[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 21-11427
Non-Argument Calendar
____________________
THE DIAZ FRITZ GROUP, INC.,
d.b.a. Diaz Fritz Isabel,
Plaintiff-Appellant,
versus
WESTFIELD INSURANCE COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Middle District of Florida
D.C. Docket No. 8:20-cv-00785-VMC-AAS
____________________
2 Opinion of the Court 21-11427
Before ROSENBAUM, BRANCH, and GRANT, Circuit Judges.
PER CURIAM:
General contractor, the Diaz Fritz Group, Inc., appeals the
district court’s grant of summary judgment in favor of Westfield
Insurance Company—which acted as Diaz Fritz’s general liability
insurer between January 1, 2009 and January 1, 2010—on its breach
of contract claim. Diaz Fritz raises two primary issues. First, it
argues that the district court erroneously concluded that, under
Florida law and the plain language of the insurance policy,
Westfield had no duty to defend Diaz Fritz against affirmative
defenses or contractual counterclaims raised by Diaz Fritz’s
subcontractor, Hayward Baker, Inc. (“HBI”), in a separate action
initiated by Diaz Fritz. Second, Diaz Fritz claims that the district
court erred by holding that, absent a duty to defend, Westfield also
had no duty to indemnify Diaz Fritz in its lawsuit against HBI.
After review, we affirm.
I. BACKGROUND
Diaz Fritz, a general contractor in the state of Florida,
purchased a general liability insurance policy from Westfield for
the period between January 1, 2009 and January 1, 2010. Under the
policy, Westfield agreed to “pay those sums that the insured
becomes legally obligated to pay as damages because of . . .
‘property damage’ to which this insurance applies.” Likewise, the
parties agreed that Westfield “will have the right and duty to
21-11427 Opinion of the Court 3
defend the insured against any ‘suit’ seeking those damages . . . .”
The policy further provided that it: “applies to . . . ‘property
damage’ only if . . . [t]he . . . ‘property damage’ is caused by an
‘occurrence’ that takes place in the ‘coverage territory;’” and “[t]he
. . . ‘property damage’ occurs during the policy period . . . .”
Pursuant to the policy, an “occurrence” meant “an accident,
including continuous or repeated exposure to substantially the
same general harmful conditions.” “Property damage” referred to
“[p]hysical injury to tangible property, including all resulting loss
of use of that property. All such loss of use shall be deemed to
occur at the time of the physical injury that caused it; or . . . . Loss
of use of tangible property that is not physically injured. All such
loss of use shall be deemed to occur at the time of the ‘occurrence’
that caused it.” More importantly to this appeal, the policy defined
a “suit” as “a civil proceeding in which damages because of ‘bodily
injury’, or ‘property damage’ or ‘personal and advertising injury’ to
which this insurance applies are alleged,” including “[a]n
arbitration proceeding in which such damages are claimed and to
which the insured must submit or does submit with our consent;
or “[a]ny other alternative dispute resolution proceeding in which
such damages are claimed and to which the insured submits with
our consent.”
In May 2009, Diaz Fritz was engaged in contracting work at the
University Community Hospital Carrollwood (“the hospital” or
“UCH”). The firm enlisted HBI’s assistance as a subcontractor to
perform foundation work at UCH. Diaz Fritz agreed to pay HBI
4 Opinion of the Court 21-11427
$290,000 to complete the project. But work at the hospital went
awry, and, according to Diaz Fritz, HBI negligently caused some of
the hospital’s other property to flood, incurring substantial
damage.
The hospital promptly sent Diaz Fritz a letter demanding that
it immediately remediate the damage, which jeopardized “patient
and employee safety.” Given the nature of UCH’s operations, it
insisted that time was “of the essence” and gave Diaz Fritz three
days to comply. In addition to withholding all payments due to
Diaz Fritz, the hospital also threatened that it would “look to [Diaz
Fritz] for any and all costs incurred” after the three days lapsed.
Diaz Fritz reached out to Westfield, but the insurer felt that HBI
was responsible for the flooding. Accordingly, it then sent the
hospital’s property damage claim to Zurich American Insurance
Company (“Zurich”), HBI’s general liability insurer. But Zurich
and Westfield could not agree about whether Zurich’s policy with
HBI required it to provide coverage to Diaz Fritz as an “additional
insured” party. While the two insurers bickered, Diaz Fritz—
without seeking approval from Westfield—paid for all of the
repairs necessary to restore the hospital’s property, albeit without
admitting fault. The repairs totaled $505,597.72.
Meanwhile, Diaz Fritz, believing that HBI’s negligence caused
the hospital’s property damage, decided to withhold the $290,000
it had agreed to pay HBI for the project in an effort to recoup the
money for the repairs. Even still, Diaz Fritz remained on the hook
for over $200,000 of the approximately $506,000 in payments
21-11427 Opinion of the Court 5
remitted to UCH. Accordingly, in 2011, it sought to recover its
perceived losses from HBI in Florida state court. In its answer, HBI
raised multiple affirmative defenses, the third of which—and the
only one relevant to this appeal—asserted that Diaz Fritz’s
negligence contributed to or entirely caused the damage to the
hospital.
