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Great Divide Insurance Co. v. Amerisure Insurance Co.

United States District Court, S.D. Florida

May 18, 2018

GREAT DIVIDE INSURANCE COMPANY, for itself and on behalf of Aventura Construction Corporation, Plaintiff,
v.
AMERISURE INSURANCE COMPANY and DRAWDY CONCRETE CONSTRUCTION, LLC, Defendants.

          MEMORANDUM OPINION

          Robin L. Rosenberg United States District Judge.

         On April 23, 2018, this Court held a one-day bench trial on GREAT DIVIDE INSURANCE COMPANY's (“Great Divide”) breach of contract claim against DRAWDY CONCRETE CONSTRUCTION, LLC (“Drawdy”). See DE 1 (Count III of the Complaint for Declaratory Relief and Damages). The Court, having otherwise disposed of Great Divide's other claims, [1] issues the following findings of fact and conclusions of law on Great Divide's breach of contract claim against Drawdy for failing to indemnify Aventura Construction Corp. (“Aventura”), Great Divide's insured.[2]

         FINDINGS OF FACT

         1. Master Contract. Aventura was the general contractor hired by Cumberland Farms, Inc. (“Cumberland Farms”) to build a convenience store located in Sebastian, Florida (the “Project”). See Master Contract, Defendant's Exhibit No. 26. Under the Master Contract, Aventura was responsible for constructing the Project in accordance with drawings, plans, and specifications. Id. at 2 (“Scope of Work”). Aventura was not responsible for the design of the Project, and had no inspection responsibilities. Id; see also Trial Transcript at 19:9-14.[3]

         2. Subcontract. Aventura subcontracted all of the concrete work to Drawdy, including all work related to A.D.A. ramps and A.D.A. curb ramp flares. See Subcontract, Plaintiff's Exhibit No. 1; see also TT at 20:1-3; 205:17 to 206:6. Pursuant to the Subcontract, Drawdy was required to “[p]rovide all labor, material, equipment, and supervision necessary to perform all CONCRETE work as per plans and specifications.” Exhibit No. 1 at 1. The Subcontract also states that Drawdy is to “[p]rovide/coordinate all inspections as necessary to achieve sign-offs.” Id.

         3. Referenced and incorporated into the Subcontract were the Project's plans and drawings, including plans and drawings related to a concrete A.D.A. ramp and A.D.A. curb ramp flare located at the outside entrance of the convenience store. Id. at 13 (Plan CFG9.1), 15 (Plan A0.4). Under the “DETAIL NOTES”, the plans stated that the A.D.A. ramp and A.D.A. curb flare are to be constructed “PER A.D.A. STANDARDS … AND FLORIDA BUILDING CODE STANDARDS”. Id. at 13 (Plan CFG9.1).

         4. The Subcontract also contains an “Indemnification” clause that states that Drawdy “expressly agrees to indemnify and save harmless Aventurafrom all claims, demands, suits, costs or expenses because of bodily injury … sustained by any person(s) … arising out of his operations, work or materials under this Subcontract…..” Id. (emphasis added).

         5. Underlying Personal Injury Lawsuit. A little over a month after the Cumberland Farms opened to the public, Bruce Henkle (“Henkle”), a customer, allegedly tripped on a concrete A.D.A. curb flare, fell, and seriously injured himself. DE 86 at 3-4 (the Project was substantially completed on October 7, 2014 and Mr. Henkle allegedly tripped and fell on November 13, 2014); see also Complaint, Plaintiff's Exhibit No. 2.

         6. Mr. Henkle initiated a lawsuit against Cumberland Farms, Aventura, and others.[4]See Complaint, Plaintiff's Exhibit No. 2. As to the claims against Aventura, Mr. Henkle alleged that he “was injured” when he “tripped and fell over a ‘flared' curb … located immediately adjacent to an ADA entrance ramp.” Id. at ¶ 20. He further alleged that Aventura, “through its agents, servants, and/or employees” was negligent “[i]n constructing … the premises in violation of applicable building codes, statutes and ordinances.” Id. at ¶ 21.[5]

         7. In terms of damages, Mr. Henkle claimed to incur over $300, 000 in past medical bills and expenses, future medical expenses estimated at over $400, 000 (due to the need for future surgeries), and significant pain and suffering damages. See TT at 30:22 to 31:2. Overall exposure was estimated to be in excess of one million dollars. Id. at 30:16-18.

         8. Liability Theories Advanced In Underlying Personal Injury Lawsuit. Mr. Henkle retained Ronald Bertone, a licensed architect, to provide expert opinions related to the subject concrete “ADA Curb Ramp” located at the Project. See Affidavit of Bertone, Plaintiff's Exhibit No. 9 at 2 (¶¶ 2-3); see also Photographs Identifying the Subject A.D.A. Curb Flare, Plaintiff's Exhibit No. 8.[6] According to Mr. Bertone's affidavit and expert report, he offered three expert opinions related to liability. See Affidavit of Bertone, Plaintiff's Exhibit No. 9.

