Opinion ID: 184144
Heading Depth: 2
Heading Rank: 1

Heading: crum & forster policy

Text: 3 Because this is a diversity case, Florida law governs the scope of the Crum & Forster CGL policy. Davis v. Nat’l Med. Enters., Inc., 253 F.3d 1314, 1319 n.6 (11th Cir. 2001). The Florida Supreme Court has stated: “Our interpretation of insurance contracts, such as the CGL policies in this case, is governed by generally accepted rules of construction. Insurance contracts are construed according to their plain meaning, with any ambiguities construed against the insurer and in favor of coverage.” U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 877 (Fla. 2007). The Crum & Forster policy contains a voluntary-payment provision, which states: 2. Duties In The Event Of Occurrence, Offense, Claim Or Suit .... d. No insured will, except at that insured’s own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without our consent. Rolyn Cos. v. R & J Sales of Tex., Inc., 671 F. Supp. 2d 1314, 1326–27 (S.D. Fla. 2009). The district court held that this provision precluded Rolyn from recovering costs it incurred when it repaired Building 2800 because Rolyn did not seek Crum & Forster’s consent before voluntarily incurring those costs. Rolyn Cos., 671 F. Supp. 2d at 1330. We agree. As one Florida court has said regarding voluntary-payment provisions such 4 as the one at issue here: While an insured is free to enter into a reasonable settlement when its insurer has wrongfully refused to provide it with a defense to a suit, we find that the insured is not similarly free to independently engage in such settlements where, as here, the insurer had not declined a defense to suit. Consequently, . . . the insured’s failure to comply with the relevant policy provisions relieved the insurer of its obligations under the policy . . . . Am. Reliance Ins. Co. v. Perez, 712 So. 2d 1211, 1212–13 (Fla. Dist. Ct. App. 1998) (brackets omitted). Thus, a voluntary-payment provision, such as the one at issue here, “requires the insured to obtain the insurer’s consent before settling.” Id. at 1213. Here, Rolyn did not obtain Crum & Forster’s consent before incurring costs with regard to Building 2800. Although Rolyn argues that it was legally obligated to address the damage caused by its subcontractor, Precision, we agree with the district court that the costs incurred by Rolyn to repair the damage were not incurred “‘involuntarily because of circumstances beyond [Rolyn’s] control,’ such as ‘a situation requiring immediate response to protect its legal interests.’” Rolyn Cos., 671 F. Supp. 2d at 1327 (quoting Jamestown Builders, Inc. v. Gen. Star Indem. Co., 91 Cal. Rptr. 2d 514, 518 (Cal. Ct. App. 1999)). There is no indication in the record that Rolyn was required to respond immediately to fix the damage, and, in fact, in the time between the damage and the repairs, Rolyn 5 worked with Precision for several months to try to get Precision to repair the damage. Accepting Rolyn’s broad definition of “legally obligated” would effectively delete the voluntary-payment provision from the policy. See Moore v. State Farm Mut. Auto. Ins. Co., 916 So. 2d 871, 877 (Fla. Dist. Ct. App. 2005) (“We will not interpret a contract in such a way as to render provisions meaningless when there is a reasonable interpretation that does not do so.”). The action of Rolyn here falls into the category of failing to cooperate with the insurer. Such a “failure which constitutes a material breach and substantially prejudices the rights of the insurer in defense of the cause will release the insurer of its obligation to pay.” Mid-Continent Cas. Co. v. Am. Pride Bldg. Co., LLC, 601 F.3d 1143, 1150 (11th Cir. 2010) (internal quotation marks omitted) (quoting Ramos v. Nw. Mut. Ins. Co., 336 So. 2d 71, 75 (Fla. 1976)). It appears obvious that completing the repair without consent would have a material effect on potential litigation, including settlement thereof. In any case, the district court was not called upon to resolve any issue of prejudice to the insurer, because such issue was not raised, as appellant’s counsel stated at oral argument.1 Moreover, Rolyn was also not excused from seeking Crum & Forster’s 1 Counsel also stated that there is no claim of an implied consent by Crum & Forster to the repairs. 6 consent due to “the insurer’s refusal to defend in a lawsuit to establish liability.” Jamestown Builders, 91 Cal. Rptr. 2d at 517. Crum & Forster never wrongfully refused to provide Rolyn with a defense to any suit, and, in fact, Crum & Forster defended Rolyn in a suit by the owner of one of Building 2800’s units. Thus, Rolyn had time to obtain Crum & Forster’s consent before incurring these costs, and nothing in the record provides an excuse for its failure to obtain such consent. Because Rolyn failed to obtain Crum & Forster’s consent before incurring costs to repair Building 2800, we agree with the district court that the voluntary-payment provision of the Crum & Forster policy bars recovery.2