Southern-Owners Insurance Company v. Waterhouse Corporation
22-12703
11th Cir.Jun 28, 2023Background:
- Darrell Patterson, a Del-Air employee, worked on Nursery Supplies’ cooling tower, later contracted Legionnaires’ disease; legionella matching Patterson’s sample was found in the tower.
- Nursery Supplies hired Waterhouse to monitor and maintain the cooling tower; Waterhouse was insured by Southern-Owners under a CGL and an Umbrella policy.
- Both policies contained fungi/bacteria exclusions barring coverage for injury from fungi/bacteria "on or within a building or structure."
- Southern-Owners reserved defense but filed a declaratory-judgment action and moved for summary judgment, arguing the cooling tower is a "structure" and the exclusions bar coverage.
- The district court denied summary judgment, holding a cooling tower is machinery/equipment (not a building/structure), the exclusions were ambiguous and must be construed for the insured; the Eleventh Circuit affirmed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a cooling tower qualifies as a "building or structure" under the fungi/bacteria exclusions | Cooling tower is a structure; exclusion applies, so insurer not liable | Cooling tower is large-scale machinery/equipment, not a building/structure; exclusion does not apply | Court: cooling tower is machinery/equipment, not a building/structure; exclusion does not apply |
| Whether the exclusionary language is ambiguous and how it must be construed | Policy language plainly excludes injury from bacteria "on or within a building or structure" | Language is reasonably susceptible to two meanings; ambiguous exclusions construed against insurer | Court: language ambiguous; apply contra proferentem and canons (noscitur a sociis); construe for insured |
Key Cases Cited
- Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29 (Fla. 2000) (ambiguous policy provisions and exclusions construed against the insurer)
- Continental Cas. Co. v. Wendt, 205 F.3d 1258 (11th Cir. 2000) (use dictionary definitions for undefined policy terms)
- Westport Ins. Corp. v. VN Hotel Group, LLC, [citation="513 F. App'x 927"] (11th Cir. 2013) (applied fungi/bacteria exclusion analysis; outdoor spa not a structure)
- Nehme v. Smithkline Beecham Clinical Lab'ys, 863 So. 2d 201 (Fla. 2003) (use noscitur a sociis to interpret related terms)
- Owen v. I.C. Sys., Inc., 629 F.3d 1263 (11th Cir. 2011) (summary-judgment standard of review is de novo)
- State Farm Mut. Auto. Ins. Co. v. Roach, 945 So. 2d 1160 (Fla. 2006) (lex loci contractus governs which state law applies to insurance contracts)
- Travelers Indem. Co. v. PCR, Inc., 889 So. 2d 779 (Fla. 2004) (interpret insurance policies according to plain meaning when unambiguous)