American Empire Surplus Lines Insurance Company v. Chabad House of North Dade, Inc., John Doe , 450 F. App'x 792 ( 2011 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 11-11850 ELEVENTH CIRCUIT
Non-Argument Calendar OCTOBER 25, 2011
________________________ JOHN LEY
CLERK
D.C. Docket No. 1:10-cv-20872-JAL
AMERICAN EMPIRE SURPLUS LINES
INSURANCE COMPANY,
a foreign corporation,
llllllllllllllllllllllllllllllllllllllll Plaintiff - Appellee,
versus
CHABAD HOUSE OF NORTH DADE, INC.,
a Florida Non-Profit Organization,
lllllllllllllllllllllllllllllllllll Defendant,
JOHN DOE,
JANE DOE,
individually and as the natural
parents and guardians of J.D., a minor,
llllllllllllllllllllllllllllllllllllllll Defendants - Appellants.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(October 25, 2011)
Before CARNES, MARTIN and ANDERSON, Circuit Judges.
PER CURIAM:
Appellants John and Jane Doe appeal the holding of the district court that
Appellee American Empire Surplus Lines Insurance Company (“American
Empire”) has no duty to defend a third party, the Chabad House of Northdade,
(“Chabad”), against claims by the Does that Chabad House’s negligence resulted
in significant injury to the Does’ special needs child, “J.D.” After review of the
briefs and the thorough analyses of the magistrate and district judges, we affirm.
This appeal stems from American Empire’s action seeking a declaratory
judgment regarding its responsibilities as Chabad’s insurer. In the underlying suit,
the Does allege that two members of Chabad House, sent ostensibly to “motivate,
befriend and enrich” J.D., in actuality tormented and abused him. They seek to
hold Chabad liable for both the actual injuries to J.D., and also Chabad’s
“negligent selection, training and monitoring of [its members], its negligent
misrepresentations, and its failure to warn that [its members] had not been
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screened or trained and would not be monitored or supervised.” Subsequent to the
Does’ initiation of their lawsuit, American Empire, with which Chabad holds an
insurance policy, brought a declaratory action seeking a judgment that the
American Empire policy does not cover the Does’ claims against Chabad. After
briefing, and with the benefit of a Report and Recommendation from the
magistrate judge, the district court found that the policy did not provide coverage
for the torts alleged by the Does, and therefore granted summary judgment in favor
of American Empire. This appeal followed.1
The parties agree that the Chabad members accused of abusing J.D. are
“insureds” within the scope of the American Empire policy. Thus the sole
question presented in this appeal is whether a separate exclusion provision in the
American Empire policy bars the Does’ claims. The district court found, and we
now affirm, that the policy contains such an exception and therefore relieves
American Empire of any responsibilities stemming from the Does’ litigation.
Specifically, the American Empire policy contains an “Abuse or
Molestation Exception,” which provides:
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We review the grant of summary judgment, as well as the interpretation of an insurance
contract, de novo. See, e.g., James River Ins. Co. v. Ground Down Eng’g, Inc., 540 F.3d 1270,
1274 (11th Cir. 2008). Furthermore, in this diversity case involving an insurance contract, state
law governs. See Dempsey v. Auto Owners Ins. Co., 717 F.2d 556, 559 (11th Cir. 1983).
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This insurance does not apply to “bodily injury”, “property damage” or
“personal and advertising injury” arising out of
1. The actual or threatened abuse or molestation by any person in
the care, custody or control of any insured, or
2. The negligent
a. Employment,
b. Investigation,
c. Supervision,
d. Reporting to the proper authorities, or failure to so
report, or
e. Retention, of a person for whom any insured is or ever
was legally responsible and whose conduct would be
excluded by Paragraph 1 above.
We have previously recognized that, under Florida law, such “arising out of”
exclusions are to be construed broadly. James River, 540 F.3d at 1275 (citing
Taurus Holdings, Inc. v. United States Fid. & Guar. Co., 913 So. 2d 528, 539 (Fla.
2005)). Indeed, in James River we explained:
“the term ‘arising out of’ is broader in meaning than the term ‘caused
by’ and means ‘originating from,’ ‘having its origin in,’ ‘growing out
of,’ ‘flowing from,’ ‘incident to’ or ‘having a connection with.’” To
have arisen out of something, there must be “some causal connection, or
relationship” that is “more than a mere coincidence” but proximate
cause is not required.
Id. (quoting Taurus Holdings, 913 So. 2d at 539). We think it clear that this
standard is broad enough to include the Does’ claims in this case.
As a result, because the parties agree that the Chabad members are
“insureds,” the plain terms of the Abuse and Molestation Exclusion thus exclude
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the Does’ claims unless some irregularity distinguishes the American Empire
policy from other “arising out of” contracts. The Does argue that indeed the
American Empire policy contains a material distinction. Specifically, they aver
that unlike the policies at issue in Taurus and James River, the American Empire
policy contains a second paragraph that modifies the first. To this end, they
interpret the policy to require courts to “look to paragraph 1 when the claims
against the insured are based on the abuse itself or vicarious liability for the acts of
the abuser, and to paragraph 2 when the claims against an otherwise innocent
insured are based on its enabling negligence.” They in turn conclude that, under
their proposed interpretation, their claims are covered by the American Empire
policy because those claims do not involve negligence of the types set forth in
paragraph 2.
We cannot agree. To begin, the Does’ reading would have us ignore the
plain meaning of the first paragraph, in contravention of Florida law. E.g.,
Khosrow Maleki, P.A. v. M.A. Hajianpour, M.D., P.A., 771 So. 2d 628, 631 (Fla.
4th DCA 2000) (a contract must be interpreted pursuant to the plain meaning of its
terms). Moreover, to accept the Does’ interpretation we would also have to ignore
the “general rule[] [that] use of a disjunctive in a statute indicates alternatives and
requires that those alternatives be treated separately. Hence, language in a clause
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following a disjunctive is considered inapplicable to the subject of the preceding
clause.” Brown v. Budget Rent-A-Car Systems, Inc., 119 F.3d 922, 924 (11th Cir.
1997). We think that Brown’s understanding of the disjunctive “or” applies
equally to the insurance policy in this case. As a result, we reject the Does’
alternative interpretation, which would require us to read “or” as a limitation on
paragraph 1, rather than as an independent exclusion where paragraph 1 does not
apply.
For the foregoing reasons, we find that the Does’ claims against Chabad are
excluded from the scope of Chabad’s insurance policy with American Empire.
Thus, we hold that American Empire is entitled to summary judgment in their
declaratory judgment action, and affirm.
AFFIRMED.
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