Vitas Healthcare Corp. v. Evanston Insurance

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
DEC 18, 2008
No. 08-13419 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________

D. C. Docket No. 07-22677-CV-JAL

VITAS HEALTHCARE CORPORATION,
a Delaware corporation,

Plaintiff-Appellant,

versus

EVANSTON INSURANCE COMPANY,
an Illinois Insurance company,

Defendant-Appellee.

________________________

Appeal from the United States District Court
for the Southern District of Florida
_________________________

(December 18, 2008)

Before CARNES, MARCUS and WILSON, Circuit Judges.

PER CURIAM:

Vitas Healthcare Corporation (“Vitas”) appeals from the district court’s
order granting judgment on the pleadings to Evanston Insurance Company

(“Evanston”), in Vitas’ action seeking a declaratory judgment of the respective

rights and obligations arising under an insurance contract between Vitas, as Named

Insured, and Evanston, as Insurer. On appeal, Vitas argues that the district court

erred in construing the contract between the parties to find that an exclusion in its

insurance policy coverage for employees injured on site also applied to the

Additional Insured, Vitas’ landlord, Northwest Capital Corporation (“NCC”).

After thorough review, we affirm.

We review de novo a district court’s denial of a motion for judgment on the

pleadings. Moore v. Liberty Nat. Life Ins. Co., 267 F.3d 1209, 1213 (11th Cir.

2001). Judgment on the pleadings is appropriate where no issue of material fact

remains unresolved and the moving party is entitled to judgment as a matter of law.

Scott v. Taylor, 405 F.3d 1251, 1253 (11th Cir. 2005). The interpretation of

provisions in an insurance contract is a question of law, reviewed de novo. James

River Ins. Co. v. Ground Down Eng’g, 540 F.3d 1270, 1274 (11th Cir. 2008).

Since this is a diversity case, we are bound by Florida law. Hartford Accident &

Indem. Co. v. Beaver, 466 F.3d 1289, 1291 (11th Cir. 2006).

The relevant facts are these. Vitas, a Delaware corporation, leased its Miami

offices from NCC pursuant to a Lease Agreement (“Lease”). The Lease required

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Vitas to procure and maintain liability insurance for the premises, and include

NCC as an Additional Insured on the policy. In February 2003, Paul Carney

(“Carney”), an employee of Vitas, fell and was injured on the premises while

within the scope of his employment. Carney filed for and received workers’

compensation benefits, and, in November 2004, filed a complaint against NCC

alleging that his injuries were caused by NCC’s negligent maintenance of the

premises. Although NCC demanded defense and indemnification from Evanston

pursuant to Vitas’ insurance policy, Evanston denied coverage on the basis of the

policy’s employee exclusion clause.1 NCC subsequently filed a third-party

complaint against Vitas in the Carney action, seeking contribution, common law

and contractual indemnification, and alleging breach of contract in procuring

insurance for NCC. On October 10, 2007, Vitas initiated the present declaratory

judgment action to determine whether NCC was entitled to coverage under the

language of the employee exclusion clause.

On appeal, Vitas argues that the district court erred by applying the

employee exclusion term “the Insured” jointly, rather than severally. Vitas argues

1
In relevant part, the policy provides that Vitas is the Named Insured and includes NCC
as an Additional Insured, but excludes coverage for "any claim based upon or arising out of
Personal Injury to any employee of the Insured arising out of and in the course of his
employment by the Insured or to any obligation of the Insured to indemnify another because of
damages arising out of such injury." (Emphases added).

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that despite the lack of a severability clause in the insurance policy, “the Insured”

should still be read severally to mean that the provision only excludes coverage for

claims arising out of injury to an employee of the insured against whom a claim is

asserted, and would not, then, exclude coverage to NCC unless the injured party

was NCC’s employee.

As an initial matter, we agree with the district court that there is no

controlling Florida case which holds that, in the absence of a severability clause, an

employee exclusion clause should only be applied to the insured employer against

whom a claim is asserted, and not to any additional insureds who are not

employers of the injured. Cases that interpret insurance exclusionary clauses

usually involve policies that do have severability clauses, and are therefore not

binding under the present facts. See McRae v. Snelling, 303 So.2d 670, 671-72

(Fla. 4th DCA 1974) (noting in dicta that employee exclusion clause only

precludes coverage if the injured is asserting a claim against her own insured

employer; relying on dicta from Shelby Mutual Insurance Co., v. Schuitema, 183

So.2d 571 (Fla. 4th DCA 1966), a case that involved a severability clause).

Appellant points to a number of cases for the proposition that Florida courts

have unequivocally held that an insurer’s use of “the Insured” in an exclusionary

provision requires the exclusion to be applied severally, rather than jointly. See

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Auto-Owners Ins. Co. v. Eddinger, 366 So.2d 123 (Fla. 2d DCA 1979); State Farm

Fire & Cas. Ins. Co. v. Kane, 715 F. Supp. 1558 (S.D. Fla. 1989); Golden Door

Jewelry Creations, Inc. v. Lloyds Underwriters Non-Marine Ass’n., 117 F.3d 1328,

1336 (11th Cir. 1998); Michigan Millers Mut. Ins. Corp. v. Benfield, 140 F.3d 915,

925 (11th Cir. 1998). These cases are all distinguishable, however, as they

involved exclusionary clauses based on concealment or fraud, not employee

injuries, and as only the named insureds intentionally committed the fraud to

trigger the exclusion. The courts applied the exclusion severally to protect the

innocent additional insureds.

Like the district court, we find Webb v. American Fire & Casualty Co., 148

Fla. 714 (1942), is more instructive. Webb involved an insurance policy that

excluded coverage for injury or death “of any employee of the Insured while

engaged in the business of the Insured.” Id. at 715. In Webb, the plaintiff was

injured in a car accident while on the job, and sued the driver -- her employer.

After obtaining judgment against her employer, the plaintiff attempted to collect

payment from her employer’s insurance company, but the insurance company

claimed that the coverage was excluded. While there was no mention of a

severability clause, the court looked to the policy’s broad definition of “the

Insured”, and held that the exclusion of coverage applied not only to the employer-

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driver, but also to the owner of the car. Id. at 717-18. In other words, coverage

was excluded for both the named insured and the additional insured, even though

the plaintiff was only employed by one of them. Id. at 718. Here, similarly, as

there is no severability clause and the policy definition of “the Insured” includes

Additional Insureds, coverage to both Vitas and NCC was properly excluded.

Accordingly, we affirm the district court’s judgment on the pleadings in

favor of Evanston.

AFFIRMED.