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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-12138
________________________
D.C. Docket No. 1:16-cv-24507-FAM
SHELITHEA HALLUMS and SAMUEL CASTILLO,
individually and as representatives of a class of
similarly situated persons,
Plaintiffs - Appellants,
versus
INFINITY INSURANCE COMPANY,
INFINITY AUTO INSURANCE COMPANY, and
JPMORGAN CHASE BANK, N.A.,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(December 17, 2019)
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Before WILLIAM PRYOR, MARTIN, and SUTTON,* Circuit Judges.
MARTIN, Circuit Judge:
Shelithea Hallums and Samuel Castillo purchased vehicle insurance which
they say is illusory because it insures no risk for which the insured can be liable.
They brought a putative class action seeking damages and a declaration that this
insurance product is not valid. The District Court held that the insurance product is
not illusory and granted summary judgment to the defendants. After oral argument
and thorough consideration, we agree and affirm the judgment of the District
Court.
I.
A.
Infinity Insurance Company is an Indiana corporation that sells insurance
products throughout Florida. Its principal place of business is in Alabama. Infinity
Insurance Company, directly and through subsidiaries, provides personal
automobile insurance, primarily targeted to “urban” and Hispanic drivers in
Arizona, California, Florida, and Texas. Infinity Auto Insurance Company—an
Ohio corporation that sells insurance products throughout Florida, with its
principal place of business in Alabama—is one such subsidiary. We refer to the
companies together as “Infinity.”
*
Honorable Jeffrey S. Sutton, United States Circuit Judge for the Sixth Circuit, sitting by
designation.
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Ms. Hallums, a citizen of Florida, leased a 2016 BMW X6 from South
Motors BMW, which assigned the lease to Financial Services Vehicle Trust. Mr.
Castillo leased a 2017 Land Rover Discovery Sport from Land Rover North Dade,
LLC, which assigned the lease to JP Morgan Chase Bank, N.A. Both leases
required the plaintiffs to maintain liability insurance with limits of $100,000 for
bodily injuries per person, $300,000 for bodily injuries per accident, and $50,000
for property damage per accident (commonly referred to as “100/300/50 limits”).
Failure to comply with this requirement could result in termination of the lease and
repossession of the automobile.
Through independent insurance agents, Ms. Hallums and Mr. Castillo
separately applied for insurance with Infinity in 2016. Instead of applying for
policies with 100/300/50 limits for all insured, the plaintiffs applied for policies
with lower limits for themselves but 100/300/50 limits covering only the lessors.
The lessors accepted the product as fulfilling the requirements of the plaintiffs’
leases.
The product that provides 100/300/50 limits for the plaintiffs’ lessors is
Infinity’s Lessor Liability Endorsement (the “Endorsement”). The Endorsement
reads as follows:
This additional coverage will apply to damages your lessor becomes
legally obligated to pay that arise from and are legally related to a loss
covered under your policy. The coverage provided by this endorsement
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. . . is available only to indemnify your lessor pursuant to the terms
listed herein.
App. of Appellants, Vol. I, Doc. 5-2 at p.9. Once selected, the Endorsement was
incorporated into the broader insurance policy purchased by the plaintiffs. The
Florida Office of Insurance (“OIR”) has approved the form of Infinity’s
Endorsement in Florida, as well as its rate for each policy type. The OIR also
approved the formula that Infinity uses to calculate its rates. Neither plaintiff has
made any claim against their Infinity policies.
B.
A federal statute, known as the Graves Amendment, bars claims of vicarious
liability against vehicle lessors. See 49 U.S.C. § 30106(a). The Graves
Amendment does not bar claims of negligence or criminal wrongdoing on the part
of the lessor. See § 30106(a)(2).
Ms. Hallums 1 filed her complaint in the U.S. District Court for the Southern
District of Florida on October 27, 2016. She alleged the Endorsement is illusory
because it only provides coverage for vicarious liability against lessors, and that
1
When the complaint was filed, Ms. Hallums was the only named plaintiff. Mr. Castillo
was added as a named plaintiff on October 27, 2017, when the plaintiffs filed their first amended
complaint. In addition, while Infinity Insurance Company and Infinity Auto Insurance Company
were originally the only defendants, JPMorgan Chase Bank, N.A. was added as a nominal
defendant on March 26, 2018, following the District Court’s order to add Mr. Castillo’s lessor as
a defendant.
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liability is foreclosed by the Graves Amendment. Infinity moved to dismiss the
complaint, but the District Court denied that motion on September 22, 2017.
Following discovery, both sides moved for summary judgment and the
plaintiffs moved for class certification. On April 20, 2018, the District Court
denied the plaintiffs’ motion for summary judgment and granted the motion for
summary judgment filed by Infinity. The District Court held that the plaintiffs
have standing to bring their claims, but their claims ultimately fail because the
Endorsement is not limited to coverage for pure vicarious liability claims (and
even if it were, a duty to defend would still exist). Hallums v. Infinity Ins. Co.,
309 F. Supp. 3d 1333, 1336–42 (S.D. Fla. 2018). The plaintiffs timely appealed.
II.
