Court Opinion

ID: 6052554
Source: CourtListenerOpinion
Date Created: 2022-01-13 15:00:55.014583+00
Date Added: 2024-06-11T08:51:43.211661
License: Public Domain

USCA11 Case: 20-11568      Date Filed: 01/13/2022   Page: 1 of 22

                                                     [PUBLISH]
                            In the
         United States Court of Appeals
                For the Eleventh Circuit

                  ____________________

                          No. 20-11568
                  ____________________

JAMES RIVER INSURANCE COMPANY,
an Ohio corporation,
                          Plaintiff-Counter Defendant-Appellant,
versus
ULTRATEC SPECIAL EFFECTS INC,
a foreign company,

             Defendant-Counter Claimant-Third Party Plaintiff-
                                                   Appellee,

MST PROPERTIES LLC,
an Alabama corporation,
ROBERT HOLLAND,
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2                     Opinion of the Court               20-11568

an individual,
RANDY MOORE,
an individual,
MIKE THOUIN,
an individual,
DAVID J. COTHRAN,
as Administrator for the Estate of Aimee Cothran,
dec.,
DONALD RAY SANDERSON,
as Administrator for the Estate of Virginia Marie
Sanderson, dec.,
COLEEN MCKENNA WHORTON,
an individual,

                                             Defendants-Appellees,

BRITTON-GALLAGHER & ASSOCIATES, INC., et al.,

                                         Third Party Defendant.

                   ____________________

          Appeal from the United States District Court
             for the Northern District of Alabama
             D.C. Docket No. 5:16-cv-00949-AKK
                   ____________________
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20-11568               Opinion of the Court                         3

Before JILL PRYOR, LUCK, and BRASHER, Circuit Judges.
JILL PRYOR, Circuit Judge:
       Coleen McKenna Whorton, Aimee Cothran, and Virginia
Marie Sanderson suffered catastrophic injuries from a pyrotechnic
explosion at their workplace. Cothran and Sanderson died of their
injuries. Their representatives and Whorton (the “Employees”)
sued their employer, Ultratec Special Effects HSV, Inc. (“Ultratec
HSV”), its parent company, Ultratec Special Effects, Inc. (“Ul-
tratec”), Ultratec’s employee, Mike Thouin, and an associated busi-
ness called MST Properties, LLC (“MST”). The Ultratec entities’
insurer, James River Insurance Company, then filed this declara-
tory judgment action, asking the district court to determine the
scope of James River’s obligations, if any, to defend and indemnify
the claims in the underlying lawsuit. The parties filed cross-mo-
tions for summary judgment, and the district court stayed the duty
to indemnify claim and granted summary judgment in Ultratec’s
favor on the duty to defend claim, concluding that James River had
a duty to defend Ultratec, as well as Thouin, and MST. James River
appealed. After careful review, and with the benefit of oral argu-
ment, we affirm.
                      I.     BACKGROUND
       Ultratec HSV and Ultratec operate the Alabama pyrotech-
nics plant that was the site of the catastrophic explosion that killed
two of the Employees and severely injured the third. The
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4                          Opinion of the Court                      20-11568

Employees are pursuing their tort claims in ongoing state court lit-
igation against Ultratec HSV, Ultratec, Thouin, MST, and several
other entities. James River currently is defending Ultratec, Thouin,
and MST (the “Insureds”) against the claims and paying litigation
costs, subject to a reservation of rights.
       Although there remain factual issues pertinent to James
River’s obligations for the state court to resolve—like whether Ul-
tratec and its wholly-owned subsidiary Ultratec HSV are separate
entities—for this appeal the parties agree that the Employees were
injured in the course and scope of their employment and that only
one company employed them: Ultratec HSV. 1 Ultratec HSV car-
ried a Commercial General Liability insurance policy (the “Policy”)
issued by James River that listed both Ultratec companies as named
insureds. Thouin is covered by the Policy because he is an Ultratec
employee and not a co-employee of the Ultratec HSV Employees.
For purposes of this appeal, we assume without deciding that MST
is an additional named insured under the Policy.2

