930 F.3d 1240
11th Cir.2019Background
- Exide leased an industrial building from Wattles and ran battery formation operations that damaged the property; Wattles sued Exide in Washington state court and obtained a $2,273,623.93 judgment (including $1,437,293.75 in damages and $836,330.18 in attorney fees), plus post-judgment interest.
- Exide had a worldwide 2006–2007 property insurance Policy issued by Ace (through Starr) with a $2 million per-occurrence program deductible; Policy is a property policy with limited coverage extensions, including a "Tenants and Neighbors" extension and a $500,000 defense-costs sublimit.
- Bankruptcy court lifted the stay to allow Wattles to pursue Exide and its insurers for any final judgment, but preserved insurers’ rights, including to assert deductibles.
- Wattles sued Ace in federal court seeking coverage for the state-court judgment amounts (including Wattles’ attorney fees and post-judgment interest) and argued those amounts were covered under the Tenants and Neighbors Provision; Ace contended the provision does not apply in the United States and the $2 million deductible was unsatisfied.
- The district court found the Tenants and Neighbors Provision ambiguous, applied it to allow coverage for Wattles’ attorney fees and reduced the deductible by the $500,000 defense-costs sublimit, awarding Wattles $1,133,918.93; Ace appealed.
- The Eleventh Circuit reversed: it held the Tenants and Neighbors Provision unambiguous, did not apply to the United States (or U.S. codes like OSHA/IBC), thus Wattles failed to satisfy the $2 million deductible and coverage was not owed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tenants & Neighbors Provision covers Wattles’ awarded attorney fees | Wattles: provision extends to Exide’s liability to Wattles (including attorney fees) and to U.S. jurisdictions because "civil or commercial codes" can include U.S. codes | Ace: provision applies only in countries governed by Napoleonic/civil-law style codes; U.S. is common-law so fees not covered | Held: Provision unambiguous; does not apply to U.S.; attorney fees not covered |
| Whether post-judgment interest is covered under the extension | Wattles: interest is part of liability covered by §8.J and so counts toward coverage/deductible | Ace: same textual/territorial limits bar interest as well | Held: Post-judgment interest not covered because extension doesn’t apply in U.S. |
| Whether Policy language is ambiguous such that it should be construed for the insured | Wattles: language ambiguous (no clear meaning of "Napoleonic or other civil or commercial code") so construed in insured’s favor | Ace: language is technical; when read in context and using noscitur a sociis it reasonably means civil-law codes only | Held: Not ambiguous; interpretive tools show intent to limit extension to Napoleonic/civil-law jurisdictions |
| Whether the $2 million deductible was satisfied | Wattles: combine jury verdict, attorney fees, post-judgment interest, and $500k defense costs to exceed $2M | Ace: without fees and interest only jury verdict + defense costs < $2M so deductible unsatisfied | Held: Deductible not satisfied (only $1,937,293.75 counted); Ace entitled to summary judgment |
Key Cases Cited
- Tech. Coating Applicators, Inc. v. U.S. Fid. & Guar. Co., 157 F.3d 843 (11th Cir.) (standard of review for contract interpretation)
- Sierra Club v. Leavitt, 488 F.3d 904 (11th Cir.) (summary judgment standard)
- State Farm Auto. Ins. Co. v. Staton, 685 S.E.2d 263 (Ga.) (definition of ambiguity in insurance policies)
- Hurst v. Grange Mut. Cas. Co., 470 S.E.2d 659 (Ga.) (policy construed against insurer when ambiguous)
- St. Paul Mercury Ins. Co. v. F.D.I.C., 774 F.3d 702 (11th Cir.) (ambiguity indicator: similar language construed differently elsewhere)
- Nat’l Cas. Co. v. Ga. Sch. Bds. Ass’n—Risk Mgmt. Fund, 818 S.E.2d 250 (Ga.) (cardinal rule: give effect to parties’ intent when construing policies)