Court Opinion

ID: 9405464
Source: CourtListenerOpinion
Date Created: 2023-06-28 17:01:04.957304+00
Date Added: 2024-06-11T17:20:22.275350
License: Public Domain

USCA11 Case: 22-12703    Document: 39-1      Date Filed: 06/28/2023   Page: 1 of 10

                                                    [DO NOT PUBLISH]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

                           ____________________

                                 No. 22-12703
                           Non-Argument Calendar
                           ____________________

        SOUTHERN-OWNERS INSURANCE COMPANY,
                                                       Plaintiﬀ-Appellant
        versus
        WATERHOUSE CORPORATION,
        NURSERY SUPPLIES INC.,
        DARRELL PATTERSON,

                                                    Defendants-Appellees

                           ____________________

                  Appeal from the United States District Court
                       for the Middle District of Florida
USCA11 Case: 22-12703      Document: 39-1      Date Filed: 06/28/2023     Page: 2 of 10

        2                      Opinion of the Court                 22-12703

                     D.C. Docket No. 6:21-cv-00504-PGB-EJK
                           ____________________

        Before WILSON, ROSENBAUM, and JILL PRYOR, Circuit Judges.
        PER CURIAM:
               Is a cooling tower a “building” or “structure”? Or is it ma-
        chinery or equipment? Plaintiff-Appellant Southern-Owners Insur-
        ance Company contends that a cooling tower is a structure,
        whereas Waterhouse Corporation, Nursery Supplies, Inc., and
        Darrell Patterson (collectively, Defendants-Appellees) argue it is
        equipment. At summary judgment, the district court agreed with
        the Defendants-Appellees and held that a cooling tower is not a
        building or structure, and therefore Southern-Owners has a duty
        to defend Waterhouse under its insurance policies. Southern-
        Owners now appeals the district court’s denial of its motion for
        summary judgment. After careful review, we affirm.
                                         I.
               This case arises out of a Florida state court negligence action
        filed by Darrell Patterson against Nursery Supplies and Water-
        house. Nursery Supplies, which manufactures products for the
        horticulture industry, had hired Waterhouse to perform monitor-
        ing, maintenance, and water treatment services for the cooling
        tower located on its property. Nursery Supplies also hired non-
        party Del-Air Heating and Air Conditioning to perform certain
        work on the cooling tower.
USCA11 Case: 22-12703     Document: 39-1     Date Filed: 06/28/2023     Page: 3 of 10

        22-12703              Opinion of the Court                        3

              In early July 2019, Patterson, a plumber and electrician em-
        ployed by Del-Air, performed work in and around the cooling
        tower. About two weeks later, he was admitted to the hospital and
        diagnosed with Legionnaires’ disease. Water samples from the
        cooling tower confirmed the presence of legionella bacteria—the
        same subtype of legionella bacteria that was found in Patterson’s
        urine when he was hospitalized. In January 2021, Patterson sued
        Nursery Supplies and Waterhouse in Florida state court for negli-
        gence (the Underlying Action).
               When Patterson contracted Legionnaire’s disease, Water-
        house was insured under policies issued by Southern-Owners. The
        first policy provided commercial general liability coverage (CGL
        Policy), and the second policy was a commercial umbrella policy
        of insurance (Umbrella Policy). The CGL Policy contained the fol-
        lowing fungi or bacteria exclusions:
              A. Under SECTION 1 – COVERAGES, COVERAGE
              A. BODILY INJURY AND PROPERTY DAMAGE
              LIABILITY, 2. Exclusions, the following exclusions
              are added:

              1. “Bodily injury” or “property damage” arising out
              of, in whole or in part, the actual, alleged or threat-
              ened inhalation of, ingestion of, contact with, expo-
              sure to, existence of, or presence of, any “fungi” or
              bacteria, whether air-borne or not, on or within a
              building or structure, including its contents. This ex-
              clusion applies whether any other cause, event,
USCA11 Case: 22-12703     Document: 39-1      Date Filed: 06/28/2023     Page: 4 of 10

        4                     Opinion of the Court                 22-12703

              material or product contributed concurrently or in
              any sequence to such injury or damage. . . .

              These exclusions do not apply to any “fungi” or bac-
              teria that are on, or are contained in, a good or prod-
              uct intended for human consumption.

        The Umbrella Policy contained a similar fungi or bacteria exclu-
        sion:
              A. The following deﬁnition is added to the
              DEFINITIONS section of the policy:

              Fungi means any form or type of fungus, including,
              but not limited to, any mildew, mold, spores, myco-
              toxins, scents or byproducts released or produced by
              any type or form of fungus.

