Court Opinion

ID: 9407639
Source: CourtListenerOpinion
Date Created: 2023-07-07 19:00:52.495326+00
Date Added: 2024-06-11T17:20:39.371373
License: Public Domain

USCA11 Case: 22-13603    Document: 21-1     Date Filed: 07/07/2023   Page: 1 of 8

                                                  [DO NOT PUBLISH]
                                   In the
                United States Court of Appeals
                        For the Eleventh Circuit

                          ____________________

                                No. 22-13603
                          Non-Argument Calendar
                          ____________________

       CHABAD OF KEY BISCAYNE, INC.,
                                                     Plaintiﬀ-Appellant,
       versus
       SCOTTSDALE INSURANCE COMPANY,

                                                   Defendant-Appellee.

                          ____________________

                 Appeal from the United States District Court
                     for the Southern District of Florida
                    D.C. Docket No. 1:21-cv-24043-DPG
                          ____________________
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       2                     Opinion of the Court                22-13603

       Before NEWSOM, GRANT, and ANDERSON, Circuit Judges.
       PER CURIAM:
              Chabad of Key Biscayne appeals the district court’s grant of
       Scottsdale Insurance Company’s motion for summary judgment.
       Chabad had brought suit after Scottsdale refused to pay more than
       $5000 in damages for Chabad’s loss of $247,584.74 from water
       damage.
              Chabad ﬁled a claim under its all-risks commercial policy
       with Scottsdale after “a drain or sewer pipe broke due to wear and
       tear, deterioration, and settling, and water accidentally discharged
       or leaked causing damage.” Scottsdale denied the claim under the
       general water damage exclusion but oﬀered $5000 under the “Wa-
       ter Backup or Overﬂow of Sewers and Drains” extension.
             The all-risks policy contains an exclusion for damages
       caused by water:
             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 se-
             quence to the loss.
             ...
             g. Water
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       22-13603               Opinion of the Court                         3

             (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);
              ...
              (3) Water that backs up or overﬂows or is other-
              wise discharged from a sewer, drain, sump, sump
              pump or related equipment;
              (4) Water under the ground surface pressing on, or
              ﬂowing or seeping through:
              (a) Foundations, walls, ﬂoors or paved surfaces;
              (b) Basements, whether paved or not; or
              (c) Doors, windows or other openings; or
              ...
              This exclusion applies regardless of whether any of
              the above, in Paragraphs (1) through (5), is caused by
              an act of nature or is otherwise caused.
       Doc. 17-1 at 92-93. Scottsdale relied on subsection (3).
              The policy also includes an exclusion for damages caused by
       wear and tear (B.2.d.(1)) but includes the following caveat: “But if
       an excluded cause of loss that is listed in 2.d.(1) through (7) re-
       sults in a ‘speciﬁed cause of loss’ . . ., we will pay for the loss or
       damage caused by that ‘speciﬁed cause of loss’.” Id. at 94. The
       policy deﬁnes “speciﬁed cause of loss” (G.2.) to include water dam-
       age and deﬁnes water damage (G.2.c.) as:
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       4                     Opinion of the Court                 22-13603

             (1) Accidental discharge or leakage of water or steam
             as the direct result of the breaking apart or cracking
             of a plumbing, heating, air conditioning or other sys-
             tem or appliance (other than a sump system including
             its related equipment and parts), that is located on the
             described premises and contains water or steam; and
             (2) Accidental discharge or leakage of water or water-
             borne 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 de-
             scribed 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 govern-
             mental subdivision where the described premises are
             located.
       Id. at 101. The deﬁnition continues:
             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 sur-
             face water or water under the surface of the
             ground.
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       22-13603               Opinion of the Court                         5

       Id. Finally, the policy contained an endorsement that deﬁned
       “drain” and “sewer:”
              1. “Sewer” means any underground pipe, channel or
              conduit for carrying water, wastewater or sewage on
              or away from the premises described in the Declara-
              tions;
              2. “Drain” means any pipe, channel or conduit for car-
              rying water, wastewater or sewage on or away from
              the premises described in the Declarations to a
              “sewer.”
       Id. at 117.
              The parties and the district court refer to B.1.g.(3) (see bold
       type above) as the Water Exclusion. They also refer to the caveat
       to the B.2.d.(1) Wear and Tear Exclusion (quoted in bold above) and
       the two provisions of the deﬁnitions of “speciﬁed cause of loss”
       and “water damage” (quoted above in bold) as the Water Damage
       Exception to the Water Exclusion.
              After agreeing with the parties that B.1.g.(3) of the Water
       Exclusion excluded the damage at issue, the district court found
       that the Water Damage Exception did not apply. The court found
       that the Water Damage Exception applied only to surface water
       (B.1.g.(1)) or to water under the surface of the ground (B.1.g.(4)),
       while Chabad’s damage fell under damage from sewer or drain
       backup or overﬂow (B.1.g.(3)). It cited several other district court
       decisions that had interpreted the same contract language the same
       way. Finally, it distinguished a Florida case, Cheetham v. Southern
       Oak Insurance Co., 114 So.3d 257 (Fla. 3d DCA 2013), and a case
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       6                       Opinion of the Court                    22-13603

