Shelley's Septic Tank, Inc. ("Plaintiff") brings the instant action seeking a declaratory judgment and damages against its liability insurer, United States Fire Insurance Company ("Defendant"). The case is currently before the Court on cross-motions for summary judgment.*fn1 Having considered the parties' submissions and pertinent law, the Court concludes that Plaintiff's motion must be denied and that Defendant's motion must be granted.
Defendant issued a commercial general liability insurance policy-policy number 5437106784-to Plaintiff covering the period September 10, 2006 to September 10, 2007. The policy provides that Defendant "will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies" and that Defendant "will have the right and duty to defend the insured against any 'suit' seeking those damages." (Policy Coverage Form at Page 1 of 15, part of Ex. A to Doc. 39). The policy is an "occurrence" type policy and covered "bodily injury" and "property damage" occurring during the policy period.
On December 1, 2009, Linda and Mark Pettis ("the Pettises") filed a lawsuit ("the state court action") against Plaintiff in state circuit court alleging that on August 21, 2007, Linda Pettis was injured on Plaintiff's premises. (Ex. B to Doc. 39). The Pettises' complaint specifically alleged that Linda Pettis "was an employee of" Plaintiff and that she "was injured while on the job." (Id. ¶¶ 4-5). Plaintiff tendered the Pettises' complaint to Defendant, but on February 5, 2010, Defendant sent Plaintiff a letter advising of its position that Defendant had no obligation to defend or indemnify Plaintiff in the state court action because of a policy exclusion for injuries to employees of the insured.*fn2 (Ex. C to Doc. 39). On March 26, 2010, Plaintiff's counsel sent Defendant a letter again seeking defense and indemnification, contesting Defendant's reliance on the employee injury exclusion and noting that Linda Pettis had given a statement to the effect that she was injured while washing her personal vehicle. (Ex. D to Doc. 39).
Defendant continued to decline to defend, and Plaintiff filed this action in state court on May 14, 2010, (Doc. 2). After Defendant removed the case to this Court, Plaintiff filed a two-count Amended Complaint (Doc. 24) on November 24, 2010. In Count I of its Amended Complaint, Plaintiff seeks a declaratory judgment that the claims in the state court action are covered by the policy; that Defendant is obligated to defend and indemnify Plaintiff; and that Defendant is obligated to reimburse Plaintiff for costs and expenses incurred in defending the state court action.*fn3 In Count II, Plaintiff alleges a claim of breach of contract, asserting that Defendant has breached the policy by refusing to defend or cover the claim and that Plaintiff has been damaged by having to pay for its own defense in the state court action. In both counts, Plaintiff claims entitlement pursuant to section 627.428, Florida Statutes, to an award of attorney's fees incurred by Plaintiff in prosecuting this case.*fn4
On May 2, 2011, Defendant filed its motion for summary judgment (Doc. 39)-one of the two motions now before the Court. On July 1, 2011, the Pettises filed an amended complaint in the state court action. (Ex. A to Doc. 55). Unlike the Pettises' initial complaint, the amended complaint does not contain any reference to Linda Pettis being an employee of Plaintiff or being injured "while on the job." (Id.). In mid-July, Defendant settled the state court action with the Pettises in exchange for a full release on behalf of Plaintiff. It is undisputed that Defendant has not reimbursed Plaintiff for attorney's fees incurred by Plaintiff in initially defending the state court action. (Joint Pretrial Statement, Doc. 71, at 7). On August 1, 2011, Plaintiff filed its motion for summary judgment (Doc. 63) in the instant case-the second motion now at issue.
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 [as to insurance 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.'" TIG Ins. Co. v. Smart Sch., 401 F. Supp. 2d 1334, 1337 (S.D. Fla. 2005) (quoting Northland Cas. Co. v. HBE Corp., 160 F. Supp. 2d 1348, 1358 (M.D. Fla. 2001)).
As earlier noted, Defendant's summary judgment motion was filed prior to the Pettises' amended complaint being filed in the state court action and prior to Defendant's settlement of that case on Plaintiff's behalf, whereas Plaintiff's summary judgment motion was filed after both of those events. Although the parties do not dispute the course of events recounted in the Background section of this Order, they do disagree as to the current posture of this case and its appropriate outcome.
Plaintiff takes the position in its summary judgment motion that Defendant's settlement of the state court action operates as a "confession of judgment" and that the claims in Plaintiff's Amended Complaint have been rendered moot except for the matter of Plaintiff's entitlement to attorney's fees under section 627.428, Florida Statutes. In short, Plaintiff argues that the fact that Defendant settled the case with the Pettises after Plaintiff filed this lawsuit entitles Plaintiff to summary judgment because Plaintiff "has essentially prevailed on its complaint." (Doc. 63 at 5). Plaintiff asserts that it is entitled to an order awarding it the attorney's fees it incurred in initially defending the state court action and in bringing this lawsuit against Defendant.
Defendant, on the other hand, contends that the fact that it settled the state court action on Plaintiff's behalf after the filing of the Pettises' amended complaint does not amount to a confession of judgment. Defendant argues that the issue for this Court remains-as it was at the time of the filing of Defendant's summary judgment motion-whether the original complaint in the state court action alleged a claim within the coverage of the policy such that Defendant had a duty to defend.
In support of its assertion that Defendant's settlement of the state court action amounts to a "confession of judgment" in the instant case, Plaintiff cites the decision of the Supreme Court of Florida in Wollard v. Lloyd's & Companies of Lloyd's, 439 So. 2d 217 (Fla. 1983). In that case, an insured sued its insurer after coverage for a claimed loss was denied, and the case was settled on the eve of trial but for the issue of attorney's fees under section 627.428, Florida Statutes. In reinstating an award of fees to the insured that had been granted by the trial court but reversed by the Third District Court of Appeal, the Supreme Court stated: "When the insurance company has agreed to settle a disputed case, it has, in effect, declined to defend its position in the pending suit. Thus, the payment of the claim is, indeed, the functional equivalent of a confession of judgment or a verdict in favor of the insured." Id. at 218.
However, neither Wollard nor any of the other cases cited by Plaintiff in support of its "confession of judgment" argument involved circumstances like those of the instant case-particularly, an initial denial by a liability insurer of a duty to defend in an underlying suit against the insured followed by the filing of an amended complaint in that suit that contains materially different allegations. Defendant did not "settle a disputed case" in the same sense as in Wollard, where the insured settled the suit brought by its insurer as to coverage of a an apparent first-party claim. Nor can Defendant here be said to have "decline[d] to defend its position" in the case brought against ...