39 Fla. L. Weekly D1491c

DAISY was entitled to make use of the pool solely because of her
membership in EASTWOOD which arose solely from her ownership of her unit. In
other words, her right to use the pool, to invite the decedent to use the pool
or to even enter the pool area was an incident of her ownership interest in the
EASTWOOD common elements, including the pool. More simply stated, but for her
ownership, neither DAISY nor Damian Fiallo, would have been in the pool area, in
the pool itself or even subject to the provisions that guests must be supervised
while at the pool.

“Common area” means all real property within a community which is
owned or leased by an association or dedicated for use or maintenance by the
association or its members, including, regardless of whether title has been
conveyed to the association:

(a) Real property the use of which is dedicated to the association
or its members by a recorded plat; or

(b) Real property committed by a declaration of covenants to be
leased or conveyed to the association.

(SAWAYA, J., concurring in part; dissenting in part.) I agree with the
majority that the summary judgment rendered in favor of the Appellees in the
declaratory judgment action should be reversed. But the majority remands the
case to the trial court, apparently for the purpose of allowing the parties to
establish whether Daisy Eastwood (the alleged tortfeasor and additional
individual insured under the policy endorsement) has an ownership interest in
the property. I do not believe that is the controlling issue in this case and,
therefore, I respectfully dissent from that part of the opinion. I believe that
the issue in this appeal is whether the personal act of Eastwood’s alleged
negligent supervision of the child who drowned in the pool is covered under the
provisions of the policy endorsement, which will be discussed shortly. It
clearly is not, and a remand to the trial court should only be for the purpose
of entering summary judgment in favor of the Appellant.

Coverage does not exist under the policy endorsement because it only provides
coverage for the individual members of the association, like Eastwood, for
“liability arising out of the ownership, maintenance or repair” of the premises.
This coverage is for premises liability, which insures against damage or injury
arising out of a dangerous condition on the premises. Eastwood is accused of an
act of personal negligence in failing to properly supervise the child who
drowned, which has nothing to do with a dangerous condition on the premises, and
the parties do not contend otherwise.

The endorsement was issued as a part of a Commercial General Liability (CGL)
insurance policy that, like the typical commercial lines policy, insures against
loss caused by business operations conducted on the premises. Eastwood was not
conducting any business activity on the premises at the time the child drowned,
and again, the parties do not contend otherwise.4 But the issue in the declaratory judgment action is
whether coverage is provided under the specific provisions of the endorsement,
so I will confine the remainder of my argument to that issue.

This declaratory judgment action was filed against the issuer of the CGL and
the endorsement, Southern Owners Insurance Company (Southern), and was
considered in conjunction with a wrongful death action initiated by the personal
representative of the deceased child (the Estate). The wrongful death action was
filed against Eastwood, the individual insured, the Eastwood Community
Association (the Association), which is also an insured under the policy (it is
a mere coincidence that both defendants share the name Eastwood), and House of
Management Enterprises for Community Associations, Inc. (House of Management).
Eastwood owns a home in a residential community, and the Association owns and
operates the common areas of the residential community, which include the pool
and adjoining amenities. House of Management was hired by the Association to
manage and operate the common areas, including the pool. Eastwood, as a member
of the Association, is entitled to use the common areas, including the pool.
Eastwood has a homeowner’s policy issued by Cooperativa De Seguros Multiples de
Puerto Rico (Cooperativa).

The deceased child is Damian. Eastwood invited him to the pool to play with
her son. Tragically, Damian drowned. The sole allegation against Eastwood in the
underlying wrongful death action is that she negligently supervised Damian.
There is absolutely nothing in the record to suggest that the drowning was
caused by a dangerous condition on the premises.

After the wrongful death action was filed, Eastwood and Cooperativa filed the
declaratory judgment action seeking to declare that the CGL policy endorsement
issued by Southern to the Association provides coverage to Eastwood individually
and personally for the alleged wrongful death of the child. At the time,
Cooperativa was providing the defense for Eastwood pursuant to the homeowners
policy it had issued to her. The Estate intervened in the action, also seeking
to have Southern placed on the hook for coverage and indemnity in the wrongful
death action filed against Eastwood. Motions for summary judgment were filed by
the parties on each side. The trial court granted the motion filed by Eastwood
and Cooperativa and denied the motion filed by Southern. Southern appeals,
arguing that the summary judgment should be reversed and this case remanded for
entry of summary judgment in its favor.

The basis of the declaratory judgment action is an endorsement issued by
Southern that includes the members of the Association as additional insureds
under limited circumstances. That endorsement provides:

ADDITIONAL INSURED

HOMEOWNERS ASSOCIATION MEMBERS

This endorsement modifies insurance provided under the
following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART.