         9. First, the slope of the concrete A.D.A. curb flare “at the location where [Mr. Henkle] tripped and fell … was not uniform” and “exceeded and violated the maximum allowable slope requirement of 10% [as] set forth in Florida's Accessibility Code For Building Construction….” Id. at 4 (¶ 4(k)). In support of this opinion, Mr. Bertone took photographs that showed that the concrete A.D.A. curb flare violated A.D.A. Standards and the Florida Building Code. Id. at 23-27. Ultimately, Mr. Bertone concluded that the concrete A.D.A. ramp and A.D.A. curb flare contained “multiple violations of the Florida Accessibility Code for Building Construction.” Id. at 5 (¶ 4(o)).

         10. Second, the concrete A.D.A. curb flare was not painted. Id. at 3 (¶ 4(g)) (“the top surface of the curb should have been painted ‘safety yellow'”).

         11. Third, the A.D.A. Access Aisle was too wide, painted to be eight feet instead of five feet. Id. at 5 (¶ 4(n)).

         12. Aventura Tenders To Drawdy. On April 13, 2017, approximately three months after first receiving notice of Mr. Henkle's claims, Aventura tendered the defense of the Henkle suit to Drawdy and demanded indemnification from Mr. Henkle's claims. See Tender Letter, Plaintiff's Exhibit No. 6 at 3 (“demand is hereby made upon Drawdy … to defend and indemnify Aventura”); see also TT at 54:5-23. The tender letter cited to the “Indemnity” clause of the Subcontract and explained that the request for indemnification was due to the fact that Mr. Henkle's claims arose out of Drawdy's operations and work. See Tender Letter, Plaintiff's Exhibit No. 6 at 2.

         13. Drawdy received notice of the tender and was afforded the opportunity to participate in litigation and settlement of the underlying personal liability claim; however, Drawdy never responded and refused to indemnify Aventura in any way. Id.; see also Pre-Trial Stipulation, ¶ 5(g) (DE 99); TT at 8:20-23; 82:7-14.

         14. Settlement Of Underlying Personal Injury Lawsuit. On June 29, 2017, Aventura settled the underlying case for $150, 000.00, [7] which was paid by Great Divide, who initiated the instant contractual indemnity action to recover the settlement amount paid, and attorneys' fees and costs incurred in defending the underlying action[8] and in prosecuting the instant indemnity suit[9].

         15. Reasonableness Of Settlement. The parties stipulated to the fact that Aventura's underlying settlement of Mr. Henkle's case in the amount of $150, 000 was reasonable. DE 99 at 6 (¶ 5(h)); see also TT at 19:22 to 20:19.

         16. Potential Liability. Frank DeMeyer, the President of Aventura, testified that he worked closely with defense counsel in the underlying personal injury case to understand plaintiff's liability theories, assisted counsel in understanding technical construction issues, and independently analyzed his own company's potential liability. See TT at 31:17 to 32:8. In doing so, he reviewed the underlying complaints filed by Mr. Henkle, pleadings and motions filed in the case, orders entered in the case, and the affidavit executed by Mr. Henkle's expert. Id. at 26:19 to 28:1; 31:21 to 33:1. He ultimately concluded that Mr. Henkle's claim created significant exposure in excess of one million dollars, and that Mr. Henkle was seeking to hold his company, Aventura, vicariously liable for the allegedly improper work completed by his subcontractor, Drawdy. Id. at 27:23 to 28:15; 30:16-18.

         17. In terms of Mr. Henkle's liability theories, Mr. DeMeyer testified that the only liability theory advanced by Mr. Henkle in the underlying personal injury case that created the potential for liability to be placed on his company, Aventura, was Mr. Henkle's claim that the concrete A.D.A. curb flare “at the location where [Mr. Henkle] tripped and fell … was not uniform” and “exceeded and violated the maximum allowable slope requirement of 10% [as] set forth in Florida's Accessibility Code For Building Construction….” TT at 41:19 to 43:25; see also Affidavit of Bertone, Plaintiff's Exhibit No. 9 at 4 (¶ 4(k)). He further testified that the evidence gathered and submitted by Mr. Henkle's expert was significant and compelling in that it included photographs that depicted violations of A.D.A. Standards and the Florida Building Code.[10] See TT at 61:9-15; see also Affidavit of Bertone, Plaintiff's Exhibit No. 9 at 23-27.

         18. As for Mr. Henkle's other liability theories, Mr. DeMeyer testified that they did not create the potential for liability to be placed on his company, Aventura. See TT at 53:11-24.

