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Hallums v. Infinity Insurance Co.

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

April 20, 2018




         I. Background

         This case presents the following question: whether the Lessor Liability Endorsements in Plaintiffs' automobile insurance policies provide insurance at all, or whether they are illusory. Plaintiffs maintain that the Graves Amendment, 29 U.S.C. § 30106, forecloses the possibility of lessor liability, and therefore, the Endorsement constitutes no insurance coverage. Before the Court are the Parties' cross-motions for summary judgment. See D.E. 68 and 83.

         Infinity moves for summary judgment on the issue of whether the Endorsement provides insurance. See D.E. 68. In support, Infinity advances six arguments: (I) Plaintiffs lack Article III standing; (II) even if the Endorsement is ambiguous, coverage exists under Florida law; (III) even under Plaintiffs' theory, coverage exists for accidents occurring in other states; (IV) Infinity has a duty to defend lessors, even against claims barred by the Graves Amendment; (V) even under Plaintiffs' theory, the remedy is not to void the Endorsement, but to ignore the exclusion or limitation that renders it illusory and find coverage; and (VI) the filed-rate doctrine bars Plaintiffs' claims.

         Plaintiffs move for partial summary judgment regarding Infinity's affirmative defenses on standing (defenses nos. 32, 35, 61), the filed-rate doctrine (defense no. 20), and fraudulent concealment (defense no. 9). See D.E. 56. Additionally, Plaintiffs move for summary judgment on whether the Endorsement provides insurance. For the following reasons, the Court finds that the Endorsement is not illusory because Plaintiffs' interpretation of the Endorsement would render the Graves Amendment's savings clause a nullity. Moreover, the Court finds that the Endorsement imposes a duty to defend. Therefore, summary judgment is granted in Infinity's favor because there is no genuine dispute of a material fact and Infinity is entitled to judgment as a matter of law.

         II. Legal Standard

         Summary judgment is authorized where there is no genuine issue of material fact. Fed.R.Civ.P. 56(c). The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The party opposing the motion for summary judgment may not simply rest upon mere allegations or denials of the pleadings; the non-moving party must establish the essential elements of its case on which it will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). The non-movant must present more than a scintilla of evidence in support of the non-movant's position. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986). A jury must be able to reasonably find for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986). Id.

         III. Analysis


         Infinity argues that Plaintiffs lack standing in the absence of a denied claim. Article III limits federal "judicial power" to the resolution of actual "cases and controversies." See U.S. Const, art. Ill. § 2. To construe an Article III case or controversy, the plaintiff must have standing. "[T]he irreducible constitutional minimum of standing contains three elements:" (1) the plaintiff must have suffered an "injury in fact;" (2) there must be a causal connection between the injury and the conduct complained of; and (3) it must be "likely" that the injury will be "redressed by a favorable decision." Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992) (citations omitted).

         The crux of Infinity's argument is that Plaintiffs cannot be injured by an Endorsement that indemnifies a third party-Plaintiffs' lessors-not Plaintiffs. See D.E. 44 at ¶ 11 ("The [E]ndorsement provides the following additional Liability Coverage for your lessor."); see also D.E. 68 at 6 ("Because Plaintiffs adduce no evidence that their lessors rejected the Endorsement, Plaintiffs have no injury."). Thus, because Plaintiffs contend that an insurance policy that protects their lessors is illusory, Infinity submits that Plaintiffs lack standing. In support, Infinity relies on a bevy of cases that hold that an insured lacks standing to challenge the enforceability of an insurance policy, unless and until the insured actually makes a claim, and the insurer denies the claim. See, e.g., Gonzales v. Nat'l Union Fire Ins. Co. of Pittsburgh, P.A., 2016 WL 5107033, at *10 (S.D.N.Y. Sept. 19, 2016) (finding no standing to claim policy was void under New York law where plaintiff never made a claim that was denied under the policy); Williams v. Nat'l Union Fire Ins. Co. of Pittsburgh, 2016 WL 739537, at *2 (N.D.Ga. Feb. 24, 2016) (dismissing the plaintiffs' "contention that if they had submitted claims, the [d]efendants would have denied [them]" as mere speculation, because "[i]t is impossible to know whether the [d]efendants would have denied their claims."); Giercyk v. Nat'l Union Fire Ins. Co. of Pittsburgh, 2015 WL 7871165, at *5 (D.N.J. Dec. 4, 2015) ("[A]ny suggestion that [d]efendants would not honor [p]laintiffs' claims is mere speculation, and not a concrete harm, " because "[p]laintiffs have not filed any claims."); Campbell v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 130 F.Supp.3d 236, 249 (D.D.C. 2015) (holding that the plaintiff lacked standing where she claimed to have paid for an illusory insurance policy but never filed a claim); Weaver v. Aetna, 2008 WL 4833035, at *3 (D. Nev. Nov. 4, 2008), aff'd, 370 Fed.Appx. 822 (9th Cir. 2010) ("[W]hile counts one through three allege [p]laintiff paid premiums for a nonexistent policy- seemingly an injury-in-fact-one could not deem a policy nonexistent unless she were improperly denied benefits. Any other claim of a 'nonexistent' policy ventures into the metaphysical, as one cannot know whether a policy exists until availing oneself of its benefits."). Plaintiffs claim that Williams, Gonzales, Giercyk, and Campbell are wholly inapposite, because in those cases, the courts had determined that the insurance policy at issue-the HealthExtras benefit program-was not illusory as a matter of law, leaving the plaintiffs' to argue that the policy was worthless because the defendants would never pay the claims. See Williams, 2016 WL 739537, at *2 ("As the [d]efendants correctly point out, the [c]ourt has already held that the insurance policies were valid and enforceable, even if the insurance policies violated Georgia insurance laws . . . Because none of the [p]laintiffs submitted claims . . . [their] argument is mere speculation."); Giercyk, 2015 WL 7871165, at *5 ("Given the policy's enforceability, [p]laintiffs lack standing because ... if [p]laintiffs filed a valid claim ... any suggestion that Defendants would not honor [their] claims is mere speculation, and not a concrete harm."); Campbell, 130 F.Supp.3d at 252 ("Accordingly, the [c]ourt finds that [the plaintiffs] allegation that the [policy] may have contained undisclosed exclusions that she believes [d]efendants would have used to deny any claims, had she made them, does not constitute the type of concrete, particularized, actual injury that supports Article III standing . . ."). Further, Plaintiffs submit that the line of cases Infinity relies on, confirms a court's ability to determine whether a product is valid insurance irrespective of whether a claim has been submitted or denied.