Article III limits the subject-matter jurisdiction of the federal courts to
“Cases” and “Controversies.” U.S. Const. art. III, § 2. Article III standing has
three elements: “The plaintiff must have (1) suffered an injury in fact, (2) that is
fairly traceable to the challenged conduct of the defendant, and (3) that is likely to
be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S.
___, 136 S. Ct. 1540, 1547 (2016). The injury-in-fact element is the “first and
foremost” of the three. Id. (alteration adopted and quotation marks omitted). “To
establish injury in fact, a plaintiff must show that he or she suffered an invasion of
a legally protected interest that is concrete and particularized and actual or
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imminent, not conjectural or hypothetical.” Id. at 1548 (quotation marks omitted).
“A concrete injury need be only an ‘identifiable trifle.’” Salcedo v. Hanna, 936
F.3d 1162, 1167 (11th Cir. 2019) (quoting United States v. Students Challenging
Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 689 n.14, 93 S. Ct. 2405,
2417 n.14 (1973)). A party’s standing to bring suit “is a threshold jurisdictional
question which must be addressed prior to and independent of the merits of a
party’s claims.” AT&T Mobility, LLC v. Nat’l Ass’n for Stock Car Auto Racing,
Inc., 494 F.3d 1356, 1359 (11th Cir. 2007) (quotation marks omitted).
Infinity argues that the plaintiffs have no standing to bring their claim. In
support, Infinity asserts the plaintiffs “must show that they did not get what they
bargained for,” which in this case is “compliance with their leases’ insurance
requirements and, thus, possession of their cars.” According to Infinity, it is not
enough that the plaintiffs paid premiums on a policy they say provides no
coverage. We reject this argument.
The plaintiffs “have met [the] burden [of standing] by alleging harm in the
form of premium payments on illegal policies.” Dubuisson v. Stonebridge Life
Ins. Co., 887 F.3d 567, 575 (2d Cir. 2018); see also London v. Wal-Mart Stores,
Inc., 340 F.3d 1246, 1252 (11th Cir. 2003) (“Florida courts recognize paying
consideration for an illegal contract as an injury per se.”). In this case, the
plaintiffs’ injury is equal to “the difference in price between what they would have
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paid for the [Endorsement] with full information”—zero dollars—“and what they
in fact paid.” See Dubuisson, 887 F.3d at 575. The plaintiffs did not bargain with
Infinity for possession of their cars; they bargained for insurance. If it were the
case that the insurance product was illusory, the bargain would have been upset
and the plaintiffs would be injured. It matters not that the plaintiffs filed no claim
under the Endorsement, because the alleged injury occurred at the time they paid
for the Endorsement.
The plaintiffs seek damages for payment in consideration of an illusory
insurance policy. This is enough for standing. Satisfied we have jurisdiction to
hear this case, we proceed to the merits of this appeal.
III.
A.
We review de novo a district court’s grant of summary judgment, viewing
all evidence and drawing all reasonable inferences in the light most favorable to
the non-moving party. Bank of Brewton v. Travelers Cos., 777 F.3d 1339, 1341–
42 (11th Cir. 2015) (per curiam). We also review de novo the interpretation of an
insurance contract, including the existence of a duty to defend. See
EmbroidMe.com, Inc. v. Travelers Prop. Cas. Co. of Am., 845 F.3d 1099, 1105,
1107–08 (11th Cir. 2017); Nat’l Union Fire Ins. Co. v. Travelers Ins. Co., 214 F.3d
1269, 1272 (11th Cir. 2000). Courts must grant summary judgment when “the
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movant shows that 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). We may
affirm a grant of summary judgment on any ground supported by the record. See
Thompkins v. Lil’ Joe Records, Inc., 476 F.3d 1294, 1303 (11th Cir. 2007).
This action was brought in federal court on the basis of the Class Action
Fairness Act’s grant of diversity jurisdiction. See 28 U.S.C. § 1332(d). “Thus,
state law applies to any issue not governed by the Constitution or treaties of the
United States or Acts of Congress.” Mid-Continent Cas. Co. v. Am. Pride Bldg.
Co., 601 F.3d 1143, 1148 (11th Cir. 2010). The District Court analyzed the claims
under Florida law, and neither side rejects this approach. Thus, we will likewise
examine the various claims asserted on appeal under Florida law. Id.
B.
Infinity offers three separate grounds by which we may affirm the District
Court: (1) the Endorsement is not illusory because it provides coverage for more
than just vicarious liability; (2) the Endorsement is not illusory because it imposes
on Infinity a duty to defend lessors from claims of vicarious liability; and (3) the
plaintiffs’ action is barred by the filed rate doctrine. We choose door number two.
Under Florida law,
[i]t is well settled that an insurer’s duty to defend its insured against a
legal action arises when the complaint alleges facts that fairly and
potentially bring the suit within policy coverage. The duty to defend
must be determined from the allegations in the complaint.
