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New South Communications, Inc. v. Houston Casualty Co.

United States District Court, S.D. Florida, Key West Division

June 13, 2019




         THIS CAUSE comes before the Court upon Defendant Houston Casualty Company's ("HCC's") Motion for Summary Judgment (the "Motion," ECF No. 36), filed April 15, 2019. The Court is fully briefed on the matter.[1] A hearing was held on the Motion on May 13, 2019. Upon review of the record and careful consideration, the Court finds that the Motion should be granted.

         I. BACKGROUND

         This dispute arises out of a claim under an insurance policy (the "Policy") issued by HCC for property damage to certain insured properties (the "Properties") allegedly caused by Hurricane Irma when it struck the Florida Keys in September 2017 (the "Claim"). HCC issued the Policy to New South Communications, Inc. ("New South") for the period of February 1, 2017 to February 1, 2018, but a change endorsement amended the Policy to include additional persons and entities as named insureds, including Florida Keys Media, LLC ("Florida Keys") and Robert Holladay ("Holladay"), the owner of Florida Keys and the president and a member of the board of New South. Plaintiffs claim in their Amended Complaint that HCC breached the insurance contract by failing to issue proper payment for the cost to repair the alleged damages and to issue payments as required by the Policy.

         This case was originally filed by Plaintiff New South on May 21, 2018, in the Circuit Court of the 16th Judicial Circuit in and for Monroe County, Florida. (ECF No. 1-1.) On July 16, 2018, HCC removed the case based upon the Court's diversity jurisdiction under 28 U.S.C. § 1332. (ECF No. 1.) The Complaint was thereafter amended to add Florida Keys and Holladay as plaintiffs. (ECF No. 19.) The Amended Complaint remains the operative Complaint. Discovery is now complete.

         HCC moves for summary judgment for three reasons. First, HCC contends that none of the Plaintiffs has standing to assert the claim for relief made in this action. HCC states that discovery has revealed that New South, the only insured to bring a claim under the Policy for the damage at issue in the Amended Complaint, has no insurable interest in the Properties, which Plaintiffs now admit are all owned or leased by Florida Keys or Holladay, the recently added Plaintiffs to this litigation. Additionally, and notwithstanding the caption of this case, New South and Florida Keys are separate corporations. "Florida Keys Media, LLC" was never a trade name of New South; nor was New South ever doing business as "Florida Keys Media, LLC." Thus, HCC contends that New South cannot have sustained an injury in fact with respect to Properties in which it has no interest, and it cannot recover for any rights allegedly belonging to persons or entities other than itself. HCC further asserts that Florida Keys and Holladay are likewise disallowed from suing on a claim brought under the Policy by their co-insured. HCC argues that where a plaintiff fails to show that it has standing to bring its case in response to a summary judgment motion, as it states the Plaintiffs have failed to do here, the motion for summary judgment should prevail.

         Second, HCC contends that, jurisdictional deficiencies aside, the suit is barred because Plaintiffs failed to comply with conditions precedent to coverage and to filing suit against HCC. Specifically, HCC argues that Plaintiffs neglected their responsibilities that arose under the Policy when, prior to New South's commencement of this lawsuit, HCC offered to pay the full amount of the damages it determined to be covered under the Policy, subject to the execution and return of a sworn proof of loss. HCC asserts that, under the Policy, a signed, sworn proof of loss should have been submitted within sixty days thereafter as a condition precedent to any coverage and to filing any suit against HCC. However, the record shows that none of the Plaintiffs - not New South, Florida Keys, or Holladay - ever submitted a sworn proof of loss to HCC. Instead, New South filed this lawsuit. HCC contends that that the failure to submit a proof of loss bars Plaintiffs from bringing this suit.

         Finally, HCC moves for summary judgment on the basis that, even if Plaintiffs had standing and were not otherwise barred from bringing this action, an exclusion in the Policy bars coverage for the alleged damages beyond those for which HCC previously offered payment. Specifically, the Policy excludes coverage for "loss to the interior of buildings or structures or i;o personal property in the buildings or structures caused by rain, snow, sleet, ice, sand, or dust, unless: entering through openings made by a 'named peril' . . . ." (Policy, ECF No. 40-1, p. 31.) HCC asserts that Plaintiffs have failed to establish that the exception to that exclusion applies to any specific piece of property included in the Claim aside from those damages HCC acknowledged were potentially caused by rain entering through an opening made by Hurricane Irma. Thus, HCC contends no genuine issue of material fact exists that the exclusion limits recovery.


         A court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A dispute about a material fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248. The applicable substantive law will determine what facts are "material," but "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id.

         The party seeking summary judgment bears the initial burden of demonstrating the basis for its motion and "identifying those portions of the pleadings, depositions, answers:o interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir. 2004) (internal quotation marks omitted), reh'g denied, 99 Fed.Appx. 889 (11th Cir. 2004). "[W]hile it is true that all reasonable inferences must be drawn in the non-moving party's favor," ultimately, "summary judgment is appropriate against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Shotz v. City of Plantation, Fla, 344 F.3d 1161, 1184 (11th Cir. 2003) (internal quotation marks omitted). "The mere existence of a scintilla of evidence in support of the plaintiffs position will be insufficient; there must be evidence on which the jury could reasonably find ... by a preponderance of the evidence that the plaintiff is entitled to a verdict" Anderson, 477 U.S. at 252. If the evidence offered by the nonmoving party is "merely colorable" or is "not significantly probative," summary judgment is proper. See Id. at 249-50.


