Court Opinion

ID: 44748
Source: CourtListenerOpinion
Date Created: 2010-04-25 22:27:26+00
Date Added: 2024-06-11T17:17:18.925682
License: Public Domain

[DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT
                             ________________________                        FILED
                                                                    U.S. COURT OF APPEALS
                                                                      ELEVENTH CIRCUIT
                                    No. 05-14862                       DECEMBER 1, 2006
                              ________________________                  THOMAS K. KAHN
                                                                            CLERK
                          D. C. Docket No. 04-60435- CV-JIC

LIVING LEGENDS RETIREMENT CENTER, INC.,

                                                                         Plaintiff-Appellant,

                                            versus

LEXINGTON INSURANCE COMPANY,
a Delaware corporation,

                                                                        Defendant-Appellee.
                              ________________________

                      Appeal from the United States District Court
                          for the Southern District of Florida
                            _________________________

                                    (December 1, 2006)

Before PRYOR, FAY and REAVLEY,* Circuit Judges.

PER CURIAM:

       * Honorable Thomas M. Reavley, United States Circuit Judge for the Fifth Circuit, sitting
by designation.
      This appeal challenges a ruling on a pre-trial motion in a breach of contract

suit. Plaintiff-Appellant, Living Legends Retirement Center Inc. (“Living

Legends”), sued its commercial property insurer, Lexington Insurance Company

(“Lexington”), for breach of contract after the insurer denied a storm water

damage claim. Defendant-Appellee Lexington asserted that Living Legends’

policy excluded surface water damages on a “Causes of Loss Special Form”

(“Special Form”) which appeared as an attachment to the policy declarations.

Living Legends filed a Motion in Limine, asking the court to find that exclusions

on the Special Form did not apply unless the word “special”appeared on the

declarations page of the policy. The court denied Living Legends’ motion, finding

that the declarations page incorporated the challenged Special Form by reference

and that the parties intended to have the form apply to the policy. After Lexington

prevailed at jury trial, Living Legends filed this appeal. For the reasons set forth

below, we affirm.

                                  BACKGROUND

      Living Legends, an assisted living facility in Deerfield Beach, Florida,

purchased commercial property insurance from Lexington Insurance Company, a

Delaware Corporation that is headquartered in Massachusetts, on August 15, 2002,

in order to cover its premises, the contents of the premises and its business income

                                          2
from property losses. Lexington issued a policy that consisted of a declarations

page and eighteen printed schedules and endorsements. The declarations page of

the policy was preprinted in parts and contained fill-in-the-blank sections in other

parts. The declarations page identified the policy as a one-year renewal of an

earlier policy and listed the perils as “all risk excluding flood and earthquake.”

The last item on the declarations page dealt with attachments and directed the

policy-holder to “See attached forms schedule.”

      The top of the attached form schedule contained a cross-reference to the

policy number and its effective date. The rest of the schedule consisted of a list of

eighteen different forms or endorsements that had some bearing on the policy,

including “Common Policy Conditions,” “ Fire Schedule,” “Business and Personal

Property Coverage” and a “Causes of Loss Special Form,” among others.

      On August 9, 2003, roughly one-week before the policy was due to expire, a

severe rainstorm damaged the Living Legends retirement facility and its contents.

Living Legends submitted a claim for damages to the building, its contents and

lost business income. Lexington denied the claim, noting that the policy’s form

schedule listed a Special Form attachment which excluded claims for surface

water damages. Living Legends sued Lexington for breach of contract in Florida

circuit court, arguing that the declarations page limited exclusions to damages

                                          3
arising from earthquake and flood, and that the exclusions on the Special Form

applied only “[w]hen Special is shown in the Declarations.” Since the word

“special” appeared nowhere on the declarations page, the exclusions did not apply,

Living Legends contended.