HBI also filed two counterclaims against Diaz Fritz. First, it
argued that Diaz Fritz breached its subcontract by withholding the
$290,000 payment for its work on the hospital. Second, it sought
to recover the value of its performance in quantum meruit.
Diaz Fritz then reached out to Westfield to seek a defense under
its general liability policy. Westfield refused, explaining that the
policy did not require it to defend against affirmative defenses, and
that the counterclaims were outside the scope of coverage.
Nevertheless, Diaz Fritz persisted and brought its case against HBI
to trial. The jury found HBI partially responsible for a total of
$266,596.32 in damages and expenses, and, offsetting that amount
against the $290,000 that Diaz Fritz withheld, awarded HBI
$23,403.68 in damages. 1
Diaz Fritz then filed suit against Westfield in state court on
March 11, 2020. Diaz Fritz sought a declaratory judgment that
Westfield was obligated to defend it in the state court litigation
against HBI and to indemnify it against the final judgment in that
1Nevertheless, the trial court entered final judgment in favor of HBI for a
grand total of $361,902.44, including pre-judgment interest.
6 Opinion of the Court 21-11427
case; alleged that Westfield breached its contract by denying
defense and indemnification of Diaz Fritz in state court; and
requested damages for a Florida law bad faith claim. Westfield
subsequently removed the case to the United States District Court
for the Middle District of Florida and successfully moved to dismiss
all of Diaz Fritz’s claims excepting breach of contract.
After discovery, both parties moved for summary judgment.
Turning first to Westfield’s motion, the district court concluded
that the insurer’s obligations to defend and indemnify were not
triggered by Diaz Fritz’s suit against HBI. Noting that Florida law
controlled the suit and that no Florida court had yet weighed in on
whether an affirmative defense can trigger an insurer’s duty to
defend, the court determined that, at least in the present case, it did
not. Though it recognized that HBI’s affirmative defense “blamed
Diaz Fritz for any purported damage to the hospital,” it
nevertheless emphasized that “it did not seek any affirmative relief
from Diaz Fritz ‘because of’ this damage,” as required to trigger the
duty to defend under the policy.
Likewise, the district court found that HBI’s counterclaims did
not seek reimbursement for property damage, but, instead only to
recover economic damages from Diaz Fritz’s breach of contract.
Because the policy “unambiguously” required damages “because
of” property damage, the district court found that HBI’s
counterclaims fell outside the scope of Diaz Fritz’s insurance
policy. And, because “the duty to defend is broader than the duty
to indemnify,” the district court also found that “as a matter of
21-11427 Opinion of the Court 7
law,” Westfield was not obligated to indemnify Diaz Fritz from the
state court’s final judgment. 2 Diaz Fritz timely appealed.
II. STANDARD OF REVIEW
We review de novo a district court’s grant of summary
judgment, “considering the evidence in the light most favorable to
the nonmoving party.” Lindley v. FDIC,
733 F.3d 1043, 1050 (11th
Cir. 2013). Likewise, we review de novo a district court’s
interpretation of an insurance contract. Galindo v. ARI Mut. Ins.
Co.,
203 F.3d 771, 774 (11th Cir. 2000).
III. ANALYSIS
A. The district court properly granted summary judgment in
favor of Westfield as to its duty to defend Diaz Fritz in the
latter’s suit against HBI.
On appeal, Diaz Fritz argues that the district court erred in
granting summary judgment in favor of Westfield and
simultaneously denying its own motion for summary judgment.
The firm contends that, under Florida law, we should construe the
statutory language “in light of the skill and experience of ordinary
people,” rather than legal scholars. Gen. Star Indem. Co. v. W. Fla.
Vill. Inn, Inc.,
874 So. 2d 26, 29–30 (Fla. 2d DCA 2004). See also
2 Consequently, the district court denied Diaz Fritz’s motion for summary
judgment.
8 Opinion of the Court 21-11427
Hrynkiw v. Allstate Floridian Ins. Co.,
844 So. 2d 739, 741-42 (Fla.
5th DCA 2003). Likewise, Diaz Fritz reiterates that where “one
reasonable interpretation of the policy provisions would provide
coverage, that is the construction which must be adopted.”
Washington Nat’l Ins. Corp. v. Ruderman,
117 So. 3d 943, 950 (Fla.
2013).
To create a “reasonable” interpretation of the contract that
favors an affirmative duty to defend in Diaz Fritz’s suit against HBI,
Diaz Fritz urges us to focus “on the substance” of the affirmative
defense, rather than the “form.” By its logic, because the hospital
would have had a “property damage” claim against Diaz Fritz
within the plain language of the policy had the firm not settled with
the hospital, HBI’s affirmative defense—that Diaz Fritz was at least
partially responsible for the flooding—litigated the same issue that
would have triggered a duty to defend in a suit between Diaz Fritz
and the hospital.
