Starstone National Insurance Company v. Polynesian Inn, LLC, d.b.a. Days Inn of Kissimmee

• Court: Court of Appeals for the Eleventh Circuit
• Decided: June 12, 2020
• Docket: 19-13769
• Status: Unpublished

Opinion

Case: 19-13769 Date Filed: 06/12/2020 Page: 1 of 11

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 19-13769 Non-Argument Calendar ________________________

D.C. Docket No. 6:18-cv-01048-GAP-EJK

STARSTONE NATIONAL INSURANCE COMPANY,

Plaintiff - Counter Defendant, Appellee,

versus

POLYNESIAN INN, LLC, d.b.a. Days Inn of Kissimmee,

Defendant - Counter Claimant, Appellant,

ANDREW JAMES BICKFORD,

Defendant - Appellant,

JANE DOE, as Personal Representative of the Estate of Zackery Ryan Ganoe,

Defendant. Case: 19-13769 Date Filed: 06/12/2020 Page: 2 of 11

________________________

Appeal from the United States District Court for the Middle District of Florida ________________________

(June 12, 2020)

Before ROSENBAUM, LUCK, and LAGOA, Circuit Judges.

PER CURIAM:

In this insurance coverage dispute, Appellants Polynesian Inn, LLC

(“Polynesian”), and Andrew Bickford appeal the district court’s grant of summary

judgment to StarStone National Insurance Company (“StarStone”) on StarStone’s

complaint seeking a declaration that it owed Polynesian no coverage under an excess

liability policy because the underlying claim was subject to a “sublimit” of liability

in the primary coverage. Appellants maintain that no “sublimit,” properly defined,

applies in this case. After careful review, we affirm.

I.

In April 2017, a woman wielding a knife attacked Bickford and Zackery

Ganoe while they were guests at a hotel operated by Polynesian in Kissimmee,

Florida. The woman stabbed Ganoe to death and slashed Bickford’s throat.

Bickford survived and then made a claim for damages against Polynesian,1 which,

at the time of the incident, was insured by a primary general-liability policy issued

1 Ganoe’s estate also made a claim but is not a party to this appeal. 2 Case: 19-13769 Date Filed: 06/12/2020 Page: 3 of 11

by Northfield Insurance Company (“Northfield”) and an excess-liability policy

issued by StarStone (previously Torus National Insurance Company).

The primary Northfield policy provides $1 million in liability coverage per

occurrence, subject to a $2 million aggregate limit. In its unmodified form, the

policy provides coverage for, among other things, sums that Polynesian became

liable to pay as damages because of “bodily injury.” However, the Northfield policy

includes an endorsement entitled “Limited Assault or Battery Liability Coverage”

(the “A&B Endorsement”). In relevant part, the A&B Endorsement (a) adds an

exclusion to coverage for “bodily injury” arising out of any “assault” or “battery”

committed by any person; (b) creates a separate coverage provision for “bodily

injury” caused by “an assault or battery offense”; and (c) establishes limits of

$25,000 for each assault or battery offense, subject to a $50,000 aggregate limit.

There is no dispute that Bickford’s claim is subject to the $25,000 limit.

The issue here is whether the StarStone policy provides excess coverage. The

StarStone policy, which has a $3,000,000-per-occurrence limit, is a “following

form” excess-liability policy, meaning it “follows the definitions, terms, conditions,

limitations and exclusions of the Followed Policy”—here, the Northfield policy.

StarStone agreed to pay sums in excess of the Northfield policy’s “Total Limits”2

2 The StarStone policy describes the “Total Limits” of the Northfield policy as follows:

$1,000,000 Per Occurrence 3 Case: 19-13769 Date Filed: 06/12/2020 Page: 4 of 11

that the insured becomes legally obligated to pay as damages. At the same time, the

StarStone policy does not provide coverage “with respect to or as a result of any of

the following clauses or similar clauses in the Followed Policy: . . . 3. Sublimit of

liability, unless coverage for such sublimit is specifically endorsed to this Policy.”

Doc. 80-4 at 5 (emphasis added).

When Polynesian submitted Bickford’s claim to StarStone, it denied coverage

and then filed this action for a declaratory judgment. StarStone maintained that it

owed no coverage for Bickford’s claim because the A&B Endorsement, which

applied to the claim, was a “sublimit of liability.” The parties filed competing

motions for summary judgment, and the district court granted summary judgment to

StarStone. This appeal followed.

II.

We review de novo the district court’s grant of summary judgment, applying

the same standards as the district court. Southern-Owners Ins. Co. v. Easdon Rhodes

& Assocs. LLC, 872 F.3d 1161, 1163 (11th Cir. 2017). We also review de novo the

district court’s interpretation of contract language. Id. at 1164.

$2,000,000 Other Aggregate Included in GL Products/Completed Operations Aggregate $1,000,000 Personal and Advertising Injury $1,000,000 Combined Single Limit

4 Case: 19-13769 Date Filed: 06/12/2020 Page: 5 of 11

Under Florida law, which governs this diversity action, 3 the “interpretation of

a contract is a question of law subject to de novo review.” Horizons A Far, LLC v.