1 Ultratec has argued in state court that it and Ultratec HSV are a “single em-
ployer group” for workers’ compensation purposes. Ex parte Ultratec Special
Effects, Inc., 296 So. 3d 801, 805 (Ala. 2019). The state court found that there
was an “abundance of disputed facts” as to whether they are separate entities
and denied Ultratec’s petition for immunity under the Workers’ Compensa-
tion Act. Id. at 813.
2 The parties dispute whether MST is an additional insured under the Policy,
but this issue is not before us on appeal. Relevant on appeal is that fact that
James River is defending MST in the underlying action under a reservation of
rights and named it as a defendant here.
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20-11568                     Opinion of the Court                       5

         The Policy provided commercial liability coverage for cer-
tain claims involving an occurrence of bodily injury. The Policy
limited coverage through an “Employer’s Liability Exclusion” (the
“Exclusion”). The Exclusion read: “This insurance does not apply
to any claim, suit, cost or expense arising out of ‘bodily injury’ to
. . . [a]ny employee of any Insured arising out of and in the course
of . . . [e]mployment by any insured[] or . . . [p]erforming duties
related to the conduct of any insured’s business.” Doc. 1-4 at 66. 3
The parties agree the Exclusion means that the Policy does not
cover the Employees’ claims against Ultratec HSV. They disagree
about whether the Exclusion excludes coverage for the Employees’
claims against the Insureds.
         The Policy also contained a separation of insureds provision.
Such provisions are also known as severability of interests provi-
sions or severability clauses. The provision at issue in this case (the
“Separation of Insureds Provision”) stated: “[T]his insurance ap-
plies . . . [a]s if each Named Insured were the only Named Insured;
and . . . [s]eparately to each insured against whom claim is made or
‘suit’ is brought.” Id. at 17.
        This case turns on the interpretation of these two provi-
sions, the Exclusion and the Separation of Insureds Provision.
      James River, naming the Insureds and the Employees as de-
fendants, sought a declaratory judgment that it had neither a duty

3   “Doc.” numbers refer to district court docket entries.
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6                      Opinion of the Court                 20-11568

to defend nor a duty to indemnify the Insureds in the underlying
action because of the Exclusion. The Insureds and the Employees
(collectively, the “Defendants”) responded by asking the district
court to declare that James River had a duty to defend. The parties
filed cross-motions for summary judgment. When the district
court read the Exclusion in conjunction with the Separation of In-
sureds Provision, it concluded that the Exclusion did not exclude
coverage for the Employees’ claims against the Insureds, so James
River had a duty to defend. The court granted the Defendants’ mo-
tion for summary judgment, denied James River’s, and ordered
James River to continue defending the Insureds. The district court
did not address the duty to indemnify at this stage of the case, stay-
ing the claim because it was not ripe for adjudication until liability
was determined in the underlying state court action. James River
now appeals the district court’s interlocutory ruling.
                 II.    STANDARD OF REVIEW
       We review de novo a district court’s rulings on cross-mo-
tions for summary judgment, and we view the facts in the light
most favorable to the nonmoving party on each motion. Chavez v.
Mercantil Commercebank, N.A., 701 F.3d 896, 899 (11th Cir. 2012).
Summary judgment is appropriate when a movant shows that
there is “no genuine dispute as to any material fact,” such that “the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). “Once the movant adequately supports its motion, the bur-
den shifts to the nonmoving party to show that specific facts exist
that raise a genuine issue for trial.” Dietz v. Smithkline Beecham
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20-11568                 Opinion of the Court                             7

