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Rockhill Insurance Co. v. Northfield Insurance Co.

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

November 8, 2017

ROCKHILL INSURANCE COMPANY, Plaintiff,
v.
NORTHFIELD INSURANCE COMPANY, Defendant.

          ORDER

          TIMOTHY J. CORRlGAN United States.

         This case is about which insurance company is better at writing a broad “other insurance” provision, one suitable for all occasions, so that its coverage becomes excess and the other insurer's primary.[1] It is before the Court on the parties' cross motions for summary judgment. (Docs. 32, 39). Defendant Northfield Insurance Company (“Northfield”) moved for summary judgment (Doc. 32), Plaintiff Rockhill Insurance Company (“Rockhill”) filed an amended Response (Doc. 42), and Northfield replied (Doc. 45). Rockhill also moved for summary judgment (Doc. 39), Northfield responded (Doc. 46), Rockhill replied (Doc. 49), and Northfield filed a sur-reply (Doc. 52). On October 13, 2017, the Court held a hearing on the motions, the record of which is incorporated herein. (Doc. 55).

         I. BACKGROUND

         This dispute between insurance companies concerns coverage priority in relation to the settlement of a wrongful death suit. On November 10, 2010, Leroy McDonald was shot and killed in the Briar Oaks at Oakleaf Plantation townhome community (“the Community”) (Doc. 39-1), which is overseen by the Briar Oaks at Oakleaf Plantation Townhomes Owners' Association, Inc. (“Briar Oaks”). (Doc. 11). On June 1, 2007, First Coast Association Management, LLC (“First Coast”) entered into a contract with Briar Oaks to manage the Community. (Doc. 39-6). This contract was in effect on November 10, 2010. Id. On November 10, 2010, Briar Oaks had insurance coverage through Rockhill (Doc. 39-4), and First Coast had insurance coverage through Northfield (Doc. 39-5).

         In 2012, Latasha McDonald, as the personal representative of the Estate of Leroy McDonald, filed a wrongful death action against First Coast and Briar Oaks (“Underlying Action”). (Doc. 11). In 2015, a jury trial returned a verdict in favor of McDonald for $2, 658, 852, with First Coast and Briar Oaks jointly and severally liable for 70% and Briar Oaks solely liable for 30%. (Doc 39-2). Subsequently, the parties agreed to a settlement, paying Leroy McDonald's Estate $2, 790, 000, divided among three insurers.[2] (Doc. 39-3).

         On June 30, 2016, Rockhill filed its First Amended Complaint (“Complaint”) (Doc. 11), seeking a declaratory judgment determining the priority of coverage for the Underlying Action, judgment to recover fees and costs incurred in the Underlying Action, [3] and costs. (Doc. 11 at 4). Northfield filed an answer and counterclaim seeking a declaratory judgment, attorney's fees, and costs. (Docs. 11, 21).

         A. The Rockhill Policy

         Rockhill issued businessowners' policy THB001324-01 to Briar Oaks, providing both first party property coverage and business liability coverage. (Doc. 39 at 3). Section I of the policy explains the coverage for first party property, Section II explains the coverage for business liability, and Section III contains policy conditions common to Sections I and II. (Doc. 39 at 3). The policy also contains multiple amendments, endorsements, exclusions, and limitations in separate forms. (Doc. 39-4). The coverage provides up to $1 million per occurrence as part of its liability and medical expense limit. (Doc. 39-4 at 4). First Coast is an omnibus insured under the policy.[4] (Doc. 39-4 at 56). Section III of the policy contains an “other insurance” provision, making the coverage excess over other insurance in certain situations. (Doc. 39-4 at 63).

         B. The Northfield Policy

         Northfield issued First Coast a commercial policy numbered WS023188 that contains a liability limit of $1 million per occurrence. (Doc. 32 at 7). First Coast is the sole named insured under the Northfield policy, and the parties agree that Briar Oaks is not insured under that policy. (See Doc. 39 at 6). The Northfield policy also contains an “other insurance” provision, a combination endorsement to the “other insurance” provision, and a second endorsement. The “other insurance” provision, as modified by the combination endorsement, provides that the policy is excess over other valid and collectible insurance in certain situations. This combination endorsement further states that if excess, Northfield has no duty to defend the insured in any suit if another insurer has such a duty, and that Northfield will only pay the amount that exceeds the other insurance coverage and deductibles. (Doc. 39-5 at 28, 39-40). The second endorsement makes the coverage excess when the liability arises from First Coast's activities as a property manager.

         II. STANDARD OF REVIEW

         Upon review of cross motions for summary judgment, “the Court must determine whether either party deserves judgment as a matter of law on the undisputed facts.” T-Mobile S. LLC v. City of Jacksonville, 564 F.Supp.2d 1337, 1340 (M.D. Fla. 2008). “When the only question a court must decide is a question of law, summary judgment may be granted.” Saregama India Ltd. v. Mosley, 635 F.3d 1284, 1290 (11th Cir. 2011). Insurance contract interpretation is a matter of law properly decided on summary judgment. LaMadrid v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 567 F. App'x 695, 700 (11th Cir. 2014).

