Opinion ID: 1874942
Heading Depth: 3
Heading Rank: 1

Heading: The Coverage Clause

Text: The parties contest the interpretation of two separate clauses of the policy: the coverage clause and the injury-intentionally-caused exclusionary clause. We begin by analyzing the coverage clause. The policy's coverage clause provides that the policy, under which Travelers agrees to pay all sums [PCR] legally must pay as damages because of bodily injury to [PCR's] employees, applies only to bodily injury by accident ... aris[ing] out of and in the course of the injured employee's employment by [PCR]. The question is whether a claim brought against PCR by an injured employee under Turner's objectively-substantially-certain standard constitutes a claim for bodily injury by accident. Travelers argues that such a claim, brought as it is under the intentional -tort exception to the exclusive-remedy provision of the Workers' Compensation Law, even if brought under the objectively-substantially-certain prong of the intentional-tort exception rather than the deliberate-intent prong, cannot be considered to be a claim for bodily injury by accident. Travelers finds support for this argument in the reasoning we employed in Turner. We noted in Turner that workers' compensation is the exclusive remedy for ` accidental injury or death arising out of work performed in the course and the scope of employment.' 754 So.2d at 686 (quoting § 440.09(1), Fla. Stat. (1997)) (emphasis added). Even though the exclusive-remedy provision did not provide explicitly for an intentional-tort exception, we were able to conclude that such an exception was implicit in the bargain struck by the Workers' Compensation Law. We took this reasoning a step further in determining that an injured employee could satisfy the intentional-tort exception not only by demonstrating that his employer actually intended to injure him, but also by demonstrating that his injury was caused by employer conduct that was objectively substantially certain to cause injury. Noting that the statute defined accident as only an unexpected or unusual event or result, we concluded that under the plain language of the statute, it would appear logical to conclude that if a circumstance is substantially certain to produce injury or death, it cannot reasonably be said that the result is `unexpected' or `unusual.' Turner, 754 So.2d at 689 (emphasis omitted). Such a result, therefore, could not be considered accidental and was not subject to the exclusive-remedy provision of the Workers' Compensation Law. Simply put, Travelers' argument is this: (1) the employer's liability policy covers only claims for bodily injury by accident; (2) if these underlying claims were claims for bodily injury by accident, they would be barred by the exclusive-remedy provision of the Workers' Compensation Law  the only reason such claims were allowed to proceed under Turner was because we concluded that they could not be considered to be claims for bodily injury by accident; therefore, (3) these underlying claims, by virtue of the fact that they are not barred by the exclusive-remedy provision, are not claims for bodily injury by accident and are not covered by the policy. This argument certainly presents a reasonable interpretation of the policy's coverage clause, and it is, essentially, the conclusion adopted by the two dissenting opinions. But it is not an interpretation that flows necessarily from the clause's plain language; nor is it the only reasonable interpretation of the clause. [8] The policy does not define the term accident, and Travelers' argument relies on the importation of our reasoning in Turner and the definition of accident employed there. The flaw in this argument, however, is that in Turner we employed principles of tort law to interpret the Workers' Compensation Law. Here, on the other hand, we are called upon to interpret an insurance policy. In Prudential Property & Casualty Insurance Co. v. Swindal, 622 So.2d 467 (Fla.1993), in the context of interpreting an intentional-injury exclusion in a homeowners' insurance policy, we held: Florida has long followed the general rule that tort law principles do not control judicial construction of insurance contracts. Insurance contracts are construed in accordance with the plain language of the policies as bargained for by the parties. Ambiguities are interpreted liberally in favor of the insured and strictly against the insurer who prepared the policy. Thus, intentional act exclusions are limited to the express terms of the policies and do not exclude coverage for injuries more broadly deemed under tort law principles to be consequences flowing from the insured's intentional acts. 622 So.2d at 470 (citations omitted). The same principle applies here. [9] We must interpret the phrase bodily injury by accident, as used in this insurance policy, in accordance with the plain language of the polic[y] as bargained for by the parties. Id. If the policy's language is not plain  if it is susceptible to more than one reasonable interpretation, one providing coverage and the other limiting coverage, Swire Pac. Holdings, 845 So.2d at 165 (quoting Auto-Owners Ins., 756 So.2d at 34) (brackets omitted)  we must resolve the ambiguity and interpret the language liberally in favor of the insured and strictly against the insurer who prepared the policy. Swindal, 622 So.2d at 470. In other words, the coverage clause must be interpreted in accordance with our general principles of insurance policy interpretation. We cannot limit the scope of the term accident (when not defined in the policy) narrowly to cover only those circumstances deemed accidental under principles of tort law or workers' compensation law. [10] Our decision in Turner rested squarely on tort law principles. In adopting an objective substantial-certainty test, we relied on Spivey v. Battaglia, 258 So.2d 815 (Fla.1972), which itself relied on the Restatement of Torts, for the proposition that [w]here a reasonable man would believe that a particular result was substantially certain to follow, he will be held in the eyes of the law as though he had intended it. Id. at 817 (first