USCA11 Case: 21-13628 Date Filed: 10/06/2022 Page: 1 of 15
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 21-13628
Non-Argument Calendar
____________________
THE CINCINNATI SPECIALTY UNDERWRITERS
INSURANCE COMPANY,
Plaintiff-Counter Defendant-Appellee
Cross- Appellant,
versus
KNS GROUP, LLC,
Defendant-Counter Defendant-Cross- Appellee,
GM&P CONSULTING AND GLAZING
CONTRACTORS, INC.,
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2 Opinion of the Court 21-13628
Defendant-Counter Claimant-Appellant
Cross-Appellee,
GEMINI INSURANCE COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 0:20-cv-61349-WPD
____________________
Before JORDAN, NEWSOM, and MARCUS, Circuit Judges.
PER CURIAM:
A casino owner unhappy with the quality of construction on
its new casino sued its general contractor and others in Maryland
state court. The general contractor filed a third-party complaint
against a subcontractor, and that subcontractor’s insurer filed suit
in the United States District Court for the Southern District of Flor-
ida, seeking a declaratory judgment that it need not defend the gen-
eral contractor and subcontractor. This appeal addresses which
parties the insurer must defend, based on the coverage provisions
and exclusions in KNS Group, LLC (“KNS”)’s insurance policy with
Cincinnati Specialty Underwriters Insurance Company
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21-13628 Opinion of the Court 3
(“Cincinnati”). After careful review, we affirm the district court’s
(1) grant of summary judgment in favor of Cincinnati on the basis
that it has no duty to defend or indemnify GM&P Consulting and
Glazing Contractors, Inc. (“GM&P”) in the underlying lawsuit; (2)
grant of summary judgment in favor of KNS on the basis that Cin-
cinnati has a duty to defend KNS; and (3) conclusion that it is prem-
ature to ascertain whether Cincinnati has a duty to indemnify KNS.
I.
The parties in this case came together to build the Maryland
Live! Casino and Hotel in Anne Arundel County, Maryland. Tutor
Perini Building Corporation (“Tutor Perini”), the general contrac-
tor leading the construction project, hired GM&P to provide exte-
rior glazing for the building. GM&P, in turn, enlisted subcontrac-
tor KNS to assist it by glazing glass and installing window walls.
The parties signed a contract on June 5, 2017, in which KNS agreed
to “take out, maintain, and pay all premiums for” commercial gen-
eral liability and other types of insurance, and to indemnify GM&P
for liability for damages “to person or property caused in whole or
in part by any act, omission, or default by the sub-contractor[.]”
KNS acquired commercial liability insurance (“the Policy”)
from Cincinnati for the relevant period. The Policy covered losses
due to “property damage,” which it defined as “[p]hysical injury to
tangible property” or “[l]oss of use of tangible property that is not
physically injured.” The Policy “include[d] as an additional in-
sured” any party that KNS, the named insured, provided in writing
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4 Opinion of the Court 21-13628
that it would insure under its policy. However, the Policy warned
that it would cover those additional insured parties:
only with respect to “bodily injury,” “property dam-
age” or “personal and advertising injury” caused, in
whole or in part, by:
1. [The named insured’s] acts or omissions in the per-
formance of [its] ongoing operations for the addi-
tional insured;
2. The acts or omissions of those acting on [the
named insured’s] behalf in the performance of [its]
ongoing operations for the additional insured[.]
The present case stems from a June 25, 2020 lawsuit (“the
Underlying Action”) brought by PPE Casino Resorts Maryland,
LLC (“PPE”), the casino’s owner, against its general contractor and
subcontractors in the Circuit Court for Anne Arundel County. The
state-court complaint alleged, inter alia, that GM&P installed a de-
fective “Glass Façade” that has “loose gaskets between window
panels, damaged sealants and panel frames, and misaligned win-
dow wall panels creating the risk of property damage.” PPE as-
serted that GM&P’s negligent furnishing of materials and negligent
installation of the Glass Façade was a breach of GM&P’s duty to
PPE to complete the façade “in a safe manner and without causing
property damage to PPE or creating the risk of property damage.”
