UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 20-60865-CIV-SMITH

1901 HOLDING, LLC, 

Plaintiff,

v. 

SCOTTSDALE INSURANCE COMPANY,

Defendant.

______________________________________/ 

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY 

JUDGMENT AND DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

This matter is before the Court on Plaintiff’s Motion for Summary Judgment [DE 33], 

Defendant’s Response in Opposition [DE 41], and Plaintiff’s Reply [DE 42]. Also before the 

Court are Defendant’s Motion for Summary Judgment [DE 35], Plaintiff’s Response in Opposition 

[DE 37], and Defendant’s Reply [DE 38]. For the reasons that follow, Defendant’s Motion for 

Summary Judgment is GRANTED, and Plaintiff’s Motion for Summary Judgment is DENIED. 

I. BACKGROUND1

This case involves a request for declaratory relief pursuant to the Federal Declaratory 

Judgment Act, 28 U.S.C. § 2201, to determine the rights of the parties under a commercial property 

insurance policy issued by Defendant. Plaintiff owns an apartment complex located at 1901 

Johnson Street, Hollywood, Florida 33020 (the “Property”). Defendant issued an insurance policy 

to Plaintiff, bearing Policy Number CPS3228811, for the Property, with dates of coverage from 

1

 The Court omits record citations to facts the parties have not disputed. 

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July 31, 2019 through July 31, 2020 (the “Policy”). (DE 34-1.) The Policy contains the following 

relevant provisions: 

BUILDING AND PERSONAL PROPERTY COVERAGE FORM

* * * 

A. Coverage 

We will pay for direct physical loss of or damage to Covered Property at 

the premises described in the Declarations caused by or resulting from any 

Covered Cause of Loss. 

* * * 

3. Covered Causes of Loss 

See applicable Causes Of Loss form shown in the Declarations.

(DE 34-1 at 57, 59.) 

CAUSES OF LOSS – SPECIAL FORM

* * * 

A. Covered Causes of Loss 

When Special is shown in the Declarations, Covered Causes of Loss means 

direct physical loss unless the loss is excluded or limited in this policy. 

B. Exclusions 

1. We will not pay for loss or damage caused directly or indirectly by 

any of the following. Such loss or damage is excluded regardless of any 

other cause or event that contributes concurrently or in any sequence 

to that loss.

* * * 

g. Water

(1) Flood, surface water, waves (including tidal wave and tsunami), 

tides, tidal water, overflow of any body of water, or spray from any 

of these, all whether or not driven by wind (including storm surge); 

(2) Mudslide or mudflow; 

(3) Water that backs up or overflows or is otherwise discharged 

from a sewer, drain, sump, sump pump or related equipment; 

(4) Water under the ground surface pressing on, or flowing or 

seeping through: 

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 (a) Foundations, walls, floors or paved surfaces; 

 (b) Basements, whether paved or not; or 

 (c) Doors, windows or other openings; or 

(5) Waterborne material carried or otherwise moved by any of 

the water referred to in Paragraph (1), (3), or (4), or material 

carried or otherwise moved by mudslide or mudflow. 

* * * 

G. Definitions 

2. “Specified causes of loss” means the following: fire; lightning; explosion; 

windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; 

leakage from fire-extinguishing equipment; sinkhole collapse; volcanic action; 

falling objects; weight of snow; ice or sleet; water damage. 

* * * 

c. Water damage means:

* * * 

(2) Accidental discharge or leakage of water or waterborne material 

as the direct result of the breaking apart or cracking of a water or sewer 

pipe caused by wear and tear, when the pipe is located off the described 

premises and is connected to or is part of a potable water supply system or 

sanitary sewer system operated by a public or private utility service provider 

pursuant to authority granted by the state or governmental subdivision 

where the described premises are located.

But water damage does not include loss or damage otherwise excluded under 

the terms of the Water Exclusion.

* * * 

To the extent that accidental discharge or leakage of water falls within the 

criteria set forth in c.(1) or c.(2) of this definition of “specified causes of loss,” 

such water is not subject to the provisions of the Water Exclusion which 

preclude coverage for surface water or water under the surface of the ground. 

(DE 34-1 at 85 – 87, 94 (emphasis added).) 