A. SECTION II – WHO IS AN INSURED is amended to include as an
additional insured each individual member of the insured Homeowners Association,
but only with respect to liability arising out of the ownership, maintenance
or repair of that portion of the premises which is not reserved for
that member’s exclusive use or occupancy.

(Emphasis added). The provisions of the endorsement that are pertinent to the
issue in this case are underscored.

The issue in this case is whether there is coverage under this endorsement
for Eastwood’s personal act of negligent supervision, and “coverage under an
insurance contract is defined by the language and terms of the policy.” Swire
Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 169 (Fla. 2003)
(citing Siegle v. Progressive Consumers Ins. Co., 788 So. 2d 355, 359
(Fla. 4th DCA 2001)). “In interpreting an insurance contract, we are bound by
the plain meaning of the contract’s text.” State Farm Mut. Auto. Ins. Co. v.
Menendez, 70 So. 3d 566, 569 (Fla. 2011); see also Travelers
Indem. Co. v. PCR Inc., 889 So. 2d 779, 785 (Fla. 2004) (“If the language
used in an insurance policy is plain and unambiguous, a court must interpret the
policy in accordance with the plain meaning of the language used so as to give
effect to the policy as it was written.”). “In construing words in insurance
policies, it is appropriate for courts to turn to legal and non-legal
dictionaries for common meanings.” Siegle, 788 So. 2d at 360.

The endorsement specifically provides coverage for “liability arising out of
ownership, maintenance, or repair . . . of the premises.” The plain meaning of
this provision clearly reveals that the endorsement provides premises liability
coverage only for loss that results from a dangerous condition on the premises.
The majority correctly states that “ownership” means the right to possess the
property, to change or improve it, and to alienate it. Indeed, the courts have
repeatedly held that ownership requires the owner to comply with the duty to
properly maintain and repair the premises and warn invitees of known dangerous
conditions on the premises. Friedrich v. Fetterman & Assocs., P.A.,
137 So. 3d 362 (Fla. 2013); Dampier v. Morgan Tire & Auto, LLC, 82
So. 3d 204 (Fla. 5th DCA 2012); Aaron v. Palatka Mall, L.L.C., 908 So. 2d
574 (Fla. 5th DCA 2005). The term “maintenance” means “the work of keeping
something in suitable condition.” Webster’s II New Riverside University
Dictionary 717 (1984 ed.). The term “repair” means “to restore to sound
condition after damage or injury.” Webster’s II New Riverside University
Dictionary 996 (1984 ed.); see also Siegel, 788 So. 2d at 360
(stating that “repair” means “restore to a good condition” (quoting The
Merriam Webster Dictionary 410 (1994 ed.))). I believe that the plain
meaning of the terms and provisions of the endorsement is that it provides
premises liability coverage for the owner regarding dangerous conditions on the
premises that cause injury. See Union Am. Ins. Co. v. Haitian Refugee
Ctr./Sant Refijie Ayisyin, Inc., 858 So. 2d 1076, 1078 (Fla. 3d DCA 2003);
Hilton Hotels Corp. v. Emp’rs Ins. of Wausau, 629 So. 2d 1064, 1065 (Fla.
3d DCA 1994) (holding that one of the reasons a policy providing coverage for
liability arising out of the ownership, maintenance, or repair of the premises
did not provide coverage for the alleged loss is because “[t]he accident was not
a result of any physical condition which emanated from the premises . . .”);
Parliament Ins. Co. v. Bryant, 380 So. 2d 1088, 1089-90 (Fla. 3d DCA
1980) (analyzing a policy that provided coverage for injuries “ ‘arising out of
the ownership, maintenance, or use of the insured premises,’ ” and stating that
“it is evident that the policy we are examining is a premises liability policy,
not a general liability policy . . .”). Therefore, it does not provide coverage
for Eastwood’s personal act of negligent supervision of the child.

In Union American, the court was confronted with a CGL policy that
provided coverage for “ ‘bodily injury . . . arising out of [t]he ownership,
maintenance or use of the premises shown in the [s]chedule and operations
necessary or incidental to those premises.’ ” Union Am. Ins. Co., 858 So.
2d at 1077. That policy differs from the endorsement in the instant case because
it provided coverage for injury arising from the “use of the premises” and to
“operations necessary or incidental to those premises,” which are not included
in the endorsement in the instant case. But both policies do provide for
coverage for loss arising out of the ownership of the premises. The court in
Union American held that the policy provision essentially made the policy
a “designated premises policy,” which meant that the injury must have occurred
on the premises and resulted from a dangerous condition on the premises as
opposed to the active negligence of the tortfeasor. Id. at 1078. The
court explained:

As was said in 11 Couch on Insurance 2d section 44:379 at 551-52
(1982):

A very common form of liability insurance is the one which insures
the owner, occupier, or operator of real property against liability incident to
his ownership or use of the premises. Such insurance, the purpose of which is
simply to protect against liability arising from the condition or use of the
building as a building must be distinguished from insurance against liability
arising from the nature of the enterprise or activity conducted therein. More
simply stated, a building liability policy does not cover a liability arising
from the insured’s activity in the building.

