Court Opinion

ID: 69483
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:47:08+00
Date Added: 2024-06-11T17:21:08.198149
License: Public Domain

[DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS
                                                                FILED
                    FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                      ________________________ ELEVENTH CIRCUIT
                                                        OCTOBER 1, 2009
                           No. 08-15533                THOMAS K. KAHN
                     ________________________              CLERK

                D.C. Docket No. 07-22248-CV-FAM

PBSJ CORPORATION,

                                                                 Plaintiff-
                                                        Counter-Defendant-
                                                                Appellant,

                               versus

FEDERAL INSURANCE COMPANY,

                                                                  Defendant-
                                                            Counter-Claimant-
                                                                    Appellee.

                     ________________________

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

                          (October 1, 2009)
Before BARKETT and HULL, Circuit Judges, and SCHLESINGER,* District
Judge.

PER CURIAM:

       The PBSJ Corporation (“PBSJ”) appeals the district court’s grant of an

adverse summary judgment for Federal Insurance Company (“Federal”). PBSJ had

purchased an insurance policy from Federal that covered criminal acts, including

employee theft, for each year between 1992 and 2005 in the amount of $2 million.

PBSJ sustained $42 million in losses due to employee theft during this period of

time. However, it became aware of the loss in March 2005, during the 2004-2005

policy period. PBSJ contends that it is entitled to recover $2 million under each

policy in effect during the years in which the employee theft occurred for a total of

$17 million. Federal contends that PBSJ is limited to recover $2 million only once

under the 2004-2005 policy in effect at the time PBSJ discovered and reported the

loss to Federal.      We have carefully considered the policy language and the

arguments of the parties and affirm.

       PBSJ’s entire case rests upon its interpretation of the following provision of

the Declarations section:

              THE EXECUTIVE LIABILITY AND INDEMNIFICATION,
              FIDUCIARY LIABILITY, OUTSIDE DIRECTORSHIP

       *
         Honorable Harvey E. Schlesinger, United States District Court for the Middle District
of Florida, sitting by designation.

                                               2
            LIABILITY AND EMPLOYMENT PRACTICES LIABILITY
            COVERAGE SECTIONS (WHICHEVER ARE
            APPLICABLE) ARE ALL WRITTEN ON A CLAIMS MADE
            BASIS. EXCEPT AS OTHERWISE PROVIDED, THESE
            COVERAGE SECTIONS COVER ONLY CLAIMS FIRST
            MADE AGAINST THE INSURED DURING THE POLICY
            PERIOD.

      This passage cannot bear the weight PBSJ places upon it. PBSJ argues that

this provision in the Declarations section demonstrates that because Crime

Coverage is not included in the list of coverage enumerated as “claims made,” this

coverage must of necessity be considered “occurrence-based” and therefore the

prior policies would apply.        The fact that the Executive Liability and

Indemnification Coverage, Fiduciary Liability Coverage, and Employment

Practices Liability Coverage “are all written on a claims made basis” and that

“[t]hese coverage sections cover only claims first made against the insured during

the policy period” does not and cannot, by negative implication, mean that the

remaining unenumerated policies – namely, Crime Coverage and Kidnap/Ransom

and Extortion Coverage – are necessarily written as “occurrence” policies.

      More importantly, PBSJ’s interpretation also flies in the face of very specific

language throughout the remainder of the policy that makes clear that each policy

terminates on a specific date and that each new policy terminates the prior policy

and any claims thereunder with the exception of the specified reporting grace

                                         3
period. To give effect to PBSJ’S interpretation of the Declarations section would

nullify the majority of these policy provisions.

      For example, the General Terms and Conditions section of the 04/05 policy

provides in relevant part:

             Paragraph 11 “Termination of Policy or Prior Coverage
             Section”

                    This policy of any coverage section shall terminate at the
                    earliest of the following times:
                    (A) sixty days after the receipt by [Federal] of a written
                           notice of termination from [PBSJ],
                    (B) upon the receipt by [PBSJ] of written notice of
                           termination from [Federal],
                    (C) upon expiration of the Policy Period as set forth in
                           Item 2 of the Declarations for this policy, or
                    (D) at such other time as may be agreed upon by
                           [PBSJ] and [Federal].

             Paragraph 12 “Termination of Prior Bonds and Policies”

                    Any bonds or policies . . . specified in Item 4 of the
                    Declarations . . . shall terminate, if not already
                    terminated, as of the inception date of this policy. Such
                    prior bonds or policies shall not cover any loss under the
                    Crime . . . coverage sections not discovered and notified
                    to the Company prior to the inception date of this policy.
                    (emphasis added).