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SEWER OR DRAIN DEFINITION ENDORSEMENT – FLORIDA

This insurance modifies insurance provided under the following: 

CAUSES OF LOSS – BASIC FORM

CAUSES OF LOSS – BROAD FORM

CAUSES OF LOSS – SPECIAL FORM

Under Section B. Exclusions, paragraph g. Water, subsection (3) the following is 

added: 

For the purpose of this exclusions, “sewer” and “drain” are defined as: (1) “Sewer” 

means any underground pipe, channel or conduit for carrying water, wastewater or 

sewage on or away from the premises described in the Declarations; (2) “Drain” 

means any pipe, channel or conduit for carrying water, wastewater or sewage on or 

away from the premises described in the Declarations to a “sewer.”

(DE 34-1 at 98.) 

On or about December 29, 2019, six units within the Property sustained water damage. 

(DE 27-2, 36-1 at 3.) On January 2, 2020, a plumber from Roto Rooter Plumbing & Drain Services 

inspected the Property and subsequently issued a report. (DE 36-1.) The report indicates that 

toilets on the first floor of the apartment complex had overflowed because of a “compromised cast 

iron pipe underground.” (Id. at 3.) The plumber determined that a break in the pipeline was located 

under the public street, not on the Property, and opined that the City of Hollywood likely caused 

the break because the break was located under a recent asphalt patch. (Id. at 2.) On January 6, 

2020, a public adjuster reported a claim to Defendants, claim number 01936143, for the water 

damage to the Property. (DE 34-2 at 16:15-17; 19:14-20:11.) On January 15, 2020, an inspector, 

on behalf of Defendant, inspected the Property and confirmed water damage in the six units. (DE 

34-2 at 22:1-16; 24:16-15; 25:8-10; 25:24-26:9.) On February 17, 2020, Defendant denied 

Plaintiff’s claim. (DE 27-2.) In the letter denying coverage, Defendant stated that the “adjuster’s 

inspection confirmed the cause of loss was an underground cast iron sewer pipe that failed and 

caused water to overflow, which resulted in water damage” to the Property. (DE 27-2 at 1.) On 

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March 25, 2020, Plaintiff filed its Complaint against Defendant in the Seventeenth Judicial Circuit 

in and for Broward County, Florida. (DE 1-2 at 3.) Defendant removed the case to federal court 

on April 28, 2020. (DE 1.) Thereafter, on November 11, 2020, Plaintiff filed its Third Amended 

Complaint [DE 27], which seeks a declaratory judgment to determine the rights of the parties under 

the Policy.2

II. STANDARD

A. Summary Judgment Standard

Summary judgment is appropriate when “the pleadings . . . show that there is no genuine 

issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” 

Anderson v. Liberty Lobby Inc., 477 U.S. 242, 247 (1986); HCA Health Servs. of GA., Inc. v. 

Employers Health Ins. Co., 240 F.3d 982, 991 (11th Cir. 2001). Once the moving party 

demonstrates the absence of a genuine issue of material fact, the non-moving party must “come 

forward with ‘specific facts showing that there is a genuine issue for trial.’” Matsushita Elec. 

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56(e)). The 

Court must view the record and all factual inferences therefrom in the light most favorable to the 

2

 Specifically, Plaintiff seeks a declaratory judgment finding that: (a) the Policy issued by Defendant is 

valid and enforceable; (b) pursuant to the terms and conditions of the Policy, Plaintiff holds a valid and 

enforceable right to property insurance coverage for damages arising from a loss on or about December 29, 

2019; (c) Exclusion B.1.g.(3) of Causes of Loss - Special Form (CP 10 30 09 17), “water that backs up or 

overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment” is 

ambiguous; (d) Exclusion B.1.g.(5) of Causes of Loss – Special Form (CP 10 30 09 17), “Waterborne 

material carried or otherwise moved by any of the water referred to in Paragraph (1), (3), or (4), or material 

carried or otherwise moved by mudslide or mudflow” is ambiguous; (e) under Causes of Loss – Special 

Form (CP 10 30 09 17) Exclusion B.1g.(3) and Exclusion B.1.g(5) directly conflict and/or are contradictory 

to the coverage afforded pursuant to Exclusion B.2.d for resulting “specified cause of loss” pursuant to 

Policy provision G.2.c.(1) and/or G.2.c.(2); (f) Exclusion B.1.g.(3) and B.1.g(5) of Causes of Loss - Special 

Form (CP 10 30 09 17) do not apply to the loss; (g) Plaintiff is entitled to coverage for damages resulting 

in a “specified cause of loss” pursuant to Exclusion B.2.d(1) of Cause of Loss – Special Form (CP 10 30 

09 17); (h) the “resulting” loss is a “specified cause of loss” as defined under Policy provision G.2.c.(1) 

and/or (2) Causes of Loss – Special Form (CP 10 30 09 17); (i) Plaintiff is entitled to coverage for ensuing 

loss damages that were denied by Defendant; and (j) Plaintiff is entitled to property insurance coverage for 

the damages arising from an event that occurred on or about December 29, 2019. 

