' designate specific facts showing that there is a genuine issue for trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590, 593-94 (11th Cir. 1995...
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