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Tudor Insurance Co. v. American Casualty Company of Reading Pennsylvania

United States District Court, N.D. Florida, Pensacola Division

March 31, 2017




         Plaintiff Tudor Insurance Company (“Tudor”) brought suit against American Casualty Company of Reading, Pennsylvania (“American Casualty”), seeking contribution for a claim that Tudor paid to settle a state court lawsuit on behalf of a mutual insured, Strategic Management Partners, LLC (“SMP”). See 28 U.S.C. § 1332(a).[1] Pending are cross motions for summary judgment, disputing whether American Casualty's policy is primary insurance or excess coverage in this instance. Having fully reviewed the matter, the Court finds that Tudor's Motion for Summary Judgment is due to be denied, and American Casualty's Motion for Summary Judgment is due to be granted.

         I. Factual Background

         The parties agree that there is no outstanding dispute of material fact. Beginning September 3, 2011, and continuing through all relevant times, SMP served as the property manager for the Royal Crest Apartments located in Pensacola, Florida, under an agreement between Woods Hill Pensacola, LLC (“Woods Hill”) and SMP.[2] On September 9, 2011, an individual named Deiante Elijah H.L. Graham was shot and killed in the parking lot of the Royal Crest Apartments. At the time of the injury, SMP was performing functions under the Management Agreement, which lists SMP as the manager of the Royal Crest Apartments and Woods Hill as the owner. The representative of Mr. Graham's estate filed a wrongful death lawsuit against SMP, as well as the alleged owners of the Royal Crest Apartments, [3] for premises liability and negligent security, alleging that his death was caused, in whole or in part, by SMP. See Chamika Moultrie, as Personal Representative of the Estate of Deiante Elijah H.L. Graham, Deceased v. Strategic Management Partners, L.L.C., et al., Case No. 2013-CA-001620 (Fla. Cir. Ct.) (hereinafter “Moultrie lawsuit”), Compl., ECF No. 1-3. Tudor settled the case on behalf of SMP for the sum of $637, 500, and paid the settlement in full.

         It is also undisputed that at the time of the incident that gave rise to the Moultrie lawsuit, SMP was insured by both Tudor and American Casualty, under separate policies. Tudor issued a general commercial liability policy, number BRP0000450 (“Tudor policy”), effective April 16, 2011 through April 16, 2012.[4] It named Progressive Management of America as the original named insured; Royal Crest Apartments was added by endorsement as an additional location; and Woods Hill and others were added by endorsement as additional named insureds. Although SMP's name does not appear in the policy, it is undisputed that the policy covered SMP by virtue of its property management agreement with Woods Hill.[5] The Tudor policy has a $1, 000, 000 per occurrence limit.

         American Casualty issued policy number CNP 4018358222 (“American Casualty policy”) directly to SMP, effective July 6, 2011 through July 6, 2012. The American Casualty policy has a $2, 000, 000 per occurrence limit. Its Businessowners Common Policy conditions include an “other insurance” provision, which provides the coverage is “excess” over any other “primary insurance” that is available in certain instances, and also an endorsement stating that the coverage is “excess” over valid collectible insurance when the liability arises out of “your management of property for which you are acting as real estate manager.”

         Tudor filed this federal declaratory judgment suit, seeking “reimbursement, equitable or ratable contribution[, ] and equitable subrogation” from American Casualty. ECF No. 1, at 1. Both parties have moved for summary judgment, asserting that the facts are undisputed and only questions of contract interpretation are at issue. In brief, Tudor argues that it is entitled to pro-rata contribution from American Casualty on grounds that both policies provide primary coverage. American Casualty maintains that its policy provides only excess coverage in this situation, and, because the Moultrie settlement amount did not exceed the limits of Tudor's primary coverage policy, the excess coverage is not triggered in this case.

         II. Legal Standards

         Summary judgment is appropriate if there is “no genuine dispute as to any issue of material fact” and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In making these determinations, the Court considers the non-movant's evidence as true and draws all justifiable inferences in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). When considering cross motions for summary judgment, the Court applies the same standards; each motion must be considered on its own with the facts viewed in the light most favorable to the nonmoving party, and to prevail, the moving parties must establish that there is no genuine dispute of fact and that they are entitled to judgment as a matter of law. See, e.g., Am. Bankers Ins. Grp. v. United States, 408 F.3d 1328, 1331 (11th Cir. 2005); United States v. Oakley, 744 F.2d 1553, 1555-56 (11th Cir. 1984).

