Century Sur. Co. v. Seductions, LLC

609 F.Supp.2d 1273

CENTURY SURETY COMPANY, Plaintiff v. SEDUCTIONS, LLC d/b/a Hotties, Mauricio Javier Arana-Landeros, and Blanca Iris Arana, Defendants.

Case No. 07-21283-CIV.

United States District Court, S.D. Florida.

March 24, 2009.

John R. Catizone, Litchfield Cavo LLP, Tampa, FL, for Plaintiff.

Richard H. Bergman, Bergman & Jacobs PA, Hollywood, FL, Deborah J. Gander, Patrick Shanan Montoya, Colson Hicks Eidson, Coral Gables, FL, for Defendants.

ORDER AND OPINION

KENNETH A. MARRA, District Judge.

THIS CAUSE has been reassigned to the undersigned pursuant to Administrative Order 2008-36, and due to Senior District Judge Shelby Highsmith's decision to retire from the Federal Bench. Before the Court are Century Surety Company's Motion For Summary Judgment [DE 30] and Defendants/Counter Plaintiffs' Cross Motion For Final Summary Judgment [DE 43]. The Court has carefully considered the motions, responses, replies, supplemental filings, and oral argument of counsel.

Introduction

On or about March 2, 2007, Mauricio Javier Arana-Landeros and Blanca Iris Arana (together "the Aranas") filed a personal injury lawsuit against Seductions, LLC d/b/a Hotties ("Seductions") in the Circuit Court of the Eleventh Judicial Circuit in and For Dade County, Case No. 07-06188CA06, seeking damages for alleged negligence on the part of Seductions (the "Underlying Action"). According to the underlying complaint, on or about December 23, 2006, Mauricio Arana was a patron at Seductions when he was allegedly attacked and beaten by one or more security personnel of Seductions for refusing to leave the bar when it was closing at about 5:00 A.M. DE 4-3, Ex. B ¶ 10. In the Underlying Action, the Aranas seek compensation for Mr. Arana's severe bodily injuries that were allegedly caused by Seductions' various acts of negligence including, but not limited to, negligent training, negligent hiring, and negligent supervision of the personnel/bouncers who attacked him. See DE 4, Counterclaim.¹ Mr. Arana required emergency medical treatment after the attack and his medical expenses for these injuries are alleged to exceed one million dollars.

This is an action for declaratory judgment and reformation of an insurance contract. Century Surety Company ("Century") seeks a judicial determination that its duty to defend and indemnify Seductions for the claims asserted in the Underlying Action is limited to the $25,000 sub-limit included in an Assault and Battery Endorsement in the subject insurance policy. Alternatively, Century seeks reformation of the insurance contract to include form number CGL 1704 (the "Exclusion") which precludes coverage for bodily injury arising out of an assault or battery, including claims for negligent employment, training, supervision, retention and investigation, which form was omitted from the policy when it was delivered to Seductions.

For purposes of Plaintiff's Motion for Summary Judgment and Defendant/Counter Plaintiffs' Cross-Motion for Partial Summary Judgment, the parties agree to the relevant facts.² On the date of loss, Seductions was insured under a commercial general liability policy issued by Century, effective August 25, 2006 to August 25, 2007 (the "Policy"). Pursuant to an Assault and Battery Endorsement (the "Endorsement"), the Policy provided limited coverage for claims arising out of an assault or battery. The limited coverage provides a $25,000 "per occurrence" sub-limit and $50,000 "aggregate" sub-limit. The Endorsement expressly states that it "reinstates" on a limited basis the specific coverage excluded under form CGL 1704, the Assault and Battery Exclusion, which was never attached to the Policy. The material dispute is in the conclusion to be drawn from the undisputed facts: namely, the interpretation to be drawn from language contained within the Endorsement, and whether the late-proffered Exclusion was intended by both Century and Seductions to exclude coverage for the specific types of claims at the time the policy was sold.³

Standard of Review

Summary judgment is appropriate only when the Court is satisfied that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). An issue is "genuine" if there is sufficient evidence such that a reasonable jury could return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if it may affect the outcome of the suit under governing law. Id. The moving party bears the burden of identifying those portions of the pleadings, depositions, answers to interrogatories, admissions, and/or affidavits which the movant believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Rice-Lamar v. City of Ft. Lauderdale, Fla., 232 F.3d 836, 840 (11th Cir.2000), cert. denied, 534 U.S. 815, 122 S.Ct. 42, 151 L.Ed.2d 14 (2001).