              B. The following exclusions are added to the
              EXCLUSIONS section of the policy:

              1. Bodily injury, property damage, personal injury or
              advertising injury arising out of, in part or in whole,
              the actual, threatened or alleged ingestion of, inhala-
              tion of, exposure to, contact with, presence of, or ex-
              istence of, any fungi or bacteria, whether airborne or
              not, within or on a structure or building, including its
              contents. This exclusion applies whether any other
              event, cause, product or material contributed in any
              sequence or concurrently to such damage or injury.
              This exclusion shall not apply to any fungi or bacteria
              that are contained in, or are on, a product or good in-
              tended for human consumption.
USCA11 Case: 22-12703        Document: 39-1        Date Filed: 06/28/2023        Page: 5 of 10

        22-12703                  Opinion of the Court                              5

               Southern-Owners agreed to defend Waterhouse in the Un-
        derlying Action pursuant to a reservation of rights. In March 2021,
        Southern-Owners filed suit against the Defendants-Appellees in the
        United States District Court for the Middle District of Florida, seek-
        ing declaratory relief that Patterson’s claims are not covered in the
        Underlying Action due to the fungi or bacteria policy exclusions.
        Southern-Owners filed a motion for summary judgment in which
        it argued that the Underlying Action falls within the exclusions be-
        cause the cooling tower is a “structure.” Nursery Supplies and Pat-
        terson filed separate responses in opposition to the summary judg-
        ment motion. Both parties argued that the cooling tower is not a
        “structure” within the meaning of the exclusions.
               In July 2022, the district court denied Southern-Owners’ mo-
        tion for summary judgment and declared that the policies cover the
        alleged injuries in the Underlying Action. The district court further
        declared that the exclusionary provisions do not apply to the claims
        in the Underlying Action because a cooling tower is not a building
        or structure—rather, it constitutes large-scale machinery. In reach-
        ing this conclusion, the district court relied on our unpublished
        opinion in Westport Insurance Corporation v. VN Hotel Group, LLC,
        513 F. App’x 927 (11th Cir. 2013) (per curiam) 1; principles of Florida

        1 In Westport, the insurer brought a declaratory judgment action seeking to
        determine whether it had a duty to defend and indemnify a hotel and its fran-
        chisor. Id. at 929. The underlying action was a wrongful-death suit brought
        by the estate of a hotel guest who had contracted Legionnaires’ Disease in the
        outdoor spa and died. Id. We concluded that the fungi/bacteria exclusion of
        the insurance policy did not exclude coverage because an outdoor spa does
USCA11 Case: 22-12703         Document: 39-1        Date Filed: 06/28/2023         Page: 6 of 10

        6                         Opinion of the Court                       22-12703

        insurance and contract law; and the ejusdem generis and noscitur a
        sociis canons of statutory construction. The district court declared
        that Southern-Owners has a duty to defend, and potentially indem-
        nify, Waterhouse in the Underlying Action. Judgment was entered
        in favor of Nursery Supplies and Patterson.
                                              II.
               We review the district court’s ruling on a motion for sum-
        mary judgment de novo. Owen v. I.C. Sys., Inc., 629 F.3d 1263, 1270
        (11th Cir. 2011). Summary judgment is appropriate when “there is
        no genuine dispute as to any material fact and the movant is enti-
        tled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
               “The interpretation of an insurance contract is also a matter
        of law subject to de novo review.” LaFarge Corp. v. Travelers Indem.
        Co., 118 F.3d 1511, 1515 (11th Cir. 1997) (per curiam). Since this is
        a diversity action, we apply state law using the choice of law rules
        of the forum state. Travelers Prop. Cas. Co. of America v. Moore, 763
        F.3d 1265, 1270 (11th Cir. 2014). Florida follows the rule of lex loci
        contractus, which provides that the law of the jurisdiction where
        the insurance contract was executed governs. State Farm Mut. Auto.
        Ins. Co. v. Roach, 945 So. 2d 1160, 1163 (Fla. 2006). Here, the insur-
        ance policies were issued in Florida, so Florida law applies.
               “Florida law provides that insurance contracts are construed
        in accordance with the plain language of the policies as bargained

        not qualify as a “structure.” Id. at 932. Thus, the insurer had a duty to defend
        and indemnify. Id.
USCA11 Case: 22-12703       Document: 39-1       Date Filed: 06/28/2023      Page: 7 of 10

        22-12703                Opinion of the Court                           7

        for by the parties.” Auto-Owners Inc. Co. v. Anderson, 756 So. 2d 29,
        34 (Fla. 2000). If the policy language is plain and unambiguous, “a
        court must interpret the policy in accordance with the plain mean-
        ing of the language used so as to give effect to the policy as it was
        written.” Travelers Indem. Co. v. PCR Inc., 889 So. 2d 779, 785 (Fla.
        2004). If the policy language can be reasonably interpreted in more
        than one way, one providing coverage and the other limiting cov-
        erage, the policy is ambiguous. Anderson, 756 So. 2d at 34. Ambig-
        uous provisions—including ambiguous policy exclusions—“are in-
        terpreted liberally in favor of the insured and strictly against the
        drafter.” Id. “In fact, exclusionary clauses are construed even more
        strictly against the insurer than coverage clauses.” Id.
               When an insurance policy does not define a word, we can
        look to dictionary definitions for their plain meaning. See Cont’l
        Cas. Co. v. Wendt, 205 F.3d 1258, 1264 (11th Cir. 2000) (per curiam);
        Universal Underwriters Ins. Co. v. Evans, 565 So. 2d 741, 742 (Fla. Dist.
        Ct. App. 1990).
               With these principles in mind, we turn to the language of
        the fungi or bacteria exclusions in the CGL and Umbrella Policies.
USCA11 Case: 22-12703        Document: 39-1         Date Filed: 06/28/2023       Page: 8 of 10

