Opinion
Case No. 8:21-cv-2932-SCB-JSS
2022-12-08
NEW MARKET REALTY 1L LLC, Plaintiff, v. GREAT LAKES INSURANCE SE, Defendant.
Hans Peter B. Haahr, Haahr Law Group, PL, St. Petersburg, FL, for Plaintiff. David B. Levin, Brian William Fernandez, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Fort Lauderdale, FL, for Defendant.
Hans Peter B. Haahr, Haahr Law Group, PL, St. Petersburg, FL, for Plaintiff. David B. Levin, Brian William Fernandez, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Fort Lauderdale, FL, for Defendant. ORDER SUSAN C. BUCKLEW, United States District Judge
THIS CAUSE comes before the Court on the following:
• Defendant/Counterclaim Plaintiff, Great Lakes Insurance SE's ("Great Lakes"), Motion for Final Summary Judgment on Amended Counterclaim for Declaratory Judgment and Incorporated Memorandum of Law with exhibit. (Doc. 34).
• Plaintiff/Counter Defendant, New Market Realty 1L, LLC's ("Plaintiff"), Response in Opposition to Great Lakes' Motion for Final Summary Judgment and Cross-Motion for Partial Summary Judgment with exhibits. (Doc. 40).
• Great Lakes' Reply in Support of its Motion for Final Summary Judgment on Amended Counterclaim for Declaratory Judgment. (Doc. 41).
• Great Lakes' Response in Opposition to Plaintiff's Cross-Motion for Partial Summary Judgment with exhibits. (Doc. 44).
• Plaintiff's Reply in Support of its Cross-Motion for Partial Summary Judgment. (Doc. 50).
For the reasons explained below, Great Lakes' Motion for Final Summary Judgment on Amended Counterclaim for Declaratory Judgment is due to be granted and Plaintiff's Motion for Partial Summary Judgment is due to be denied.
I. BACKGROUND AND STATEMENT OF FACTS
This case involves an insurance coverage dispute regarding a commercial lines policy, identified as policy number LK453754 (the "Policy"), which Defendant, Great Lakes Insurance SE, issued to Plaintiff, New Market Realty 1L LLC. The Policy provided insurance coverage for ten (10) different single family residence rental properties in St. Petersburg, Florida, for the period from November 30, 2020 to November 30, 2021. (See Doc. 15-1, pp. 17-19 (Commercial Property Coverage Part Declarations). Significantly, the Policy contains a PROTECTIVE SAFEGUARDS ENDORSEMENT (CP 04 11 10 12) ("the Protective Safeguards Endorsement" or "the Endorsement") which states, in relevant part:
A. The following is added to the Commercial Property Conditions:(Id. at 39-42). The P-9 protective safeguards symbol is then described in the Protective Safeguards Schedule (or "the Schedule") as "fire extinguishers." (Id. at 39, 41). The properties to which the P-9 safeguards symbol is applicable appear in list form in that Schedule as Premise Nos. 1 through 10 and the P-9 symbol appears on the same line as each of the insured properties. (Id.). More specifically, the Schedule shows, in pertinent part:
Protective Safeguards
1. As a condition of this insurance, you are required to maintain the protective devices or services listed in the Schedule above.
2. The protective safeguards to which this endorsement applies are identified by the following symbols:
* * * *
"P-9", the protective system described in the Schedule.
* * * *
B. The following is added to the Exclusions section of:
Causes Of Loss - Basic Form
Causes Of Loss - Broad Form
Causes Of Loss - Special Form
Mortgage holders Errors And Omissions Coverage Form
Standard Property Policy
We will not pay for loss or damage caused by or resulting from fire if, prior to the fire, you:
1. Knew of any suspension or impairment in any protective safeguard listed in the Schedule above and failed to notify us of that fact; or
2. Failed to maintain any protective safeguard listed in the Schedule above, and over which you had control, in complete working order.