GM&P responded with a third-party complaint in the Un-
derlying Action against KNS and two other third-party defendants
that played roles in the construction process. In it, GM&P brought
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claims against KNS for breach of contract and negligence due to
KNS’s alleged defective construction of the casino. GM&P also
raised a common-law indemnification claim, as well as a contrac-
tual-indemnification claim, alleging that KNS “expressly or im-
pliedly agreed to indemnify and/or defend GM&P for any and all
damages assessed against GM&P due to their acts or omissions.”
On July 7, 2020, Cincinnati filed the instant lawsuit in federal
district court, seeking a declaratory judgment that it has no duty to
defend and no duty to indemnify KNS or GM&P in the Underlying
Action. According to Cincinnati, the policy “provides in part that
no coverage is afforded to an additional insured where there is no
coverage for the named insured (i.e., KNS).” Gemini Insurance
Company, which provides GM&P with commercial general liabil-
ity insurance, intervened in the suit on the side of GM&P and KNS.
The parties then filed cross-motions for summary judgment,
and the district court ruled that Cincinnati has a duty to defend
KNS in the Underlying Action, and that Cincinnati’s narrower duty
to indemnify KNS is not yet ripe for adjudication, but that Cincin-
nati has no duty to defend and no duty to indemnify GM&P in the
Underlying Action. GM&P timely appealed this ruling, and Cin-
cinnati filed a cross-appeal of the district court’s ruling that it has a
duty to defend KNS in the Underlying Action.
II.
We review a district court’s summary judgment ruling de
novo, viewing the facts in the light most favorable to the non-
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6 Opinion of the Court 21-13628
movant. Hallums v. Infinity Ins. Co.,
945 F.3d 1144, 1148 (11th Cir.
2019). Summary judgment is proper when “there is no genuine
dispute as to any material fact and the movant is entitled to judg-
ment as a matter of law.” Fed. R. Civ. P. 56(a). We also review de
novo the interpretation of insurance contracts, see Hallums, 945
F.3d at 1148, which, in this diversity case, we construe in accord-
ance with Florida law, see State Farm Fire and Cas. Co. v. Stein-
berg,
393 F.3d 1226, 1230 (11th Cir. 2004).
Under Florida law, we read insurance contracts “according
to their plain meaning,” considering the provisions in tandem to
find the most reasonable and probable interpretation. Garcia v.
Fed. Ins. Co.,
969 So. 2d 288, 291 (Fla. 2007) (quotations omitted);
see also Gilmore v. St. Paul Fire & Marine Ins.,
708 So. 2d 679, 680
(1st Fla. DCA 1998). Policy language is deemed ambiguous only if
“the relevant policy language is susceptible to more than one rea-
sonable interpretation, one providing coverage and another limit-
ing coverage.” Garcia,
969 So. 2d at 291 (quotations omitted).
An insurer’s duty to defend an insured in a legal action based
on Florida law “arises when the complaint alleges facts that fairly
and potentially bring the suit within policy coverage,” and does not
require delving into the merits of a case. Jones v. Fla. Ins. Guar.
Ass’n,
908 So. 2d 435, 442–43 (Fla. 2005). We analyze the duty to
defend by comparing the allegations in the complaint with the lan-
guage of the policy.
Id. We resolve any doubts about whether an
insurer has a duty to defend in favor of the insured.
Id. at 443.
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21-13628 Opinion of the Court 7
However, an insurer need not defend an insured party if a
policy exclusion applies. Keen v. Fla. Sheriffs’ Self-Ins. Fund,
962
So. 2d 1021, 1024 (4th Fla. DCA 2007). If an insured satisfies its
initial burden of showing that policy coverage applies, “the burden
shifts to the insurer to prove that the loss arose from a cause which
is excepted.” Hudson v. Prudential Prop. and Cas. Ins. Co.,
450 So.
2d 565, 568 (2d Fla. DCA 1984).
III.
