Court Opinion

ID: 9959236
Source: CourtListenerOpinion
Date Created: 2024-04-11 14:00:49.92843+00
Date Added: 2024-06-11T08:17:38.603603
License: Public Domain

USCA11 Case: 23-11366   Document: 35-1     Date Filed: 04/11/2024   Page: 1 of 9

                                                 [DO NOT PUBLISH]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

                          ____________________

                                No. 23-11366
                          Non-Argument Calendar
                          ____________________

       SOUTHERN-OWNERS INSURANCE COMPANY,
                                Plaintiﬀ-Counter Defendant-Appellant,
       versus
       MAC CONTRACTORS OF FLORIDA, LLC,
       d.b.a. KJIMS Construction,

                                Defendant-Counter Claimant-Appellee,

       PAUL S. DOPPELT,
       Trustee of Paul S. Doppelt
       Revocable Trust dated 12/08/90,
       DEBORAH A. DOPPELT,
       Trustee of Deborah A. Doppelt
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       2                         Opinion of the Court                       23-11366

       Revocable Trust dated 12/08/90,

                                                            Defendants-Appellees.

                               ____________________

                   Appeal from the United States District Court
                        for the Middle District of Florida
                    D.C. Docket No. 2:18-cv-00021-JES-KCD
                            ____________________

       Before ROSENBAUM, BRANCH, and ABUDU, Circuit Judges.
       PER CURIAM:
              This is the third appeal in an insurance dispute arising from
       the abandoned construction of a custom-built home in Marco Is-
       land, Florida. Southern-Owners Insurance Company seeks a dec-
       laration that it owed no duty to defend its insured, MAC Contrac-
       tors of Florida, LLC, doing business as KJIMS Construction, against
       a since-resolved lawsuit for breach of contract brought by the prop-
       erty owners after KJIMS abandoned the job site and left the work
       unﬁnished and damaged. 1

       1 According to the district court, the state-court lawsuit was dismissed in Sep-

       tember 2019 under a settlement agreement for $70,000. KJIMS has withdrawn
       its claim for indemnification of the settlement amount, leaving only the issue
       of the duty to defend.
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       23-11366               Opinion of the Court                         3

               In the prior two appeals, we rejected Southern-Owners’ ar-
       guments that it had no duty to defend KJIMS from the property
       owners. We held that coverage was not entirely excluded by a
       “Your Work” exclusion, Southern-Owners Ins. Co. v. MAC Contractors
       of Fla., LLC (“KJIMS I”), 768 F. App’x 970, 973 (11th Cir. 2019), and
       that the complaint could be fairly construed to allege “property
       damage” within the meaning of the commercial liability policy,
       Southern-Owners Ins. Co. v. MAC Contractors of Fla., LLC (“KJIMS II”),
       819 F. App’x 877, 883 (11th Cir. 2020).
              On remand, the district court considered two additional pol-
       icy exclusions, j(6) and j(7), and concluded that they did not elimi-
       nate coverage. Accordingly, the court granted KJIMS’ motion for
       summary judgment and declared that Southern-Owners had a duty
       to defend KJIMS in the underlying state court lawsuit. Southern-
       Owners appeals, arguing that it had no duty to defend because all
       of the damages alleged in the underlying lawsuit were entirely
       within the scope of exclusions j(6) and (7) and the Your Work ex-
       clusion, considered cumulatively.
              We review de novo the grant of summary judgment and the
       interpretation of contract language. Southern-Owners Ins. Co. v.
       Easdon Rhodes & Assocs. LLC, 872 F.3d 1161, 1163–64 (11th Cir.
       2017). Because this is a diversity action, we apply the substantive
       law of the forum state, which is Florida. Mid-Continent Cas. Co. v.
       Am. Pride Bldg. Co., LLC, 601 F.3d 1143, 1148 (11th Cir. 2010). We
       may aﬃrm on any ground supported by the record. Kernel Records
       Oy v. Mosley, 694 F.3d 1294, 1309 (11th Cir. 2012).
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       4                       Opinion of the Court                   23-11366

