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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 21-10675
Non-Argument Calendar
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D.C. Docket No. 2:19-cv-14420-RLR
THE ESTATE OF LILY COOMBS,
by and through Susan E. Corrigan, Personal Representative,
Plaintiff,
versus
ATLANTIC HEALTHCARE CENTER, LLC,
LYRIC HEALTH CARE FACILITIES, LLC,
GRANTHAM HEALTH CARE, LLC,
TIMOTHY F. NICHOLSON,
Defendants-ThirdParty Plaintiffs-Appellees,
ADD IT, LLC,
MILESTONE RETIREMENT COMMUNITIES, LLC,
SLC PROFESSIONALS CHAI, LLC,
SLC PROFESSIONALS MONARCH, LLC,
SLC PROFESSIONALS HOLDINGS, LLC, et al.,
Defendants,
versus
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ARGONAUT INSURANCE COMPANY,
ThirdParty Defendant-Appellant.
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Appeal from the United States District Court
for the Southern District of Florida
________________________
(August 24, 2021)
Before WILLIAM PRYOR, Chief Judge, WILSON and BRASHER, Circuit
Judges.
PER CURIAM:
Argonaut Insurance Company appeals the summary judgment in favor of its
insureds, Atlantic Healthcare Center, LLC, its parent companies, and their owner,
Timothy Nicholson. Nicholson and his companies obtained a declaratory judgment
that they were owed a defense under a directors and officers liability insurance
policy in an action filed by the estate of a former resident of an Atlantic Healthcare
nursing home. Argonaut challenges the ruling that a policy exclusion for prior
wrongful acts did not apply to a complaint that Nicholson and his companies
exploited a vulnerable adult. We affirm.
The Estate of Lily Coombs filed in a Florida court a complaint against
Nicholson, his three partners, six entities that Nicholson and his partners jointly
owned, Atlantic Healthcare, and its parent companies, Lyric Health Care Facilities,
LLC, and Grantham Health Care, LLC. The complaint alleged that Coombs, a
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“vulnerable adult with a long-term disability” who was unable to perform daily
self-care activities, resided at the Atlantic Healthcare nursing home from January
9, 2012, until her death on December 5, 2016. The complaint described a scheme
in which Nicholson used Atlantic Healthcare and its parent companies (“the
Nicholson companies”) as his alter egos to contract with his nursing home and to
enrich the entities that he and his partners jointly owned.
The complaint alleged that Nicholson and his partners agreed “[a]t some
time in 2012 . . . to operate a group of management and consulting companies[,
which they jointly owned,] together as a partnership and/or joint venture
partnership (the Venture).” “In or around 2012,” the defendants agreed “to utilize
the Venture to operate, manage, consult with, and control the day-to-day
operations of” Coombs’s nursing home “to generate as much profits as possible”
and to avoid detection of their self-serving contracts. “To prevent scrutiny” by a
regulatory agency, on May 25, 2012, Nicholson filed an application for license
renewal that concealed his ownership of the nursing home.
The complaint alleged four counts. In counts one and two, the Estate
complained that all the defendants assisted and conspired with the nursing home to
breach duties it owed Coombs of loyalty, good faith, and fair dealing. Count one
incorporated all the factual allegations in the preceding paragraphs of the
complaint, and count two incorporated all the allegations in count one. In count
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three, the Estate complained that all the defendants, except the Venture, exploited
Coombs by depriving her “of the use, benefit or possession of [her] funds, assets or
property” by failing to use those resources for her care. See Fla. Stat. § 415.1111.
Count three incorporated select factual allegations in preceding paragraphs of the
complaint regarding venue, jurisdiction, and prerequisites for suit. Count three also
contained factual allegations concerning Coombs’s exploitation, including “it is
not alleged that the Defendants are an entity that established, controlled,
conducted, managed or operated the Facility.” In count four, the Estate complained
that all the defendants conspired to exploit Coombs. See id. Count four
incorporated all the allegations in count three.
Nicholson and his companies submitted a claim to Argonaut for coverage
and a defense under the insurance policy it had issued to Lyric Health Care in
Maryland. The policy covered losses of the “Company,” which consisted of “the
Policyholder . . . and any Subsidiary of the Policyholder,” and of “Insured
Person(s),” including the “director, trustee, governor, management committee
member, Manager, [or] officer[s] . . . of the Company.” Argonaut denied the claim
in part based on an endorsement to its policy that excluded coverage for losses for
conduct occurring “in whole or in part” before December 1, 2012.
[T]he insurer shall not be liable to make payment for Loss . . . based
upon, arising out of, directly or indirectly resulting from, in
consequence of, attributable to or in any way involving:
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1. any act, omission, fact, circumstance, situation, transaction,
or event which occurred, or is alleged to have occurred, in
whole or in part, prior to December 1, 2012, including any
act, omission, fact, circumstance, situation, transaction,
and/or event which constitutes a Wrongful Act; or
2. any other act, omission, fact, circumstance, situation,
transaction, or event, whenever occurring or allegedly
occurring, which together with an act, omission, fact,
circumstance, situation, transaction, and/or event described in
paragraph 1. above constitute Interrelated Wrongful Acts.
Argonaut stated that all allegations in the complaint related to the formation of the
Venture, which occurred before December 1, 2012.