Corp., 598 F.3d 812, 815 (11th Cir. 2010). If the nonmovant’s evi-
dence is “not significantly probative,” summary judgment is appro-
priate. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50
(1986). A genuine dispute of material fact exists only when “the ev-
idence is such that a reasonable jury could return a verdict for the
nonmoving party.” Id. at 248. “The mere existence of a scintilla of
evidence in support of the [nonmovant’s] position will be insuffi-
cient; there must be evidence on which the jury could reasonably
find for the [nonmovant].” Id. at 252.
                         III.    DISCUSSION
        The parties do not contest our jurisdiction, but because we
have an independent duty to ensure that we have jurisdiction, we
begin our discussion with an examination of the basis for our juris-
diction over this interlocutory appeal from a declaratory judgment.
Then we address the merits of whether James River has a duty to
defend. We review Alabama’s contract interpretation principles
and case law before applying that law to the insurance policy before
us. 4 After doing so, we affirm the district court’s grant of summary
judgment to the Defendants in the declaratory judgment action
and hold that James River has a duty to defend the Insureds: Ul-
tratec, MST, and Thouin.

4 There is no dispute that Alabama law governs our interpretation of the in-
surance contract in this case. Although James River argued below that Ohio
law applied, it now looks to Alabama law and thus has waived any argument
that another state’s law applies.
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8                          Opinion of the Court                        20-11568

    A. We Have Jurisdiction over This Appeal Despite Its Lack of
       Finality Because of Its Injunctive Qualities.
        We are obligated to review sua sponte whether we have ju-
risdiction. Thomas v. Blue Cross & Blue Shield Ass’n, 594 F.3d 814,
818 (11th Cir. 2010). We do so now.
        The order before us on appeal is nonfinal and interlocutory
because James River’s request for a declaratory judgment on the
duty to indemnify remains pending before the district court. Ordi-
narily, we have jurisdiction only over final decisions, those that
“end[] the litigation on the merits and leave[] nothing for the court
to do but execute the judgment.” Quackenbush v. Allstate Ins. Co.,
517 U.S. 706, 712 (1996) (internal quotation marks omitted); 28
U.S.C. § 1291. But insurers often seek declaratory judgments on
their duty to defend and their duty to indemnify at the same time,
before the duty to indemnify becomes ripe. See, e.g., Hartford Cas.
Ins. Co. v. Merch. & Farmers Bank, 928 So. 2d 1006, 1013 (Ala.
2005). 5 Recognizing that the duty to indemnify cannot be

5The duty to defend—to pay the insured’s litigation costs in the underlying
action—is broader than the duty to indemnify—to cover the damages ulti-
mately awarded against the insured. See Ladner & Co. v. S. Guar. Ins. Co., 347
So. 2d 100, 102 (Ala. 1977). Under Alabama law, the duty to defend is deter-
mined primarily on the allegations in the complaint in the underlying action
against the insured. Hartford Cas. Ins. Co., 928 So. 2d at 1009. But often a court
can only determine whether there is coverage under the insurance policy—
and thus a duty to indemnify—based on facts adduced at the trial of the un-
derlying action. Id. at 1013. And there will be nothing to indemnify unless and
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20-11568                   Opinion of the Court                               9

determined at a “preliminary stage in the proceedings,” district
courts in our circuit have declined to address the duty to indemnify
when determining whether there is a duty to defend. Pa. Nat’l Mut.
Cas. Ins. Co. v. Hethcoat & Davis, Inc., 339 F. Supp. 3d 1248, 1256–
58 (N.D. Ala. 2017). 6 Here, the district court stayed its decision on
the duty to indemnify and addressed only the duty to defend. Thus,
we must determine whether we have jurisdiction to review this
nonfinal order.
       We have jurisdiction to review nonfinal orders in certain cir-
cumstances, including, as relevant here, when the nonfinal order
grants an injunction. 28 U.S.C. § 1292(a)(1). We may review orders
that do not expressly grant injunctions when they have certain
qualities of injunctions that make them immediately appealable—
for example, when the order is directed to a party, is enforceable
by contempt, and provides relief on the merits. 16 Charles Alan
Wright & Arthur R. Miller, Fed. Prac. & Proc. § 3922 (3d ed. 1977).

