# Nautilus Insurance Company v. Pinnacle Engineering & Development, Inc.

> District Court, S.D. Florida · September 22, 2023

URL: https://www.frixlaw.com/law-library/cases/10122483

## Case

- **Court:** District Court, S.D. Florida
- **Decided:** September 22, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10122483

## How later opinions describe it (automated extraction)

- stating that whether an ambiguity exists in a contract is a matter of law

## Opinion text

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

Case No. 22-cv-62300-BLOOM/Valle

NAUTILUS INSURANCE COMPANY,

Plaintiff,

v.

PINNACLE ENGINEERING & DEVELOPMENT, INC.,
EMUNA CONSTRUCTION, LLC,

Defendants.
________________________________/

ORDER ON MOTION FOR SUMMARY JUDGMENT
THIS CAUSE is before the Court upon Defendant/Cross-Plaintiff Emuna Construction,
LLC’s (“Emuna”) Motion for Summary Judgment, ECF No. [27] (“Motion”). Plaintiff/Cross-
Defendant Nautilus Insurance Company (“Nautilus”) filed a Response in Opposition, ECF No.
[30], to which Emuna filed a Reply, ECF No. [32]. The Court has carefully reviewed the Motion,
all opposing and supporting submissions,1 the record in this case, the applicable law, and is
otherwise fully advised. For the reasons set forth below, the Motion is denied.
I. BACKGROUND
Nautilus initiated the instant action on December 8, 2022, by filing a Complaint for
Declaratory Judgment seeking a declaration that claims asserted against Defendant Pinnacle
Engineering & Development, Inc. (“Pinnacle”) by Emuna in an Underlying Lawsuit are not
covered under insurance policies issued by Nautilus to Pinnacle. See ECF No. [1]. Nautilus further

1 Emuna filed a Statement of Material Facts, ECF No. [26] (“SMF”), with its Motion for Summary
Judgment. Nautilus filed a Response to Defendant’s SMF (“RSMF”), and a Statement of Additional
Material Facts (“SAMF”), ECF No. [31]. Emuna filed a Response to Nautilus’s SAMF (“RSAMF”), ECF
No. [33].
seeks a declaration that it has no duty to defend Pinnacle, no duty to indemnify Pinnacle, and
Nautilus has the right to withdraw its defense of Pinnacle in the Underlying Lawsuit. Id.
On March 20, 2023, Emuna filed its Answer and Counterclaim. ECF No. [17]. Therein,
Emuna asserts one count of breach of contract, alleging that Nautilus breached its insurance policy

“by denying coverage and/or failing to make a coverage determination for Emuna’s liability . . .
for the property damage caused by Pinnacle.” Id. ¶ 33.
Emuna brings the instant Motion arguing that the Court should find that Emuna is an
additional insured under the insurance policies issued by Nautilus to Pinnacle, Nautilus has a duty
to indemnify Emuna for faulty work completed by Pinnacle, and Nautilus breached that duty. See
generally ECF No. [27]. Nautilus responds that Emuna is not an additional insured under the
policies, and even if the Court were to find that Emuna is an additional insured, it has not breached
any obligations it owes to Emuna. See generally ECF No. [30].
II. MATERIAL FACTS
A. The Policies
Nautilus issued Pinnacle commercial general liability insurance under policy numbers

NN1087682 and NN1254993 (collectively, the “Policies”). SMF ¶ 1. Policy NN1087682 was in
effect from January 23, 2020 to January 23, 2021, and Policy NN1254993 was in effect from April
22, 2021 to September 18, 2021. Id. ¶ 2. The Policies are subject to the Coverage Limitation and
Exclusion – Residential Construction Operations Endorsement (the “Endorsement”) which
provides that certain construction projects are excluded from coverage including “the following
construction projects: a. Any new townhouse or residential condominium project where the total
number of individual residential units is greater than twenty-five (25), regardless of number of
buildings, developments, phases, or associations . . ..” Id. ¶ 4. The Policies define the term
“Residential housing units” as “detached single family or multiple family dwellings, duplexes,
triplexes, dormitories or any other housing or dwelling built or used, in whole or in part, for the
purpose of residential occupancy. For purpose of this endorsement, each duplex will be considered
two residential housing units, each triplex will be considered three residential housing units, and
so forth. Residential housing units does not include apartments.” Id. ¶ 5.