Nicholson and his companies filed a third-party complaint seeking a
declaration that Argonaut owed them a duty to defend. The Florida court severed
the third-party action from the Coombs action. Later, Argonaut removed the
severed action to the district court. See 28 U.S.C. § 1332.
Both Argonaut and its insureds moved for summary judgment. Argonaut
argued that its policy excluded from coverage all counts of the complaint because
they were based on allegations of wrongful acts that occurred before the cut-off
date. Nicholson and his companies argued that Argonaut had a duty to defend
because the complaint alleged conduct that occurred or possibly occurred after the
cut-off date.
The district court granted summary judgment in favor of Nicholson and his
companies. The district court ruled that Argonaut had a duty to defend because the
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allegations in the complaint left “open the potential—however slight” that
Nicholson “could have joined the Venture after [the cut-off date of] December 1,
2012, and still have done so ‘in or around 2012’ or ‘at some time in 2012.’” The
district court determined that “a claim based on” or interrelated with Nicholson’s
wrongful act on May 25, 2012, was a prior act excluded from coverage and that
incident was “incorporated in Counts 1 and II alleging claims for breach of
fiduciary duties.” But the district court ruled that Argonaut had a duty to defend
because the incident was “specifically not incorporated in Counts III and IV
alleging exploitation of a vulnerable adult” and the “claim . . . that [Nicholson and
his companies] exploited Ms. Coombs by using her property for their benefit
instead of for her support . . . ha[d] naught to do with the false statement
[Nicholson filed] on May 25, 2012.”
We review de novo a summary judgment. Amerisure Mut. Ins. Co. v.
Auchter Co., 673 F.3d 1294, 1295 n.2 (11th Cir. 2012). Summary judgment is
appropriate when “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).
Under Maryland law, which the parties agree applies, “insurance contracts
are construed as ordinary contracts.” Nat’l Union Fire Ins. Co. of Pittsburgh v.
David A. Bramble, Inc., 879 A.2d 101, 109 (Md. 2005). Their interpretation
“begins with the language employed by the parties.” MAMSI Life & Health Ins.
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Co. v. Callaway, 825 A.2d 995, 1005 (Md. 2003). And all “terms of the contract
are accorded their customary, ordinary, and accepted meanings.” Walk v. Hartford
Cas. Ins. Co., 852 A.2d 98, 106 (Md. 2004).
In Maryland, “[a]n insurance company has a duty to defend its insured for
all claims that are potentially covered under the policy.” Id. That duty “is
determined by the allegations in the tort action[].” Id. (quoting Brohawn v.
Transamerica Ins. Co., 347 A.2d 842, 850 (Md. 1975)). When “a tort plaintiff does
not allege facts which clearly bring the claim within or without the policy
coverage, the insurer still must defend if there is a potentiality that the claim could
be covered by the policy.” Id. (quoting Brohawn). “If there is any doubt as to
whether there is a duty to defend, it is resolved in favor of the insured.” Id. at 106–
07. And so long as “any claims potentially come within the policy coverage, the
insurer is obligated to defend all claims.” Utica Mut. Ins. Co. v. Miller, 746 A.2d
935, 940 (Md. 2000).
Argonaut had a duty to defend the suit against Nicholson and his companies
because the complaint alleges a wrongful act potentially covered by their insurance
policy. By its plain terms, the endorsement to the policy excluded from coverage
wrongful acts and acts interrelated with a wrongful act that occurred before
December 1, 2012. That exclusion did not apply to the Estate’s complaint in count
three that Nicholson, his companies, his partners, and their jointly-owned entities
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exploited Coombs. Count three alleges no date when any defendant misused
Coombs’s property. And count three did not incorporate the earlier allegation
about Nicholson’s wrongful act of filing a false application on May 25, 2012, or
share a common nexus with that distinct activity. So the defendants could have
exploited Coombs in the years after the cut-off date while she continued to live at
the nursing home. Because Nicholson and his companies could have exploited
Coombs after December 1, 2012, their claim possibly is covered by the policy they
bought from Argonaut, and it has a duty to defend them.
Argonaut argues that it owes no duty to defend because “all of the acts
undertaken by Defendants were part and parcel of the Venture’s conspiracy” and
involved interrelated wrongful acts that preceded the cut-off date. But the Venture
was not named in count three as a perpetrator who exploited Coombs. See Fla. Stat.
§ 415.1111 (“A vulnerable adult who has been . . . exploited . . . has a cause of
action against any perpetrator . . . .”). And the specific allegations unique to the
count for exploitation eliminated the Venture as a perpetrator by stating that the
defendants were not “an entity that established, controlled, conducted, managed or
operated the Facility.”
Argonaut also argues, for the first time, that it owes no defense because
Nicholson and his companies filed a single claim for coverage and some counts of
the complaints against them involve wrongful acts that preceded the cut-off date
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and are excluded from coverage. In the district court, Argonaut argued that the
wrongdoing that formed the basis for each count of the complaint was interrelated.
We decline to address the merits of a theory Argonaut raises for the first time on
appeal. See Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th Cir.
2004).
We AFFIRM the summary judgment in favor of Atlantic Healthcare, its
parent companies, and Nicholson.
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