        8                         Opinion of the Court                     22-12703

                                             III.
              We agree with the district court’s conclusion that a cooling
        tower does not constitute a building or structure and is more
        properly considered machinery. Thus, Patterson’s claims are not
        excluded from coverage under the fungi or bacteria exclusions.
        The district court properly denied Southern-Owners’ motion for
        summary judgment.
               Both the CGL Policy and the Umbrella Policy excludes cov-
        erage for “[b]odily injury . . . arising out of . . . exposure to . . . any
        fungi or bacteria . . . within or on a building or structure.” 2 Here,
        the policy language can be reasonably interpreted in two ways—
        one providing coverage and the other excluding coverage. Ander-
        son, 756 So. 2d at 34. One could reasonably interpret “structure” to
        include a cooling tower, but it would be equally reasonable to in-
        terpret “structure” to mean something more akin to a building.
        Thus, the policy language is ambiguous.
               Neither policy defines “building” or “structure,” so we may
        look to dictionary definitions to determine the plain meaning of the
        terms. Wendt, 205 F.3d at 1264. The Merriam-Webster dictionary
        defines “building” as “a usually roofed and walled structure built
        for permanent use (as for a dwelling).” Building, MERRIAM-
        WEBSTER                 (2023),             https://www.merriam-

        2 The language of the Umbrella Policy exclusion mirrors the CGL Policy ex-
        clusion, except that “structure” is listed before “building.” Southern-Owners
        does not argue that this difference in the sequence of terms is material, thus
        we will disregard this minor difference.
USCA11 Case: 22-12703      Document: 39-1      Date Filed: 06/28/2023      Page: 9 of 10

        22-12703               Opinion of the Court                          9

        webster.com/dictionary/building. It defines “structure” as “some-
        thing (such as a building) that is constructed.” Structure, MERRIAM-
        WEBSTER (2023), https://www.merriam-webster.com/diction-
        ary/structure.
               While a cooling tower may indeed qualify as a “structure”
        under a broad definition of the term, Florida law clearly instructs
        that ambiguous provisions in insurance policies must be inter-
        preted strictly against the drafter. Anderson, 756 So. 2d at 34. Ex-
        clusionary provisions are to be construed “even more strictly
        against the insurer than coverage clauses.” Id.; see also State Com-
        prehensive Health Ass’n v. Carmichael, 706 So. 2d 319, 320 (Fla. Dist.
        Ct. App. 1997) (listing cases). Here, given the ambiguity of the lan-
        guage in the fungi or bacteria exclusions, we must construe the
        provisions strictly against Southern Owners and liberally in favor of
        coverage.
                The doctrine of noscitur a sociis (a word is known by the com-
        pany it keeps) further supports our view that a cooling tower is not
        a structure. When applying this canon of construction, “one exam-
        ines the other words used within a string of concepts to derive the
        [drafter’s] overall intent.” Nehme v. Smithkline Beecham Clinical
        Lab’ys, 863 So. 2d 201, 205 (Fla. 2003); see also Air Quality Assessors
        of Fla. v. S.-Owners Ins. Co., 354 So. 3d 569, 572 (Fla. Dist. Ct. App.
        2022) (applying noscitur a sociis to an exclusionary provision in an
        insurance policy). Here, applying noscitur a sociis to the fungi or
        bacteria exclusions, we must examine the word “structure” in rela-
        tion to the word “building” to derive its meaning.
USCA11 Case: 22-12703      Document: 39-1      Date Filed: 06/28/2023      Page: 10 of 10

        10                     Opinion of the Court                  22-12703

               Southern-Owners argues that, even under a narrow defini-
        tion of structure, the cooling tower constitutes a “building like”
        structure because it is two stories tall, has four sides, a bottom, and
        a door. We reject this argument because, in our view, a cooling
        tower is not similar to a building. As the district court noted in its
        order, a cooling tower
               is designed to remove heat from a building or facility
               by spraying water down through the tower to ex-
               change heat into the inside of the building. Air comes
               in from the sides of the tower and passes through the
               falling water. . . . The cooled water is collected at the
               bottom of the tower and pumped back into the plant
               or building for reuse. Cooling towers are primarily
               used for heating, ventilation, and air conditioning and
               industrial purposes.

        Doc. 75 at 25 (citations omitted and alterations adopted).
              We are persuaded by the district court’s logic that, given its
        purpose and function, a cooling tower constitutes large-scale ma-
        chinery or equipment rather than a building or building-like struc-
        ture.
               We conclude that the language “building” or “structure” in
        the fungi or bacteria exclusionary provisions does not encompass a
        cooling tower, thus the underlying claims are not excluded from
        coverage. Accordingly, we affirm the district court’s denial of
        Southern-Owners’ motion for summary judgment.
               AFFIRMED.