Westport Ins. Corp.. v. Vn Hotel Group Llc

• Decision Date: 09 December 2010
• Docket Number: Case No. 6:10–cv–222–Orl–28KRS.
• Citation: 761 F.Supp.2d 1337
• Parties: WESTPORT INSURANCE CORPORATION, Plaintiffv.VN HOTEL GROUP, LLC, Choice Hotels International, Inc., V.J. Chukkapalli, Walter Cooper, Elizabeth Cooper, Andrew Wheatley, Valerie Walker, as Personal Representative of the Estate of Paul Walker, Deceased, Defendants.
• Court: U.S. District Court — Middle District of Florida

761 F.Supp.2d 1337

WESTPORT INSURANCE CORPORATION, Plaintiff

v.VN HOTEL GROUP, LLC, Choice Hotels International, Inc.,

v.J. Chukkapalli, Walter Cooper, Elizabeth Cooper, Andrew Wheatley, Valerie Walker, as Personal Representative of the Estate of Paul Walker, Deceased, Defendants.

Case No. 6:10–cv–222–Orl–28KRS.

United States District Court, M.D. Florida,Orlando Division.

Dec. 9, 2010.

John R. Catizone, Litchfield Cavo, LLP, Ft. Lauderdale, FL, for Plaintiff.Stacey L. Papp, Litchfield Cavo, LLP, Tampa, FL.John J. Kozak, Lynch & Robbins, PA, St. Petersburg, FL, Chris Ballentine, Fisher, Rushmer, Werrenrath, Dickson, Talley & Dunlap, PA, Edmund A. Normand, Wooten, Kimbrough, Gibson, Doherty & Normand, PA, Orlando, FL, Daniel Anthony Tocco, Daniel Tocco, PA, Daytona Beach, FL, Jules Zacher, Jules Zacher, PC, Philadelphia, PA, for Defendants.

ORDER

JOHN ANTOON II, District Judge.

This is a declaratory judgment action regarding insurance coverage. The parties dispute whether Plaintiff Westport Insurance Corporation (“Westport”) must defend and indemnify Defendants VN Hotel Group, LLC (“VN Hotel”) and Choice Hotels International, Inc. (“Choice”) (collectively, “Named Insureds”) in two underlying lawsuits ¹ alleging that three individuals contracted Legionnaires' disease from the spa tub and guest room showers of the Quality Suites hotel (“Quality Suites”) located at 7400 Canada Avenue in Orlando, Florida.

The case is now before the Court on Westport's Motion for Summary Judgment seeking a declaration that Westport has no duty to defend or indemnify the Named Insureds in connection with the Cooper and Walker Suits. (Doc. 44). All named Defendants have filed responses in opposition. (Docs. 47, 49, 50, 58). In addition, Choice and VN Hotel have submitted Cross Motions for Partial Summary Judgment seeking a declaration that Westport has a duty to defend them in connection with the Cooper and Walker Suits. (Docs. 47, 58). Westport has filed a reply to the Defendants' responses to the Motion and a response opposing the Cross Motions for Partial Summary Judgment. (Doc. 59).

Having considered these submissions and the evidentiary support attached thereto, the Court concludes that Westport has a duty to defend the Named Insureds in connection with the Cooper and Walker Suits and that it is premature to determine whether Westport has a duty to indemnify.

I. Undisputed Facts

Westport issued a commercial general liability insurance policy, number WCP137008238801 (“Policy”), to VN Hotel and Choice for the Quality Suites, effective from February 2, 2008 to February 2, 2009. (Doc. 44–4 at 3, 5; Doc. 44–5 at 50 ²). The Policy obligates Westport to defend and indemnify VN Hotel and Choice against claims of bodily injury or property damage, subject to several conditions and exclusions from coverage. (Doc. 44–5 at 20).

The plaintiffs in the Cooper and Walker Suits allege that they were guests at the Quality Suites while the Policy was in effect and that during their stay they contracted Legionnaires' disease. (Doc. 47–1 (“Cooper TAC”) ¶¶ 11, 19–20; Doc. 47–2 (“Walker SAC”) ¶¶ 18–19). According to the underlying complaints, VN Hotels and Choice negligently maintained the hotel's potable water and plumbing systems, causing an accumulation of Legionella bacteria in the water. (Cooper TAC ¶¶ 22–25, 32–35, 76–79, 86–89; Walker SAC ¶ ¶ 50–60, 79–89). Plaintiffs in the Cooper and Walker Suits allege that, as a consequence thereof, they were infected with Legionnaires' disease when they inhaled and ingested heated water vapor from the guest room showers and hotel spa tub. (Cooper TAC ¶¶ 17–20; Walker SAC ¶¶ 32–40).

II. Summary Judgment Standards

“The court shall grant summary judgment 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). “Summary judgment is appropriate ‘in declaratory judgment actions seeking a declaration of coverage when the insurer's duty, if any, rests solely on the applicability of the insurance policy, the construction and effect of which is a matter of law.’ ” Ernie Haire Ford, Inc. v. Universal Underwriters Ins. Co., 541 F.Supp.2d 1295, 1297 (M.D.Fla.2008) (quoting TIG Ins. Co. v. Smart Sch., 401 F.Supp.2d 1334, 1337 (S.D.Fla.2005)). However, “ ‘summary judgment may only be decided upon an adequate record,’ ” Snook v. Trust Co. of Ga. Bank, 859 F.2d 865, 870 (11th Cir.1988) (quoting WSB–TV v. Lee, 842 F.2d 1266, 1269 (11th Cir.1988)), and therefore, summary judgment should only be rendered if the party opposing the motion has had a sufficient opportunity for discovery, Id.

