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Luhman v. Covington Specialty Insurance Co.

United States District Court, S.D. Florida, Miami Division

March 2, 2017




         This insurance case originated from a state court personal injury action, where Plaintiff Denise A. Luhman (“Luhman”) sued, among other defendants, Manuel Cordero Truck Corporation and its principal, Manuel Cordero (referred to collectively as “Cordero”) for injuries resulting from an automobile accident (the “Underlying Action”). Defendant Covington Specialty Insurance Company (“Covington”) issued a commercial general liability policy, Policy No. VBA21');">1');">1');">1');">1');">1');">1');">195700, to Manuel Cordero Truck Corporation (the “Policy”). [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-1');">1');">1');">1');">1');">1');">1');">1]. Based on this Policy, Cordero reached out to Covington to provide a defense in the Underlying Action.[1');">1');">1');">1');">1');">1');">1');">1" name="FN1');">1');">1');">1');">1');">1');">1');">1" id= "FN1');">1');">1');">1');">1');">1');">1');">1">1');">1');">1');">1');">1');">1');">1');">1] However, Covington refused to defend or indemnify Cordero based on an “auto exclusion” to coverage applying and the fact that the Underlying Action's Amended Complaint (“Underlying Complaint”) included the allegations of joint venture. [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">15-2; 1');">1');">1');">1');">1');">1');">1');">15-3].

         Luhman has since been assigned the rights of Cordero's Policy, which gave Luhman full authority to sue Covington regarding the Underlying Action's coverage dispute and for Covington's alleged breaches of the Policy. [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-5]. Luhman brought this action against Covington for breaching its contractual duties to defend (Count I) and to indemnify (Count II) Cordero in the Underlying Action. [ECF No. 1');">1');">1');">1');">1');">1');">1');">1-1');">1');">1');">1');">1');">1');">1');">1]. Luhman and Covington have each filed cross-motions for partial summary judgment on Count I. [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">16; 22]. Both motions are fully briefed. [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">17; 1');">1');">1');">1');">1');">1');">1');">19; 26; 28].

         After review of the motions, responses, replies, applicable Florida law, and the record, the Undersigned grants Luhman's motion for partial summary judgment that Covington breached its duty to defend Cordero in the Underlying Action and denies Covington's amended motion for cross-summary judgment on that same issue because it is clear that the Policy's “auto exclusion” and joint venture provisions were inapplicable.


         Both parties repeatedly, expressly, and unequivocally acknowledge that (1');">1');">1');">1');">1');">1');">1');">1) the coverage issue relating to Covington's duty to defend arises from undisputed facts; (2) it is purely a matter of law for the Court to decide; and (3) the only documents the Court needs to consider (or should consider) are the Underlying Complaint and the Policy.

         Thus, unlike most summary judgment motions, where the party opposing the motion argues that genuine issues of material fact preclude summary judgment, the parties here agree that no additional factual disputes need to be resolved before a ruling can issue. Instead, they concede that the legal issue of Covington's duty to defend is based solely on this Court's interpretation of Florida law and is entirely ripe for a ruling. The parties' conflicting views of Florida law on Covington's duty to defend is exactly what this Court will resolve in this Omnibus Order.

         BACKGROUND[2" name="FN2" id="FN2">2]

         Underlying Action

         On January 9, 201');">1');">1');">1');">1');">1');">1');">13, Covington issued the Policy to Manuel Cordero Truck Corporation. [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-1');">1');">1');">1');">1');">1');">1');">1, p. 1');">1');">1');">1');">1');">1');">1');">1]. On October 27, 201');">1');">1');">1');">1');">1');">1');">13, Luhman was injured in an automobile accident when her car collided with a semi-truck operated by Melquiades Gongora (“Gongora”). [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-2, 3');">p. 3]. On or about January 20, 201');">1');">1');">1');">1');">1');">1');">14, Luhman filed the Underlying Complaint, which added Cordero as defendants and alleged that they were vicariously liable for the acts of Gongora regarding the auto accident. [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-2].

         The Underlying Complaint included: a vicarious liability count against Cordero, Shark Trucking Corporation (“Shark Truck”), and Big Dog Express of South Florida, Inc. (“Big Dog”) (Count IV); a negligent hiring, retention, and supervision count against Cordero, Shark Truck, and Big Dog (Count V); and a joint venture liability count against Cordero, Shark Truck, and Big Dog (Count VI). [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-2, pp. 6-1');">1');">1');">1');">1');">1');">1');">12].

         On April 24, 201');">1');">1');">1');">1');">1');">1');">14, Covington notified Cordero's counsel that it was denying coverage and it refused to defend Cordero against Luhman's claims. [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-3].

         On May 1');">1');">1');">1');">1');">1');">1');">1, 201');">1');">1');">1');">1');">1');">1');">15, Luhman and Cordero entered into a Settlement Agreement and an Assignment, a “Coblentz” agreement, under which Cordero assigned the legal rights and claims under the Policy to Luhman. [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">15-4; 1');">1');">1');">1');">1');">1');">1');">15-5]. A consent judgment for damages in the amount of $1');">1');">1');">1');">1');">1');">1');">1, 376, 000.00 was entered against Cordero. [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">15-6; 27-1');">1');">1');">1');">1');">1');">1');">1].