Turning first to GM&P’s appeal, we conclude that Cincin-
nati’s additional insured endorsement does not provide coverage
to GM&P. The Policy limits GM&P’s coverage to “bodily injury,”
“property damage” or “personal and advertising injury” caused, in
whole or in part, by KNS or KNS’s agents. Relying on the “plain
meaning” of the Policy, see Garcia,
969 So. 2d at 291, we read it to
cover GM&P only for damages that KNS or KNS’s agents com-
pletely or partially caused. The complaint in the Underlying Action
alleges that GM&P was negligent in its furnishing of materials and
installation of the Glass Façade. It alleges no negligence by KNS
nor any of its agents. Without more, Cincinnati has no duty to
defend GM&P in the Underlying Action. Nor, moreover, does
Cincinnati have a duty to indemnify GM&P. See U.S. Fire Ins. Co.
v. Hayden Bonded Storage Co.,
930 So. 2d 686, 691 (4th Fla. DCA
2006) (explaining that “the duty to indemnify is narrower” than the
duty to defend and is based on the actual merits of the claims
against the insured, instead of the allegations in the complaint).
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8 Opinion of the Court 21-13628
Our interpretation of the Policy aligns with the Florida Su-
preme Court’s decision in Garcia. There, the state court answered
“yes” to our certified question, which asked: “Does an insurance
policy providing coverage for an additional insured ‘with respect to
liability because of acts or omissions’ of the named insured limit
coverage to instances in which the additional insured is vicariously
liable for acts of the named insured?”
969 So. 2d at 289. The court
explained that the policy’s causal language “clearly indicate[s] that
an additional insured is only entitled to coverage concerning liabil-
ity that is caused by or occurs by reason of acts or omissions of the
named insured.”
Id. at 292 (emphases omitted). The court thus
concluded that the insurance company did not owe coverage to an
additional insured in Garcia because the plaintiff in the underlying
lawsuit had sued the additional insured “for her own negligence,”
and “did not allege that [the additional insured] was liable for [the
named insured’s] acts or omissions.”
Id. Applying Garcia’s logic to
this case, the allegations in the complaint make clear that Cincin-
nati does not owe GM&P a duty to defend in the Underlying Ac-
tion because GM&P is being sued for its own negligence, not vicar-
iously for any negligent acts or omissions on the part of KNS.
GM&P argues that, because the language “caused by” or
“because of” would require an allegation of vicarious negligence in
the complaint, per the reasoning in Garcia, reading “caused, in
whole or in part, by” to similarly require vicarious negligence
would render the term “in part by” mere surplusage. We disagree.
There is a clear difference between “caused” and “caused in part
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21-13628 Opinion of the Court 9
by”: the latter term means that even if the complaint alleged KNS
was only 1% responsible for causing the faulty workmanship, then
Cincinnati would have a duty to defend GM&P.1
Accordingly, we affirm the district court’s conclusion that
the Policy does not require Cincinnati to defend GM&P.
IV.
We also affirm the district court’s declaration that Cincinnati
must defend KNS in the Underlying Action. As we’ve explained,
“[a]ll doubts as to whether a duty to defend exists in a particular
case must be resolved against the insurer and in favor of the in-
sured,” so an insurer is “required to offer a defense in the underly-
ing action unless it [is] certain that there [is] no coverage for the
damages sought by the [insured party] in the action.” Carithers v.
Mid-Continent Cas. Co.,
782 F.3d 1240, 1246 (11th Cir. 2015); see
also Klaesen Bros. v. Harbor Ins. Co.,
410 So. 2d 611, 613 (4th Fla.
DCA 1982) (holding that an insurer has a duty to defend if a “com-
plaint alleges (at least marginally and by reasonable implication)”
facts that would lead to coverage). Since the exclusions to property
damage coverage do not clearly apply, this standard is met here.
First, “property damage” -- defined as “[p]hysical injury to
tangible property, including all resulting use of that property” -- is
1 To the extent the parties dispute the meaning of the phrase “caused, in whole
or in part by,” this simple, straightforward language is unambiguous. See, e.g.,
Amerisure Ins. Co. v. Seneca Specialty Ins. Co., No. 10-20442-Civ,
2020 WL
3317035, at *4 (S.D. Fla. June 18, 2020).
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10 Opinion of the Court 21-13628
properly alleged to have occurred under the Policy. The complaint
in the Underlying Action alleges that the “Glass Façade supplied
and installed by” GM&P and other entities, including Tutor Perini
and C.I. Energia Solar S.A.S. E.S. Windows (“CI Energia”) “is
fraught with systemic defects, including loose gaskets between
window panels, damaged sealants and panel frames, and misa-
ligned window wall panels creating the risk of property damage.”