“Cross motions for summary judgment do not change the standard.” Id. (quoting Latin Am. Music Co. v. Archdiocese of San Juan of the Roman Catholic & Apostolic Church, 499 F.3d 32, 38 (1st Cir.2007)). “Cross motions for summary judgment are to be treated separately; the denial of one does not require the grant of another.” Id. at 1297–98 (quoting Christian Heritage Acad. v. Okla. Secondary Sch. Activities Ass'n, 483 F.3d 1025, 1030 (10th Cir.2007)). “Even where the parties file cross motions pursuant to Rule 56, summary judgment is inappropriate if disputes remain as to material facts.” Id. at 1298 (quoting Christian Heritage, 483 F.3d at 1030).

III. Adequacy of the Record

Defendants Walter Cooper, Elizabeth Cooper, and Andrew Wheatley (“Cooper and Wheatley Defendants”) assert that summary judgment is improper at this stage because the record is inadequate. (Doc. 49 at 4–5). In support of their argument, the Cooper and Wheatley Defendants note that they have outstanding discovery requests, the answers to which, they assert, may prove that the Named Insureds were covered by a different insurance policy than the one at issue. ( Id. at 5).

The Cooper and Wheatley Defendants' argument is based on a Florida law that requires an insurer to give 45 days prior notice of changes in a renewal policy. § 627.4133, Fla. Stat. Under this statute, if the insurer fails to give the proper notice, the prior policy remains in effect until 45 days after the proper notice is given or the insured obtains replacement coverage. Id. Therefore, the Cooper and Wheatley Defendants argue that because they stayed at the Quality Suites less than 45 days after the Policy took effect and because there is ongoing discovery as to whether Westport gave the Named Insureds sufficient notice of any changes in coverage under the Policy, the Court should defer ruling on the pending motions until that discovery is completed. (Doc. 49 at 5).

Neither of the Named Insureds raises this argument or otherwise seeks to postpone a ruling on the instant motions, and the Cooper and Wheatley Defendants do not cite any authority for the proposition that the protections afforded by section 627.4133 may be asserted by persons other than Named Insureds. See St. Paul Fire & Marine Ins. Co. v. Valdivia, 771 So.2d 1229, 1230 (Fla. 3d DCA 2000) (noting that the purpose of section 627.4133 is to “ ‘enable an insured to obtain coverage elsewhere before the insured is subjected to risk without protection’ ” (quoting U.S. Fire Ins. Co. v. S. Sec. Life Ins. Co., 710 So.2d 130, 131 (Fla. 5th DCA 1998))); see also Marchesano v. Nationwide Prop. & Cas. Ins. Co., 506 So.2d 410, 413 (Fla.1987) (noting that statutory notice under an analogous provision coupled with the insured's failure to act upon the notice binds the insured to the terms set forth in the notice). Accordingly, the Cooper and Wheatley Defendants' outstanding requests for discovery regarding Westport's compliance with section 627.4133 do not justify postponing ruling on the instant Motions.

IV. Merits of the Motions for Summary Judgment

In its Motion, Westport requests a declaration as to its obligations regarding both its duty to defend and its duty to indemnify the Named Insureds in the underlying suits. Under the Policy, Westport has a duty to indemnify the Named Insureds for “those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which [the Policy] applies,” and a duty to defend the Named Insureds “against any ‘suit’ seeking those damages.” (Doc. 44–5 at 20). The parties' dispute centers around whether the Policy applies to the “bodily injury” alleged in the underlying complaints. Westport contends that the underlying complaints are not covered because they fall into the Policy's Pollution Exclusion, or in the alternative the Policy's Fungi or Bacteria Exclusion. Defendants, on the other hand, argue that the exclusions do not apply to the underlying complaints and that even if they did, the underlying allegations trigger the exceptions to the exclusions.

A. Principles of Insurance Contract Interpretation

“The interpretation of an insurance contract is a question of law.” Kattoum v. N.H. Indem. Co., 968 So.2d 602, 604 (Fla. 2d DCA 2007). It is undisputed that Florida law governs the interpretation of the insurance policies at issue here. “Florida law provides that insurance contracts are construed in accordance with the plain language of the policies as bargained for by the parties.” Auto–Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla.2000). “The scope and extent of insurance coverage is determined by the language and terms of the policy.” Bethel v. Sec. Nat'l Ins. Co., 949 So.2d 219, 222 (Fla. 3d DCA 2006). The burden rests on the insurer to show that exclusions in a policy apply. See, e.g., U.S. Concrete Pipe Co. v. Bould, 437 So.2d 1061, 1065 (Fla.1983).

Where language in a policy is plain and unambiguous, there is no special construction or interpretation required, and the plain language in the contract is to be given the meaning which it clearly expresses. Jefferson Ins. Co. of N.Y. v. Sea World of Fla., Inc., 586 So.2d 95, 97 (Fla. 5th DCA 1991); U.S. Liab. Ins. Co. v. Bove, 347 So.2d 678, 680 (Fla. 3d DCA 1977). The fact that the policy does not...