         On December 3, 201');">1');">1');">1');">1');">1');">1');">15, Luhman filed the instant action against Covington in the Circuit Court in and for Miami-Dade County, Florida (Case No. 201');">1');">1');">1');">1');">1');">1');">15-028052-CA-01');">1');">1');">1');">1');">1');">1');">1) and on January 1');">1');">1');">1');">1');">1');">1');">1, 201');">1');">1');">1');">1');">1');">1');">16, Covington removed the case to federal court. [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">1; 1');">1');">1');">1');">1');">1');">1');">1-1');">1');">1');">1');">1');">1');">1');">1].

         On March 21');">1');">1');">1');">1');">1');">1');">1, 201');">1');">1');">1');">1');">1');">1');">16, Luhman filed her motion for partial summary judgment, which Covington responded to on April 5, 201');">1');">1');">1');">1');">1');">1');">16, and Luhman replied to on April 1');">1');">1');">1');">1');">1');">1');">12, 201');">1');">1');">1');">1');">1');">1');">16. [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">16; 1');">1');">1');">1');">1');">1');">1');">17; 1');">1');">1');">1');">1');">1');">1');">19]. Covington filed its cross-motion for summary judgment on April 5, 201');">1');">1');">1');">1');">1');">1');">16, which Luhman responded to on April 1');">1');">1');">1');">1');">1');">1');">13, 201');">1');">1');">1');">1');">1');">1');">16. [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">18; 20]. On April 1');">1');">1');">1');">1');">1');">1');">15, 201');">1');">1');">1');">1');">1');">1');">16, Covington filed a motion to amend/correct its cross motion for summary judgment by filing its amended motion. [ECF No. 22]. Luhman responded to the amended motion on April 27, 201');">1');">1');">1');">1');">1');">1');">16, to which Covington replied to on May 9, 201');">1');">1');">1');">1');">1');">1');">16. [ECF Nos. 26; 28]. On October 5, 201');">1');">1');">1');">1');">1');">1');">16, the Court entered Endorsed Orders granting Covington's motion to amend and stating that “Covington need not separately re-file the Amended Cross Motion” and denying as moot Covington's original cross-motion. [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">18; 53; 54].

         The Policy's Provisions and Covington's Reasons for Denying Cordero Coverage

         The Policy's “Section I - Coverages, ” subsection 1');">1');">1');">1');">1');">1');">1');">1 “Insuring Agreement, ” covers bodily injury and bodily damage liability to which the insurance applies. [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-1');">1');">1');">1');">1');">1');">1');">1, p. 1');">1');">1');">1');">1');">1');">1');">19]. Section I also includes subsection 2 “Exclusions, ” which contains the “auto exclusion, ” which is referenced by Covington as “Exclusion g.” and is titled “Aircraft, Auto Or Watercraft.” [ECF Nos. 1');">1');">1');">1');">1');">1');">1');">15-1');">1');">1');">1');">1');">1');">1');">1, pp. 20-22; 1');">1');">1');">1');">1');">1');">1');">15-3]. Exclusion g. excludes coverage for:

“Bodily injury” or “property damage” arising out of the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured.
This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training, or monitoring of others by that insured, if the “occurrence” which caused the “bodily injury” or “property damage” involved the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft that is owned or operated by or rented or loaned to any insured.

[ECF No. 1');">1');">1');">1');">1');">1');">1');">15-1');">1');">1');">1');">1');">1');">1');">1, p. 22, Exclusion g.] (emphasis added). The Policy's Section II- WHO IS AN INSURED includes “an employee” as an insured. [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-1');">1');">1');">1');">1');">1');">1');">1, pp. 27-28, 31');">1');">1');">1');">1');">1');">1');">1-33].

         In Covington's denial letter, it identified Luhman's loss as arising out of an auto accident and stated that Exclusion g. to Section I-Coverages applied. [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-3, p. 5]. Covington argues in its filings before the Court that Luhman alleged in the Underlying Complaint that Gongora was acting as an “employee” of Cordero and, based on this, Gongora qualified as an insured under the Policy. Thus the “auto exclusion” applied to deny Cordero coverage under the Policy.

         Covington's other stated basis for denying coverage in its denial letter, which it reasserts in its cross-motion, was that Luhman alleged that Gongora and Cordero were parties in a joint venture. Section II, subsection 1');">1');">1');">1');">1');">1');">1');">1.d states: “If you are designated in the Declarations as: . . . [a]n organization other than a . . . joint venture . . ., you are an insured[.]” [ECF No. 1');">1');">1');">1');">1');">1');">1');">15-1');">1');">1');">1');">1');">1');">1');">1, p. 27]. Section II, subsection 4 states that “[n]o person or organization is an insured with respect to the conduct of any current or past . . . joint venture . ...

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