B. Townhome Development Project
Emuna contracted with BCD Dania Oaks, LLC (“BCD”), the owner of the real property
located at 5461 SW 40th Ave, Dania Beach, Florida 33314 (the “Property”), to construct a
townhome development at the Property. Id. ¶¶ 7-8. The townhome development contains 18
detached townhome units, or 57 units including both attached and detached units. SAMF ¶ 27;
RSAMF ¶ 27.
“Emuna and Pinnacle executed a subcontract for Pinnacle to perform underground utility
construction services.” SMF ¶ 11. The Subcontract required that Pinnacle secure and maintain
commercial general liability insurance to cover claims for property damages resulting for their
services and that the policy name Emuna as an additional insured for liability arising out of the
Subcontract. Id. ¶¶ 12-13.

On April 15, 2022, Emuna sent Nautilus notice that it was reporting “a claim on behalf of
Emuna” for faulty work performed by Pinnacle. ECF No. [26-1] at 51-52. Emuna cooperated with
Nautilus’s investigation. SMF ¶ 20. In December 2022, Emuna’s insurance carrier sent Nautilus
notice of that BCD was alleging damages. ECF No. [26-1] at 54-56. A demand letter or claim from
BCD to Emuna is not part of the record, and Nautilus disputes whether BCD’s counsel formally
made a demand on Emuna. SMF ¶ 21; RSMF ¶ 21.
Emuna and BCD entered into a Settlement Agreement dated June 2, 2023, which included
the following language: “[w]hereas, the Owner has demanded that the Contractor be liable for the
damage caused by the defective Pinnacle Work and that the Contractor compensate the Owner for
such damage.” ECF No. [26-1] at 58-62.
III. LEGAL STANDARD
A. Summary Judgment
A court may grant a motion for summary judgment “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a). The parties may support their positions by citations to materials in the record,
including depositions, documents, affidavits, or declarations. See Fed. R. Civ. P. 56(c). “A factual
dispute is ‘material’ if it would affect the outcome of the suit under the governing law, and
‘genuine’ if a reasonable trier of fact could return judgment for the non-moving party.” Miccosukee
Tribe of Indians of Fla. v. United States, 516 F.3d 1235, 1243 (11th Cir. 2008) (citing Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)).
A court views the facts in the light most favorable to the non-moving party, draws “all
reasonable inferences in favor of the nonmovant and may not weigh evidence or make credibility
determinations[.]’” Lewis v. City of Union City, Ga., 934 F.3d 1169, 1179 (11th Cir. 2019); see
also Crocker v. Beatty, 886 F.3d 1132, 1134 (11th Cir. 2018) (“[W]e accept [the non-moving

party’s] version of the facts as true and draw all reasonable inferences in the light most favorable
to him as the non-movant.” (citation omitted)). “The mere existence of a scintilla of evidence in
support of the [non-moving party’s] position will be insufficient; there must be evidence on which
a jury could reasonably find for the [non-moving party].” Anderson, 477 U.S. at 252. “If more than
one inference could be construed from the facts by a reasonable fact finder, and that inference
introduces a genuine issue of material fact, then the district court should not grant summary
judgment.” Bannum, Inc. v. City of Fort Lauderdale, 901 F.2d 989, 996 (11th Cir. 1990) (citation
omitted).
B. Evaluation of an Insurance Policy
An insurer’s duty to defend arises from the insurance contract and policy. See Allstate Ins.
Co. v. RJT Enters., Inc., 692 So.2d 142, 144 (Fla. 1997) (“[I]f there is no contractual duty to defend
in the parties' contract then there is no duty to defend.”). That is, an insurer’s duties toward its
insured arise from the legal effects of the relevant policy provisions. See Nat’l Union Fire Ins. Co.

of Pittsburgh, Pa. v. Brown, 787 F. Supp. 1424, 1427 (S.D. Fla. 1991). Therefore, summary
judgment may be “appropriate in declaratory judgment actions seeking a declaration of coverage
when the insurer’s duty, if any, rests solely on the applicability of the insurance policy, the
construction and effect of which is a matter of law.” Northland Cas. Co. v. HBE Corp., 160 F.
Supp.2d 1348, 1358 (M.D. Fla. 2001) (citing Talat Enters., Inc. v. Aetna Life & Cas., 952 F. Supp.
773 (M.D. Fla. 1996)). “An insurer’s duty to indemnify is narrower than its duty to defend and
must be determined by analyzing the policy coverages in light of the actual facts in the underlying
case.” Sinni v. Scottsdale Insurance Co., 676 F. Supp. 2d 1319, 1323 (M.D. Fla. 2010) (citing State
Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So.2d 1072, 1077 n. 3 (Fla. 1998) and Hagen v.
Aetna Cas. & Sur. Co., 675 So.2d 963, 965 (Fla. 5th DCA 1996)).