emphasis added). Based on this tort law principle, we held that an injury would not be considered accidental, and an injured employee therefore could satisfy the intentional-tort exception, if his injury resulted from employer conduct that was objectively substantially certain to result in injury. Importantly, under this standard the employer need not have known that its conduct was substantially certain to cause injury; the fact that it should have known of the substantial certainty of injury would be sufficient to negate the unexpectedness or unusualness of any resulting injury, regardless of whether the injury truly was unexpected by the employer. [11] Nothing in the insurance policy, however, suggests that the by accident coverage clause should be construed in this narrow sense. [12] In support of its argument that we should interpret the by accident coverage clause in accordance with our reasoning in Turner, Travelers points to our decision in State Farm Fire & Casualty Co. v. CTC Development Corp., 720 So.2d 1072 (Fla.1998). In CTC Development, we had to interpret the coverage clause of a building contractor's business liability insurance policy. The policy covered [t]hose sums that the insured becomes legally obligated to pay as damages because of ... property damage ... caused by an occurrence. Id. at 1073 (emphasis omitted). The policy defined an occurrence as [a]n accident. Id. The case arose after CTC Development (CTC), the insured building contractor, was sued by the neighbors of the clients for whom it was building a house. The neighbors sued CTC for building the house in violation of restrictive covenants that required the house to be built at a fifteen-foot setback. CTC admitted that it knowingly built the house beyond the fifteen-foot setback but asserted that it did so only on the mistaken belief that its variance request had been approved. The question in CTC Development was whether the damages resulting from CTC's setback violation were caused by an accident. If so, they were covered by the policy; if not, they were not. State Farm, the insurer, argued that the case was controlled by our earlier decision in Hardware Mutual Casualty Co. v. Gerrits, 65 So.2d 69 (Fla.1953), a case involving remarkably similar facts. We held in Gerrits that the construction of a home over the property line was not an accident within the meaning of the policy (which left the term undefined) because the builder had deliberately and designedly (although erroneously) located the building on a part of the adjoining property and he intended to build it at that particular site. CTC Development, 720 So.2d at 1074 (quoting Gerrits, 65 So.2d at 71). Gerrits relied on the principle that [a]n effect which is the natural and probable consequence of an act or course of action is not an accident. Id. (quoting Gerrits, 65 So.2d at 70) (emphasis omitted). Gerrits reasoned that it did not matter whether the builder intended or expected the result because the result was the natural and probable consequence of its deliberate act. Id. In CTC Development, we rejected Gerrits' reasoning. Gerrits erred, we held, in importing the tort law principle of natural and probable consequences into the context of insurance policy interpretation. Id. (Florida law has long followed the general rule that tort law principles do not control judicial construction of insurance contracts.) (quoting Swindal, 622 So.2d at 470). Interpreting the term accident, which the policy left undefined, in accordance with the principles of insurance policy interpretation rather than tort law, we held that the policy in CTC Development covered not only `accidental events,' [i.e., accidental or unwilled acts,] but also damages or injuries that are neither expected nor intended from the viewpoint of the insured. Id. at 1072. This, we held, was the proper definition of the term `accident' in a[ny] liability policy [in which the term] is not defined. Id. at 1076. Travelers argues that we should apply the CTC Development definition of accident to the by accident coverage clause at issue here. If we were to apply this definition, Travelers argues, the policy could not be interpreted to extend coverage to the injured employees' Turner claims. Travelers' argument, however, is unpersuasive. Assuming that we should use the CTC Development definition in interpreting this policy, the result still would not support Travelers' argument that a claim brought under Turner's objectively-substantially-certain standard, by definition and as a matter of law, cannot be considered a claim for bodily injury by accident  and, therefore, necessarily falls outside the scope of the policy's coverage clause. [13] The flaw in this argument is that the CTC Development definition evaluated intent or expectation from the insured's subjective point of view. 720 So.2d at 1072. CTC Development extended the scope of the term accident to include not only damages resulting from unintentional or accidental acts, but also to include damages resulting from intentional or volitional acts as long as the insured actor neither intended nor expected the resulting damages. To satisfy the objectively-substantially-certain standard of Turner, on the other hand, an injured employee need not prove that his or her employer actually expected that its conduct would result in injury. Rather, under Turner, an injured employee only needs to demonstrate that his or her employer should have expected that injury would result. Turner, 754 So.2d at 688-89. At the least, therefore, the policy's by accident coverage clause, if interpreted in accordance with our CTC Development definition, would provide coverage for a Turner claim unless the injured employee demonstrated that the insured employer actually expected (with expectation measured to the degree of substantial certainty) that its conduct would result in injury. Interpreting the coverage clause in this way probably would preclude coverage of a claim brought under the newly enacted, virtual-certainty standard, but it does not, as a matter of law, preclude coverage under the more liberal, objectively-substantially-certain standard articulated in Turner. [14]