       from this court, Cameron v. Scottsdale Insurance Co., 726 F. App’x 757
       (11th Cir. 2018), because neither of the policies in those cases in-
       cluded the deﬁnition of drain and sewer found in the Endorsement
       in the policy here.
               Florida substantive law applies because we are sitting in di-
       versity. Admiral Ins. Co. v. Feit Management Co., 321 F.3d 1326, 1328
       (11th Cir. 2003). Under Florida law, the interpretation of an insur-
       ance policy is a question of law for the court. Penzer v. Transporta-
       tion Ins. Co., 29 So.3d 1000, 1005 (Fla. 2010). As a general rule, clear
       and unambiguous policy terms should be given their plain, ordi-
       nary and generally accepted meaning. Taurus Holdings, Inc. v. U.S.
       Fid. & Guar. Co., 913 So.2d 528, 532 (Fla. 2005). When applying the
       “plain meaning” rule, courts must not construe insurance policy
       provisions in isolation, but instead should read all terms in light of
       the policy as a whole, with every provision given its full meaning
       and operative eﬀect. Auto–Owners Ins. Co. v. Anderson, 756 So.2d 29,
       34 (Fla. 2000). Finally, “[b]ecause they tend to limit or avoid liability,
       exclusionary clauses are construed more strictly than coverage
       clauses.” Category 5 Mgmt. Grp., LLC v. Companion Prop. & Cas. Ins.
       Co., 76 So. 3d 20, 23 (Fla. Dist. Ct. App. 2011) (citation omitted).
              As the district court noted, Chabad agrees that the Water
       Exclusion (B.1.g.(3)) applies initially to exclude the loss. Chabad’s
       only argument on appeal is that the Water Damage Exception op-
       erates as an exception to the Water Exclusion in B.1.g.(3), so as to
       save coverage.
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       22-13603                  Opinion of the Court                               7

               We agree with the district court that there is no coverage
       here for the damage suﬀered. The Water Exclusion bars coverage
       for water that backs up or is discharged from a sewer and the policy
       deﬁnes sewer and drain to mean “pipe, channel or conduit for car-
       rying water, wastewater or sewage on or away from the premises.”
       The Water Damage Exception applies to the Wear and Tear Exclu-
       sion and its language must be interpreted through the lens of the
       provisions of the Wear and Tear Exclusion, including its exceptions.
       The exception explicitly states that it exempts from the Water Ex-
       clusion damage from surface water or water under the surface of
       the ground. That corresponds to B.1.g.(1) and B.1.g.(4) of the pol-
       icy. 1 But the parties agree that B.1.g.(3)—water discharged from a
       drain or sewer—is the exclusion at issue. Because the exception to
       the exclusion at issue here does not apply, there is no coverage. 2

       1See the Water Damage Exception quoted in bold type above: “such water is
       not subject to the provisions of the Water Exclusion which preclude coverage
       for surface water [B.1.g.(1)] or water under the surface of the ground
       [B.1.g.(4)].”
       2 Contrary to Chabad’s arguments, the exception is not illusory. The excep-
       tion actually operates as an exception to the exclusions for surface water and
       for water under the surface of the ground when a pipe (either offsite or within
       the premises) breaks due to wear and tear. Further, Chabad’s reliance on
       Cheetham is misplaced because, although the court interpreted a similar (but
       not the same) policy, the court held that language in a water exclusion similar
       to B.1.g.(3) in our case applied only to “damage caused by water originating
       from somewhere other than the residence premises’ plumbing system.” 114
       So. 3d at 263. Chabad in this case does not argue that the Water Exclusion
       does not apply because the water originated from within its own plumbing
       system. Also, as the district court found, Cheetham is distinguished because it
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       8                         Opinion of the Court                      22-13603

              AFFIRMED

       did not include the definition in this case of “sewer” and “drain” pipes (which
       clearly encompass pipes both on- and off-premises) and, unlike this case, did
       not include the “Water Backup or Overflow of Sewers and Drains” extension
       of coverage (which clearly contemplates that the Water Exclusion in B.1.g.(3)
       would apply to exclude coverage but then adds back such coverage with a
       $5000 limit). In any event, Chabad has acknowledged in this case that B.1.g.(3)
       would apply to exclude coverage unless the exception applies to save cover-
       age, thus making the holding of Cheetham irrelevant for this case.