United States District Court, M.D. Florida, Jacksonville Division
MONTPELIER U.S. INSURANCE COMPANY and MESA UNDERWRITERS SPECIALTY INSURANCE COMPANY, a foreign corporation, Plaintiffs,
PORTOFINO OF ST. AUGUSTINE, LLC., JOHNSON-GRAHAM-MALONE, INC., OLD TOWN VILLAGES CONDOMINIUM ASSOCIATION, INC., A.J. JOHNS, INC., BRADCORP FLORIDA II, LLC., BUILDER SERVICES GROUP, INC., HWZ, LLC, STRANGE LATHING & PLASTERING, INC., STANLEY SMITH DRYWALL, INC., and JLH ELECTRIC SERVICES, LLC, Defendants.
Timothy J. Corrigan United States District Judge.
declaratory judgment action is before the Court on Defendant
Old Town Villages Condominium Association, Inc.'s Motion
to Dismiss, Or In the Alternative, Motion to Stay the First
Amended Complaint for Declaratory Relief (Doc. 26); Defendant
Johnson-Graham-Malone, Inc.'s (“JGM”) Motion
to Dismiss, Or In the Alternative, Motion to Stay the First
Amended Complaint for Declaratory Relief (Doc. 57); and
Defendant A.J. Johns, Inc.'s Motion to Dismiss Count V of
Plaintiffs' Amended Complaint (Doc. 72). Responses and
supplemental authority were filed. (Docs. 39, 60, 84, 86).
the Court has reviewed the briefing and determined that the
suit should proceed on Plaintiffs' claims in Counts I
through V regarding whether they have a duty to
defend. However, the suit will be stayed as to the
claims involving the duty to indemnify and other claims
regarding coverage pending resolution of the Underlying
Action, as defined in paragraph 29 of the First Amended
Complaint. (Doc. 14).
A.J. Johns, a subcontractor, moves to dismiss Count V of
Plaintiffs' Amended Complaint, (Doc. 14 ¶¶
66-74), in which Plaintiffs seek a declaration as to whether
the subcontract agreements between JGM, the general
contractor, and the subcontractors obligate those
subcontractors to defend and indemnify Portofino, the
owner/developer, in the underlying action. (Doc. 84).
Plaintiffs allege that the subcontractors agreed to provide
defense and indemnification to JGM in relation to their work
at the project. (Doc. 14 ¶ 67). Under a master contract,
JGM agreed to defend and indemnify Portofino for its work,
including the subcontractors' work, at the project.
(Id. ¶ 68). Accordingly, Plaintiffs allege that
the subcontractors' defense and indemnity obligations
“ultimately pass through JGM to Portofino, ”
which is entitled to defense and indemnification from each of
the subcontractors in the underlying action. (Id.
¶ 69). Further, Plaintiffs, as insurers of Portofino,
allege that they are third party beneficiaries of the
foregoing contracts and are defending Portofino in the
underlying action when they may have no obligation to do so.
(Id. ¶ 70). As such, Plaintiffs ask the Court
to declare whether the subcontracts and the master contract
obligate the subcontractors to defend and indemnify
Portofino. (Id. ¶ 72). In response, A.J. Johns
argues that Plaintiffs lack standing to seek declaratory
judgment in Count V, and the contract between A.J. Johns and
JGM demonstrates that they struck the language which would
have perhaps obligated A.J. Johns to defend and indemnify
Portofino. (Doc. 72).
a non-party to a contract has a legally enforceable right
therein for standing purposes is a matter of state law.
See Miree v. DeKalb Cnty., 433 U.S. 25, 29-33
(1977). “Under Florida law, a third party is an
intended beneficiary of a contract between two other parties
only if a direct and primary object of the contracting
parties was to confer a benefit on the third party.”
Bochese v. Town of Ponce Inlet, 405 F.3d 964, 982
(11th Cir. 2005). Without such a purpose, any benefit reaped
by the third party is merely incidental, and that party has
no legally enforceable rights under the contract.
Id. Courts examine “the terms of the contract
as a whole, construed in the light of the circumstances under
which it was made and the apparent purpose that the parties
are trying to accomplish” to understand the
parties' intent. Id. (quotations and citation
omitted). Intent must be “specific” and
“clearly expressed” to confer a legally
enforceable right. Id. (citation omitted).
Plaintiffs lack standing as alleged third party beneficiaries
to bring a declaratory judgment action regarding a contract
that was not intended to benefit them. Plaintiffs
proclaim that not only Portofino, but they, too, are third
party beneficiaries of the subcontract between A.J. Johns and
JGM. (Doc. 14 ¶ 70; Doc. 84 at 8). However, the Contract
Terms provision in A.J. Johns and JGM's contract struck
the language that arguably might have obligated A.J. Johns to
Portofino. (Doc. 14-5 at 5). Specifically, the parties struck
the following language:
14-5 at 5). Rather than confirm A.J. Johns and JGM's
intent to benefit Portofino, these terms demonstrate the
opposite: that they intended to disclaim A.J. Johns's
purported obligations to Portofino. And regardless, the
provision certainly does not establish that the parties
intended to benefit Portofino's insurers-the Plaintiffs
argue that “even in its modified form, ” the
contract “unequivocally intended to confer a benefit on
Portofino as it explicitly provides that the Subcontractors
shall assume the requirements and conditions set forth in the
Master Contracts, including but not limited to, the
obligations of the Master Contracts as they concern the scope
and quality of Subcontractor's work.” (Doc. 84 at
9). However, Plaintiffs' argument makes little sense in
light of the very modifications they acknowledge: that the
responsibilities assumed in that provision obligate A.J.
Johns to JGM only and strike any reference to Portofino.
Moreover, Plaintiffs are not mentioned in the contract, and
given that there is no evidence that the parties intended to
benefit them, the Court cannot find that the contracting
parties “clearly expressed a direct or primary intent
to benefit” Plaintiffs, as Portofino's insurers.
Bochese, 405 F.3d at 983-84.
also argue that in the master contract, JGM has agreed to
indemnify Portofino on behalf of itself and its
subcontractors for all claims arising out of the work
performed. (Doc. 84 at 7, 9).
3.18.1 To the fullest extent permitted by law, the Contractor
Shall indemnity and hold harmless the Owner, Architect,
Architect's consultants, and agents and employees of any
of them from and against claims, damages, losses and
expenses, including but not limited to attorneys' fees,
arising out of or resulting from performance of the Work,
provided that such claim, damage, loss or expense is
attributable to bodily injury,
sickness, disease or death, or (o injury to or destruction of
tangible property (other than the Work itself) including loss
of use resulting therefrom, but only to the extent caused m
whole or in part by negligent acts or omissions of the
Contractor, a Subcontractor anyone tally or directly employed
by them or anyone for whose acts they may be liable,
regardless of whether or not such claim, damage, loss or
expense is caused in part by a party indemnified hereunder.
Such obligation shall not be construed to negate, abridge, or
reduce other rights or obligations of indemnity which would
otherwise exist as to a party or person described in this
Paragraph 3, 18,
(Doc. 14-3 at 96). On this basis, Plaintiffs extrapolate that
“Portofino is a third-party beneficiary of the
subcontract agreements because the obligations assumed
therein include the defense and indemnity obligations that
are contained in the Master Contracts and that form the basis
of the relief sought in Count V.” (Doc. 84 at 9). This
conclusion is simply too attenuated, particularly given that
A.J. Johns and JGM's agreement struck A.J. Johns's
obligations to Portofino. The remaining language obligates
A.J. Johns to JGM but does not extend to Portofino. The