Id.

Rather than consider all of the pertinent provisions of the endorsement,
the trial court and the analysis in the majority opinion erroneously focus
solely on the term “ownership” in isolation.5 It is improper to consider chosen phraseology of a
policy in isolation to the rest of the provisions. § 627.419(1), Fla. Stat.
(2013) (“Every insurance contract shall be construed according to the entirety
of its terms and conditions as set forth in the policy and as amplified,
extended, or modified by any application therefor or any rider or endorsement
thereto.”); U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871, 877
(Fla. 2007) (“ ‘[I]n construing insurance policies, courts should read each
policy as a whole, endeavoring to give every provision its full meaning and
operative effect.’ ” (quoting Auto-Owners Ins. Co. v. Anderson, 756 So.
2d 29, 34 (Fla. 2000))); Swire Pac. Holdings, Inc., 845 So. 2d at 166
(same); Cont’l Ins. Co. v. Collinsworth, 898 So. 2d 1085, 1087 (Fla. 5th
DCA 2005). Specifically, “ ‘when construing an insurance policy to determine
coverage the pertinent provisions should be read in pari materia.’
” J.S.U.B., Inc., 979 So. 2d at 877 (quoting State Farm Fire &
Cas. Co. v. CTC Dev. Corp., 720 So. 2d 1072, 1074-75 (Fla. 1998)). Proper
application of these rules requires that “[a]n insurance policy . . . receive a
reasonable, practical and sensible interpretation.” Denman Rubber Mfg. Co. v.
World Tire Corp., 396 So. 2d 728, 729 (Fla. 5th DCA 1981) (citations
omitted).

When proper consideration is given to all of the pertinent provisions, it
becomes clear that the endorsement does not provide coverage in this case. The
complaint against Eastwood does not allege that the child was injured as a
result of a dangerous condition on the premises. When deciding whether an
insurer has a duty to defend, the allegations of the underlying complaint
determine whether that duty exists. Essex Ins. Co. v. Big Top of Tampa,
Inc., 53 So. 3d 1220, 1223 (Fla. 2d DCA 2011). A liability insurer has no
duty to defend a suit where the complaint on its face alleges facts that fail to
bring the case within the coverage of the policy. Id. If there is no duty
to defend, there is no duty to indemnify. Id. at 1224. Because this
endorsement and the coverage it provides do not apply to the alleged act of
personal negligence in this case, there is no corresponding duty to defend or
indemnify on the part of Southern. I would reverse the judgment under review and
remand this case to the trial court to enter a summary judgment declaring that
Southern has no duty to defend or indemnify for Eastwood’s alleged act of
negligence.

__________________

1To avoid confusion, Daisy Eastwood will be
referred to as “Daisy.” It is pure coincidence that Daisy and the Association
share the same name.

2Throughout the proceedings, Southern
Owners has maintained that because the underlying complaint alleged that Daisy
was negligent in supervising Damian, any liability on the part of Daisy did not
arise out of her “ownership” interest in the parcel on which the community pool
was situated. Although Southern Owners denied that Daisy had an ownership
interest in the community pool in its pleadings, at times it appeared to accept
opposing counsels’ assertion that Daisy, as a member of the Homeowner’s
Association, had an ownership interest in the common areas. Appellees’
contention that Daisy had an ownership interest in the common areas appears to
have been based on caselaw involving condominiums. However, the Florida
statutory scheme regarding ownership of common elements in a condominium is
significantly different from the statutory scheme regulating the ownership of
common areas in a homeowners’ association. Section 718.103(11), Florida Statutes
(2009), expressly defines “condominium” to mean “that form of ownership of real
property created pursuant to this chapter, which is comprised entirely of units
that may be owned by one or more persons, and in which there is, appurtenant to
each unit, an undivided share in common elements.” By contrast, as referenced
above, the statute regulating homeowners’ associations suggests that title to
the common areas is often held by the association.

3Appellees cite to the deposition testimony
of Cheryl Simmons, Eastwood Community Association’s manager, for support of its
contention that Daisy had an ownership interest in the community pool. However,
a close review of Ms. Simmons’ testimony reflects that she gave conflicting
testimony on this issue. She testified at one point that the common areas were
owned by the Association and at another point that they were owned by the
members of the Association. Furthermore, it is unclear from her deposition
whether Ms. Simmons had the knowledge necessary to be able to render an opinion
on this issue.