until damages are assessed against the insured in that action. See Ladner, 347
So. 2d at 104 (declining to decide whether the insurer had a duty to indemnify
because the plaintiffs in the underlying lawsuit could change the theory of lia-
bility and obtain judgment on a claim covered by the policy).
6 District courts in our circuit have withheld ruling on the duty to indemnify
in different ways. See, e.g., Am. Nat’l Prop. & Cas. Co. v. Gulf Coast Aerial,
LLC, 533 F. Supp. 3d 1110, 1113 (S.D. Ala. 2021) (staying decision on the duty
to indemnify claim); Auto-Owners Ins. Co. v. Toole, 947 F. Supp. 1557, 1565–
67 (M.D. Ala. 1996) (dismissing without prejudice the duty to indemnify
claim); Guar. Nat’l Ins. Co. v. Beeline Stores, Inc., 945 F. Supp. 1510, 1514–16
(M.D. Ala. 1996) (denying without prejudice the duty to indemnify claim).
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10                      Opinion of the Court                 20-11568

Sometimes these injunctive qualities are present in declaratory
judgments. Id. Such declaratory judgments have “the practical ef-
fect of granting or denying injunctions,” and thus we are permitted
to review them on interlocutory appeal. Abbott v. Perez, 138 S. Ct.
2305, 2319 (2018) (internal quotation marks omitted).
        In this case, the district court not only denied James River a
declaratory judgment that it had no duty to defend; it granted sum-
mary judgment on the Insureds’ counterclaim for a declaratory
judgment in their favor. Previously, in a very similar context, we
held that the district court’s order granting summary judgment on
the insureds’ counterclaim was an appealable injunction. Nat’l Un-
ion Fire Ins. Co. of Pittsburgh, Pa. v. Sahlen, 999 F.2d 1532, 1535
(11th Cir. 1993). We said, “During the pendency of this case, the
district court granted a motion by the Insureds for partial summary
judgment and held that National Union was required to pay the
Insureds’ defense costs in the underlying suits until its claim for re-
scission was resolved. We find that this order of the district court
constituted an injunction for purposes of § 1292(a)(1).” Id.
       It is true that the district court’s order in Sahlen was more
explicit in stating that the insurer “was required to pay the Insureds’
defense costs.” Id. But we find Sahlen instructive despite the differ-
ence in wording because the district court here likewise granted
summary judgment to the Insureds on their counterclaim for a de-
claratory judgment, thereby requiring James River to pay their de-
fense costs. The Insureds sought a declaratory judgment and other
appropriate relief, which includes injunctive relief. By entering an
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20-11568                  Opinion of the Court                            11

order declaring that the Insureds have a right to be defended by
James River, the district court made the declaratory judgment akin
to an injunction.7 See Wright & Miller, Fed. Prac. & Proc. § 3922.
We therefore have jurisdiction to entertain this appeal from the or-
der on the duty to defend even though it does not provide com-
plete relief because the duty to indemnify claim remains pending
before the district court.
    B. James River Has a Duty to Defend Under the Policy Because
       the Exclusion Is Ambiguous.
        The Employer’s Liability Exclusion in the Policy excluded
coverage for “any claim, suit, cost or expense arising out of ‘bodily
injury’ to . . . [a]ny employee of any Insured arising out of and in
the course of . . . [e]mployment by any insured[] or . . . [p]erforming
duties related to the conduct of any insured’s business.” Doc. 1-4 at
66 (emphasis added). James River argues that the Exclusion unam-
biguously applies equally to all the insureds—Ultratec HSV, Ul-
tratec, MST, and Thouin. Because the Employees’ claims arose out
of bodily injury they suffered while employed by one of the in-
sureds (“any Insured”), James River argues, none of the Employees