             Paragraph 13 “Definitions”

                    When used in this policy:

                             Policy Period means the period of time specified
                             in Item 2 of the Declarations of this policy subject

                                            4
                           to prior termination in accordance with
                           [Paragraph] 11 above. If this policy is less than or
                           greater than one year, then the Limits of Liability
                           specified in the Declarations for each coverage
                           section shall be the . . . maximum limit of liability
                           under such coverage section for the entire period.

      The plain language of the 04/05 policy expressly provides that the only

policy in effect (i.e. providing coverage) was the then-current 04/05 policy. Each

policy contained the identically worded provisions as to their respective policy

periods. The Declarations section of each policy explicitly sets out its effective

coverage dates and also expressly notes that the prior policy (with the policy

number and its respective start and end dates of the policy period) is terminated.

      General Terms and Conditions Paragraph 11 reiterates this intention by

explaining that the policy terminates at the expiration of the enumerated policy

period. In what can be best construed as a firewall in case prior policies did not

contain a self-terminating provision like Paragraph 11, General Terms and

Conditions Paragraph 12 reiterates this intention by explaining its corollary

principle that any bonds and policies “shall terminate, if not already terminated, as

of the inception date of this policy.”

      Finally, Paragraph 13 defines the policy period as the period specified in the

Declarations section. The Court’s interpretation of the plain language of the policy

gives meaning to the policy as a whole; PBSJ’s reliance on the Declarations

                                           5
section to the exclusion of all other policy provisions does not. See Harborside

Refrigerated Sys., Inc. v. IARW Ins. Co., 759 F.2d 829, 830 (11th Cir. 1985) (“In

construing an insurance policy to determine the intention of the parties, the court

must consider the instrument in its entirety. If possible, the court must adopt a

construction which will give effect to the total instrument and its provisions.”);

Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000) (noting that “we

must read [the limitation on liability] clause in connection with the entire policy,

including the liability coverage provisions and the policy declarations.”).

      Furthermore, courts interpreting identical crime insurance policies issued by

Federal have held that they are not, as PBSJ contends, occurrence policies. See,

e.g. J.I. Corp. v. Fed. Ins. Co., 920 F.2d 118, 120 (1st Cir. 1990) (holding that the

“ordinary meaning” of Federal employee theft policy, which contained identical

exclusions, “is that no coverage exists unless written notice is given within the

period prescribed by the policy, the instant provisions clearly reveal a “claims

made” type policy.”); JEP Mgmt., Inc. v. Fed. Ins. Co., 2006 WL 2372961, at *5

(Pa. Com. Pl. Aug. 8, 2006) (interpreting identical Crime Coverage exclusions by

Federal to bar coverage “because plaintiffs did not discover and provide notice

within the time prescribed by the policy, which had been in effect the prior year”).

      PBSJ relies upon City of Miami Springs v. Travelers Indem. Co.,, 365 So.

                                          6
2d 1030 (Fla. Dist. Ct. App. 1978), to argue that its recovery may be aggregated

across policies. This case, however, is more analogous to Reliance Ins. Co. v.

Treasure Coast Travel Agency, Inc., 660 So. 2d 1136, 1137-38 (Fla. Dist. Ct. App.

1995) than Miami Springs. As the Reliance court noted, the policy at issue in

Miami Springs provided only that the policies would not be “cumulative from year

to year.”     Reliance, 660 So.2d at 1137. The policy in Miami Springs did not

contain the explicit language that limited recovery to a maximum amount under

that or other policies. Id. As did the court in Reliance, we find that the presence of

both a non-accumulation clause1 and a clause limiting recovery to a stated

maximum ($2 million2 in PBSJ’s policy with Federal) supports the conclusion that

      1
          Crime Coverage section Paragraph 17 provides in relevant part:

                Paragraph 17 “Non-Accumulation of Liability”

                       Regardless of the number of years coverage shall continue in
                       force, and the number of premiums which shall be payable or paid
                       or any other circumstances whatsoever, the liability of [Federal]
                       with respect to any loss or losses shall not be cumulative from year
                       to year or from period to period.

      2
          Crime Coverage section Paragraph 16 provides in relevant part:

                Paragraph 16 “Limit of Liability”

                       Payment of any loss under [the Crime Coverage] section shall not
                       reduce the liability of [Federal] for other losses; provided,
                       however, that the maximum liability of [Federal] shall not exceed
                       the dollar amount set forth in Item 1 of Declarations [i.e. $2
                       million] . . . for any loss or losses caused by any Employee . . .
                       resulting from a single act or any number of such acts, regardless

                                                 7
the insured is limited to the maximum recovery under one policy for an employee

theft spanning multiple policies and years.

      Under the clear and unambiguous terms of the 04/05 Policy, the district

court did not err in finding that PBSJ is entitled to recover only the $2 million

maximum limit, which it has already recovered, and is not entitled to recover any

amount under any of the predecessor policies.

AFFIRMED.

                   of when, during the period of this coverage section or prior thereto,
                   such acts occurred . . . .” (emphasis added).

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