“Under Florida law, an insurance policy is treated like a contract, and therefore ordinary
contract principles govern the interpretation and construction of such a policy.” Pac. Emp’rs Ins.
Co. v. Wausau Bus. Ins. Co., No. 3:05-cv-850-J-32TEM, 2007 WL 2900452, at *4 (M.D. Fla. Oct.
2, 2007) (citing Graber v. Clarendon Nat’l Ins. Co., 819 So.2d 840, 842 (Fla. 4th DCA 2002)). As
with all contracts, the interpretation of an insurance contract—including determining whether an
insurance provision is ambiguous—is a question of law to be determined by the court. Id.;
Travelers Indem. Co. of Illinois v. Hutson, 847 So.2d 1113 (Fla. 1st DCA 2003) (stating that
whether an ambiguity exists in a contract is a matter of law).
Further, “[u]nder Florida law, insurance contracts are construed according to their plain
meaning.” Garcia v. Fed. Ins. Co., 473 F.3d 1131, 1135 (11th Cir. 2006) (quoting Taurus
Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So.2d 528, 532 (Fla. 2005)). The “terms of an
insurance policy should be taken and understood in their ordinary sense and the policy should
receive a reasonable, practical and sensible interpretation consistent with the intent of the parties-

not a strained, forced or unrealistic construction.” Siegle v. Progressive Consumers Ins. Co., 819
So.2d 732, 736 (Fla. 2002) (quoting Gen. Accident Fire & Life Assurance Corp. v. Liberty Mut.
Ins. Co., 260 So.2d 249 (Fla. 4th DCA 1972); see also Gilmore v. St. Paul Fire & Marine Ins.,
708 So.2d 679, 680 (Fla. 1st DCA 1998) (“The language of a policy should be read in common
with other policy provisions to accomplish the intent of the parties.”). However, if there is more
than one reasonable interpretation of an insurance policy, an ambiguity exists and it “should be
construed against the insurer.” Pac. Emp’rs Ins., 2007 WL 2900452, at *4 (citing Purrelli v. State
Farm Fire & Cas. Co., 698 So.2d 618, 620 (Fla. 2d DCA 1997) ).
A coverage clause is generally interpreted as broadly as possible to ensure the greatest
amount of insurance coverage. Id. at *5 (citing Westmoreland v. Lumbermens Mut. Cas. Co., 704

So.2d 176, 179 (Fla. 4th DCA 1997)). To determine the parties’ contractual intent, a court may
only consider the language in the insurance policy, unless the policy is ambiguous. Fireman’s
Fund Ins. Co. v. Tropical Shipping & Constr. Co., Ltd., 254 F.2d 987, 1003 (11th Cir. 2001) (citing
Towne Realty v. Safeco Ins. Co. of Am., 854 F.2d 1264, 1267 (11th Cir. 1988)). “As a general rule,
in the absence of some ambiguity, the intent of the parties to a written contract must be ascertained
from the words used in the contract, without resort to extrinsic evidence.” Id. (quoting Lee v.
Montgomery, 624 So.2d 850, 851 (Fla. 1st DCA 1993)).
IV. DISCUSSION
Emuna argues that summary judgment is appropriate because (1) it is an additional insured
under the Policies; (2) Pinnacle performed faulty work triggering coverage under the Policies so
(3) Nautilus had a duty to defend and indemnify Emuna from claims brought by BCD; and (4)
breached that contractual duty. See generally ECF No. [27]. Emuna further asserts that exclusions
asserted by Nautilus do not bar coverage. Id. at 6-8. Nautilus responds that that “(a) Emuna has

not established it qualifies as an additional insured on the Policies; (b) even if Emuna qualifies as
an additional insured, Emuna cannot seek first-party coverage for the claims it asserts against
Pinnacle Engineering in the Underlying Lawsuit; (c) Nautilus could not have breached any defense
obligations to Emuna because no suit has been filed against Emuna; (d) Nautilus could not have
breached any indemnity obligations to Emuna because Emuna has not been found ‘legally
obligated to pay damages’ because of ‘property damage’ to which the insurance applies and
Nautilus cannot be bound to the putative settlement entered into by Emuna and BCD; and (2) the
Policies’ Residential Construction Operations Exclusion is clear and unambiguous and plainly bars
coverage for the claims asserted in the Underlying Lawsuit–– relative to any potential insured.”
ECF No. [30] at 9. The Court considers each argument in turn.