7 James River points out that the order is not expressly enforceable by con-
tempt; however, Wright & Miller sets out examples of characteristics that in-
dicate injunctive qualities rather than absolute requirements. See Wright &
Miller, Fed. Prac. & Proc. § 3922. And we doubt that, should James River fail
to comply with the order by not paying defense costs, there would be no con-
sequences. Indeed, in that event James River likely would be subject to con-
tempt proceedings, as the parties acknowledged during oral argument.
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12                     Opinion of the Court               20-11568

is covered under the Policy. The Defendants respond that the Ex-
clusion is ambiguous because the phrase “any Insured” could also
be interpreted to apply only to the Employees’ claims against their
employer, Ultratec HSV. In other words, the Exclusion could ex-
clude coverage for claims that an Ultratec HSV employee brings
against her employer, Ultratec HSV, but not affect coverage for
claims an Ultratec HSV employee brings against another insured
who is not her employer. Under this interpretation, the Defendants
argue, the Insureds, all non-employers, are covered under the Pol-
icy for the Employees’ claims against them, and James River should
have a duty to defend them.
       The Defendants further contend that, even if the Exclusion
were unambiguous on its own, it must be interpreted in light of the
Separation of Insureds Provision. The Separation of Insureds Pro-
vision directs that the Policy be read “[a]s if each Named Insured
were the only Named Insured; and . . . [s]eparately to each insured
against whom claim is made or ‘suit’ is brought.” Id. at 17. Accord-
ing to the Defendants, this provision means that we must read the
Policy and the Exclusion separately for each insured, as if that in-
sured were the only insured under the Policy. Read this way, the
Exclusion bars coverage only when the insured is sued by its own
employee; when it is sued by another insured’s employee, cover-
age exists under the Policy. Because Ultratec is being sued by an-
other insured’s employees and not its own, the Defendants say,
James River has a duty to defend it in the underlying action. The
same goes for MST and Thouin.
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20-11568                Opinion of the Court                        13

       We now turn to Alabama caselaw to interpret the Policy.
       1. Principles of Alabama Law Regarding Ambiguity in the
           Interpretation of Insurance Contracts
       Alabama caselaw obliges us to conclude that James River has
a duty to defend the Insureds. Insurance policies are contracts, and
“like other cont[r]acts, [they are] governed by the general rules of
contracts.” Twin City Fire Ins. Co. v. Alfa Mut. Ins. Co., 817 So. 2d
687, 691 (Ala. 2001). Courts must construe them to give effect to
the intention of the parties. Id. To glean the parties’ intent, we ex-
amine “more than an isolated sentence or term”; instead, we “read
each phrase in the context of all other provisions.” Id. (internal quo-
tation marks omitted).
        If a policy’s terms are unambiguous, the court must enforce
the policy as written. Johnson v. Allstate Ins. Co., 505 So. 2d 362,
365 (Ala. 1987). But when there is doubt about whether the policy
provides coverage, we must construe the policy language for the
benefit of the insured. St. Paul Mercury Ins. Co. v. Chilton–Shelby
Mental Health Ctr., 595 So. 2d 1375, 1377 (Ala. 1992). A policy term
is ambiguous only if, when applying the term’s ordinary meaning,
it is reasonably susceptible to different constructions. Safeway Ins.
Co. of Ala. v. Herrera, 912 So. 2d 1140, 1144 (Ala. 2005). In deter-
mining whether a term is ambiguous, we cannot consider the term
in isolation; we must consider the policy as a whole. State Farm
Fire & Cas. Co. v. Slade, 747 So. 2d 293, 309 (Ala. 1999).
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14                        Opinion of the Court                    20-11568