      Lexington removed the case to federal district court, invoking the court’s

diversity jurisdiction, and raised fourteen affirmative defenses in its answer to the

complaint. The district court dismissed a number of them, but left intact nine of

the defenses that relied upon exclusions in the Special Form attachment. Before

the case proceeded to trial Living Legends filed a Motion in Limine that asked the

court to find the exclusions inapplicable because the declarations page did not list

“special” exclusions or causes of loss. In support of this motion, Living Legends

cited prefatory language on the Special Form which stated: “[w]hen Special is

shown in the Declarations, Covered Causes of Loss means RISKS OF DIRECT

PHYSICAL LOSS UNLESS THE LOSS IS: 1. Excluded in Section B.,

Exclusions, or 2. Limited in Section C, Limitations.”

      Lexington argued that the word “special” did not need to appear on the

declarations page because that page incorporated the Special Form by reference.

Living Legends conceded during oral argument on its motion that the declarations

page did incorporate the Special Form by reference, but insisted that the wording

                                          4
in the first part of the Special Form limited the force of the form’s exclusionary

provisions to policies that featured the word “special” in their declarations.

Alternatively, Living Legends argued that the language appearing under Part A of

the Special Form should be considered ambiguous at best, and construed in favor

of the policy-holder.

        The district court denied Living Legends’ motion, finding that the

declarations page did incorporate the Special Form by reference and that the “clear

intent of the parties was to include the form with its exclusions and limitations.”

The court also found that the terms of the policy contained no ambiguities.

OMNIBUS ORDER ON MOTIONS IN LIMINE, decided by the district court on June 9,

2005.

        The case proceeded to a jury trial and at the close of the evidence, Living

Legends filed a Motion for Judgment as a Matter of Law. The court denied the

motion and instructed the jury to find for Lexington should the evidence show that

the damage was caused by an excluded cause of loss. The jury entered a verdict for

Lexington and Living Legends filed a Motion Renewing its Motion for a

Judgment as a Matter of Law. The court denied that motion. Thereafter, Living

Legends filed this appeal to challenge the district court’s interpretation of the

                                           5
insurance policy and its conclusion that the parties intended to incorporate the

exclusions and limitations that appeared on the Special Form.

                            STANDARD OF REVIEW

      The district court ruling in this case turned on the interpretation of an

insurance contract. Since the court was sitting in diversity, it applied the law of the

forum state, Florida. See, e.g., Technical Coating Applicators, Inc. v. United States

Fid. and Guar. Co., 157 F.3d 843, 844 (11th Cir. 1998) (noting that when a

contract suit comes before a federal district court as a matter of diversity

jurisdiction, the court applies the substantive law of the forum state unless federal

constitutional or statutory law compels a contrary result). In Florida, the

interpretation of an insurance contract is a matter of law. Id. We review decisions

on matters of law de novo. Admiral Ins. Co. v. Feit Mgmt. Co., 321 F.3d 1326,

1328 (11th Cir. 2003), Vector Prods. v. Hartford Fire Ins. Co., 397 F.3d 1316,

1318 (11th Cir. 2005), citing LaFarge Corp. v. Travelers Indem. Co., 118 F.3d

1511, 1515 (11th Cir. 1997).

                                     ANALYSIS

      Courts interpret insurance coverage provisions liberally under Florida case

law and generally construe insurance contracts in accordance with the plain

language of the policies as bargained for by the parties. Prudential Property &

                                           6
Casualty Ins. Co. v. Swindal, 622 So. 2d 467, 470 (Fla. 1993); Hrynkiw v. Allstate

Floridian Ins. Co., 844 So. 2d 739, 741-742 (Fla. 5th DCA 2003). Since

exclusionary clauses run counter to the fundamental protective principles of

insurance coverage, however, Florida courts construe exclusionary provisions

more narrowly. See, e.g., Deni Associates of Florida, Inc. v. State Farm Fire &

Cas. Ins. Co., 711 So. 2d 1135, 1138 (Fla.1998); Guideone Elite Ins. Co. v. Old

Cutler Presbyterian Church, Inc., 420 F.3d 1317, 1327 (11th Cir. 2005).