              An insurer’s duty to defend arises where the underlying alle-
       gations “fairly bring the case within the scope of coverage.” State
       Farm Fire & Cas. Co. v. Tippett, 864 So. 2d 31, 35–36 (Fla. 4th DCA
       2003). “If the complaint alleges facts partially within and partially
       outside the scope of coverage, the insurer is obligated to defend the
       entire suit.” Trizec Props., Inc. v. Biltmore Constr. Co., Inc., 767 F.2d
       810, 811–12 (11th Cir. 1985). Any doubt about whether the insurer
       owes a duty to defend must be resolved against the insurer and in
       favor of the insured. Id. at 812. So when there is “uncertainty in
       the law at the time” about the insurer’s duty to defend, the insurer
       is “required to resolve this uncertainty in favor of the insured and
       oﬀer a defense.” Carithers v. Mid Continent Cas. Co., 782 F.3d 1240,
       1246 (11th Cir. 2015).
               “[E]xclusionary clauses are construed more strictly than cov-
       erage clauses.” Category 5 Mgmt. Grp., LLC v. Companion Prop. & Cas.
       Ins. Co., 76 So. 3d 20, 23 (Fla. 1st DCA 2011). But if the complaint
       clearly shows “the applicability of a policy exclusion, the insurer
       has no duty to defend.” Keen v. Fla. Sheriﬀs’ Self-Insurance Fund, 962
       So. 2d 1021, 1024 (Fla. 4th DCA 2007). The insurer bears the heavy
       burden of showing “that the allegations of the complaint are cast
       solely and entirely within the policy exclusion and are subject to no
       other reasonable interpretation.” Castillo v. State Farm Fla. Ins. Co.,
       971 So. 2d 820, 824 (Fla. 3d DCA 2007).
             The CGL policies at issue provided coverage for damages
       due to “property damage” caused by an “occurrence.” Under a
       “Your Work” exclusion, the policies did not cover “property
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       23-11366               Opinion of the Court                          5

       damage” to the insured’s “work” that had been “completed or
       abandoned.” Exclusions j(6) and j(7) also excluded coverage for
       property damage to the following:
              (6) That particular part of real property on which any in-
              sured or any contractors or subcontractors working directly
              or indirectly on your behalf are performing operations, if
              the “property damage” arises out of those operations; or
              (7) That particular part of any property that must be re-
              stored, repaired or replaced because “your work” was incor-
              rectly performed on it.
       Exclusions j(6) and j(7) in the subject policy are identical to exclu-
       sions j(5) and j(6) in the standard CGL coverage form, respectively.
       For consistency with the case law, we’ll use the latter, standard
       numbering to describe the Particular Part exclusions.
               In the ﬁrst appeal, we agreed with KJIMS that the Your Work
       exclusion did not cover property damage that occurred during on-
       going operations, and that the underlying allegations could reason-
       ably be construed to allege damages that occurred before abandon-
       ment—that is, during ongoing operations. KJIMS I, 768 F. App’x at
       973. We also held, in the second appeal, that the allegations could
       be construed to allege that “one subcontractor damaged nondefec-
       tive work performed by another subcontractor,” creating a poten-
       tial for coverage for “property damage” beyond “the defective work
       itself.” KJIMS II, 819 F. App’x at 882; see Carithers, 782 F.3d at 1250
       (holding that “property damage” under Florida law requires “dam-
       age beyond the defective work of a single sub-contractor”).
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       6                          Opinion of the Court                       23-11366

       Southern-Owners does not challenge these rulings, which it con-
       cedes are law of the case. 2
              Instead, Southern-Owners maintains that the Particular Part
       exclusions, speciﬁcally exclusion j(5), operate to exclude coverage
       for any property damage caused by KJIMS or its subcontractors
       during ongoing operations. And because the Your Work exclusion
       excludes damages occurring once operations ceased, according to
       Southern-Owners, “all damages alleged in the [underlying law-
       suit]—no matter when they occurred—are cast solely and entirely
       within these exclusions cumulatively.”
              The parties oﬀer competing views of the scope of the Par-
       ticular Part exclusions. Southern-Owners advocates a broad inter-
       pretation, under which “that particular part” is deﬁned by reference
       to the scope of the insured’s project. Because KJIMS was the gen-
       eral contractor, Southern-Owners contends, these exclusions bar
       coverage for any property damage at the project site caused by
       KJIMS or its subcontractors. KJIMS proposes a narrower view, em-
       phasizing the limiting nature of the phrase “that particular part.”
       That restrictive language, according to KJIMS, means that the ex-
       clusions bar coverage for damages only for the distinct part or unit
       of the project being worked on, rather than the entire scope of a
       contractor’s work.

       2 See Culpepper v. Irwin Mortg. Corp., 491 F.3d 1260, 1271 (11th Cir. 2007) (“The

       law-of-the-case doctrine holds that subsequent courts will be bound by the
       findings of fact and conclusions of law made by the court of appeals in a prior
       appeal of the same case.”) (quotation marks omitted).
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       23-11366               Opinion of the Court                          7