       In this case, we must decide whether the Exclusion unam-
biguously excludes coverage under the Policy. The insurer has the
burden of establishing that an exclusion excludes coverage for a
claim. Acceptance Ins. Co. v. Brown, 832 So. 2d 1, 12 (Ala. 2001).
Exclusions must be interpreted “as narrowly as possible in order to
provide maximum coverage for the insured, and must be con-
strued most strongly against the company that drew the policy and
issued it.” Nationwide Mut. Ins. Co. v. Thomas, 103 So. 3d 795, 805
(Ala. 2012) (internal quotation marks omitted).
        The Alabama Supreme Court has twice considered an exclu-
sion using the term “any insured” and deemed it ambiguous on its
face. Transp. Indem. Co. v. Wyatt, 417 So. 2d 568, 571 (Ala. 1982);
Wilson v. State Farm Mut. Auto. Ins. Co., 540 So. 2d 749, 752 (Ala.
1989). 8 In addition, Alabama caselaw applies a minority rule for
separation of insureds provisions, interpreting them to mean that
the whole policy, including exclusions, should be read as if each
insured has its own separate insurance. U.S. Fire Ins. Co. v. McCor-
mick, 243 So. 2d 367, 375 (Ala. 1970) (superseded by statute on
other grounds); see also Wyatt, 417 So. 2d at 570. Applying Ala-
bama law and reading the Separation of Insureds Provision with

8Wilson interpreted an exclusion that used the phrase “an insured.” Wilson,
540 So. 2d at 750–51 (emphasis added). But because “‘an insured’ unambigu-
ously means ‘any insured,’” according to the Alabama Supreme Court, we
equate Wilson’s interpretation of “an insured” with Wyatt’s interpretation of
“any insured.” See State Farm Fire & Cas. Co. v. Davis, 612 So. 2d 458, 466
(Ala. 1993) (internal quotation marks omitted).
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20-11568               Opinion of the Court                       15

the Exclusion, we conclude that the Exclusion is ambiguous and
therefore must be construed in favor of the insured.
      2. The Exclusion’s “Any Insured” Language Is Ambiguous.
        The Alabama Supreme Court’s Wyatt and Wilson decisions
held that the phrase “any insured” was ambiguous when used in an
employer’s liability exclusion. Wyatt was injured in the scope of his
employment and sued his employer and its executive officers for
his injuries. Wyatt, 417 So. 2d at 568. The employer corporation
and the officers were insured by the same commercial general lia-
bility policy, which included an employer’s liability exclusion that
read: “This insurance does not apply . . . [t]o any OCCURRENCE
which caused BODILY INJURY to any employee of any INSURED
arising out of or in the course of his employment by any
INSURED.” Id. at 569 (emphases added). The policy defined both
the corporation and its officers as insureds. Id. at 568. The parties
agreed that Wyatt was an employee of the corporation but not of
the officers. Id. at 570. When the officers demanded that the insurer
defend them against Wyatt’s lawsuit, the insurer denied coverage.
Id. at 568–69. It filed a declaratory judgment action in which it ar-
gued that “any insured” as used in the exclusion unambiguously
meant that the policy covered claims against neither the corpora-
tion nor its officers when an employee was injured while working
for the corporation, and thus the insurer had no duty to defend
against Wyatt’s claims. Id. at 570.
     The trial court disagreed and concluded that “the term ‘any
INSURED’ is ambiguous on its face” because it could refer to “any
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16                     Opinion of the Court                 20-11568

one of the insureds” instead of all the insureds. Id. The Alabama
Supreme Court agreed that the term was ambiguous because it
“could be interpreted either to mean only singularly ‘any one of the
insureds’ or could apply collectively to the whole group of in-
sureds.” Id. at 571. Because it is “axiomatic” that courts must con-
strue ambiguities in favor of coverage for the insured, the Court
held that the insurer had a duty to defend the officers. Id. (internal
quotation marks omitted).
       In Wilson the Alabama Supreme Court found similar lan-
guage to be ambiguous. There, the Court interpreted an em-
ployer’s liability exclusion that excluded coverage for any bodily
injury to “any employee of an insured ” arising from the em-
ployee’s employment. Wilson, 540 So. 2d at 750–51 (emphasis
added). The ambiguity in the exclusion arose because “there are
multiple insureds and the injured party is an employee of one or
some, but not all.” Id. at 752. Construing the ambiguity in favor of
the insured, the Court held that the insurer had a duty to defend.
Id.
        These cases compel us to conclude that the Exclusion in the
Policy is ambiguous. The Exclusion is nearly identical to the am-
biguous exclusion in Wyatt. In Wyatt and Wilson, the policies cov-
ered multiple insureds, and the injured parties were not employees
of all the insureds. Wyatt, 417 So. 2d at 568; Wilson, 540 So. 2d at
751. Here, similarly, the Policy covers multiple insureds—Ultratec
HSV, Ultratec, MST, and Thouin—and the injured Employees
were employed by only one insured, Ultratec HSV. Wyatt and
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20-11568                  Opinion of the Court                              17