* * * *
SCHEDULE
| Prem No. | Bldg No. | Protective Safeguards Symbols Applicable |
| 1 | 1 | P-9 |
| 2 | 1 | P-9 |
| 3 | 1 | P-9 |
| 4 | 1 | P-9 |
| 5 | 1 | P-9 |
| 6 | 1 | P-9 |
| 7 | 1 | P-9 |
| 8 | 1 | P-9 |
| 9 | 1 | P-9 |
| 10 | 1 | P-9 |
On or about December 21, 2020, during the Policy term, one of the scheduled properties, Premise No. 9, located at 1140 15th Avenue S., St. Petersburg, FL 33705 ("the Property"), suffered fire damage ("the Loss"). On May 27, 2021, Great Lakes conducted an examination under oath of Joseph Lovett, Plaintiff's sole owner and member. (Doc. 34, Ex. 1, Declaration of Christopher Nichols, ¶ 14 & Tab B, Lovett Examination ("Exam."), 8:19-9:8). During the examination, Mr. Lovett asserted that the Property had only one fire extinguisher. (Id. at 34:1-35:11). On August 17, 2021, Great Lakes denied coverage for the Loss on the basis that Plaintiff had materially breached the Protective Safeguards Endorsement by failing to maintain multiple fire extinguishers at the Property. (Id., Ex. 1, Nichols Decl., ¶ 15). On November 8, 2021, in response to the Insured's Notice of Intent to Initiate Litigation, Great Lakes again denied coverage for the Loss on the basis that the Insured had materially breached the Protective Safeguards Endorsement by failing to maintain multiple fire extinguishers at the Property. (Id. at ¶ 16).
II. PROCEDURAL HISTORY
As a result, on November 9, 2021, Plaintiff initiated litigation in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida, asserting a single count for breach of contract against Great Lakes based on its denial of insurance coverage for the Loss. (Doc. 1-1). Great Lakes then removed the case to this Court on December 17, 2021, based upon diversity subject matter jurisdiction. (Doc. 1).
On January 21, 2022, Plaintiff filed an Amended Complaint that merely changed the named plaintiff from New Market Realty, LLC to New Market Realty 1L, LLC. (Doc. 15). On February 24, 2022, Defendant filed an Amended Answer, Affirmative Defense, and Counterclaim for Declaratory Judgment. (Doc. 24). In the Amended Counterclaim, Great Lakes asserts two counts for declaratory relief pursuant to 28 U.S.C. § 2201. The first count seeks a declaration that the Protective Safeguards Endorsement requires Plaintiff to maintain at least two fire extinguishers at the Property. The second count seeks a declaration that there is no coverage for the Loss due to Plaintiff's breach of the Protective Safeguards Endorsement by not maintaining at least two fire extinguishers at the Property.
On March 11, 2022, Plaintiff filed a Motion to Dismiss Great Lakes' Amended Counterclaim for failure to state a claim on which relief can be granted, pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure. (Doc. 25). On April 22, 2022, this Court denied that Motion. (Doc. 31). On April 28, 2022, Plaintiff filed an Answer and Affirmative Defenses to the Amended Counterclaim. (Doc. 32.) In its defense, Plaintiff does not dispute that the Protective Safeguards Endorsement uses the plural "extinguishers," but it asserts that the Protective Safeguards Endorsement is ambiguous because it is subject to more than one reasonable interpretation. Plaintiff suggests two interpretations of the Policy: (1) that the Policy requires only one fire extinguisher at each of the ten properties listed in the Policy (id., ¶¶ 72-73) and (2) that the Policy requires at least two fire extinguishers among the ten different locations (id.). Plaintiff disputes Great Lakes' interpretation that the Endorsement requires more than one fire extinguisher at each location. (Id., ¶ 73).