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non-moving party and decide whether “‘the evidence presents a sufficient disagreement to require 

submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.’” 

Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997) (quoting Anderson, 477 U.S. at 

251-52)). In opposing a motion for summary judgment, the non-moving party may not rely solely 

on the pleadings, but must show by affidavits, depositions, answers to interrogatories, and 

admissions that specific facts exist demonstrating a genuine issue for trial. See Fed. R. Civ. P. 

56(c), (e); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). A mere “scintilla” of 

evidence supporting the opposing party’s position will not suffice; instead, there must be a 

sufficient showing that the jury could reasonably find for that party. Anderson, 477 U.S. at 252; 

see also Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990). 

B. Florida Contract Law 

This case was removed from state court on the basis of diversity jurisdiction pursuant to 

28 U.S.C. § 1332. Therefore, the Court applies the substantive law of Florida as the forum state. 

Mid-Continent Cas. Co. v. Am. Pride Bldg. Co., LLC, 601 F.3d 1143, 1148 (11th Cir. 2010). Under 

Florida law, interpretation of an insurance contract is a matter of law to be decided by the court. 

Mama Jo’s, Inc. v. Sparta Ins. Co., 823 F. App’x 868, 878 (11th Cir. 2020). In determining 

coverage under an insurance policy, courts look at the policy in its entirety and are required to give 

“every provision its full meaning and operative effect.” State Farm Fire & Cas. Co. v. Steinberg, 

393 F.3d 1226, 1230 (11th Cir. 2004). Florida law requires that the plain and unambiguous 

language of the policy controls. See Swires Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 

165 (Fla. 2003). Only if the language is susceptible to more than one reasonable interpretation, 

“one providing coverage and the other limiting coverage,” will the court resolve the ambiguity, 

construing the policy to provide coverage. Interline Brands, Inc. v. Chartis Specialty Ins., Co. 749 

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F.3d 962, 965 (11th Cir. 2014) (quoting Taurus Holdings, Ins. v. U.S. Fidelity & Guar. Co., 913 

So. 2d 528, 532 (Fla. 2005)). 

However, interpreting the contract language is necessary, and the act of interpreting does 

not impute ambiguity to its terms. Id. A party claiming coverage generally bears the burden of 

proof to establish that coverage exists. Mama Jo’s, 823 F. App’x at 879 (citing U.S. Liab. Ins. Co. 

v. Bove, 347 So. 2d 678, 680 (Fla. 3d DCA 1977)). “[A]n ‘all-risk’ policy is not an ‘all loss’ 

policy, and thus does not extend coverage for every conceivable loss.” Id. (quoting Sebo v. Am. 

Home Assurance Co., 208 So. 3d 694, 696-97 (Fla. 2016)). “[I]nsurance coverage must be 

construed broadly and its exclusions narrowly.” Evanston Ins. Co. v. Budget Grp. Inc., 199 F. 

App’x 867, 868 (11th Cir. 2006). Policies “are to be construed most strongly against the insurer 

and liberally in favor of the insured.” Id. (citing Harnett v. Southern Ins. Co., 181 So. 2d 524, 528 

(Fla. 1965)). Accordingly, exclusionary clauses restricting the insured’s coverage are generally 

disfavored. Hartford Acc. & Indem. Co. v. Beaver, 466 F.3d 1289, 1296 (11th Cir. 2006). 

III. DISCUSSION

The record is clear in that the Property sustained damage because a broken or compromised 

cast iron pipe located under the public street, not on the Property, caused water or waterborne 

material to discharge from toilets located on the first floor of the Property. The dispute between 

the parties is simply whether the language of the Policy provides coverage under this situation for 

the damage to the Property. Plaintiff argues that it is entitled to summary judgment because, under 

the Policy, Paragraph G.2.c(2) provides coverage for its claim. In the alternative, Plaintiff argues 

that Paragraphs B.1.g.(3), (5) and G.2.c(2) are ambiguous and suspectable to multiple 

interpretations. In contrast, Defendant argues that it is entitled to summary judgment because, 

under the Policy, Paragraphs B.1.g.(3) and B.1.g.(5) unambiguously preclude coverage and neither 

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provision conflicts with or contradicts the exception affording coverage under Paragraph G.2.c.(2). 

