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Southern-Owners Insurance Co. v. Mac Contractors of Florida, LLC

United States District Court, M.D. Florida, Fort Myers Division

June 21, 2018

MAC CONTRACTORS OF FLORIDA, LLC d/b/a KJIMS Construction, PAUL S. DOPPELT, Trustee of Paul S. Doppelt Revocable Trust dated 12/08/90, and DEBORAH A. DOPPELT, Trustee of Deborah A. Doppelt Revocable Trust dated 12/08/90, Defendants.



         This matter comes before the Court on the parties' Cross Motions for Summary Judgment (Docs. #42, 51). The parties filed responses in opposition to each other's motion (Docs. ##44, 53), and a reply (Doc. #47) and a surreply (Doc. #50). Both parties seek judgment as to defendant's duty to defend pursuant to two almost identical insurance policies. Both parties agree that there are no disputed issues of material fact which preclude summary judgment for one of them, although they dispute who should prevail. For the reasons set forth below, the Court grants summary judgment in favor of plaintiff.


         In this insurance coverage dispute, plaintiff-insurer Southern-Owners Insurance Company seeks a declaratory judgment that it has no duty to defend or indemnify defendant-insured MAC Contractors of Florida, LLC (d/b/a KJIMS Construction) for claims asserted in a currently pending state-court lawsuit brought by Paul and Deborah Doppelt, styled Doppelt et al. v. MAC Contractors of Florida, LLC d/b/a KJIMS Construction, No. 2016-CA-1530 (the “Doppelt Action”). In particular, Southern-Owners seeks a declaratory judgment that certain policy exclusions apply and thus, Southern-Owners has no duty to defend or indemnify MAC for the claims Doppelts asserts against it. (Doc. #21.) MAC (d/b/a KJIMS Construction) filed a counterclaim seeking a declaration that Southern-Owners was obligated to defend and indemnify MAC. (Doc. #31.)

         The Court previously stayed the indemnity issue pending the Court's determination of the duty to defend issue or the Doppelt Action's conclusion, reasoning that if Southern-Owners had no duty to defend MAC, it follows that Southern-Owners has no duty to indemnify. (Doc. #39); see Trailer Bridge, Inc. v. Ill. Nat'l Ins. Co., 657 F.3d 1135, 1146, n.2 (11th Cir. 2011) (collecting Florida cases) (“[A] court's determination that the insurer has no duty to defend requires a finding that there is no duty to indemnify.”).


         A court may grant summary judgment only if satisfied that “there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” if it goes to “a legal element of the claim under the applicable substantive law” and thus may impact the case's outcome. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997). “An issue of fact is ‘genuine' if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party.” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260 (11th Cir. 2004).

         “The burden of establishing that there is no genuine issue of material fact lies with the moving party.” Walker v. Darby, 911 F.2d 1573, 1576 (11th Cir. 1990) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). “[O]nce the moving party has met that burden by presenting evidence which, if uncontradicted, would entitle it to a directed verdict at trial, ” the party opposing summary judgment must “set forth specific facts showing that there is a genuine issue for trial. A mere ‘scintilla' of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party.” Id. at 1576-77. In ruling on the motion, the court must view all evidence and draw all reasonable inferences in favor of the non-moving party. Scott v. Harris, 550 U.S. 372, 380 (2007); Tana v. Dantanna's, 611 F.3d 767, 772 (11th Cir. 2010).

         Summary judgment should be denied not just where the parties disagree on issues of material fact, but also “where the parties agree on the basic facts, but disagree about the factual inferences that should be drawn from these facts.” Warrior Tombigbee Transp. Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir. 1983); see also Allen v. Bd. of Pub. Educ., 495 F.3d 1306, 1315 (11th Cir. 2007) (“If a reasonable fact finder evaluating the evidence could draw more than one inference from the facts, and if that inference introduces a genuine issue of material fact, then the court should not grant summary judgment.”). Put simply, if the resolution of a material fact or the inference to be drawn therefrom presents a “he said, she said” scenario, and if the record has evidence genuinely supporting both sides of the story, then summary judgment is not appropriate.