Plaza N. 15, LLC, 114 So. 3d 992, 994 (Fla. Dist. Ct. App. 2012). Contract

interpretation is governed by the intent of the parties, which is “determined from the

plain language of the agreement and the everyday meaning of the words used.” Id.

We look at the policy “as a whole and give every provision its full meaning and

operative effect.” State Farm Fire & Cas. Co. v. Steinberg, 393 F.3d 1226, 1230

(11th Cir. 2004) (quotation marks omitted); Am. Home Assurance Co. v. Larkin Gen.

Hosp., Ltd., 593 So. 2d 195, 197 (Fla. 1992) (“To determine the intent of the parties,

a court should consider the language in the contract, the subject matter of the

contract, and the object and purpose of the contract.”). To aid the interpretation of

insurance-policy terms, “Florida courts commonly adopt the plain meaning of words

contained in legal and non-legal dictionaries.” Hegel v. First Liberty Ins. Corp., 778

F.3d 1214, 1221 (11th Cir. 2015) (quotation marks omitted).

Ambiguous provisions are construed against the insurer and in favor of

coverage. James River Ins. Co. v. Ground Down Eng’g, Inc., 540 F.3d 1270, 1274-

75 (11th Cir. 2008). “A contract provision is considered ambiguous if the relevant

policy language is susceptible to more than one reasonable interpretation, one

3 Mid-Continent Cas. Co. v. Am. Pride Bldg. Co., LLC, 601 F.3d 1143, 1148 (11th Cir. 2010) (stating that, in diversity cases, “state law applies to any issue not governed by the Constitution or treaties of the United States or Acts of Congress”). 5 Case: 19-13769 Date Filed: 06/12/2020 Page: 6 of 11

providing coverage and the other limiting coverage.” Id. (quotation marks omitted).

But an insurance policy that is plain and unambiguous must be enforced as written.

Garcia v. Fed. Ins. Co., 969 So. 2d 288, 291 (Fla. 2007).

In interpreting the terms “sublimit” or “sublimit of liability,” which are not

defined in the insurance policies at issue, Appellants focus on the prefix “sub-,”

which is defined in part as meaning “under,” “below,” “beneath,” or “subordinate.”

Sub-, Dictionary.com, https://www.dictionary.com/browse/sub-?s=t (last visited

May 21, 2020); Sub-, Merriam-Webster Dictionary Online, https://www.merriam-

webster.com/dictionary/sub- (last visited May 21, 2020). From these meanings, they

reason that a limit is a sublimit only if it is “subordinate to (or under) another limit,”

in the same way that a “subcontractor” is subordinate to or under a primary

contractor. If a limit is not subordinate to another limit, their argument goes, it is a

“standalone limit” even if it is lower than some other limit in the policy. And in

their view, the A&B Endorsement is not a sublimit because it exists apart from and

is not under or subordinate to the $1 million-per-occurrence limit.

StarStone replies that the A&B Endorsement fits within the well-recognized

definition of “sublimit” because it caps the insurer’s exposure at an amount below

the ordinary policy limit for a particular type of loss. In support of that argument,

StarStone points to the International Risk Management Institute’s (“IRMI”) online

glossary of insurance terms, which defines “sublimit” as

6 Case: 19-13769 Date Filed: 06/12/2020 Page: 7 of 11

a limitation in an insurance policy on the amount of coverage available to cover a specific type of loss. A sublimit is part of, rather than in addition to, the limit that would otherwise apply to the loss. In other words, it places a maximum on the amount available to pay that type of loss, rather than providing additional coverage for that type of loss.

Sublimit, Int’l Risk Mgmt. Inst., Glossary – Insurance and Risk Management Terms,

https://www.irmi.com/term/insurance-definitions/sublimit (last visited May 21,

2020).

We conclude that the district court correctly granted summary judgment to

StarStone. As we see it, the IRMI definition of “sublimit” adopted by the district

court is consistent with the ordinary meaning of that term as reflected in legal and

non-legal dictionaries. See Hegel, 778 F.3d at 1221. The term “sublimit” has been

defined generally as “a limit on a subcategory,” Sublimit, Collins English Dictionary,

https://www.collinsdictionary.com/us/dictionary/english/sublimit (last visited May

21, 2020), and more specifically as “a liability limit in an insurance policy for a

particular risk (as loss of jewelry by theft) that is below the aggregate liability limit

of the policy,” Sublimit, Merriam-Webster.com Legal Dictionary,

https://www.merriam-webster.com/legal/sublimit (last visited May 21, 2020).

These definitions are consistent with the IRMI definition in describing “sublimit” as

a lower limit on a particular subcategory of loss.