      Additionally, the Florida Supreme Court has held that ambiguous

exclusionary provisions must be construed in favor of the insured.

Prudential Property and Casualty Insurance Co., 622 So. 2d at 470; Deni

Associates of Florida, Inc., 711 So. 2d at 1138, citing State Farm Mutual

Automobile Insurance Co. v. Pridgen, 498 So. 2d 1245, 1248 (Fla. 1986). As this

Court has cautioned, however, a contract should not be considered ambiguous

simply because it requires interpretation or it fails to define a term. Carneiro da

Cunha v. Standard Fire Insurance Co., 129 F.3d 581, 585 (11th Cir. 1997).

Absent any ambiguities, courts should defer to the plain language meaning of the

policy in determining whether a given provision applies. Guideone Elite Ins. Co.,

420 F.3d at 1327.

                                          7
      We begin our analysis of the facts by noting that Living Legends conceded

that the declarations page of its property insurance policy incorporated the Special

Form by reference. Accordingly, the district court properly ruled that the

declarations page of the policy incorporated the Special Form by reference since

the declarations page directed the policy-holder to “See attached form schedule,”

and the attachment listed this form by name.

      Proceeding to the language at the heart of this dispute, we examine Part A

of the Special Form which states: “A. COVERED CAUSES OF LOSS When

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

DIRECT PHYSICAL LOSS unless the loss is: 1. Excluded in Section B.,

Exclusions; or 2. Limited in Section C. Limitations; that follow.” We find no

ambiguities in this section of the form. Part A simply informs the policy-holder

which losses will be “covered” in policies that have Causes of Loss forms that are

identified as “special” in the Declarations.

      Language contained in other portions of the policy supports this

interpretation. For example, the “Building and Personal Property Coverage Form”

which appears on the form schedule to the Declarations directs the policy-holder

under “[Part] A. COVERAGE...[Number] 3. Covered Causes of Loss” to “See

applicable Causes of Loss Form as shown in the Declarations.” Similarly, Part B.

                                          8
of this same form, which addresses “EXCLUSIONS” directs the policy-holder to

“See applicable Causes of Loss Form as shown in the Declarations.” Thus, when

we read Part A of the Special Form in the context of the entire policy, we conclude

that it uses the word “special” to identify a particular Causes of Loss Form.

Indeed, Lexington asserted that it used three different Causes of Loss forms in its

commercial property policies, and that the forms were identified as “basic,”

“broad” or “special,” depending upon the type of coverage/exclusions the policy-

holder desired. Living Legends did not dispute this assertion.

      Turning to Part B of the Special Form, which deals with exclusions from

coverage, we find subparagraph “g” which states:

             “Water.
             1) Flood, surface water, waves, tides, tidal waves, overflow of
             any body of water or their spray, whether driven by wind or
             not;
             2) Mudslide or mudflow;
             3) Water that backs up from a sewer or drain; or
             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.
             But if loss or damage by fire, explosion or sprinkler leakage
             results, we will pay for that resulting loss or damage.”

      As we noted previously, a contract should not be considered ambiguous

simply because it requires interpretation or it fails to define a term. Carneiro da

                                          9
Cunha v. Standard Fire Insurance Co., 129 F.3d 581, 585 (11th Cir. 1997). And,

when a policy does not present ambiguities, courts should defer to the plain

language meaning of the policy. Guideone Elite Ins. Co., 420 F.3d at 1327.

                                 CONCLUSION

      The district court did not err when it found that the declarations page of

Living Legends’ insurance policy incorporated the Special Form by reference. Nor

did it err when it interpreted the language on that Special Form according to its

plain meaning, and found that the exclusions listed therein applied.

      AFFIRMED.

                                         10