Defendant argues further that Paragraph G.2.c.(2) does not provide coverage for Plaintiff’s claim, 

because the Paragraph G.2.c.(2) Exception to the Water Exclusion only applies to “surface water” 

or “water under the surface of the ground,” not water or waterborne material overflowing or 

discharged from a “drain” or “sewer.”

First, the Water Exclusion unambiguously excludes coverage for the damage to the 

Property. Paragraphs B.1.g.(3) and (5) of the Water Exclusion state, in relevant part, that 

Defendants “will not pay for loss or damage caused directly or indirectly” by “[w]ater” or 

“[w]aterborne material” that “backs up or overflows or is otherwise discharged from a sewer [or] 

drain[,]” “regardless of any other cause or event that contributes concurrently or in any sequence 

to the loss.” (DE 34-1 at 85.) The Policy defines “sewer” as “any underground pipe . . . for 

carrying water, wastewater or sewage on or away from the premises . . ..” (DE 34-1 at 98.) The 

Policy defines “drain” as “any pipe . . . carrying water, wastewater or sewage on or away from the 

premises . . . to a sewer.” (Id.) In the present situation, it is undisputed that the damage to the 

Property was caused when water or waterborne material overflowed or was otherwise discharged 

from toilets — defined under the Policy as a “drain” — located on the first floor of the Property. 

Thus, the plain meaning of the language in Paragraphs B.1.g.(3) and (5) of the Water Exclusion 

clearly excludes insurance coverage in the present situation.

Notwithstanding the above, Plaintiff contends that it is entitled to coverage under 

Paragraph G.2.c(2). Paragraph G.2.c(2) provides an exception to specific provisions of the Water 

Exclusion and states, in relevant part, that “[a]ccidental discharge or leakage of water or 

waterborne material as the direct result of the breaking apart or cracking of a water or sewer pipe 

caused by wear and tear, when the pipe is located off the described premises . . . .” (DE 34-1 at 

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94.) However, Plaintiff’s reliance on Paragraph G.2.c(2) is misplaced for two reasons. First, 

Paragraph G.2.c clearly states that “water damage” under this paragraph “does not include loss or 

damage otherwise excluded under the terms of the Water Exclusion.” (DE 34-1 at 94.) Second, 

Paragraph G.2.c also states that “to the extent that accidental discharge or leakage of water falls 

within the criteria set forth in [Paragraphs G.2.c.(1) or G.2.c.(2)] of this definition of ‘specified 

causes of loss,’ such water is not subject to the provisions of the Water Exclusion which precludes 

coverage for surface water or water under the surface of the ground.” (DE 34-1 at 94

(emphasis added).) In other words, Paragraph G.2.c.(2) provides an exception to only those 

provisions of the Water Exclusion that involve surface water or water under the surface of the 

ground. Paragraph G.2.c.(2) does not modify or otherwise impact any provisions of the Water 

Exclusion that involve water or waterborne material that overflows or is otherwise discharged from 

a “drain.” See Raffell v. Scottsdale Ins. Co., No. 20-21719-CIV-ALTONAGA, 2021 U.S. Dist. 

LEXIS 4843, at *17 (S.D. Fla. Jan. 8, 2021) (interpreting the same language to mean that “the 

Water Exclusion’s provisions that preclude coverage for either surface water [Paragraph B.1.g.(1)] 

or water under the surface of the ground [Paragraph B.1.g.(4)] do not apply to ‘accidental discharge 

or leakage of water that falls within the criteria set forth in . . . this definition of specified causes 

of loss.’”) (marks omitted)). In this situation, the damage to the Property squarely falls within the 

circumstances described in Paragraphs B.1.g.(3) and (5) of the Water Exclusion. The Paragraph 

G.2.c.(2) Exception does not apply to or otherwise modify Paragraphs B.1.g.(3) or (5) of the Water 

Exclusion. Therefore, Paragraph G.2.c.(2) does not cover accidental discharge of water or 

waterborne material otherwise precluded under Paragraphs B.1.g.(3) or (5) of the Water Exclusion.

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In summary, the language of the Policy is unambiguous and excludes insurance coverage 

for Plaintiff’s claim. Therefore, summary judgment in favor of Defendant is appropriate. 

Accordingly, it is 

ORDERED that:

1. Plaintiff’s Motion for Summary Judgment [DE 33] is DENIED. 

2. Defendant’s Motion for Summary Judgment [DE 35] is GRANTED. 

3. All pending motions not otherwise ruled upon are DISMISSED as moot. 

4. The Court will enter a separate judgment.

5. The case is CLOSED. 

DONE AND ORDERED in Fort Lauderdale, Florida on this 22nd day of June, 2021. 

cc: Counsel of record 

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