Great Lakes now seeks the entry of final summary judgment in its favor on both counts of its Amended Counterclaim for declaratory relief. Plaintiff, in turn, asks the Court to find that Great Lakes breached the Policy by denying coverage based upon an erroneous interpretation of the Policy and enter a partial summary judgment in Plaintiff's favor. Plaintiff asserts that the Policy's Protective Safeguards Endorsement is ambiguous because it does not specify the exact number of fire extinguishers to be placed at each insured location and where they should be placed or, alternatively, that the only reasonable interpretation of the Endorsement requires one fire extinguisher at each of the ten locations. Plaintiff maintains that it complied with the Policy's Endorsement by placing one fire extinguisher at the Property prior to the fire.
III. STANDARD OF REVIEW
Summary judgment is appropriate "if the movant shows there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P.56(a). The Court must draw all inferences from the evidence in the light most favorable to the non-movant and resolve all reasonable doubts in that party's favor. See Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir. 2006) (citation omitted). The moving party bears the initial burden of showing the Court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. See id. (citation omitted). When a moving party has discharged its burden, the non-moving party must then go beyond the pleadings, and by its own affidavits, or by depositions, answers to interrogatories, and admissions on file, designate specific facts showing there is a genuine issue for trial. See id. (citation omitted). If the non-movant's response consists of nothing "more than a repetition of his conclusory allegations," summary judgment is not only proper, but required. Morris v. Ross, 663 F.2d 1032, 1034 (11th Cir. 1981). Where one party's story is directly contracted by the record, such that no reasonable jury would believe it, summary judgment is proper. See Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).
IV. CONTROLLING LAW AS TO INSURANCE POLICY INTERPRETATION
The parties are in agreement that Florida law controls the interpretation of the Policy inasmuch as this case is based on diversity subject-matter jurisdiction. Under Florida law, the interpretation of provisions of an insurance policy is a question of law. See James River Ins. Co. v. Ground Down Eng'g, 540 F. 3d 1270, 1274 (11th Cir. 2008). Whether a policy provision is ambiguous is also a question of law. State Farm Fire & Cas. Co. v. Metro. Dade County, 639 So. 2d 63, 65 (Fla. Dist. Ct. App. 1994).
When interpreting an insurance policy under Florida law, its terms are interpreted in accordance with the policy's plain language. Travelers Indem. Co. of Conn. v. Richard Mckenzie & Sons, Inc., 10 F. 4th 1255, 1264 (11th Cir. 2021) (citing Prudential Prop. & Cas. Ins. Co. v. Swindal, 622 So. 2d 467, 470 (Fla. 1993)). "When contractual language is clear and unambiguous, [courts] cannot indulge in construction or interpretation of its plain meaning." Id. A "true ambiguity exists only when the language at issue is reasonably susceptible to more than one interpretation.' " Id. However, "a true ambiguity does not exist merely because a document can possibly be interpreted in more than one manner" or because "it is complex or requires analysis." Id. (citing Garcia v. Fed. Ins. Co., 969 So. 2d 288, 291 (Fla. 2007)). "If the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and another limiting coverage, the insurance policy is considered ambiguous." Garcia, 969 So. 2d at 291 (quotation marks and citations omitted). However, an ambiguity does not exist based on "fanciful, inconsistent, and absurd interpretations of plain language" and "[i]t is the duty of the trial court to prevent such interpretations." Am. Med. Int'l, Inc. v. Scheller, 462 So. 2d 1, 7 (Fla. Dist. Ct. App. 1984).
V. DISCUSSION
Great Lakes contends that it is entitled to the entry of final summary judgment on its Amended Counterclaim because the Protective Safeguards Endorsement clearly and unambiguously requires at least two fire extinguishers at the Property. This Court agrees. The Protective Safeguards Endorsement modified the Policy by adding conditions of insurance. The Endorsement contains a Schedule, which lists and identifies each of Plaintiff's ten properties. Within the Schedule, safeguard "P-9" is described as "FIRE EXTINGUISHERS." (Doc. 15-1, pp. 39-42.) The Protective Safeguards Endorsement specifies—as shown in the Schedule—that the "P-9" symbol applies to each of the ten listed properties. The "P-9" symbol appears on the same line as, and directly across from, each enumerated property and so, it is used ten times within the Schedule. Most importantly, the "P-9" protective safeguard is defined in the plural form as "FIRE EXTINGUISHERS," not fire extinguisher (singular).