         A. Substantive Legal Principles

         1. Duty to Defend

         In this diversity action, the Court must apply the “substantive law of the forum state.” Tech. Coating Applicators, Inc. v. U.S. Fid. & Guar. Co., 157 F.3d 843, 844 (11th Cir. 1998). In this case, Florida law applies. The duty to defend is distinct from, and broader than, the duty to indemnify. Keen v. LA. Sheriff's Self-Ins., 962 So.2d 1021, 1024 (Fla. 4th DCA 2007). Under Florida law, “[i]t is well settled that an insurer's duty to defend its insured against a legal action arises when the complaint alleges facts that fairly and potentially bring the suit within policy coverage. The duty to defend must be determined from the allegations in the complaint.” Jones v. Florida Ins. Guar. Ass'n, Inc., 908 So.2d 435, 442-43 (Fla. 2005) (citations omitted). This duty to defend exists “even if the allegations in the complaint are factually incorrect or meritless.” Id. at 443. “If the complaint alleges facts partially within and partially outside the coverage of the policy, the insurer is obligated to defend the entire suit.” Category 5 Mgmt. Grp. LLC v. Companion Prop. & Cas. Ins. Co., 76 So.3d 20, 23 (Fla. 1st DCA 2011). See also Marr Inv., Inc. v. Greco, 621 So.2d 447, 449 (Fla. 4th DCA 1993) (“[T]he burden of demonstrating that the allegations of the complaint are cast solely and entirely within [a] policy exclusion” rests with the insurer.). Any doubt as to the duty to defend is resolved in favor of the insured. Id. Therefore, the Court looks to the complaint filed in the Doppelt Action and assumes all facts are accurate. See Jones, 908 So.2d at 443.

         2. Exclusions

         Although courts should narrowly construe exclusions to an insurance policy, “exclusions are presumptively valid and will be given effect if specific, plain, clear, prominent, and not contrary to public policy.” C.R. Bard, Inc. v. Liberty Mut. Ins. Co., 473 Fed.Appx. 128, 132 (11th Cir. 2012). An insurer has no duty to defend if the allegations in the underlying complaint show the applicability of a policy exclusion. Essex Ins. Co. v. Big Top of Tampa, Inc., 53 So.3d 1220, 1223-24 (Fla. 2d DCA 2011); State Farm Fire and Cas. Co. v. Tippett, 864 So.2d 31, 35 (Fla. 4th DCA 2003). “Because they tend to limit or avoid liability, exclusionary clauses are construed more strictly than coverage clauses.” Category 5 Mgmt. Grp., 76 So.3d at 23. The insurer “has the burden of demonstrating that the allegations of the complaint are cast solely and entirely within the policy exclusion and are subject to no other reasonable interpretation.” Northland Casualty Co. v. HBC Corp., 160 F.Supp.2d 1348, 1359 (M.D. Fla. 2001).

         B. Pertinent Allegations of the Doppelt Action

         In 2014, MAC contracted with the Doppelts to serve as the general contractor in the construction of a residence in Marco Island, Florida. (Doc. #21-3, ¶¶ 13-16; Exh. A.) Due to a dispute between the parties, the Doppelts allege that MAC left the job site prior to completing the residence in breach of the parties' contract and prior to the issuance of a certificate of occupancy.[1]Because the residence remained replete with construction defects, the Doppelts served MAC with a Notice of Defect pursuant to Fla. Stat. § 558.01, et. seq., identifying eighty-six distinct defects that were caused by MAC and/or its subcontractors that MAC failed to correct. (Doc. #21-3, ¶¶ 38-39, 43-44; Doc. #31-5, Exh. B.) MAC claimed that the list of defects were simply “punch-list items.” (Id., ¶ 56.) MAC failed to cure the defects. The Doppelts allege that this was an anticipatory repudiation and total breach of the contract. (Id., ¶ 42.)

         On August 24, 2016, the Doppelts filed suit in state court against MAC for breach of contract, alleging construction defects. Specifically, in the Verified First-Filed Complaint (Doc. #31-5), the Doppelts alleged, among other things, “damage to wood floors and the metal roof.” (Id., ¶ 54.) Additionally, the First-Filed Complaint incorporated as an exhibit the Section 558 Notice that listed eighty-six defects. (Id., ¶ 45.)

         On November 17, 2016, the Doppelts filed an Unverified Amended Complaint (Doc. #21-3), alleging nearly the same allegations as the First-Filed Complaint, but stating for the first time that MAC “abandoned” the project:

Contractor refused to complete the contract, abandoned the project, ordered his subcontractors to also abandon the project and to refuse to work with the Owners in completing the ...

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