         The standing analysis boils down to: (1) the injury Plaintiffs allegedly suffered and (2) whether that injury is sufficiently concrete and particularized-not conjectural or hypothetical- to confer standing. See Kelly v. Harris, 331 F.3d 817, 819 (11th Cir. 2003) ("To have standing, a plaintiff must show (1) he has suffered an injury in fact that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical . . ."). Plaintiffs maintain they were injured upon payment to Infinity-thereby satisfying their lessors' requirements-for an allegedly illusory Endorsement. In return, Plaintiffs became "lessees" and obtained possession of the leased vehicles from their lessors. Thus, Infinity posits that the premiums paid by Plaintiffs do not constitute an injury, because Plaintiffs continue to reap the benefits of their bargains-possession of the vehicles. See D.E. 68 at 6. ("[B]ecause the Endorsement expressly covers only lessors, not Plaintiffs, any challenge to the sufficiency of the Endorsement must be brought by the lessors . . ."). Plaintiffs did receive what they bargained for, but did so at their financial expense, for an Endorsement that they allege can never trigger because it violates federal law.

         Requiring Plaintiffs to file a claim on their policies before bearing an Article III injury would be-at best-futile in this limited instance, because the Endorsement indemnifies entities-Plaintiffs' lessors-that do not bear the cost of the premium. Indeed, the very basis on which Plaintiffs filed this suit is the theory that the Endorsement is illusory because there is no situation in which the policy does not violate the Graves Amendment. Infinity maintains that Plaintiffs lack standing because Plaintiffs "argue on behalf of third-party lessors, who have never made a claim or had a claim denied. They never contend their claim was denied." D.E. 68 at 5. Expecting Plaintiffs to file a claim on an Endorsement that does not indemnify them is nonsensical. Conversely, assuming arguendo that Plaintiffs have no standing because they have not suffered an injury, and thus, expecting their lessors to challenge the Endorsement, is similarly illogical, as the lessors are reaping the benefits-albeit through the power of contract- of being insured under an Endorsement they do not pay for. Accordingly, Plaintiffs have standing in this limited instance because they suffered concrete, cognizable injuries when they paid for an Endorsement that allegedly does not provide insurance.


         Similarly, Infinity argues that this case is not ripe for review because it has not denied a claim. "The ripeness doctrine protects federal courts from engaging in speculation or wasting their resources through the review of potential or abstract disputes. Digital Properties, Inc. v. City of Plantation, 121 F.3d 586, 589 (11th Cir. 1997). The case is ripe for the Court's review, notwithstanding Infinity's contention that it has yet to deny a claim, because Plaintiffs suffered a concrete injury when they paid for an insurance policy that they allege does not provide insurance.

         The Endorsement

         The primary contention between the Parties is whether Infinity's obligation to indemnify Plaintiffs' lessors can ever arise in a scenario that is not foreclosed by the Graves Amendment. Plaintiffs assert that under the Endorsement, the damages that a lessor becomes legally obligated to pay post-Graves (and Infinity has an obligation to indemnify), can only stem from an injury for which the insured is legally liable. Such ...

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