Court Opinion

ID: 146804
Source: CourtListenerOpinion
Date Created: 2010-05-20 14:30:47+00
Date Added: 2024-06-11T17:24:02.658245
License: Public Domain

[DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT
                          ________________________                  FILED
                                                           U.S. COURT OF APPEALS
                                No. 09-15866                 ELEVENTH CIRCUIT
                                                                 MAY 20, 2010
                            Non-Argument Calendar
                                                                  JOHN LEY
                          ________________________
                                                                   CLERK

                     D. C. Docket No. 08-81187-CV-DTKH

EASTPOINTE CONDOMINIUM I ASSOCIATION, INC.,

                                                               Plaintiff-Appellant,

                                      versus

TRAVELERS CASUALTY & SURETY COMPANY OF AMERICA,

                                                             Defendant-Appellee.

                          ________________________

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

                                 (May 20, 2010)

Before HULL, MARTIN and FAY, Circuit Judges.

PER CURIAM:

      Eastpointe Condominium I Association, Inc. (“Eastpointe”) appeals the

district court’s entry of summary judgment in favor of Travelers Casualty & Surety
Company of America (“Travelers”) on Eastpointe’s claims for breach of contract

and declaratory judgment. Eastpointe contends that the district court erred in

concluding that an insurance policy exclusion relieved Travelers of its duty to

defend Eastpointe in a lawsuit brought by a condominium unit owner. Following a

brief recitation of the relevant facts, we affirm.

                                           I.

      Eastpointe is a Florida corporation that owns and operates a condominium

building in Singer Island, Florida. One of the condominium unit owners, Lynn

Bursten, sued Eastpointe for failing to adequately maintain and repair the roof and

air conditioning system of the condominium building before, between, and after

two hurricanes hit south Florida in October 2004. The condominium building

sustained severe water intrusion, which allegedly caused pervasive mold and other

damage to Bursten’s unit. Bursten brought claims for negligence, breach of

fiduciary duty, and breach of contract.

      During the times relevant to this appeal, Eastpointe had insurance liability

coverage under two different policies: a commercial general liability policy from

QBE Insurance Corporation (“QBE”), and a non-profit management and

organization liability policy, or directors and officers (“D&O”) policy from

Travelers. The D&O policy contained a “property damage” exclusion, which

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excluded coverage for loss in connection with any claim made “for or arising out

of any damage, destruction, loss of use or deterioration of any tangible property

including . . . mold, toxic mold, spores, mildew, fungus, or wet or dry rot.”

      Eastpointe tendered notice of the Bursten complaint to both QBE and

Travelers. QBE, accepting defense of the Bursten suit under a reservation of

rights, designated and paid for defense counsel. Travelers, however, denied

coverage and disclaimed any duty to defend pursuant to the property damage

exclusion. Eastpointe then hired its own lawyer to defend its interests in the

Bursten lawsuit. The Bursten suit proceeded to trial, where Eastpointe—jointly

represented by QBE’s designated counsel and its own personal counsel—obtained

a defense verdict on all counts.

      Eastpointe then filed this declaratory judgment and breach of contract action,

seeking to establish Travelers’s duty to defend under the D&O policy and to

recover attorney’s fees paid in the underlying Bursten suit. After considering the

parties’ cross-motions for summary judgment and hearing oral argument, the

district court entered summary judgment in Travelers’s favor. Because the sole

basis for Bursten’s lawsuit was water damage to the condominium property that

resulted in leaking, mold, and loss of use of the owner’s unit, the district court

determined that the underlying claim arose out of damage or destruction to tangible

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property. The district court therefore concluded that the property damage

exclusion applied and that Travelers had no duty to defend Eastpointe. This appeal

followed.

                                          II.

      We review the district court’s grant of summary judgment de novo. Rine v.

Imagitas, Inc., 590 F.3d 1215, 1222 (11th Cir. 2009). Summary judgment is

appropriate when the evidence, viewed in the light most favorable to the

nonmoving party, presents no genuine issue of material fact and compels judgment

as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S. Ct.

2548, 2552 (1986). We likewise review the district court’s determination of

coverage under an insurance policy de novo. Fireman’s Fund Ins. Co. v. Tropical

Shipping & Constr. Co., 254 F.3d 987, 1003 (11th Cir. 2001). Because our subject

matter jurisdiction in this case is based on diversity of citizenship, 28 U.S.C.

§ 1332, “Florida law governs the determination of the issues on this appeal.” State

Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004).

      In interpreting insurance contracts, the Florida Supreme Court has made

clear that “the language of the policy is the most important factor.” Taurus

Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528, 537 (Fla. 2005). “Under

Florida law, insurance contracts are construed according to their plain meaning,”

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and any ambiguities must be construed in favor of the insured. Id. at 532. Policy

provisions are ambiguous if “susceptible to more than one reasonable

interpretation, one providing coverage and the [ ]other limiting coverage.”

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

      Eastpointe presents three main arguments on appeal: (1) that the origin of

the claims in this case is a breach of fiduciary duty, so the fact that the breach

resulted in property damage does not trigger the property damage exclusion; (2)

that the policy language is ambiguous, as demonstrated by the fact that two district

judges have reached different interpretations of the same policy language, and

therefore must be construed against Travelers; and (3) that any wrongful acts

committed by Eastpointe necessarily relate to property, so enforcing the property

damage exclusion would render the policy illusory. We address each of these

arguments in turn.

      First, we are not persuaded by Eastpointe’s attempt to differentiate between

losses originating from property damage, and losses originating from breaches of

fiduciary duty that ultimately result in property damage. The plain language of the

D&O policy excludes coverage for any claim made “for or arising out of any

damage, destruction, loss of use or deterioration of any tangible property.”