But Florida’s lodestar interpretive principle undermines Diaz
Fritz’s argument: “Where the language in an insurance contract is
plain and unambiguous, a court must interpret the policy in
accordance with the plain meaning so as to give effect to the policy
as written.” Allstate Ins. Co. v. Orthopedic Specialists,
212 So. 3d
973, 975-76 (Fla. 2017) (quoting Washington Nat. Ins. Corp. v.
Ruderman,
117 So. 3d 943, 948 (Fla. 2013)). Granted “[p]olicy
language is considered to be ambiguous . . . if the language ‘is
susceptible to more than one reasonable interpretation, one
providing coverage and the other limiting coverage.’”
Id. at 976
21-11427 Opinion of the Court 9
(quoting Travelers Indem. Co. v. PCR Inc.,
889 So. 2d 779, 785 (Fla.
2004)). But “[t]o find in favor of the insured on th[at] basis,
however, the policy must actually be ambiguous.”
Id. (quoting
Penzer v. Transp. Ins. Co.,
29 So. 3d 1000, 1005 (Fla. 2010)
(emphasis omitted)). We may not “put a strained and unnatural
construction on the terms of a policy in order to create an
uncertainty or ambiguity.” Jefferson Ins. Co. of N.Y. v. Sea World
of Fla., Inc.,
586 So. 2d 95, 97 (Fla. 5th DC A 1991).
Here, the district court granted Westfield’s motion for
summary judgment after concluding that the plain and
unambiguous policy language covered “suits” for “damages”
“because of ‘property damage.’” In contrast, it found that HBI’s
affirmative defense only sought to offset the amount of damages
Diaz Fritz claimed it was owed in a contract action. We agree, and
find Diaz Fritz’s contrary argument unconvincing.3 Diaz Fritz fails
to identify any Florida precedent suggesting that, when construing
3 Although Diaz Fritz urges us to follow Simon v. Maryland Cas. Co.,
353 F.2d
608, 610-12 (5th Cir. 1965), as “circuit precedent,” it misunderstands how
federal courts, sitting in diversity, operate. “In diversity cases, we are required
to apply the substantive law of the forum state; here, Florida.” Mesa v.
Clarendon Nat’l Ins. Co.,
799 F.3d 1353, 1358 (11th Cir. 2015). And, “Florida
applies its own laws to interpret policies which are purchased and delivered in
that state.” Trans Caribbean Lines, Inc. v. Tracor Marine, Inc.,
748 F.2d 568,
570 (11th Cir. 1984). Consequently, Simon, a case involving an insurance
contract governed by Texas law, does not control our analysis of a case under
Florida law.
10 Opinion of the Court 21-11427
an insurance contract, courts should look past plain and
unambiguous language to rule in favor of coverage.
Although HBI blamed Diaz Fritz for causing the flood that
damaged the hospital, its affirmative defense did not seek “any
sums that [Diaz Fritz] [would] become[] legally obligated to pay as
damages because of . . . ‘property damage’” as required by the
policy. Instead, Diaz Fritz sued HBI to recover the amount it had
paid voluntarily to the hospital to rectify the flood damage.
Consequently, HBI’s affirmative defense could only reduce the
amount of damages sought by Diaz Fritz, rather than entitle it to
any amount of compensation. Therefore, there is no reasonable
construction under which HBI’s third affirmative defense could
qualify as a “suit” for “damages.”
Diaz Fritz opines that this interpretation “effectively punishes
[it] for doing the right thing.” Perhaps, but Diaz Fritz agreed to the
policy’s unambiguous language, which, as we have explained, does
not implicate Westfield’s duty to defend in this case. Accordingly,
we affirm the district court’s grant of summary judgment in favor
of Westfield.
B. The district court properly granted summary judgment in
favor of Westfield as to its duty to indemnify Diaz Fritz after
concluding that, as a matter of law, the duty to indemnify is
coterminous with the duty to defend.
21-11427 Opinion of the Court 11
Finally, because we reject Diaz Fritz’s argument that the district
court erred in concluding that Westfield was not obligated to
defend its suit against HBI, we also reject its claim that the district
court erroneously concluded that Westfield was not obligated to
indemnify Diaz Fritz in that suit. Under Florida law, “[a]n insurer’s
duty to defend is distinct from and broader than the duty to
indemnify.” Lime Tree Vill. Cmty. Club Ass’n v. State Farm Gen.
Ins. Co.,
980 F.2d 1402, 1405 (11th Cir. 1993) (quotation omitted).
And, as a matter of Florida law and binding Eleventh Circuit
precedent, “[a] court’s determination that the insurer has no duty
to defend requires a finding that there is no duty to indemnify.”
Trailer Bridge, Inc. v. Ill. Nat. Ins. Co.,
657 F.3d 1135, 1146 (11th
Cir. 2011) (quoting Philadelphia Indem. Ins. Co. v. Yachtsman's Inn
Condo Ass'n, Inc.,
595 F. Supp. 2d 1319, 1322 (S.D. Fla. 2009)).
AFFIRMED.
