Southern Owners Insurance Company v. Gallo Building Services, Inc. et al

MOTION for summary judgment

M.D. Fla.May 12, 2017

1 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION SOUTHERN OWNERS INSURANCE COMPANY Plaintiff, v. Case No.: 8:15-CV-1440-EAK-AAS GALLO BUILDING SERVICES, INC., KB HOME TAMPA LLC, KB HOME ORLANDO LLC and DISPOSITIVE MOTION KB HOME FORT MYERS LLC. Defendants. __________________________________________/ SOUTHERN OWNERS INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT Plaintiff, Southern Owners Insurance Company (“Southern Owners”), by and through its undersigned counsel, and pursuant to Federal Rule of Civil Procedure 56 and Local Rule 3.01, moves this Honorable Court for the entry of an order granting Southern Owners’ Motion for Summary Judgment on KB Homes’ Third Amended Complaint. In support thereof, Southern Owners provides this Memorandum in support of its Motion: I. INTRODUCTION Southern Owners filed this action seeking a declaration that it did not owe a duty to defend or indemnify its named insured, Gallo Building Services, Inc. under the Southern Owners’ Commercial General Liability Policies issued to Gallo, with Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 1 of 22 PageID 2397 2 respect to a lawsuit styled KB Home Tampa, LLC, KB Home Orlando, LLC and KB Home Ft. Myers, LLC v. Gallo Building Services, Inc., et al Case No.: 2013-CA- 002679, which is currently pending in the Circuit Court of the Twelfth Judicial Circuit, In and For Manatee County, Florida (herein “underlying lawsuit”). A determination of Southern Owners’ duty to defend is ripe for summary adjudication insofar as the allegations of the underlying complaint and incorporated exhibits clearly show that the “property damage” claimed in the underlying lawsuit falls squarely within Southern Owners’ “Damage to Your Work Exclusion” and the “Exterior Finishing System and Stucco Exclusion.” Summary judgment, therefore, should be granted in Southern Owners’ favor. II. UNDISPUTED FACTS A. THE CGL POLICIES Southern Owners issued the following policies: [1] Policy # 084612-20725344-09 effective 12/31/2009 through 12/12/31/2010 [2] Policy #084612-20725344-10 effective 12/31/2010 through 12/31/2011 [3] Policy #084612-20725344-11 effective 12/31/2011 through 12/31/2012 (These policies shall collectively be referred to herein as the Southern Owners’ CGL policies). The CGL coverage part of the Southern policies states in relevant part: 2. Exclusions Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 2 of 22 PageID 2398 3 This insurance does not apply to: l. Damage to Your Work “Property damage” to “your work” arising out of it or any part of it and Included in the “products-completed operations hazards”. The Southern policies also contain the following definitions SECTION V - DEFINITIONS… 27. “Your work”: a. Means: (1) Work or operations performed by you or on your behalf; and (2) Materials, parts or equipment furnished in connection with such work or operations. b. Includes: (1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance of use of “your work”; and (2) The providing of or failure to provide warnings or instructions. The Southern policies also contain the following endorsement, which provides, in relevant part: ENDORSEMENT 55189 (9-04) THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EXTERIOR FINISHING SYSTEM AND STUCCO EXCLUSION - FORM A This endorsement modified insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART A. Under SECTION 1 - COVERAGES, COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY 2. Exclusions and COVERAGE Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 3 of 22 PageID 2399 4 B. PERSONAL INJURY AND ADVERTISING INJURY LIABILITY, 2. Exclusions, the following exclusion is added: Exterior Finishing System and Stucco This insurance does not apply to any claim “suit”, action or proceeding for “bodily injury”, “property damage”, “personal injury”, or “advertising injury” which is in any way related to or arising out of any “exterior finishing system” or exterior “stucco” application. This exclusion does not apply any claim, “suit”, or proceeding for “bodily injury” which occurs before completion of “your work”. “Your work” is deemed completed: 1. When all of the work called for in your contract has been completed. 