Eastpointe Condominium I Ass'n v. Travelers Casualty & Surety Co. of America , 379 F. App'x 906 ( 2010 )

[DO NOT PUBLISH]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
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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.
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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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