Moreover, the IRMI definition uses the prefix “sub” in a way that is

synonymous with “under,” “below,” or “beneath,” three of the four meanings put

7 Case: 19-13769 Date Filed: 06/12/2020 Page: 8 of 11

forth by Appellants. Contrary to Appellants’ assertion, a limit is not a sublimit under

the IRMI definition merely because it is lower than some other limit. Rather, the

limit must be “part of, rather than in addition to, the limit that would otherwise apply

to the loss.” In other words, the subcategory of loss to which a sublimit applies is

under, below, or beneath the broader category of loss and the corresponding limit

that would have applied absent the sublimit.

Therefore, under the ordinary meaning of that term, the A&B Endorsement

qualifies as a sublimit because it caps the insurer’s exposure at an amount below the

ordinary policy limit for a subcategory of loss. See Century Sur. Co. v. Seductions,

LLC, 349 F. App’x 455, 457–58 (11th Cir. 2009) (describing a similar endorsement

in passing as a “sublimit”). Without the A&B Endorsement, bodily injury resulting

from assault or battery is covered by the Northfield policy’s general $1 million-per-

occurrence limit for “bodily injury.” The A&B Endorsement operates to cap

Northfield’s liability for that subcategory of loss at $25,000. In other words, the

effect of the A&B Endorsement was to cap existing coverage for a particular

subcategory of loss, not to create a new category of coverage that did not exist before

the A&B Endorsement. The A&B Endorsement is therefore properly viewed as

“part of, rather than in addition to, the limit that would otherwise apply to the loss.”

Appellants’ arguments in response are unconvincing. Appellants claim that

insurance-industry definitions are “immaterial” under Florida law. But they vastly

8 Case: 19-13769 Date Filed: 06/12/2020 Page: 9 of 11

overstate Florida law on this point, which merely cautions that terms “extracted from

the vernacular of the insurance industry should never transcend the common

understanding of the ordinary person.” Hrynkiw v. Allstate Floridian Ins. Co., 844

So. 2d 739, 741–42 (Fla. Dist. Ct. App. 2003). For the reasons we have explained

above, the IRMI definition is consistent with common understanding.

Plus, Appellants’ own convoluted interpretation of the A&B Endorsement

“transcend[s] the common understanding of the ordinary person.” Id. Appellants

focus on the particular way in which the A&B Endorsement creates a lower limit for

bodily injury resulting from assault or battery. They note that the A&B

Endorsement, after adding an exclusion to bodily injury coverage for assault or

battery, creates a separate coverage provision for assault and battery offenses with

its own limit that is not expressly made subject to the $1 million-per-occurrence

limit. Because the lower limit for assault and battery offenses is not “subordinate

to” the $1 million limit, they argue, it is not a sublimit of that limit.

But we fail to see why these facts would cause an “ordinary person” to view

the A&B Endorsement as something other than a sublimit. In interpreting policy

language, we consider the policy “as a whole,” Steinberg, 393 F.3d at 1230, and in

view of the “the object and purpose of the contract,” Am. Home Assurance Co, 593

So. 2d at 197. As explained above, the purpose and effect of the A&B Endorsement

as a whole is to cap existing coverage for bodily injury resulting from assault or

9 Case: 19-13769 Date Filed: 06/12/2020 Page: 10 of 11

battery, not to provide additional coverage for that type of loss. In that regard,

Appellants’ reliance on Lark v. Western Heritage Ins. Co., 64 F. Supp. 3d 802 (W.D.

Va. 2014), is misplaced because Lark—which did not address sublimits, in any

case—involved a policy that “explicitly exclude[d] coverage for damages arising

from assault and battery,” and the insured “separately bargained for the additional

assault and battery endorsement.” Id. at 811. In other words, the endorsement in

Lark, in contrast to the A&B Endorsement here, provided “additional coverage that

[the insured] otherwise would not have enjoyed under the general policy—coverage

for assault and battery.” Id.

Alternatively, even if we were to assume that the A&B Endorsement is not

technically a sublimit because it was not expressly made subordinate to the ordinary

per-occurrence limit, it is assuredly a “similar clause[]” within the meaning of the

StarStone policy. By excluding coverage where a “sublimit of liability” or “similar

clause[]” applies, the policy ensures that StarStone does not take on greater risk with

respect to certain subcategories of loss unless there is some additional agreement to

cover that loss. For instance, in this case, under Appellants’ interpretation,

StarStone’s excess coverage responsibilities would be triggered at $25,000 for losses

resulting from assault or battery but at $1,000,000 for nearly every other type of

covered loss. That result is plainly inconsistent with the intent of the “sublimit”

10 Case: 19-13769 Date Filed: 06/12/2020 Page: 11 of 11

provision and with other terms of the policy, including the “Total Limits” definition,

which sets StarStone’s various coverage responsibilities at no less than $1 million.

For all of these reasons, we conclude that the A&B Endorsement is a “sublimit

of liability” or “similar clause[]” under the “plain language of the agreement[s] and

the everyday meaning of the words used.” Horizons A Far, 114 So. 3d at 994. We

therefore affirm the district court’s summary judgment that StarStone owes no

coverage to Polynesian in excess of the limits of the Northfield policy with respect

to Bickford’s claim.

AFFIRMED.