In turn, GM&P’s third-party complaint, says that, if proven, the al-
leged property damage was the fault of KNS and/or its agents.
Cincinnati relies on Florida law to argue that the Policy’s
“property damage” coverage does not cover damage caused only
by faulty workmanship. Indeed, Florida courts have held that the
term “property damage” in standard commercial liability insurance
policies does not cover an insured’s use of defective components
or defective installation of components. Auto-Owners Ins. Co. v.
Pozzi Window Co.,
984 So. 2d 1241, 1248 (Fla. 2008). Instead, for
actionable property damage, an insured must have damaged an-
other independent component of the property.
Id. So, the Florida
Supreme Court has explained that an allegation that a subcontrac-
tor “installed the windows defectively” would not suffice as prop-
erty damage, but “[b]ecause the alleged defective installation re-
sulted in water penetration causing further damage,” sufficient
property damage was alleged. U.S. Fire Ins. Co. v. J.S.U.B., Inc.,
979 So. 2d 871, 890 (Fla. 2007).
Our decision in Carithers -- which held that an insurer owed
coverage stemming from “the negligent application of exterior
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21-13628 Opinion of the Court 11
brick coating” that had “caused property damage to the brick” of a
house -- controls here. 782 F.3d at 1249–50. Applying J.S.U.B., our
Court reasoned that no property damage would have occurred if
the brick coating was negligently applied by the same subcontrac-
tor who installed the bricks, but “if the bricks were installed by one
sub-contractor, and a different sub-contractor applied the brick
coating, then the damage to the bricks caused by the negligent ap-
plication of the brick coating was not part of the sub-contractor’s
defective work, and constituted property damage.” Id. at 1250.
Just as in Carithers, the complaint in the Underlying Action
alleges that one defendant (CI Energia) “supplied the glass panels”
installed by another defendant (GM&P), which suggests that
GM&P’s faulty installation could have damaged a separate compo-
nent of the property -- CI Energia’s panels. Thus, when the plead-
ings are read favorably to the insured, they reasonably could lead
to coverage.
We are not persuaded by Cincinnati’s argument that certain
exclusions apply. For starters, Cincinnati waived its arguments
about exclusion l, which concerns property damage to the named
insured’s work “arising out of it or any part of it and included in the
‘products-completed operations hazard.’” See Walker v. Jones,
10
F.3d 1569, 1572 (11th Cir. 1994) (quotations omitted) (“[A]n issue
not raised in the district court and raised for the first time in an
appeal will not be considered by this [C]ourt.”).
Considering the next proposed exclusions, we stress that
Cincinnati bears the heavy burden of showing “that the allegations
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12 Opinion of the Court 21-13628
of the complaint are cast solely and entirely within the policy ex-
clusion and are subject to no other reasonable interpretation.” Cas-
tillo v. State Farm Fla. Ins. Co.,
971 So. 2d 820, 824 (Fla. 3d DCA
2007) (emphasis added and quotations omitted). As for exclusions
j(5) and j(6), they exclude coverage for “property damage” to:
(5) That particular part of real property on which you
or any contractors or subcontractors working directly
or indirectly on your behalf are performing opera-
tions, if the “property damage” arises out of those op-
erations; or
(6) That particular part of any property that must be
restored, repaired or replaced because “your work”
was incorrectly performed on it.
Exclusions j(5) and j(6), which Florida courts regularly eval-
uate together, cover the pieces of real property “the contractor’s
operations were intended to include.” Wilshire Ins. Co. v. Birch
Crest Apartments, Inc.,
69 So. 3d 975, 976 (4th Fla. DCA 2011). So,
for example, when a contractor damaged part of a customer’s pool
while draining the entire pool, a Florida appeals court held that the
damage to the pool was excluded from coverage. Am. Equity Ins.
Co. v. Van Ginhoven,
788 So. 2d 388, 391 (5th Fla. DCA 2001).
“Conversely,” the court explained, “damage to any property that
[the contractor] was not performing operations on, or incorrectly
performing work on,” such as “the plumbing, electrical, deck work,
patio, screen enclosure or the residence,” would not fit within the
exclusion.