2. When all the work to be done at the site has been completed if your contract calls for work at more than one site. 3. When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project. Work that may need service, maintenance, correction, repair or replacement but which is otherwise complete, it will be treated as completed. B. The following definitions are added to SECTION V - DEFINITIONS: “Exterior finishing system,” is an exterior insulating and finishing system applied to the exterior of a structure which incorporates any synthetic stucco or material similar in substance or purpose, and which may also include: insulating board or other material; adhesive or mechanical fasteners; and the application of flashings, coatings, caulking or sealants. “Stucco” is a material made out of Portland cement; sand, cement, line, and/or plaster, or any combination thereof, applied as a hard covering for exterior walls. B. THE UNDERLYING LAWSUIT Gallo Building Services, a general contractor, was named as a defendant in the underlying lawsuit, which seeks damages allegedly caused by defective construction of a condominium complex in Bradenton, Florida. Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 4 of 22 PageID 2400 5 The KB Home defendants (herein “underlying plaintiff”) are the Plaintiffs in the underlying lawsuit styled KB Home Tampa, LLC, KB Home Orlando, LLC, and KB Home Fort Myers, LLC v. A & D Construction Services, Inc., et al, Case No.: 2013-CA-002679, which is presently pending in the Twelfth Judicial Circuit in and for Manatee County, which seeks damages for alleged construction defects and deficiencies caused by the subcontractors at the Willowbrook Condominiums as more fully set forth in KB Home’s Third Amended Complaint and demand for jury trial. In the underlying Third Amended Complaint, KB Homes allege that subcontractor Gallo breached its master subcontract with KB Home, causing KB Home Tampa damages. KB Homes’ Third Amended Complaint contains the following causes of actions asserted against Southern Owners’ named insured, Gallo, as follows: Count 49-Breach of Contract, Breach of Express and Implied Warranty, and Breach of Duty to Defend and Indemnify; Count 50-Negligence; Count 51-Breach of Statutory Warranty; Count 52-Common Law Indemnity; and Count 53-Statutory Cause of Action pursuant to §553.84. C. SOUTHERN OWNERS’ COMMUNICATION WITH GALLO Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 5 of 22 PageID 2401 6 Southern Owners was placed on notice of the lawsuit filed by KB Homes against Gallo in the underlying lawsuit. On June 27, 2013, Southern Owners provided its coverage position to Gallo indicating that it would defend Gallo in the underlying lawsuit but that it reserved the right to file a declaratory judgment action. Thereafter, the 3rd Amended Complaint was filed against Gallo. Southern Owners again informed Gallo it would continue to defend the allegations of the 3rd Amended Complaint but reserved its right to file a Dec Action to have the Court determine that it did not have a duty to defend or indemnify Gallo [D.E. 4-1 Ex. F]. III. ARGUMENT A. SUMMARY JUDGMENT STANDARD The existence of some factual disputes among the litigants will not defeat an otherwise properly supported summary judgment motion; the requirement is that there be no genuine issue of material fact. See St. Paul Fire & Marine Ins. Co. v. The Medical Protective Co. of Ft. Wayne, Indiana et al., 2006 U.S. Dist. Lexis 89422, Para 6, 7 (M.D. Fla. 2006). No genuine issue of material fact exist when the non-moving party “fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett 477 U.S. 317, 322 (1986). The adjudication of an insurer’s duty to defend is a legal issue, and thus summary judgment is an appropriate vehicle for resolution of this issue. See Nationwide Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 6 of 22 PageID 2402 7 Mutual Fire Ins. Co. v. Royal, 588 F. Supp. 2d 1306, 1313 (M.D. Fla. 2008); Lawyers Title Ins. Corp. v. JDC (MAM.) Corp., 52 F.3d 1575, 1580 (11th Cir. 1995) (applying Florida law) (holding no duty to defend due to no coverage under policy and affirming summary judgment for insurer); Hartford Accident & Indemnity Co. v. Weaver, 466 F.3d 1289, 1292 (11th Cir. 2006) (applying Florida law); E.N.D. Services 2011 U.S. Dist. Lexis 144585 (summary judgment appropriate for issues of law). Here, there are no factual disputes that preclude the entry of summary judgment in favor of Southern Owners on whether it has a duty to defend. Florida’s law governs a Federal court sitting in diversity and the court must look to the forum’s state choice of law rules to determine the law applicable to the action. See Nova Casualty Co. v. Waserstein, 424 F.Supp. 