The Eleventh Circuit recently reversed a district court’s decision to enforce an insurance policy’s “fellow employee” exclusion on the ground that the employee was acting outside the scope of his employment at the time of the underlying incident. In Empire Fire & Marine Insurance Company v. Floyd, No. 15-11438 (11th Cir. Nov. 6, 2015), the Eleventh Circuit Court considered a case involving a family-owned business, where the son, Scott Floyd, drove a van into a ladder on which his father, Steven Floyd, had been standing, causing injury. The injured father made a claim against the supplemental liability policy Scott Floyd had purchased when renting the van, which he rented for the purpose of moving his personal belongings.The insurer sought a declaration of no coverage, citing the “fellow employee” exclusion.The district court granted summary judgment to the insurer, since Scott and Steven Floyd were “fellow employees.”But the Eleventh Circuit reversed, finding the exclusion inapplicable.
What’s In A Name?
Scott Floyd and Steven Floyd were fellow employees of A-Plus Storage, Inc.Scott rented a van from Enterprise Leasing Company (“Enterprise”) for his personal use: moving personal belongings into a storage space on the premises.To rent the van, Scott entered into a supplemental liability insurance policy with Enterprise.He drove the van onto the premises of A-Plus Storage, and in doing so, struck a ladder on which Steven was standing to perform maintenance work for A-Plus Storage.
Scott’s supplemental liability insurance policy with Enterprise listed him as the insured and excluded coverage related to the bodily injury of any “fellow employee of the insured arising out of and in the course of the fellow employee’s employment.”The policy did not define “fellow employee.”
One Bite Allowed
The “fellow employee” exclusion serves to exclude from coverage an employee versus employee lawsuit under a liability policy. This type of liability would necessarily result from one employee’s negligence in a work-related injury case, and would thus trigger worker’s compensation insurance coverage.As the sole remedy, worker’s compensation entitles an injured employee to benefits regardless of fault, and, as a trade-off, the injured employee may not pursue legal action against his employer.Thus, as we have reported previously here and here, the “fellow employee” exclusion serves the purpose of ensuring clear delineation between what may be covered under workers compensation, versus an employer’s liability policy.Yet still, the lines aren’t always clear.
In reviewing de novo the declaratory action, the Eleventh Circuit stated that (as in most jurisdictions), “the current Florida rule is that strict construction is required of exclusionary clauses in insurance contracts only in the sense that the insurer is required to make clear precisely what is excluded from coverage.”Noting further that Florida court decisions make it clear that if an exclusionary clause with undefined terms has not been stated with sufficient clarity, then the rule of strict construction in favor of the insured applies.
The appellate court distinguished cases cited by both parties in their brief by pointing out that the cited cases involved situations where both the alleged tortfeasor employee and the victim were acting within the scope of their employment when the accident occurred.Here, the Eleventh Circuit pointed out, Scott Floyd was not acting as an employee when driving the van to move his personal belongings.In contrast, Steven Floyd was acting as an employee of A-Plus Storage when the accident occurred.Thus, at the moment that the van struck the ladder, the Court found, it was at least a reasonable interpretation to suggest that Scott Floyd and Steven Floyd were not “fellow employees.”
Because the policy exclusion does not state clearly that coverage is excluded under the circumstances presented by these facts, the Eleventh Circuit held, the district court erred under Florida law because it should have strictly construed the “fellow employee” exclusion in favor of the insured.It therefore reversed the summary judgment that had been rendered in the insurer’s favor and remanded with instructions.