Id. By the same token, another Florida appeals court
held that exclusions j(5) and j(6) did not apply when a contractor
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21-13628 Opinion of the Court 13
cutting trees trimmed some trees on a neighboring property, be-
cause those were not in the contractor’s intended scope of work.
Nova Cas. Co. v. Willis,
39 So. 3d 434, 436–437 (3d Fla. DCA 2010).
At this stage of the proceedings, it is not clear whether the
damage allegedly attributable to KNS in the Underlying Action
would have been within the “natural and intended scope” of its op-
erations on the property. See Wilshire,
69 So. 3d at 976. More
specifically, it is unclear whether KNS allegedly damaged only the
exterior of the glass façade or whether it caused other damage, or
whether a different contractor or subcontractor’s work was in-
volved. Therefore, Cincinnati did not meet its burden of showing
that exclusions j(5) and j(6) remove its duty to defend KNS in the
Underlying Action.
As for the Policy’s breach-of-contract exclusion, Cincinnati
argues that it precludes coverage for GM&P’s claims because they
all arise from the allegedly defective work KNS performed pursu-
ant to its contract. But the Policy does not exclude any and all tort
claims related to KNS’s breach of contract. The breach-of-contract
exclusion reads:
This insurance does not apply to any claim for “bodily
injury” or “property damage” arising directly from or
indirectly from breach of express or implied contract,
including breach of an implied in law or implied in
fact contract. This exclusion does not apply to liability
for damages that an insured would have in the ab-
sence of the contract.
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14 Opinion of the Court 21-13628
Cincinnati says that GM&P’s claims against KNS -- for negligence,
common law indemnification, and contribution -- all fall within this
exclusion because they “stem from the fact that KNS contracted to
perform the scope of work set forth in its contract with GM&P.”
To begin with, Cincinnati has a duty to defend this whole
suit if any claims fall within its scope of coverage. Irvine v. Pruden-
tial Prop. & Cas. Ins. Co.,
630 So. 2d 579, 580 (Fla. 3d DCA. 1993)
(“Where some allegations set out in the complaint require the in-
surer to defend the insured and some allegations do not, the in-
surer must provide a defense on the entire suit.”); see also Stevens
v. Horne,
325 So. 2d 459, 461 (Fla. 4th DCA 1975). Further, if any
of GM&P’s claims against KNS could have been brought in the ab-
sence of a contract between the parties, that claim would not fall
within the breach-of-contract exclusion. The exclusion expressly
“does not apply to liability for damages that an insured would have
in the absence of the contract,” and, under Florida law, when a
“claim sounds in tort,” the claim is “based on a duty independent
of any contractual obligation or duty, . . . [thus,] the breach of con-
tract exclusion cannot apply.” Carolina Cas. Ins. Co. v. Spicer,
323
So. 3d 350, 352, 354 (1st Fla. DCA 2021).
GM&P’s third-party complaint alleged that KNS had:
a duty of care to ensure that the design and construc-
tion of Maryland Live were free from defective con-
ditions, code violations, in conformance with the ap-
plicable plans and/or specifications, in conformance
with industry and sound engineering and
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21-13628 Opinion of the Court 15
construction standards, constructed with appropriate
and non-faulty materials, and constructed in a work-
manlike manner.
And it alleges KNS breached that duty. At least one of GM&P’s
claims -- its claim that KNS was negligent -- sounds in tort, so this
exclusion does not apply.
In short, because PPE’s complaint in the Underlying Action
includes allegations that plausibly fit within the Policy’s definition
of “property damage,” and plausibly are not captured by the Pol-
icy’s exclusions, Cincinnati has a duty to defend KNS in the Under-
lying Action. However, since the duty to indemnify is a narrower
inquiry that involves delving into the merits of PPE’s claims -- ra-
ther than just the allegations in PPE’s complaint -- we agree with
the district court’s assessment that it is still premature to rule on
Cincinnati’s duty to indemnify KNS for any damages that it might
be liable for in the Underlying Action.
AFFIRMED.