2d 1325, 1331-32 (S.D. Fla. 2006) (citing Adolfo House Distributing Corp. v. Travelers Property & Cas. Ins. Co., 165 F.Supp. 2d 1332, 1335 (S.D. Fla. 2001). Florida courts apply the rule of Lex Loci Contractus in insurance contract matters unless public policy requires otherwise. See Lincoln National Health Ins. v. Mitsubishi, 666 So.2d 159, 161 (Fla. 5th DCA 1995). Under the Lexi Loci Contractus principle, the law of the jurisdiction where the contract was issued and delivered governs the interpretation of the insurance contract. See Lumberman’s Mutual Cas. Co. v. August, 530, So.2d 293, 295 (Fla. 1998). Here, because the Southern policies were executed and delivered to Gallo in the State of Florida, Florida law applies in construing the parties’ rights Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 7 of 22 PageID 2403 8 and obligations under the policies. On information and belief, the parties do not dispute the application of Florida law to this matter. “Under Rule 56(a), [t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law.” Bays v. Globe Life and Accident Insurance Company, 216 WL 2621886@1-3 (S.D. Fla. 2016, appeal filed to 11th Circuit May 6, 2016). “The movant bears ‘the stringent burden of establishing the absence of a genuine issue of material fact’.” Id. According to the 11th Circuit: [A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the “pleadings, depositions, answers to interrogatories with the affidavits, if any” which it believes demonstrate the absence of a genuine issue of material fact. Stillman v. Travelers Insurance Company, 88 F.3d 911, 913 (11th Cir. 1996). “The very mission of the summary judgment procedure is to pierce the pleadings and to assess the proof to see whether there is a genuine need for trial…” Id. “In a declaratory judgment action, if the allegations in the complaint alleging a claim against the insured either are acts not covered by the policy or are excluded from the policy’s coverage, the insurer is not obligated to defend or indemnify the insured.” IDC Construction, LLC v. Admiral Insurance Company, 339 F. Supp. 2d 1342, 1347-48 (S.D. Fla. 2004). “Summary judgment is appropriate in declaratory Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 8 of 22 PageID 2404 9 judgment actions seeking a declaration of coverage when the insurer’s duty, if any, rests solely on the applicability of the insurance policy, the construction and effect of which is a matter of law.” Id. B. DUTY TO DEFEND The duty to defend is determined solely from the allegations of the complaint and subject policies. “Under Florida law, the interpretation of an insurance policy is a question of law for the court.” Amerisure Ins. Co. v. Albanese Popkin Oaks Dev. Group, LP, 210 U.S. Dist. Lexis 125918 (S.D. Fla. Nov. 30, 2010) (citing Technical Coating Applicators, Inc. v. U.S. Fidelity & Guaranty Co., 157 F.3d 843 (11th Cir. 1998). Florida jurisprudence is clear; the adjudication of an insurer’s duty to defend is determined solely from the allegations of the underlying complaint and the subject policy(s). See Colony Ins. Co. v. Montecito Renaissance, 2011 U.S. Dist. Lexis 113160 @39 (M.D. Fla. Sept. 30, 2011); St. Paul Fire & Marine Ins. Co. v. The Medical Protective Co. of Ft. Wayne, Indiana et al 2006 U.S. Dist. Lexis 89422, @13, 14 (M.D. Fla. 2006); Nationwide Mutual Fire Ins. Co. v. Donnelly, 2009 U.S. Dist. Lexis 10549 (M.D. Fla. Oct. 28, 2009) (exhibits are considered part of the complaint under Federal Rule of Civ. Proc. 10). Where there is no duty to defend, there is no duty to indemnify. See Fun Spree Vacations v. Orion Ins. Co., 659 So.2d 419, 421 (Fla. 3d DCA 1995). Here, there is no dispute as to the allegations in the underlying complaint and the applicable Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 9 of 22 PageID 2405 10 relevant provisions of the Southern Owners policies. Thus, this court needs to look no further than the underlying pleading and the Southern Owners’ policies to render a determination on the duty to defend as a matter of law. An insurer has no duty to defend if the facts and legal theories alleged in the complaint do not fall within a policy’s coverage. CDC Builders, Inc. v. Amerisure Mutual Ins. Co. 2011 WL 4454937 @10 (S.D. Fla. Aug. 16, 2011) (“If the application of a policy exclusion is clear from the pleadings, the insurer has no duty to defend.”). Auto Owners Ins. Co. v. Marvin Development Corp. 805 So.2d 888, 891 (Fla. 2d DCA 2001) (“An insurer has no duty to defend a lawsuit where the