A. Additional Insured
First, Emuna argues that it is an additional insured under the Policies. ECF No. [27] at 3-
4. Nautilus responds that Emuna cannot meet its burden to demonstrate that it was an additional
insured under the Policies.
The Policies contain an Endorsement which pertains to Additional Insureds under the
Policies, (the “AI Endorsement”). Pursuant to the AI Endorsement:
Who is An Insured is amended to include as an additional insured any person or
organization for whom you are performing operations when you and such person
or organization have agreed in writing in a contract or agreement that such person
or organization be added as an additional insured on your policy. Such person or
organization is an additional insured only with respect to liability for ‘bodily
injury’, ‘property damage’ or ‘personal and advertising injury’ caused, in whole or
in part, by:
a. Your acts or omissions, or the acts or omissions of those acting on your
behalf in the performance of your ongoing operations for the additional insured; or
b. “Your work” and included in the “products-completed operations hazard”
that was completed by or on behalf of any insured after the date shown in the
Schedule of this endorsement
but only for “occurrences” or coverages not otherwise excluded in the Coverage
Part to which this endorsement applies.
ECF No. [1-6] at 75.
Emuna argues that because the AI Endorsement affords it coverage for property damage
caused by Pinnacle’s acts or omissions, “Emuna is additional insured when Pinnacle’s work is
ongoing and after it completes the work.” ECF No. [27] at 4.
Nautilus relies on multiple cases from this district applying Florida law, in which the courts
determined that a putative additional insured’s liability is caused in whole or in part by the named
insured only where the additional insured faces vicarious liability for acts or omissions of the
named insured. See Cincinnati Specialty Underwriters Ins. Co. v. KNS Group, LLC, 561 F. Supp.
3d 1298, 1314-16 (S.D. Fla. 2021), aff’d, No. 21-13628, 2022 WL 5238711 (11th Cir. Oct. 6,
2022) (finding that allegations of vicarious liability were necessary to find an insurer liable for the
coverage of an additional insured where the policy specified liability only for the acts or omissions
of the named insured); Amerisure Ins. Co. v. Seneca Specialty Ins. Co., No. 20-20442-CIV, 2020
WL 3317035, at *5 (S.D. Fla. June 18, 2020) (finding that because an additional insured “was not
held vicariously liable for the direct negligence of [the named insured], and therefore, because the
liability was not premised on injuries ‘caused, in whole or in part by’ [the named insured], it
necessarily follows that [the additional insured] is not covered as an additional insured under the
[policy endorsement].”). Nautilus argues that “Emuna has provided no evidence that it is being
held vicariously liable for [Pinnacle’s] acts or omissions” and therefore “the terms of the AI
Endorsement are not satisfied, and Emuna cannot qualify as an additional insured.” ECF No. [30]
at 10.
The underlying Complaint makes clear Emuna’s position that “Pinnacle failed to perform
underground utility construction services” and “[a]s a result of Pinnacle’s failure to perform the
services required under the Subcontract, Emuna has incurred and continues to incur substantial
damages.” ECF No. [1-5] ¶¶ 28-30. It is therefore apparent that the AI Endorsement applies

because Emuna seeks coverage as an additional insured for property damage caused by the acts or
omissions of Pinnacle, the primary insured under the Policies. The underlying complaint alleges
that BCD is not seeking to hold Emuna liable for its own negligence as in the cases cited by
Nautilus, but instead to hold it vicariously liable for the failings of its subcontractor Pinnacle.
Accordingly, the Court finds that there is no dispute of material fact. Emuna is an additional
insured under the AI Endorsement.
B. Whether Coverage was Triggered
Emuna argues that defective work performed by Pinnacle under the Subcontract caused
property damage covered under the Policies. ECF No. [27] at 4-5. Emuna further argues that
Nautilus therefore had a duty to defend and indemnify Emuna from claims asserted by BCD, the
Property’s owners. Id. at 5-6. Nautilus responds that “it is undisputed that no third-party lawsuit

has been asserted against Emuna, nor has it otherwise become ‘legally obligated to pay’ damages
associated with Pinnacle Engineering’s work. Therefore, Emuna’s potential additional insured
status does not provide a direct basis for recovery under the Policies.” ECF No. [30] at 11.
Emuna submits in its SMF that “BCD made claims against Emuna to repair the subject
property damage.” In support, Emuna cites to the attached affidavit of Miguel Bubis, a manager
and principal of Emuna. ECF No. [26-1]. However, as Nautilus correctly points out, “Emuna has
yet to provide any documentation of a third-party claim against it by BCD prior to the June 2, 2023
settlement agreement between the parties.” ECF No. [30] at 13. As such, a genuine dispute of fact
exists as to when a claim was made by BCD to Emuna for damage caused by Pinnacle and the
precise nature of that claim. Moreover, the case law cited by the parties suggests that the dispute
of fact regarding when a claim or demand was made, and whether its contents are material.
Emuna cites to a district court case from this circuit in which the court, applying Florida
law, determined that an insured need not wait to be sued and lose a reasonable opportunity to

