SINNI v. Scottsdale Ins. Co.

676 F.Supp.2d 1319

Melissa J. SINNI, Plaintiff, v. SCOTTSDALE INSURANCE COMPANY, Defendant.

Case No. 6:08-cv-1787-Orl-31KRS.

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

December 18, 2009.

As Amended January 4, 2010.

Charles R. Steinberg, Charles R. Steinberg, PA, Cocoa, FL, for Plaintiff.

Julie Karen Linhart, Phelps Dunbar, LLP, Tampa, FL, for Defendant.

OPINION AND ORDER

GREGORY A. PRESNELL, District Judge.

This matter came before the Court without oral argument upon consideration of cross-motions for summary judgment filed by Plaintiff Melissa J. Sinni ("Plaintiff") and Defendant Scottsdale Insurance Company ("Scottsdale") and the parties' respective responses thereto (see Docs. 51, 53, 55 and 56).

I. Overview

This insurance dispute arises out of a slip-and-fall suit that culminated in a Coblentz agreement.¹ On May 3, 2007, Plaintiff sued Aaron P. Cullen and Absolutely Massage, Inc. (collectively, the "underlying defendants") in state court, alleging, inter alia, that she slipped and fell on a wet mulch walkway while leaving the underlying defendants' premises (see generally Doc. 2-2).² Count I of the Complaint asserted a claim for premises liability against Absolutely Massage, Inc. (Doc. 2-2, ¶¶ 20-25). Count II asserted that Absolutely Massage, Inc.'s general manager, Cullen, was negligent in maintaining Absolutely Massage, Inc.'s premises (Doc. 2-2, ¶¶ 10 and 26-32). Count III asserted a negligence claim against Absolutely Massage, Inc. predicated on respondeat superior and Cullen's negligence (Doc. 2-2, ¶¶ 33-35).

Approximately one year after filing suit, Plaintiff resolved all of her claims against the underlying defendants by entering into an "Assignment, Settlement Agreement and Covenant Not to Execute" (Doc. 17-43). Pursuant to the settlement agreement, Plaintiff and the underlying defendants agreed to the entry of a $300,000 judgment in favor of Plaintiff and against the underlying defendants (Doc. 17-44). They further agreed, however, that Plaintiff would not attempt to record or execute against the judgment (Doc. 17-44). Instead the underlying defendants assigned all rights in their commercial general liability (CGL) policy to Plaintiff so that she could enforce the judgment against the underlying defendants' insurance carrier: Scottsdale (Doc. 17-44).

On May 21, 2008, the state court approved and entered the settlement agreement as a consent judgment (Doc. 18-2). Plaintiff thereafter filed an "amended"³ complaint, seeking to enforce the consent judgment against Scottsdale (see Docs. 17-46 and 31-3). Scottsdale timely removed the case to this Court (Doc. 19).

The issue now before the Court is whether there was coverage for Plaintiff's claims in the state court action under the CGL policy that Scottsdale issued to the underlying defendants.⁴ The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 (Doc. 19 at 3) and the parties agree that Florida substantive law is controlling.

II. Applicable Law

A. Summary Judgment

A party is entitled to summary judgment when it can show that there is no genuine issue as to any material fact. FED. R. CIV. P. 56(c); Beal v. Paramount Pictures Corp., 20 F.3d 454, 458 (11th Cir. 1994). Which facts are material depends on the substantive law applicable to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party bears the burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991); Watson v. Adecco Employment Servs., Inc., 252 F.Supp.2d 1347, 1351-52 (M.D.Fla.2003). In determining whether the moving party has satisfied its burden, the court considers all inferences drawn from the underlying facts in a light most favorable to the party opposing the motion, and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

When a party moving for summary judgment points out an absence of evidence on a dispositive issue for which the non-moving party bears the burden of proof at trial, the non-moving party must "go beyond the pleadings and by its own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Celotex Corp., 477 U.S. at 324-25, 106 S.Ct. 2548 (internal quotations and citations omitted). Thereafter, summary judgment is mandated against the non-moving party who fails to make a showing sufficient to establish a genuine issue of fact for trial. Id. at 322, 324-25, 106 S.Ct. 2548; Watson, 252 F.Supp.2d at 1352. The party opposing a motion for summary judgment must rely on more than conclusory statements or allegations unsupported by facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986 (11th Cir.1985) ("conclusory allegations without specific supporting facts have no probative value") (citations omitted); Broadway v. City of Montgomery, Ala., 530 F.2d 657, 660 (5th Cir.1976).

With respect to determining insurance coverage issues, summary judgment is generally appropriate inasmuch as the construction and legal effect of a written contract are matters of law to be determined by the Court. See, e.g., Northland Cas. Co. v. HBE Corp., 160 F.Supp.2d 1348, 1358 (M.D.Fla.2001) ("Summary judgment is appropriate in declaratory judgment actions seeking a declaration of coverage when the insurer's duty, if any, rests solely upon the applicability of the insurance policy, the construction and effect of which is a matter of law.") (citations omitted).