         19. With respect to the A.D.A. curb flare not being painted, Mr. DeMeyer explained that the painting of the A.D.A. curb flare was not included in Aventura's scope of work as set forth in the Master Contract, that the plans and drawings did not state that painting was required, and that the concrete A.D.A. curb flare was not required to be painted under the A.D.A. Standards or the Florida Building Code. TT at 49:24 to 51:4. In other words, the work was completed according to the plans and drawings and complied with the A.D.A. Standards and the Florida Building Code. Id. at 50:11 to 51:4. As such, this liability theory did not create the potential for liability to be placed on Aventura.[11] Id. at 53:16-18. Drawdy did not put forth any evidence to contradict this assertion.

         20. With respect to the A.D.A. Access Aisle being “too wide”, painted to be eight feet instead of five feet, Mr. DeMeyer explained that the painting of the A.D.A. Access Aisle was included in Aventura's scope of work as set forth in the Master Contract. TT at 51:5 to 53:10. However, he demonstrated that plans and drawing provided by Cumberland Farms stated that the A.D.A. Access Aisle was to be eight feet wide. Id. at 51:25 to 52:5; see also Subcontract, Plaintiff's Exhibit No. 1 at 12 (Plan CFG4.0). Mr. DeMeyer explained that although the standard notes on the plans mention a five-foot A.D.A. Access Aisle, a five-foot width is a minimum requirement under the A.D.A. Standards and that the width noted in the actual plans and drawings would govern construction. TT at 52:10-17. Even more, he explained that the parking space located next to the A.D.A. Access Aisle was a twelve-foot-wide “van-accessible parking space” and that under A.D.A. Standard 502.2, an eight-foot A.D.A. Access Aisle is required when adjacent to a “van-accessible parking space”. Id. at 51:16-24. In other words, the work was completed according to the plans and drawings and complied with the A.D.A. Standards and the Florida Building Code. Id. at 53:3-10. As such, this liability theory did not create the potential for liability to be placed on Aventura. Id. at 53:22-24. Drawdy did not put forth any evidence to contradict this assertion.

         21. There was also no evidence put forth that Mr. Henkle's claims arose out of Aventura's actions or inactions, nor was there any evidence that Aventura's independent actions or inactions created the potential for liability in the underlying case. TT at 123:3-15. In fact, the evidence put forth by Aventura demonstrated that when independent inspectors identified slope issues with the concrete A.D.A. ramp and A.D.A. curb flare, Aventura immediately put Drawdy on notice of the issue and requested that they remedy any issues before the Project would be opened to the public. See Punchlist E-Mail, Plaintiff's Exhibit No. 11 (inspector's issuance of punchlist to Aventura, which states in relevant part, “The curb ramp appears to be non-ADA complaint.”); Punchlist Letter, Plaintiff's Exhibit No. 3;[12] Punchlist Request to Drawdy, Plaintiff's Exhibit No. 4 (Aventura's request that Drawdy complete all punchlist items); see also TT at 71:22 to 72:10; 179:7-14. In response, Drawdy advised Aventura that the concrete A.D.A. ramp and A.D.A. curb flare issues were resolved and issued a warranty to Aventura. See Warranty, Plaintiff's Exhibit No. 5; see also TT at 74:16-22; 182:2-16.

         CONCLUSIONS OF LAW

         “[W]hen a settlement is paid, the party seeking indemnification has the burden to show that the settlement, or portions thereof, fell within the coverage of the indemnity clause.” Bankers Ins. Co. v. Am. Team Managers, Inc., 2012 WL 2179117, at *6 (M.D. Fla. June 13, 2012) (citing Metro. Dade County v. Florida Aviation Fueling Co., Inc., 578 So.2d 296, 298 (Fla. 3d DCA 1991)). In such a case, “the indemnitee is entitled to indemnity upon proof of its potential liability to the original plaintiff and the reasonableness of the settlement.” Id. at *9; see also Camp, Dresser & McKee, Inc. v. Paul N. Howard Co., 853 So.2d 1072, 1079 (Fla. 5th DCA 2003) (“courts generally agree that a party seeking indemnification must establish that the settlement was made based on his potential liability to the plaintiff.”). Accordingly, “[t]he indemnitee may settle for a reasonable amount and then recover that amount from the indemnitor by showing it was not liable on any theory outside the indemnity agreement and was potentially liable on a theory covered by the agreement.” Id. at 1080.

         I. The Indemnity Clause At Issue - Scope Of Coverage

         “In Florida, courts construe indemnity contracts according to ordinary rules of contract construction.” Fid. & Guar. Ins. Co. v. Ford Motor Co., 707 F.Supp.2d 1300, 1313 (M.D. Fla. 2010). The intent of the parties and the scope of the indemnification provision are derived from the language of the contract and the circumstances in which it was made. Id. The duty to indemnify must be measured by the facts developed through ...


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