underlying complaint does not allege facts that would bring the complaint within the coverage of the policy”). The underlying complaint must allege facts which clearly bring the case within coverage even though ultimately there may be no liability on part of the insured. Trizec Property Inc., v. Biltmore Construction Co. 767 F.2d 810, 811-12 (11th Cir. 1985); Jones v. Florida Ins. Guaranty Assoc., Inc. 908 So.2d 435 (Fla. 2005). As noted by this court in Trizec, supra, the underlying complaint must allege at least some facts that bring the lawsuit potentially within coverage. Unsupported and conclusory “buzzwords” in the complaint are insufficient to trigger coverage. See State Farm Fire & Casualty Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004). Without question, KB Homes seeks damages “for the repair of the alleged defects it has incurred and has incurred additional damages caused thereby, Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 10 of 22 PageID 2406 11 including loss of use, damage to other property, and out of pocket expenses to investigate the alleged defects.” [D.E. 4-1 p. 62]. C. SOUTHERN OWNERS “YOUR WORK” EXCLUSION BARS COVERAGE Southern Owners’ policies state the following: This insurance does not apply to “property damage” to “your work” arising out of it or any part of it and included in the “products-completed operations hazard.” “Your work” means: (1) work or operations performed by you or on your behalf and (2) materials, parts or equipment furnished in connection with such work or operations. There is no dispute that Gallo was contracted by KB Homes to act as shell subcontractor for the project, responsible for framing the buildings and installing the exterior stucco facades. [D.E. 4-1 p. 14]. Further, there is no dispute that based upon the KB Homes underlying complaint against Gallo with its attachments, that KB Homes seeks damages arising out of alleged construction defects and deficiencies caused by Gallo’s scope of work. The Karins report attached to KB Homes’ Third Amended Complaint as Exhibit U, identifies a number of alleged construction defects and deficiencies attributable Gallo’s scope of work. KB Homes has alleged that defects have caused damage to “other building components, damage to other property, loss of use, and require relocation of residents.” KB Homes has also alleged that the defects included water Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 11 of 22 PageID 2407 12 intrusion, defective workmanship by subcontractors causing property damage to the work of KB Homes, other subcontractors and tradesmen, and to other building components and materials. KB Homes’ other allegations state that KB Homes incurred additional damages caused thereby including loss of use, damage to other property and out of pocket expenses to investigate the alleged defects. Unsupported and conclusory “buzz words” as contained in KB Homes’ Third Amended Complaint are insufficient to trigger coverage. State Farm Fire and Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004) (“Conclusory buzz words unsupported by factual allegations are not sufficient to trigger coverage.”); See Amerisure Insurance Company v. Gold Coast Marine Distributors, Inc. 771 So.2d 579, 582 (Fla. 4th DCA 2000) (holding that the use of buzz words were insufficient to trigger coverage). The Florida Supreme Court has pointed out “The difference between (a) a claim for cost of repairing or removing defective work, which is not a claim for “property damage” and (b) a claim for the costs of repairing damage caused by the defective work which is a claim for “property damage”. United States Fire Ins. Co. v. J.S.U.B., Inc. 979 So.2d 871, 889 (Fla. 2007). See also Auto Owners Ins. Co. v. Pozzi Window Co., 984 So.2d 1241, 1248 (Fla. 2008). In 2012, the 11th Circuit applied J.S.U.B. and Pozzi Windows and found that allegations regarding the repair and replacement of defective components, without defective components, did not give Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 12 of 22 PageID 2408 13 rise to a duty to defend. Amerisure Mut. Ins. Co. v. Auchter Co., 673 F.3d 1294 (11th Cir. 2012). (Faulty workmanship to one part of the home that causes damage to other parts of the home not covered where policy contains a “your work” exclusion). Assurance Company of America v. Lucas Waterproofing, 581 F. Supp 2d 1201, 1209-10 (S.D. Fla. 2008) (Insured contractor would not have been covered but for subcontractor exception to “your work” exclusion, because damage