In State National Insurance Company v. Al Lamberti, in his official capacity as Sheriff of Broward County, Florida and Broward County Sheriff’s Office, No. 09-12077, 2010 WL 200832 (11th Cir. Jan. 21, 2010), the U.S. Court of Appeals for the Eleventh Circuit unanimously held that an insurance policy, including all of its endorsements, must be read as an integrated whole. It also affirmed that under Florida law, each immediate cause of injury constitutes a separate occurrence.

Background

This coverage dispute arose out of incidents that took place in Miami in November 2003, during the ministerial meetings of Free Trade Area of the Americas (“FTAA”). Numerous FTAA protesters alleged that they were subjected to mistreatment and injury by the Broward County Sheriff’s Office (“BSO”) and its employees in the form of illegal and unconstitutional or other wrongful conduct, including false arrest and the use of excessive force.

BSO had an excess insurance contract with State National Insurance Company (“State National”) subject to a selfinsured retention (“SIR”). The excess policy included a Law Enforcement Endorsement, which provided coverage for certain enumerated offenses, such as false arrest and assault and battery. The endorsement did not specifically reference the SIR. However, in notifying State National of the FTAA claims, representatives of BSO’s risk management division acknowledged that the lawsuits were subject to the SIR, and BSO had previously applied the SIR in connection with settlement of claims purportedly covered under the Law Enforcement Endorsement. Nevertheless, in the spring of 2008, BSO took the position that although the SIR applied to the rest of the policy, it did not apply to claims under the Law Enforcement Endorsement. BSO contended that the Law Enforcement Endorsement was separate from the rest of the policy and that it provided firstdollar coverage. BSO then demanded immediate payment of defense costs for the FTAA lawsuits, some of which had been pending for years without any request for coverage, and despite BSO having not satisfied even a single SIR. BSO also took the position that if an SIR applied, all FTAA claims arose from a single occurrence and were subject to the payment of only one SIR.

State National initiated a declaratory judgment action in U.S. District Court for the Southern District of Florida seeking a declaration that (i) the excess policy provided for an SIR with respect to each of a number of underlying claims against BSO and (ii) the SIR applied separately to each immediate cause of injury or damage. BSO counterclaimed for declaratory judgment, breach of contract and specific performance. Applying Florida law, the district court granted summary judgment to State National, finding that the insurance contract unambiguously provided excess coverage only, not first-dollar coverage as BSO claimed, and that the FTAA events did not constitute a single occurrence but rather more than one distinct occurrence. BSO appealed to the Eleventh Circuit, where the judgment below was affirmed.

On appeal, BSO argued that although most of the insurance policy provided excess coverage, the Law Enforcement Endorsement unambiguously provided first-dollar coverage. Alternatively, if the SIR applied to the Law Enforcement Endorsement, BSO argued that it should be required to satisfy only one SIR for all FTAA claims. BSO claimed that under Florida precedent, the term “occurrence” was ambiguous and should be construed in the insured’s perceived self-interest.

The Eleventh Circuit’s Ruling

The Eleventh Circuit first found that, like the rest of the policy, the Law Enforcement Endorsement unambiguously provided excess coverage subject to the SIR. The court rejected BSO’s argument that the Law Enforcement Endorsement could be read in isolation, as “stand-alone” coverage. Rather, the court affirmed that Florida law requires insurance contracts to be read as a whole and construed according to the plain language of the policies as bargained for by the parties. Even complex provisions requiring analysis for application are not automatically rendered ambiguous. In concluding that the entire policy was one for excess coverage, the court noted, among other things, that the declarations page was entitled “Public Entity Excess Liability Declarations,” and neither the Law Enforcement Endorsement nor other parts of the policy indicated that any coverage was first-dollar. Reading the entire contract as a whole, the court held that the Law Enforcement Endorsement was a part of, and modified, the commercial general liability coverage — which BSO conceded was subject to the SIR. Standing alone, the Law Enforcement Endorsement would be materially incomplete.

As for the second issue — the number of occurrences and attendant number of SIRs — the court again ruled in favor of State National and found that the FTAA claims comprised more than one occurrence. The court rejected BSO’s argument that “occurrence” was ambiguous and should be construed in its favor. The court observed that if the FTAA claims were treated as one occurrence, State National could be subject to substantial liability. On the other hand, if the FTAA claims each settled for less than the amount of the SIR, BSO might pay damages that added up to a total in excess of the SIR and yet not be entitled to any reimbursement from State National. Nevertheless, the court found that, under the Florida Supreme Court’s decision in Koikos v. Travelers Insurance Co., 849 So. 2d 263 (Fla. 2003), an occurrence is determined by the immediate cause of each injury, not the underlying cause (in this case, coordinated police action, as BSO argued). In the claims raised by FTAA protesters, each interaction with an individual BSO officer was the cause of injury, and each was distinguishable in time and place. Each interaction, therefore, could be a separate occurrence. Accordingly, the court determined that there were multiple occurrences and dismissed the insured’s single-occurrence claim.1

Implications

The BSO decision highlights the importance of reading an insurance policy as an integrated whole and not isolating an endorsement from the rest of the contract. Additionally, the case affirms that Florida law identifies occurrences by the immediate cause of injury and not by an underlying or remote cause. In addition, the decision confirms that the term “occurrence” is not ambiguous under Florida law and, thus, the term should not be construed as to favor the insured in any given circumstance.