B. Insurance

In Florida, an insurer's duty to defend is distinct from, and broader than, the duty to indemnify. Lime Tree Vill. Cmty. Club Ass'n, Inc. v. State Farm Gen. Ins. Co., 980 F.2d 1402, 1405 (11th Cir. 1993) (citing Baron Oil Co. v. Nationwide Mut. Fire Ins. Co., 470 So.2d 810, 813-14 (Fla. 1st DCA 1985)). The duty to defend is determined by examining the allegations in the underlying complaint against the insured. Id. (citing Nat'l Union Fire Ins. Co. v. Lenox Liquors, Inc., 358 So.2d 533, 536 (Fla.1977)); see also State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So.2d 1072, 1077 n. 3 (Fla.1998). The insurer must defend when the complaint alleges facts that fairly and potentially bring the suit within coverage. Jones v. Fla. Ins. Guar. Ass'n, Inc., 908 So.2d 435, 442-43 (Fla.2005). The allegations in the complaint control even when the actual facts are inconsistent with the allegations in the complaint. Id. at 443. Furthermore, once a court finds that there is a duty to defend, the duty will continue "even though it is ultimately determined that the alleged cause of action is groundless and no liability is found within the policy provisions defining coverage." Baron Oil Co., 470 So.2d at 814. In exceptionally rare cases, however, where the complaint omits a reference to an uncontroverted fact that, if pled, would have clearly placed the claim outside the scope of coverage, equity may relieve an insurer from its duty to defend. See Underwriters at Lloyds London v. STD Enters., Inc., 395 F.Supp.2d 1142 (M.D.Fla.2005) hereinafter "Underwriters"; Nationwide Mut. Fire Ins. Co. v. Keen, 658 So.2d 1101 (Fla. 4th DCA 1995) hereinafter "Keen"; but see First Specialty Ins. Corp. v. 633 Partners, Ltd., 300 Fed.Appx. 777, 786 (11th Cir.2008) (suggesting that, unless it is "manifestly obvious" to the parties that the actual facts put the plaintiff's claims outside the scope of coverage, Underwriters and Keen should be regarded as aberrations) (citations omitted) (unpublished).⁵

An insurer's duty to indemnify is narrower than its duty to defend and must be determined by analyzing the policy coverages in light of the actual facts in the underlying case. CTC Dev. Corp., 720 So.2d at 1077 n. 3 (citing Hagen v. Aetna Cas. & Sur. Co., 675 So.2d 963, 965 (Fla. 5th DCA 1996)); see also, e.g., Auto Owners Ins. Co. v. Travelers Cas. & Sur. Co., 227 F.Supp.2d 1248, 1258 (M.D.Fla.2002). In construing insurance policies, courts should read the policy as a whole, endeavoring to give every provision its full meaning and operative effect. U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871, 877 (Fla.2007) (citation). Exclusionary clauses are typically read strictly and in a manner that affords the insured the broadest possible coverage. Indian Harbor Ins. Co. v. Williams, 998 So.2d 677, 678 (Fla. 4th DCA 2009).

C. Coblentz Agreements

In Florida, a party seeking to recover under a Coblentz agreement must prove: (1) coverage; (2) a wrongful refusal to defend; and (3) that the settlement was objectively reasonable and made in good faith. Chomat v. N. Ins. Co. of N.Y., 919 So.2d 535, 537 (Fla. 3d DCA 2006) (quoting Quintana v. Barad, 528 So.2d 1300, 1301 n. 1 (Fla. 3d DCA 1988) (internal citation omitted)); see also, e.g., Shook v. Allstate Ins. Co., 498 So.2d 498 (Fla. 4th DCA 1986). The party seeking to recover has the initial burden of proving that its underlying claim against the insured was within the coverage of the policy. See, e.g., Steil v. Fla. Physicians' Ins. Reciprocal, 448 So.2d 589, 592 (Fla. 2d DCA 1984); Keller Indus., Inc. v. Employers Mut. Liab. Ins. Co. of Wis., 429 So.2d 779, 780 (Fla. 3d DCA 1983).⁶

The determination of coverage is a condition precedent to any recovery against an insurer pursuant to a Coblentz agreement. Spencer v. Assurance Co. of Am., 39 F.3d 1146, 1149 (11th Cir.1994); Farmer v. Liberty Mut. Fire Ins. Co., Case No. 06-61477-CIV, 2007 WL 2028842 at *3 (S.D.Fla. July 9, 2007); Steil, 448 So.2d at 592. As the Eleventh Circuit has observed:

Florida law clearly states that liability of an insurer depends upon whether the insured's claim is within the coverage of the policy. This remains true even when the insurer has unjustifiably failed to defend its insured in the underlying action. A determination of

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