to entire home caused by subcontractor’s work would have been encompassed within the general contractor’s work). As stated in Amerisure Mutual Ins. Co. v. Auchter Co., 673 F.3d 1294 (11th Cir. 2012): “[F]aulty workmanship to one part of the project (the roof, for example) can lead to damage to another part of the project (such as stucco walls which may leak from faulty roof construction). In such an example, under Auchter’s CGL policies, the damage to the stucco walls would be “property damage” within the meaning of the policy, but would ordinarily be excluded under the “your work” exclusion unless the stucco walls had been constructed by a subcontractor, in which case the damage could be covered by the subcontractor exception to “your work” exclusion. In the instant case, Southern Owners exclusion “damage to your work”, eliminated the subcontractor exception and specifically excludes coverage for damages associated with the repair and replacement of the defective work itself. Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 13 of 22 PageID 2409 14 KB Homes’ characterization in use of the term “other property” is simply referring to parts of the condominium buildings which may have been worked on by other subcontractors. This reference to otherwise non-defective components of these condominium buildings that were damaged by the alleged defective work of Gallo does not give rise to a duty to defend. KB Homes attempts to allege certain work of its own and other subcontractors and tradesmen were damaged by the allegedly defective work of Gallo. This is a distinction pointed out in J.S.U.B. which could give rise to a duty to defend pursuant to the subcontractor exception. Unlike J.S.U.B., there is no subcontractor exception here, so the distinction is meaningless. All the components of the project alleged to have been damaged are to the condo project itself. There are no allegations of any damage to personal property such as clocks, rugs, appliances, flooring or any other interior portions of the condominium project. To construe KB Homes’ Complaint as potentially alleging damage to property other than the condominium buildings themselves requires either (a) adding factual allegations that do not exist; or (b) making inferences without any factual basis. The 11th Circuit has recently addressed the exact same “your work” exclusion as contained in Southern Owners’ policy and held the exclusion applied and that a builder was not entitled to coverage. Auto-Owners Insurance Company v. Elite Homes, 2017 WL280711 (11th Cir.). In Elite Homes, the builder argued that there Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 14 of 22 PageID 2410 15 was property damage to “other property”. The underlying complaint alleged that there was damage to drywall and interior finishes as well as other damage to interior portions of the home. Likewise, in the instant case, KB Homes argues “damage to other property” and “other building components”. The 11th Circuit was unpersuaded and held that the use of conclusory phrases such as “other property” was insufficient. Id. D. SOUTHERN OWNERS EXTERIOR FINISHING SYSTEM AND STUCCO EXCLUSION BARS COVERAGE There is no dispute of fact that Southern Owners Exterior Finishing System and Stucco Exclusion applies to the duty to defend, making summary judgment appropriate. The Exterior Finishing System and Stucco Exclusion applies to “any claim, suit, action or proceeding for … “property damage”…which is any way related to or arising out of any “Exterior Finishing System or Exterior Stucco” application.” “Exterior Finishing System” is an exterior insulating and finishing system applied to the exterior of a structure which incorporates any synthetic stucco or materials similar in substance or purpose, and which may also include: insulating board or other materials; adhesive or mechanical fasteners; and the applications of flashings, coatings, caulking or sealants. Stucco is defined as “a material made of Portland cement, sand, cement, lime, plaster or any combination thereof, applied as a hard covering for exterior walls.” Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 15 of 22 PageID 2411 16 In order for an insurer to deny a defense based on a policy exclusion, the complaint against the insured must allege facts that clearly bring the entire case within the exclusion. Trovillion Construction & Development, Inc. v. Mid- Continent Casualty Company, 2014 WL 201678 @4 (M.D. Fla. 2014). There is no disputed issue of fact that an Exterior Finishing System and Stucco was utilized on this project, and these facts are apparent on the face of the pleadings in the underlying action. There is no dispute that Gallo’s scope of work was entirely limited to the shell of the project. KB Homes acknowledges that “Gallo was to act as the shell sub-contractor for the project, responsible for framing the buildings and installing the exterior stucco facades.” [D.E. 25 pg. 1]. KB Homes further identified the deficiency in the stucco work as (a) failing to install all necessary and appropriate control joints; (b) installing incorrect mid- wall flashing and other missing and/or improperly installed accessories; (c) failing to lathe properly; (d) using incorrect size staples that do not penetrate the framing members the minimum of ¾” per code; (e) installing stucco in direct contact with dissimilar materials; (f) installing the incorrect weep screed flashing at the stucco stops at the elevated deck and improper embedment of and thickness of the stucco. [D.E. 4-1 Exh. A]. Accordingly, Southern Owners Exterior Finishing System and Stucco Exclusion applies and Southern Owners has no duty to defend Gallo because of it. Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 16 of 22 PageID 2412 17 There are cases in other jurisdictions that have considered similar exclusions. These cases have universally enforced Exterior Finishing System and Stucco Exclusions, even if the damages alleged against the insured did not directly deal with the deficient Exterior Finishing System and Stucco Application. In Pine Oak Builders Inc. v. Great American Lloyds Insurance Company, the court considered an EIFS Exclusion that applied to “[A]ny work or operations with respect to any exterior component, fixture or feature of any structure if an “Exterior Insulation and Finish System” is used on any part of that structure”. 292 SW.3d 48, 61-64 (TX Appellate-Houston 14th District 2006). The court enforced the EIFS Exclusion, even as it relates to damages that were not related to the EIFS, so long as the damaged component including a chimney cap, the roof, and inadequately caulked windows were on the exterior of the building. Id. In First Mercury Insurance Company v. Miller Roofing Enterprises, the court enforced a similar EIFS Exclusion for damages related to roof leaks. 2013 WL 662970@1 (W.D. WA 2013). The court held that the plain language of the Exclusion had to be applied, and it was clear the damages related to “work” on a building with an “Exterior Insulation and Finish System”, on an exterior component of the building. Id@2. The insured argued that this Exclusion should not apply because the leak was the result of defective workmanship to the roof itself and the insured did not install or make any repairs to the EIFS itself. Id. The insured further Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 17 of 22 PageID 2413 18 argued that the entire building is not constructed of EIFS but rather EIFS was employed on the exterior walls of the structure. Id. Despite these arguments, the court enforced the Exclusion. The insured argued that for the Exclusion to be applied in this way would mean that the insurer could “escape liability for any negligent act performed by the insured on the building because EIFS was installed on the building”, but the court believed that was “the meaning of the policy” paid for and signed by the insured. Id. Trinity Universal Insurance Company v. Employers Mutual Insurance Company, in analyzing a duty to defend issue, the 5th Circuit summarized a similar EIFS Exclusion as well as one that: “Excludes coverage for injuries to or loss of use of tangible property on premises not owned or rented by the insured, Lacy Masonry, if those injuries arise out of either its construction, installation, application, or other services of an EIFS, and also excludes coverage for any work or operations performed by Lacy Masonry on any exterior components or features of a structure if EIFS is used on that structure or any part of that structure. 592 F.3d 687, 692-93 (5th Cir. 2010). The Trinity Universal Court determined that the insurance contract at issue was implicated, but only because the petition alleged damages to interior portions of the building from work done by the insured on the interior. Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 18 of 22 PageID 2414 19 In Crum & Forster v. Breese Corp., the appellate court upheld a judgment prohibiting coverage on an EIFS Exclusion, noting that when “construing a policy, courts cannot write for the insured a better policy of insurance than the one purchased.” 