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The duty to defend is of greater breadth than the insurer’s duty to
indemnify, and the insurer must defend even if the allegations in the
complaint are factually incorrect or meritless. Indeed, when the actual
facts are inconsistent with the allegations in the complaint, the
allegations in the complaint control in determining the insurer’s duty to
defend. Any doubts regarding the duty to defend must be resolved in
favor of the insured.
Hartford Accident & Indem. Co. v. Beaver, 466 F.3d 1289, 1292 (11th Cir. 2006)
(quoting Jones v. Fla. Ins. Guar. Ass’n, 908 So. 2d 435, 442–43 (Fla. 2005) (per
curiam)). We are also aware that the covered party’s defenses to liability are
irrelevant to whether a duty to defend exists. See Amerisure Ins. Co. v. Gold Coast
Marine Distribs., Inc., 771 So. 2d 579, 580 (Fla. 4th DCA 2000). “[T]he central
inquiry in a duty to defend case is whether the complaint ‘alleges facts that fairly
and potentially bring the suit within policy coverage.’” Beaver, 466 F.3d at 1292
(quoting Jones, 908 So. 2d at 443).
The policy imposes a duty to defend on Infinity. See App. of Appellants,
Vol. II, Doc. 68-2 at p.21 (“We will settle or defend . . . any claim or action which
is covered under the policy. . . . We have no duty to settle or defend any claim or
action that is not covered under the policy.”). The duty to defend extends to all
aspects of the policy, including the Endorsement. See id. at p.19 (“The contract
includes . . . endorsements . . . .”); see also State Farm Mut. Auto. Ins. Co. v.
Mashburn, 15 So. 3d 701, 704 (Fla. 1st DCA 2009) (“[An insurance] contract is to
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be construed according to its entire terms, as set forth in the policy and amplified
by the policy application, endorsements, or riders.”).
Because the Endorsement is part of the insurance contract, and because the
Endorsement covers claims of vicarious liability against lessors, a complaint
alleging vicarious liability against a lessor would fairly and potentially fall within
the policy coverage. See EmbroidMe.com, 845 F.3d at 1107 (“[A]n insurer’s duty
to defend under Florida law is determined solely by the allegations of the
complaint in which the insured has been sued, and if those allegations identify
facts within the scope of the policy’s coverage, the insurer must defend.”). It does
not matter for duty-to-defend purposes that the Endorsement may only protect
against claims foreclosed by federal law: the Graves Amendment is a defense to
liability, not coverage. 2 See 49 U.S.C. § 30106(a). And, as we have already
observed, the duty to defend is broader than the duty to indemnify. Beaver, 466
F.3d at 1292; see EmbroidMe.com, 845 F.3d at 1107 (stating that, under Florida
law, the duty to defendant “is determined solely by the allegations of the
complaint” and that the insurer must defend “if those allegations identify facts
within the scope of the policy’s coverage”). Of course, an insurer must defend
against plainly unmeritorious claims, Beaver, 466 F.3d at 1292, as well as claims
2
As noted above, we do not address either side’s contentions regarding the scope of the
Endorsement’s indemnity coverage.
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for which coverage may not clearly exist under the policy, EmbroidMe.com, 845
F.3d at 1107; Mid-Continent, 601 F.3d at 1149. That principle resolves this
appeal.
As the District Court observed, the duty to defend imposed by the
Endorsement is no illusory promise:
Post-Graves, Infinity must continue defending lessors sued for claims
that are barred by the law, because inevitably, a lessor will be named as
a defendant under a theory of vicarious liability, as a result of the
lessee’s alleged negligence. In such a case, a lessor will incur cost
associated with hiring counsel that will: analyze the claims asserted and
determine whether the suit is grounded in vicarious liability, and
therefore foreclosed by Graves, or the savings clause, and therefore
permitted to proceed against the lessor; presumably file a motion to
dismiss relying on Graves as a defense if vicarious liability is asserted;
and potentially defend the case on appeal.
Hallums, 309 F. Supp. 3d at 1342. Infinity has these duties regardless of whether
lawsuits alleging acts within the Endorsement’s scope are likely—or even able—to
succeed in court. And the record shows that lessors continue to be sued under
vicarious liability, even after the Graves Amendment. See App. of Appellees, Vol.
V, Doc. 77-1 at pp.10–20 (collecting lessor vicarious liability actions). Even if this
were a close case, “[a]ny doubt concerning an insurer’s duty to defend must be
resolved in favor of coverage.” Flamingo Self Storage, LLC v. Travelers Indem.
Co., 43 So. 3d 168, 170 (Fla. 4th DCA 2010); see Beaver, 466 F.3d at 1292.
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IV.
Because the Endorsement imposes on Infinity a duty to defend lessors from
claims of vicarious liability, the Endorsement is not illusory. We need not reach
the other grounds put forward by Infinity.
AFFIRMED.
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