The Court agrees with Great Lakes that given its plain meaning, the Policy's deliberate use of the plural terminology, and the intentional placement of the "P-9" symbol adjacent to each listed insured property, the Protective Safeguards Endorsement clearly and unambiguously confirms the requirement that each scheduled location must have more than one fire extinguisher. This is the only reasonable interpretation of the Protective Safeguards Endorsement in this commercial-lines—not homeowner's—policy. While Plaintiff contends that the only reasonable interpretation of the Endorsement is that it requires a single fire extinguisher at each of the ten scheduled properties, this is simply not a reasonable interpretation of the Endorsement. It is not supported by the plural use of "FIRE EXTINGUISHERS," and the deliberate placement of the "P-9" symbol next to each property. Rather, Plaintiff's interpretation is an impermissible attempt to rewrite the Policy.
Plaintiff, alternatively, contends that the Protective Safeguards Endorsement is ambiguous because it does not specify the exact number of fire extinguishers required at each insured location and where the fire extinguishers should be placed at each location. This interpretation is also unsupported by the language and structure of the Policy's Schedule. The lack of specificity as to the exact number of multiple extinguishers does not result in any uncertainly or ambiguity regarding coverage, because the Protective Safeguards Endorsement would be satisfied with any number of multiple extinguishers—as long as there is more than one. As Great Lakes correctly argues, Plaintiff also cannot create ambiguity based on non-existent contractual language by improperly attempting to add terms to the endorsement that the drafter did not intend to include—to wit, the precise location of the required multiple fire extinguishers. No ambiguity arises from the non-inclusion of any specified locations. The Court, therefore, agrees with Great Lakes that Plaintiff's contention that the Endorsement is ambiguous for not specifying the number of multiple fire extinguishers or their location is, therefore, flawed.
Plaintiff presents no credible argument or interpretation that the Protective Safeguards Endorsement requires anything other than the placement of at least two fire extinguishers at each property, including the subject Property. Therefore, Great Lakes' sole reasonable interpretation is fully dispositive of Count I of the Amended Counterclaim, which seeks a declaration that the Protective Safeguards Endorsement requires Plaintiff to maintain at least two fire extinguishers at the Property. The Endorsement expressly states that the "P-9" protective system is an additional "condition of insurance" which, if breached, relieves the insurer from having to pay for fire loss. (Doc. 15-1, pp. 39-42). More specifically, Plaintiff's failure "to maintain any protective safeguard listed in the Schedule" precludes payment "for loss or damage caused by or resulting from fire." (Id. at 42.) Based on Great Lakes' interpretation of the Policy, Plaintiff's admitted failure to comply with the Protective Safeguards Endorsement is fully dispositive of Count II of the Amended Counterclaim, which seeks a declaration that there is no coverage for the Loss due to Plaintiff's breach of the Protective Safeguards Endorsement by not maintaining at least two fire extinguishers at the Property.
ACCORDINGLY, it is ORDERED AND ADJUDGED that:
1. Defendant/Counterclaim Plaintiff, Great Lakes Insurance SE's, Motion for Final Summary Judgment on Amended Counterclaim for Declaratory Judgment (Doc. 34) is GRANTED.
2. Plaintiff/Counter Defendant, New Market Realty 1L, LLC's, Cross-Motion for Partial Summary Judgment (Doc. 40) is DENIED.
3. The Clerk is directed to enter final summary judgment in favor of Defendant/Counterclaim Plaintiff, Great Lakes Insurance SE, and close this case.
DONE and ORDERED at Tampa, Florida, this 8th day of December, 2022.