Wilson found ambiguity in employer’s liability exclusions that in-
cluded the term “any insured” when injured employees sued an in-
sured who was not their employer. Wilson, 540 So. 2d at 751; Wy-
att, 417 So. 2d at 572. In this case, the same ambiguity exists because
the Employees sued insureds who were not their employer. 9
       According to Wyatt, “any insured” can be interpreted singu-
larly as “any one of the insureds,” or collectively as “the whole
group of insureds.” See Wyatt, 417 So. 2d at 571. Reading “any in-
sured” singularly means that the Policy does not cover any claim
arising out of bodily injury to any employees of Ultratec arising out
of their employment with Ultratec. The Employees were not em-
ployed by Ultratec, so the Exclusion does not bar coverage for their
claims against Ultratec for employment-related bodily injury. Un-
der this reading, James River would have a duty to defend Ultratec.
        Reading “any insured” collectively produces the opposite re-
sult: the Policy excludes coverage for any claim for bodily injury to
any employees of any of the four insureds, Ultratec, Ultratec HSV,
MST, or Thouin, arising out of the course of their employment.
Because the Employees were employed by one of those insureds,
the Exclusion applies to their claims against all the insureds. Under
this reading, James River would have no duty to defend.

9It is undisputed that the Exclusion excludes coverage under the Policy for the
Employees’ claims against their employer, Ultratec HSV, and therefore James
River has no duty to defend Ultratec HSV.
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18                       Opinion of the Court                    20-11568

        The Exclusion is ambiguous under Alabama law because it
is reasonably open to either interpretation. We must construe the
ambiguous provision in favor of coverage. Therefore, we adopt the
first interpretation and conclude that the Exclusion does not ex-
clude coverage, and thus James River has a duty to defend the In-
sureds.
        James River argues that Wyatt is inapposite because the pol-
icy in that case featured an automobile exclusion that contributed
to the employer’s liability exclusion’s ambiguity. But in Wyatt the
Alabama Supreme Court determined that the employer’s liability
exclusion was ambiguous on its own; the Court’s analysis ignored
the automobile exclusion. Wyatt, 417 So. 2d at 571. We are thus
obliged to follow Wyatt on this question of state law. 10
        In this case, the district court concluded that the Exclusion
was unambiguous on its own but ambiguous when read together
with the Separation of Insureds Provision. As we explain in the next
subsection, we agree with the district court that the provisions,
read together, are ambiguous. Although we do not agree with the
district court that the Exclusion is unambiguous on its own, we can
affirm the court’s ruling on any ground that is supported by the
record. Thomas v. Cooper Lighting, Inc., 506 F.3d 1361, 1364 (11th
Cir. 2007).

10 We are bound by the   decisions of the Alabama Supreme Court on questions
of Alabama law. See Gonzalez v. Governor of Ga., 978 F.3d 1266, 1271 (11th
Cir. 2020) (citing 28 U.S.C. § 1652).
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20-11568                   Opinion of the Court                              19