compromise when faced with an obligation it cannot resist. Zurich Am. Ins. Co. v. Cutrale Citrus
Juices USA, Inc., 5:00-CV-149-OC-10GRJ, 2002 WL 1433728, at *4 (M.D. Fla. Feb. 11, 2002)
(citing Post Houses, Inc. v. Fireman’s Fund Ins. Co., 469 So. 2d 863, 864 (Fla. 1st DCA 1985)).
In Post Houses, the First District Court of Appeal found that “the fact of voluntary payment does
not negative the right to indemnity, since a person confronted with an obligation that he cannot
legally resist is not obligated to wait to be sued and to lose a reasonable opportunity for
compromise.” Id. That court noted that “Post Houses had notice and a reasonable opportunity to
intervene and failed to do so.” Id. In its Reply, Emuna cites St. Paul Fire & Marine Ins. Co. v.
Rosen Millennium, Inc., 337 F. Supp. 3d 1176 (M.D. Fla. 2018), in which the court looked to the
notice of claim and demand letter because there was no underlying litigation to determine whether

the insurer had a duty to defend after a data breach. Id. at 1182. The court determined that the
detail in both the notice and demand letter was sparse and ruled that “because Defendants have not
made such claims, the issue of whether the CGL Policies would cover those claims is not ripe.”
Id. at 1183.
Nautilus relies on Ayers v. State Farm Mut. Auto. Ins. Co., 316 F. Supp. 3d 1324 (M.D.
Fla. 2018), in which a district court in this circuit considered a coverage dispute on cross motions
for summary judgment. Id at 1327. There, the plaintiff sought to recover the costs of hiring pre-
suit counsel. Id. at 1329. The Ayers court interpreted the relevant insurance policy and found “the
Defense Provision’s unambiguous language—that is, State Farm's “right to defend”—does not
compel a reading that State Farm is obligated to defend a claim by hiring pre-suit counsel for an
insured.” Id. Nautilus also argues that because Emuna has not provided a claim or demand letter
served on it by BCD, Emuna is not entitled to summary judgment.
There is record evidence that demonstrates that Emuna sent Nautilus notice on April 15,

2022, indicating that Emuna was making a claim for faulty work performed by Pinnacle. ECF No.
[26-1] at 51-52. Emuna also attached a notice provided from its insurance carrier to Nautilus
notifying Nautilus that BCD was making a claim against Emuna for damages exceeding
$1,200,000,00. Id. at 54-56. The Settlement Agreement between Emuna and BCD dated June 2,
2023, is also attached to Emuna’s SMF. Id. at 58-62. The Settlement Agreement between Emuna
and BCD specifically states “Whereas, the Owner has demanded that the Contractor be liable for
the damage caused by the defective Pinnacle Work and that the Contractor compensate the Owner
for such damage.” ECF No. [26-1] at 58. Despite that line in the Settlement Agreement, the nature
and extent of any claim made is uncertain as a claim or demand letter from BCD to Emuna is not
part of the record. Like in St. Paul Fire, the Court is therefore left without an adequate basis to

determine whether the Policies are applicable for the purpose of determining that no dispute of
material fact exists regarding Nautilus’s duty to defend and/or indemnify Emuna. See 337 F. Supp.
3d at 1182-83.
Nautilus correctly points out that “Emuna has yet to provide any documentation of a third-
party claim against it by BCD prior to the June 2, 2023 settlement agreement between the parties.”
ECF No. [30] at 13. As such, whether Emuna was confronted with an obligation it could not legally
resist and provided notice of such obligation to Nautilus prior to entering the Settlement
Agreement is a disputed material fact. Because Emuna is the moving party and has not established
that there are no genuine disputes of material fact allowing it to be entitled to judgment as a matter
Case No. 22-cv-62300-BLOOM/Valle
of law, the Motion must be denied. The Court need not address the parties’ remaining arguments.
V. CONCLUSION
Accordingly, it is ORDERED AND ADJUDGED that Emuna’s Motion for Summary
Judgment, ECF No. [27], is DENIED.
DONE AND ORDERED in Chambers at Miami, Florida, on September 21, 2023.

UNITED STATES DISTRICT JUDGE
Copies to:
Counsel of Record

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10122483. Public record. Not legal advice.