2016 WL 1453518 @1-5 (N.J. App. Div. 2016). In National American Insurance Company v. Gerlicher Company, LLC, the Court of Appeals for the State of Oklahoma upheld a similar EIFS Exclusion. 260 P.3d 1279, 1283-86 (OK App. Div. 2 2011). That policy excluded coverage for “damage that arises out of any work that you do, work that is done on your behalf or any other activity related to an “exterior insulation and finishing system” (commonly called EIFS)…This includes any damage to a building or structure caused by the intrusion of water or moisture through an EIFS…system for which you may be held responsible.” Id. @1283. The damage to the building in that case was related to the exterior insulation and finish system. Id. @1281. See also FSLM Associates, LLC v. Arch Insurance Company 122 A.D. 3d 493 (N.Y. App. 1st Dep. 2014) (affirming granting of Motion for Summary Judgment when EIFS Exclusion was present and the alleged damages were related to the installation of an EIFS). Southern Owners Exterior Finishing System and Stucco Exclusion is unambiguous on its face. There is no dispute that the project utilized a stucco finish, and this point is clear on the face of the underlying pleadings. Gallo’s work was limited to the shell of the building and that water intrusion entered through the Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 19 of 22 PageID 2415 20 alleged defects in the stucco and the alleged water damage was related to or arose out of the installation of the stucco. The property damages alleged in the underlying suit is without question “related to or arising out of “The exterior stucco applied on all condo building in the project.” “The term ‘arising out of’ is broader in meaning than the term ‘caused by’ and means “originating from”, ‘having its origin in’ ‘growing out of’, ‘flowing from’, ‘incident to’, or “having a connection with’.” Taurus Holdings, Inc. v. United States Fidelity and Guaranty Co., 913 So.2d 528 (Fla. 2005) (quoting Hagen v. Aetna Cas. & Surety Co., 675 So.2d 963, 965 (Fla. 5th DCA 1996); Travelers Property Cas. Ins. Co. of America et al. v. Anda, Inc. et al., 658 Fed. Appx. 955 (11th Cir. 2016) (“in any way related to” has been construed to mean “connected or associated with one or another without restriction or exception.”) Diversified Dynamics Corp. v. Wagner Spray Tech. Corp. 106 Fed. Appx. 29 (Fed. Cir. 2004). This means that Southern Owners has no duty to defend Gallo and summary judgment should be granted on the duty to defend. IV. CONCLUSION The Court should find that there are no material issues of fact and Southern Owners “Your Work” and “Exterior Finishing System and Stucco” exclusions bar coverage for Gallo. Accordingly, this Court should enter an order granting Southern Owners’ Motion for Summary Judgment finding that Southern Owners has no duty to defend Gallo. If there is no duty to defend, then there is no duty to indemnify. If Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 20 of 22 PageID 2416 21 this Court determines that there is no duty to defend there cannot be a duty to indemnify. Wilshire Insurance Company v. Poinciana Grocer, Inc. 151 So.3d 55, 57 (Fla. 5th DCA 2014); Essex Insurance Company v. Big Top of Tampa, Inc. 53 So.3d 1220, 1224 (Fla. 2d DCA 2011) (“Because Essex has no duty to defend Big Top…Essex has no corresponding duty to indemnify.”); See also New Hampshire Insurance Company v. Hill, 516 Fed. Appx. 803, 805 (11th Cir. 2013) (“Because the duty to indemnify is narrower than the duty to defend; duty to indemnify cannot exist if there is no duty to defend.”); Auto Owners Insurance Company v. E.N.D. Services, Inc. 506 Fed. Appx. 920, 927 (11th Cir. 2013) (same). WHEREFORE, Southern Owners respectfully requests that this Court grant its Motion for Summary Judgment and enter judgment declaring that Southern Owners owes no duty to defend and/or indemnify Gallo in the underlying lawsuit. CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and accurate copy of the foregoing was served via email on this 12th day of May, 2017 upon all counsel of record. /s/ Andrew F. Russo _________ Andrew F. Russo FBN: 508594 Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 21 of 22 PageID 2417 22 Rywant, Alvarez, Jones, Russo & Guyton 109 N. Brush Street, Suite 500 Tampa, FL 33602 813-229-7007 phone 813-223-6544 fax arusso@rywantalvarez.com Case 8:15-cv-01440-EAK-AAS Document 64 Filed 05/12/17 Page 22 of 22 PageID 2418