       3.      The Separation of Insureds Provision Adds Ambigu-
               ity.
       Regardless of whether the Exclusion taken on its own is am-
biguous, we agree with the district court that the Exclusion does
not unambiguously apply when we interpret it in conjunction with
the Separation of Insureds Provision, also known as a severability
of interests provision. James River argues that we should not read
the provisions together. The district court disagreed, concluding
that the Alabama Supreme Court’s McCormick and Wyatt deci-
sions required it to read the Policy and Exclusion as if each Insured
had its own, separate policy. Based on this reading, the court deter-
mined that the Exclusion did not exclude coverage, and therefore
James River had a duty to defend the Insureds. We agree.
       McCormick established that Alabama courts read em-
ployer’s liability exclusions and severability of interests provisions
together. 11 In that case, as in this one, injured employees sued a

11 James River contends that the district court erred in assuming Alabama
would follow the minority rule for interpreting a severability of interests pro-
vision and an exclusion excluding coverage for “any insured.” True, most
courts that have addressed the issue have concluded that a separation of in-
sureds provision in a general policy does not nullify an exclusion’s “any in-
sured” language contained in an endorsement that changes the general policy.
See Doc. 169 at 17 n.17 (collecting cases). But other courts have concluded
otherwise, holding that a separation of insureds provision requires the whole
policy, including exclusions and other endorsements, to be read as if each in-
dividual seeking coverage is the only insured. See id. at 17–18. The Alabama
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20                        Opinion of the Court                    20-11568

defendant who was not their employer but was insured under the
same policy as their employer. McCormick, 243 So. 2d at 369. The
policy included an employer’s liability exclusion and a separation
of insureds provision, styled there as a severability of interests pro-
vision. Id. at 373. The provision read: “Severability of Interests. The
term ‘the insured’ is used severally and not collectively.” Id. The
Alabama Supreme Court concluded that a severability of interests
provision means that a court must consider “each insured sepa-
rately, independently of every other insured.” Id. at 375. Using that
provision to interpret the exclusion, the Court stated that “the un-
qualified word ‘insured’” in the exclusion at issue “means only the
person claiming coverage.” Id.
       Wyatt followed McCormick, finding the severability provi-
sions in the two cases to be similar. Wyatt, 417 So. 2d at 571. Be-
cause McCormick controlled, the Wyatt court read the employer’s
liability exclusion and the severability of interests provision to-
gether, so the word “insured” referred only to the person or entity
claiming coverage. Id. Having already determined that the exclu-
sion was ambiguous, the Court concluded that reading the provi-
sions together “also creates ambiguity in determining the extent of

Supreme Court chose to follow this minority rule in McCormick, where it
acknowledged the “decided split of authority” before concluding that the sev-
erability of interests provision applied to the exclusion. McCormick, 243 So.
2d at 373, 375. The district court did not assume Alabama courts would follow
the minority rule; it merely applied the rule they had already adopted.
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20-11568               Opinion of the Court                      21

coverage.” Id. Applying Alabama law, we, too, read the provisions
together.
       The Separation of Insureds Provision in the Policy is similar
to the severability of interests provision in McCormick. It reads:
“[T]his insurance applies . . . [a]s if each Named Insured were the
only Named Insured; and . . . [s]eparately to each insured against
whom claim is made or ‘suit’ is brought.” Doc. 1-4 at 17. As with
the policies in the cases discussed above, this means that each
named insured has a separate insurance policy; one insured’s con-
duct will not affect another insured’s coverage. Thus, we read the
Policy as if it applies separately to Ultratec HSV, Ultratec, MST,
and Thouin—as if each one is the only named insured. Applying
this reading to the Exclusion, we conclude that the Policy does not
apply to bodily injury to an employee of Ultratec arising out of and
in the course of employment by Ultratec. But the Exclusion does
not exclude coverage for Ultratec in this case because the Employ-
ees were not Ultratec’s employees. James River therefore has a
duty to defend Ultratec. Substituting Thouin or MST for Ultratec
leads to the same conclusion: James River has a duty to defend
them.
                      IV.    CONCLUSION
       For the foregoing reasons, we affirm the district court’s or-
der granting summary judgment in part in favor of the Defendants
and holding that James River has a duty to defend the Insureds:
Ultratec, MST, and Thouin.
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22                 Opinion of the Court              20-11568

      AFFIRMED.