In order to avoid the entry of summary judgment, a party faced with a properly supported summary judgment motion must come forward with extrinsic evidence, i.e., affidavits, depositions, answers to interrogatories, and/or admissions, which are sufficient to establish the existence of the essential elements to that party's case, and the elements on which that party will bear the burden of proof at trial. Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548; Hilburn v. Murata Elecs. N. Am., Inc., 181 F.3d 1220, 1225 (11th Cir. 1999). In ruling on a motion for summary judgment, if there is a conflict in the evidence, the non-moving party's evidence is to be believed and all reasonable inferences must be drawn in favor of the non-moving party. Shotz v. City of Plantation, Fla., 344 F.3d 1161, 1164 (11th Cir.2003).

Applicable Law

"Under the Erie doctrine, a federal court adjudicating state law claims applies the substantive law of the state." Sphinx Int'l, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 412 F.3d 1224, 1227 (11th Cir.2005) (quotation omitted). "The construction of insurance contracts is governed by substantive state law." Sphinx Int'l, Inc., 412 F.3d at 1227 (quoting Provau v. State Farm Mut. Auto. Ins. Co., 772 F.2d 817, 819 (11th Cir.1985)). Thus, the Court evaluates the insurance policy in this case under Florida law.

Declaratory Judgment

Century states it is in doubt of its rights under the Policy and by its Complaint seeks a declaration of its rights and obligations with respect to the Underlying Action. Century believes that, under the Policy, its obligation to indemnify Seductions for all claims asserted in the Underlying Action is limited to the $25,000 as provided in the Limited Coverage-Assault & Battery Endorsement. DE 1 at ¶ 29. Specifically, Century wishes the Court to declare that the Endorsement, which expressly states that $25,000 is the policy limit for any claim "arising from" an assault and battery, is applicable to the Underlying Action.

The Aranas maintain that the Assault and Battery Endorsement is not applicable to their negligence claims because the Policy's definition of "assault" qualifies it as an "intentional" tort, not a negligent act. Because the claims of the Underlying Action involve negligence, and not an intentional tort such as assault and battery, the Aranas assert the claims do not fall under any of the policy exclusions, and Century is obligated to defend and indemnify Seductions in the Underlying Action in state court. Defendants maintain that it is clear from the language of the Policy as a whole, including the Endorsement, the negligence coverage separately purchased under forms CGL 1711 0406 and CG1 1701 07075, and the fact that the Exclusion contained in form CGL 1704 was never made a part of the contract, that the $25,000 limitation applied only to the intentional acts defined on the face of the Endorsement, but not to the negligence for which Seduction separately purchased coverage. Defendants also argue that the Policy language regarding the limits of medical coverage is ambiguous and is thus subject to a general aggregate limit of $2,000,000.

1. Endorsement

The Endorsement in question is one of the 30 forms listed on the Schedule of Forms and Endorsements of the Policy. It is titled "Limited Coverage-Assault & Battery," (the "Endorsement"). This Endorsement has a $25,000 applicable limit to a covered loss "arising from" an assault and battery. DE 31-3. After reviewing the record, and considering the parties' arguments, the Court finds that the Endorsement, which limits coverage for any claim "arising from" an assault and battery, is applicable to the Underlying Action.

In Taurus Holdings, Inc. v. U.S. Fidelity and Guar. Co., 913 So.2d 528, 539-40 (Fla.2005), the Florida Supreme Court held that the term "arising out of" is to be construed broadly, concluding that it is equivalent to the terms "originating from," "having its origins in," "growing out of," "flowing from," "incident to," or "having a connection with." This Court concludes that "arising from" falls within the same category. Applying Taurus to this case, Mr. Arana's negligence claims against Seductions were clearly "incident to," "had a connection with," "grew out of," "had its origin in," "flowed from," and hence "arose from" the assault and battery alleged in the Underlying Action. Id., DE 4-3, ¶ 10.

In the specific context of assault and battery exclusions, other Florida courts have addressed this issue and held that related negligence claims "arose from" the assault and battery. See e.g., Perrine Food Retailers, Inc. v. Odyssey Re (London) Ltd., 721 So.2d 402, 404 (Fla.Dist.Ct. App.1998) ("[a]n assault and battery exclusion in a liability policy precludes coverage for the negligence of the insured which arises as a result of the assault and battery"); Miami Beach Entertainment, Inc. v. First Oak Brook Corp. Syndicate, 682 So.2d 161, 162 (Fla...