         A federal court sitting in diversity applies federal procedural law and state substantive law. See Erie R. Co. v. Tompkins, 304 U.S. 64 (1938); Trailer Bridge, Inc. v. Illinois Nat. Ins. Co., 657 F.3d 1135, 1141 (11th Cir. 2011). Thus, the Court applies federal procedural law and Florida substantive law; therefore, Florida law governs the choice of law rules that will apply. See Rando v. Gov't. Employees Ins. Co., 556 F.3d 1173, 1176 (11th Cir. 2009). “With regard to insurance contracts, Florida follows the ‘lex loci contractus' choice-of-law rule, which ‘provides that the law of the jurisdiction where the contract was executed governs the rights and liabilities of the parties in determining an issue of insurance coverage.'” Rando v. Govt. Emps. Ins. Co., 556 F.3d 1173, 1176 (11th Cir. 2009) (quoting State Farm Mut. Auto. Ins. Co v. Roach, 945 So.2d 1160, 1163 (Fla. 2006)). The parties agree that, based on where each contract was executed, the Tudor policy is governed by Florida law and the American Casualty policy is governed by Georgia law.

         Under either state's law, the interpretation of an insurance contract is a matter of law. See Wash. Nat'l Ins. Corp. v. Ruderman, 117 So.3d 943, 948 (Fla. 2013); see also Claussen v. Aetna Cas. & Sur. Co., 380 S.E.2d 686, 687 (Ga. 1989); see also Giddens v. Equitable Life Assurance Soc'y of the U.S., 445 F.3d 1286, 1297 (11th Cir. 2006) (stating this includes “the determination and resolution of ambiguities”). Where the language is plain and unambiguous, courts give effect to the language of the policy as written. See Ruderman, 117 So.3d at 948; Claussen, 380 S.E.2d at 687-88 (“Under Georgia rules of contract interpretation, words in a contract generally bear their usual and common meaning.”). Also, the policy must be construed as a whole, giving each provision its full meaning and effect. See Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla. 2000); Boardman Petroleum, Inc. v. Federated Mut. Ins. Co., 498 S.E.2d 492, 494 (Ga. 1998) see also Fla. Stat. § 627.419(1); O.C.G.A. § 13-2-2(4).

         III. Discussion

         Tudor moves for summary judgment conceding that its insurance is primary but arguing that the American Casualty policy was also primary insurance, and consequently, American Casualty is liable for contribution in the amount of its pro-rata share of the Moultrie settlement. Anticipating American Casualty's excess coverage argument, Tudor argues that the excess clauses are either inapplicable or not enforceable due to ambiguity. In response and in its own motion for summary judgment, American Casualty maintains that its coverage is excess under either of two separate excess clauses in its policy. American Casualty further maintains that Tudor's “tortured construction” of the American Casualty policy fails to read all provisions as a whole. ECF No. 49, at 12. For the following reasons, the Court agrees with American Casualty that a plain reading of the policy language requires a conclusion that its coverage is excess in this situation.

         “Excess or secondary coverage is coverage whereby, under the terms of the policy, liability attaches only after a predetermined amount of primary coverage has been exhausted.” Coker v. Am. Guar. & Liab. Ins. Co., 825 F.3d 1287, 1294 (11th Cir. 2016) (quoting U.S. Fire Ins. Co. v. Capital Ford Truck Sales, Inc., 257 Ga. 77, 355 S.E.2d 428, 431 (1987)). When the excess provision applies, “excess” insurance is not available until the limits of the primary policy have been exhausted. See Coker, 825 F.3d at 1294. Even if both policies have unambiguous “other insurance” clauses, if one excess clause plainly applies, the Court will give it effect and relieve the excess insurer “from any duty to indemnify [the insured] for a covered loss until all primary insurance coverage is exhausted.”[6]Keenan Hopkins Schmidt and Stowell Contractors, Inc. v. Cont'l. Cas. Co., 653 F.Supp.2d 1255, 1265 (M.D. Fla. 2009); see also Phoenix Ins. Co. v. Nationwide Prop. and Cas. Ins. Co., 1:12-CV-00660-JOF, 2013 WL 11975142, at *3 (N.D.Ga. ...

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