         III. ANALYSIS

         A. Jurisdictional Issues

         This action is appropriately brought under 28 U.S.C. § 1332.[5] Both parties seek declaratory relief pursuant to 28 U.S.C. §§ 2201 and 2202. When the Complaint and Answer and Counterclaims were filed, the Underlying Action had not yet settled. However, on January 11, 2017, the parties settled the Underlying Action. At the October 13, 2017 hearing, the Court, citing Housing Enterprise Insurance Co. v. AMTRUST Insurance Co., 212 F.Supp.3d 1330, 1338 (N.D.Ga. 2016), expressed concern that it may not have jurisdiction to provide declaratory relief.[6] The parties, at the request of the Court, submitted a joint brief responding to the Court's concerns. (Doc. 56).

         In their Joint Brief on Jurisdiction and Notice Regarding Settlement, the parties provide two reasons why this Court has jurisdiction. (Doc. 56). First, the settlement agreement did not destroy jurisdiction to provide declaratory relief because the settlement reserves the parties' rights to maintain this action. (Doc. 56 at 1-5). The second reason is that the complaint could be liberally construed to include a claim for equitable contribution over which the Court maintains jurisdiction. (Doc. 56 at 5-6). Although the Complaint was unartfully drafted- containing no counts, and titled “Plaintiff's Amended Complaint for Declaratory Relief”-the “wherefore” clause contains several requests for relief, at least one of which can be construed as an equitable contribution claim. (Doc. 11 at 4). As the Court agrees that the Complaint could be interpreted to include a claim for equitable contribution and that the parties have a concrete dispute regarding coverage, it retains jurisdiction.[7]

         B. Florida Law Governing the Interpretation of Insurance Contracts[8]

         Florida interprets insuring or coverage clauses in the broadest possible manner to provide the greatest extent of coverage. Keenan Hopkins Schmidt & Stowell Contractors, Inc. v. Cont'l Cas. Co., 653 F.Supp.2d 1255, 1263 (M.D. Fla. 2009). Courts view the policy “as a whole and give every provision its full meaning and operative effect.” Trailer Bridge, Inc. v. Ill. Nat. Ins. Co., 657 F.3d 1135, 1141 (11th Cir. 2011) (quotations omitted). The policies are interpreted according to their plain meaning, but if ambiguities exist they are construed to favor coverage. Id. Policy language is ambiguous when it is susceptible to multiple reasonable interpretations. Pac. Emp'rs Ins. Co. v. Wausau Bus. Ins. Co., 508 F.Supp.2d 1167, 1175 (M.D. Fla. 2007). Undefined words or phrases should be given their common everyday meaning. Id. “Although exclusionary clauses cannot be relied upon to create coverage, principles governing the construction of insurance contracts dictate that when construing an insurance policy to determine coverage the pertinent provisions should be read in pari materia.” Intervest Const. of Jax, Inc. v. Gen. Fid. Ins. Co., 133 So.3d 494, 498 (Fla. 2014).

         C. The “Other Insurance” Provisions

         This dispute concerns the interpretation of “other insurance” provisions in the Rockhill and Northfield policies, both of which cover First Coast. Rockhill alleges that both insurance policies are co-primary because they each contain “other insurance” provisions that attempt to make the policy excess to any other coverage to which the insured is entitled. (Doc. 39 at 9). Northfield alleges that Rockhill's “other insurance” provision does not apply and that Northfield's policy is excess over Rockhill's policy. (Doc. 32 at 9).

         In Florida, “where two or more policies that apparently cover the same loss both contain excess ‘other insurance' provisions, the clauses are deemed ‘mutually repugnant.'” Keenan, 653 F.Supp.2d at 1263. Florida does not recognize superiority of one excess “other insurance” provision over another. Certain Underwriters at Lloyds, London Subscribing to Policy No. SA 10092-11581 v. Waveblast Watersports, Inc., 80 F.Supp.3d 1311, 1320 (S.D. Fla. 2015). When the excess “other insurance” provisions cancel each other out, each insurer is liable for a pro rata share in accordance with their policy coverage limits. Id. at 163-64. Thus, the Court must consider whether the “other insurance” provisions in both the Rockhill and Northfield policies apply to the Underlying Action.

         1. Northfield's “other insurance” provision makes its coverage excess.

         The Northfield policy's “other insurance” provisions apply to First Coast vis-a-vis the Underlying Action. (Doc. 32 at 9; Doc. 39 at 13). Northfield's “other insurance” provision, as modified by the combination endorsement, states:

         4. Other Insurance

If other valid and collectible other insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as ...

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