               In support of its broader interpretation, Southern-Owners
       primarily relies on our decision in Travelers Indemnity Co. of Connect-
       icut v. Richard Mckenzie & Sons, Inc., 10 F.4th 1255 (11th Cir. 2021).
       In Mckenzie & Sons, we examined exclusion j(5) in the context of
       damages caused by the manager of citrus groves. Id. at 1262. Ap-
       plying Florida law, we deﬁned “particular part of real property” in
       the exclusion as “the property on which [the insured] was perform-
       ing operations.” Id. at 1263. And we deﬁned the manager’s “oper-
       ations” by reference to the duties speciﬁed in the work contract. Id.
       Because the damage happened to the citrus groves on which the
       manager was performing those operations, and arose out of those
       operations, we found that the Particular Part exclusion applied to
       bar coverage. Id. Southern-Owners contends that this case pre-
       sents the “same situation” as Mckenzie & Sons, since KJIMS, like the
       citrus manager, was responsible for all operations at the property
       where the damages occurred.
              Even assuming Mckenzie & Sons is on point, though, “it
       would not follow that [Southern-Owners] was entitled to refuse to
       oﬀer [KJIMS] a defense.” Carithers, 782 F.3d at 1246. That’s because
       “an insurer is obligated to defend a claim even if it is uncertain
       whether coverage exists under the policy,” and even if it ultimately
       prevails on the issue of coverage. Id. Mckenzie & Sons was decided
       in August 2021, nearly two years after the underlying lawsuit set-
       tled. So it does not speak directly to the state of the “law at the
       time” of the underlying lawsuit or “retroactively justify [the] re-
       fusal to oﬀer a defense.” Id.
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       8                          Opinion of the Court                         23-11366

              Here, at the time of the underlying lawsuit, there was un-
       certainty in the law about the scope of exclusions j(5) and j(6). See
       Carithers, 782 F.3d at 1246. Southern-Owners has not identiﬁed any
       Florida appellate or Supreme Court decision that had deﬁned the
       phrase “that particular part” or applied it in materially similar cir-
       cumstances as this case. And Florida district courts, applying Flor-
       ida law, had adopted diﬀering views of the scope of Particular Part
       exclusions.3 Beyond Florida, other circuit courts had adopted views
       consistent with the narrower interpretation.4 The narrower view
       was also supported by the body that drafted the Particular Part

       3 Compare Bradfield v. Mid-Continent Cas. Co., 143 F. Supp. 3d 1215, 1243 (M.D.

       Fla. 2015) (“Where an insured is a builder of homes, as is the case here, the
       entire house is considered the product of the builder. Thus, the [Particular
       Part] exclusions serve to deny coverage when the insured builder or its sub-
       contractor has caused any damage to the home itself.”) (quotation marks omit-
       ted), with Essex Ins. Co. v. Kart Constr., Inc., No. 8:14-cv-356, 2015 WL 4730540,
       at *4–5 (M.D. Fla. Aug. 10, 2015) (adopting the narrower view that “the dis-
       positive issue” for exclusion j(5) “is the ‘operations’ that [the insured] per-
       formed at the moment of the accident, not the tasks that the contract explicitly
       contemplates”). Both Bradfield and Kart relied heavily on American Equity Ins.
       Co. v. Van Ginhoven, 788 So. 2d 388 (Fla. 5th DCA 2001).
       4 See Fortney & Weygandt, Inc. v. Am. Mfrs. Mut. Ins. Co., 595 F.3d 308, 311 (6th

       Cir. 2010) (stating the words “that particular part” are “trebly restrictive,” mak-
       ing clear that the exclusion applies only to “the distinct component parts of a
       building” on which work was being performed, “and not to the building gen-
       erally”); Mid-Continent Cas. Co. v. JHP Development, Inc., 557 F.3d 207, 217 (5th
       Cir. 2009) (reasoning that exclusion j(6) did not apply because “[t]he exterior
       finishes and retaining walls were distinct component parts that were each the
       subject of separate construction processes and are severable from the interior
       drywall, stud framing, electrical wiring, and wood flooring”).
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       23-11366                  Opinion of the Court                                9

       exclusions. See INSURANCE SERVICES OFFICE, INC., ISO CIRCULAR
       GENERAL LIABILITY GL 79-12 ( Jan. 29, 1979). 5
               Southern-Owners does not dispute that it had a duty to de-
       fend under the narrow interpretation of Particular Part exclusions
       advocated by KJIMS and its supporting cases. And it has not at-
       tempted to discredit that interpretation apart from citing Mckenzie
       & Sons, which was decided well after the underlying lawsuit settled.
       Accordingly, given the uncertainty about the scope of exclusions
       j(5) and j(6) at the time, Southern-Owners has not shown that the
       damages were “solely and entirely within the policy exclusion[s].”
       Castillo, 971 So. 2d at 824. Accordingly, consistent with our prior
       decisions in these cases, we hold that Southern-Owners had a duty
       to defend the underlying lawsuit. See Trizec Props., 767 F.2d at 811–
       12; Tippett, 864 So. 2d at 35–36.
              For these reasons, we aﬃrm the district court’s judgment.
              AFFIRMED.

       5 To illustrate the application of exclusion j(5), the ISO offered the following

       example:
               [A] general contractor engages a steel erection contractor to
               erect steel beams for a building. After erecting several beams,
               the subcontractor negligently swings another beam against the
               erected beams causing damage to all the beams. The damage
               to the beams already in place would be covered. The damage
               to the swinging beams would be excluded . . . .