4I do not believe that coverage exists
under the other provisions of the CGL. In order to properly determine coverage,
it is necessary to consider the type of policy involved. See U.S. Fire
Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871 (Fla. 2007); Union Am. Ins.
Co. v. Haitian Refugee Ctr./Sant Refijie Ayisyin, Inc., 858 So. 2d 1076,
1078 (Fla. 3d DCA 2003). “Commercial General Liability policies are designed to
protect an insured against certain losses arising out of business operations.”
J.S.U.B., Inc., 979 So. 2d at 877 (citation omitted). CGL policies are
distinguished from personal liability policies, and the importance of the
distinction between the two lies in what is and what is not covered under each.
“Whereas personal liability insurance policies are intended to protect the
insured against the risks which are associated with the ‘personal’ aspects of
the insured’s life, commercial general liability policies are designed to
protect the insured from losses arising out of business operations.” 9A Steven
Plitt et al., Couch on Insurance § 129:1 (3d ed. 2013) (footnote
omitted). The Florida courts have adopted this principle. J.S.U.B., Inc.;
Union Am.. Therefore, unless the loss arises out of the insured’s
business operations, it is not covered.

These principles extend beyond the confines of Florida jurisprudence, as the
authors in Couch on Insurance explain:

Commercial general liability policies are designed to protect the
insured against losses to third parties arising out of the operation of the
insured’s business. Consequently, a loss must arise out of the insured’s
business operations in order to be covered under the policy issued to the
insured.

9A Steven Plitt et al., Couch on Insurance § 129:2 (3d ed. 2013)
(footnote omitted). In Stempel on Insurance Contracts, the author
similarly explains:

Appreciating the nature and organizational structure of the CGL is
of value in gauging coverage controversies. The CGL, like most insurance
policies, has a relatively targeted objective for insuring risks. It is designed
to protect commercial operators from litigation and liability arising out of
their business operations.

2 Jeffrey W. Stempel, Stempel on Insurance Contracts § 14.01[B] at
14-17 (3d ed. Supp. 2010); see also Kennedy v. Lumbermans Mut. Cas.
Co., 577 N.Y.S.2d 353, 354 (N.Y. Sup. Ct. 1991) (“Looking at the overall
scheme of the policy and the exclusion in particular, the policy is a
homeowner’s policy and intends to cover only the home and domestic
related activities. This is not a ‘business’ policy, and the carrier wishes to
make sure that it is not forced to cover business activities. The policy holder
has, of course, not paid for business coverage.”), affirmed as modified on
other grounds, 593 N.Y.S.2d 659 (N.Y. App. Div. 1993).

Considering the policy as a whole, it is clear that it provides coverage that
is limited to business conducted on the premises. The definition of “insureds”
in Section II of the policy specifically provides that if you are designated as
an individual insured, “you and your spouse are insureds, but only with
respect to the conduct of a business of which you are the sole owner.”
(Emphasis added). The definition of insureds goes on to discuss partnerships or
joint ventures, but only “with respect to the conduct of your business.”
Therefore, the CGL policy does not provide coverage for personal acts of
negligence, such as the negligent supervision of a child, committed by an
individual Association member who uses the pool for personal and social reasons,
as Eastwood did.

5Eastwood and Cooperativa argue that a duty
to defend is established by the allegations in the underlying complaint that
Eastwood’s membership in the Association, which allows her the right to use the
swimming pool owned by the Association, bestows upon Eastwood ownership of the
pool and creates coverage and a duty to defend. I agree with the majority that a
duty to defend cannot be based on such allegations. This is no more than clever
and fanciful pleading designed to create coverage that does not exist. As the
court explained in Pioneer National Title Insurance Co. v. Fourth Commerce
Properties Corp., 487 So. 2d 1051 (Fla. 1986), to allow a party to
improperly plead his way into coverage by asserting allegations that do not
fairly bring the cause of action within the scope of coverage would force
insurance companies “to underwrite risks not bargained for by either party.”
Id. at 1054; see also Great Am. Bank of Fla. Keys v. Aetna Cas.
& Sur. Co., 662 F. Supp. 363, 365 (S.D. Fla. 1986) (“In Pioneer,
the court reasoned that to hold an insurer liable for an action not covered
under the policy would force insurers ‘to underwrite risks not bargained for by
either party.’ ” (quoting Pioneer, 487 So. 2d at 1054)). The complaint in
the instant case does nothing more than attempt to create an inference of
ownership, and no fair reading of it can lead to the conclusion that Eastwood
was an owner of the premises.

* * *