According to the Florida Supreme Court, the phrase “arising out of” should be

                                            5
interpreted broadly and encompasses all of the following meanings: “originating

from, having its origin in, growing out of, flowing from, incident to, or having a

connection with.” Taurus Holdings, 913 So. 2d at 539 (internal quotation marks

omitted).

         Eastpointe’s putative breach of fiduciary duty plainly “ha[d] a connection

with” the property damage alleged in Bursten’s complaint. Id. The premise of

Bursten’s breach of fiduciary duty claim was that Eastpointe failed in its duty to

properly maintain, repair, and replace the building’s roof and air conditioning

units, and that, as a result, water infiltrated the building and caused extensive

damage to Bursten’s unit. Bursten’s claim thus depended upon the existence of the

property damage. See James River Ins. Co. v. Ground Down Eng’g, Inc., 540 F.3d

1270, 1275 (11th Cir. 2008) (no insurance coverage under pollution exclusion

containing “arising out of” language, because “[a]lthough the alleged conduct was

negligence in performing the site assessment, Priority’s claim depends upon the

existence of the environmental contamination”). In light of the broad

interpretation given to the phrase “arising out of,” we agree with the district court

that the property damage exclusion applies to Bursten’s breach of fiduciary duty

claim.

         Second, we are not convinced that the policy language is ambiguous. While

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it is true that ambiguous policy provisions are interpreted strictly against the

insurer and ambiguous policy exclusions are construed even more strictly, these

rules apply “‘[o]nly when a genuine inconsistency, uncertainty, or ambiguity in

meaning remains after resort to the ordinary rules of construction.’” State Farm

Mut. Auto. Ins. Co. v. Pridgen, 498 So. 2d 1245, 1248 (Fla. 1986) (alteration in

original) (quoting Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So.

2d 938, 942 (Fla. 1979)).

      Eastpointe directs our attention to Lumbermens Mutual Casualty Co. v.

Dadeland Cove Section One Homeowners’ Ass’n (Lumbermens I), No.

06-22222-CIV, 2007 WL 2979828 (S.D. Fla. Oct. 11, 2007), in which a judge in

the Southern District of Florida interpreted a property damage exclusion similar to

the exclusion we consider here. That district judge found that the property damage

exclusion did not apply to breach of fiduciary duty claims brought against a

condominium homeowners’ association after the association purportedly allowed

the common areas to deteriorate. Relying on Lumbermens I, Eastpointe argues that

the property damage exclusion must be ambiguous because the Lumbermens I

court came to the opposite conclusion as the district judge in this case. However,

the fact that different judges have reached different interpretations of similar policy

language does not necessarily mean that the language is ambiguous. See, e.g.,

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Deni Assocs. of Fla., Inc. v. State Farm Fire & Cas. Ins. Co., 711 So. 2d 1135,

1137–38 (Fla. 1998) (finding an exclusion unambiguous even though courts in

other jurisdictions had found the same clause ambiguous); Indian Harbor Ins. Co.

v. Williams, 998 So. 2d 677, 678–79 (Fla. 4th DCA 2009) (finding an exclusion

unambiguous even though one trial judge had ruled that the insured was not

entitled to coverage and another trial judge had reached the opposite conclusion).

      Neither does the fact that the Lumbermens case was affirmed on appeal alter

our analysis. We affirmed in an unpublished opinion. See Lumbermens Mut. Cas.

Co. v. Dadeland Cove Section One Homeowners Ass’n (Lumbermens II), 295 F.

App’x 361 (11th Cir. 2008). Unpublished opinions are not controlling authority

and are “persuasive only to the extent that a subsequent panel finds the rationale

expressed in that opinion to be persuasive after an independent consideration of the

legal issue.” Twin City Fire Ins. Co. v. Ohio Cas. Ins. Co., 480 F.3d 1254, 1260

n.3 (11th Cir. 2007). The one-sentence legal analysis in Lumbermens II provides

little guidance here. See Lumbermens II, 295 F. App’x at 362 (“We find no error

in the court’s application of the law in its March 27 order.”). It is also worth

noting that Lumbermens appealed from the denial of its motion for relief under

Federal Rule of Civil Procedure 60(b), so the court’s consideration was governed

by a different standard than the summary judgment we affirm today. See Nisson v.

                                           8
Lundy, 975 F.2d 802, 806 (11th Cir. 1992) (noting that a party seeking relief under

Rule 60(b) based on a court’s mistake generally must show “a ‘plain

misconstruction’ of the law and the erroneous application of that law to the facts”

(quoting Compton v. Alton Steamship Co., 608 F.2d 96, 104 (4th Cir. 1979))).

       As for Eastpointe’s third argument, we do not agree that enforcing the

property damage exclusion would render the D&O policy illusory. The fact that

Eastpointe’s primary responsibilities relate to the operation and maintenance of

tangible property does not mean that the property damage exclusion bars coverage

for all claims that might be asserted against Eastpointe. The claims at issue here

are excluded because they arise out of damage to Bursten’s property. But there are

other claims that could be asserted against Eastpointe that would not fall within the

property damage exclusion and might therefore be covered by the D&O policy.

See, e.g., Lime Tree Vill. Cmty. Club Ass’n v. State Farm Gen. Ins. Co., 980 F.2d

1402, 1405–06 (11th Cir. 1993) (finding that D&O insurer had duty to defend

homeowners’ association against claims of slander or disparagement of title,

breach of residential development’s declaration of covenants and restrictions, and

restraint of trade).

                                        III.

       Because Bursten’s claims fell within the D&O policy’s property damage

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exclusion, Travelers had no duty to defend Eastpointe against the claims brought in

Bursten’s original complaint. Accordingly, the district court’s entry of summary

judgment in favor of Travelers is AFFIRMED.

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