         Upon review of the facts and legal arguments, the undersigned finds persuasive and adopts HCC's legal arguments in support of its Motion.

         A. Standing

         1. New South lacks standing because it has no insurable interest in the Properties.

         "[A] party has standing to prosecute a claim in federal court only if he is the 'real party in interest'" to that claim, as required by Federal Rule of Civil Procedure 17(a). Tribue v. Hough, No. 3:04CV286/RV/EMT, 2006 WL 212017, at *2 (N.D. Fla. Jan. 26, 2006) (quoting U.S. v. 936.71 Acres of Land, More or Less, in Brevard Cnty., State of Fla., 418 F.2d 551, 556 (5th Cir.[2]1969)) (citing Fed.R.Civ.P. 17(a) (2019)). "An action brought by the real party in interest is one 'brought by the person who, according to the governing substantive law, is entitled to enforce the right.'" Payroll Mgmt, Inc. v. Lexington Ins. Co., 815 F.3d 1293, 1299 n.10 (11th Cir. 2016) (quoting 6A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Richard L. Marcus & Adam N. Steinman, Federal Practice and Procedure § 1543 (3d ed. 2015).

         "[P]roperty insurance contracts are enforceable only where the insured has an insurable interest in the covered property at the time of the loss." Banta Props., Inc. v. Arch Specialty Irs. Co., 553 Fed.Appx. 908, 910 (11th Cir. 2014) (citing Fla. Stat. § 627.405(1) (2019)). Although an insured does not necessarily have to own certain property to have an insurable interest therein, it must have "an 'actual, lawful, and substantial economic interest' in keeping the property 'free from loss, destruction, or pecuniary damage or impairment.'" Id. (quoting Fla. Stat. § 627.405(2)). "The measure of an insurable interest in property is the extent to which the insured might be damnified by loss, injury, or impairment thereof.'" Id. (quoting Fla. Stat. § 627.405(3)).

         The fact that an insurance policy insures multiple, separate insureds along with their respective properties does not give all insureds under the policy an insurable interest in all covered properties where no such interest otherwise exists. See Id. at 911; Unijax, Inc. v. Factory Ins. Ass'n, 328 So.2d 448, 456 (Fla. 1st DCA 1976), cert, denied, 341 So.2d 1086 (Fla. 1976). Instead, each insured must establish its own rights to recovery under the policy, and it cannot rely on the rights of others. See Banta, 553 Fed.Appx. at 911; Unijax, 328 So.2d at 453-54. This is so even when the insureds are related corporate entities, since "[d]ifferent corporations usually are distinct entities in law," and disregarding the separate existence of corporations is only justified where one of the corporations "is a sham, or is used to perpetrate deception to defeat a public policy .. . ." Unijax, 328 So.2d at 452 (internal quotation marks omitted); see also Banta, 553 Fed.Appx. at 909, 911. Absent such justification, the "claims of various entities, even though interrelated, must be treated separately, and ... the rights of each must be maintained in separate actions ... in accord with Florida law." Unijax, 328 So.2d at 453; see also Federated Title Insurers, Inc. v. Ward, 538 So.2d 890, 891 (Fla. 4th DCA 1989) ("Claims of various entities, even though interrelated, must ordinarily be treated separately.").

         At the summary judgment stage, a party "can no longer rest on . . . mere allegations" to demonstrate its standing, "but must set forth by affidavit or other evidence specific facts" establishing standing. Clapper v. Amnesty Int'l USA, 568 U.S. 398, 412 (2013) (internal quotation marks omitted). In this case, it is undisputed between the parties that at all relevant times: New South did not own or lease the Properties at issue; New South and Florida Keys were separate corporations; "Florida Keys Media, LLC" was not a trade name of New South; and New South was not doing business as "Florida Keys Media, LLC." (See SUMF, ECF No. 35, ¶¶ 15-17; RSUMF, ECF No. 40, ¶¶ 15-17.) Rather, at all relevant times, the Properties were all owned or leased by Florida Keys or Holladay in his individual capacity. (SUMF, ECF No. 35, ¶ 15; RSUMF, ECF No. 40, ¶ 15.) In an attempt to establish that New South nevertheless had "an actual, lawful, and substantial economic interest" in the Properties, entitling it to sue HCC in connection with the Claim, Plaintiffs contend that New South: (1) is the named insured on the Policy; (2) was required under the language of the Policy to give HCC notice of the Claim; and (3) owned personal property contained within the subject Properties. See Fla. Stat. § 627.405(2). (See also Pis.' Resp. in Opp'n to Def.'s Mot. for Summ. J., ECF No. 42, p. 2.) The Court finds these arguments to be without merit as respects New Souths standing to bring this lawsuit.

         First, it is clear from the Policy that New South was not the only named insured thereunder, and that the insurance contract did not mandate that only New South report claims. Indeed, the Policy's notice provision provides:

1. Notice -- In case of a loss, "you" must:

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