James River Insurance Company v. Ultratec Special Effects Inc

USCA11 Case: 20-11568 Date Filed: 01/13/2022 Page: 1 of 22

[PUBLISH]

In the

United States Court of Appeals

For the Eleventh Circuit

____________________

No. 20-11568

____________________

JAMES RIVER INSURANCE COMPANY,

an Ohio corporation,

Plaintiff-Counter Defendant-Appellant,

versus

ULTRATEC SPECIAL EFFECTS INC,

a foreign company,

Defendant-Counter Claimant-Third Party Plaintiff-

Appellee,

MST PROPERTIES LLC,

an Alabama corporation,

ROBERT HOLLAND,

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2 Opinion of the Court 20-11568

an individual,

RANDY MOORE,

an individual,

MIKE THOUIN,

an individual,

DAVID J. COTHRAN,

as Administrator for the Estate of Aimee Cothran,

dec.,

DONALD RAY SANDERSON,

as Administrator for the Estate of Virginia Marie

Sanderson, dec.,

COLEEN MCKENNA WHORTON,

an individual,

Defendants-Appellees,

BRITTON-GALLAGHER & ASSOCIATES, INC., et al.,

Third Party Defendant.

____________________

Appeal from the United States District Court

for the Northern District of Alabama

D.C. Docket No. 5:16-cv-00949-AKK

____________________

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20-11568 Opinion of the Court 3

Before JILL PRYOR, LUCK, and BRASHER, Circuit Judges.

JILL PRYOR, Circuit Judge:

Coleen McKenna Whorton, Aimee Cothran, and Virginia

Marie Sanderson suffered catastrophic injuries from a pyrotechnic

explosion at their workplace. Cothran and Sanderson died of their

injuries. Their representatives and Whorton (the “Employees”)

sued their employer, Ultratec Special Effects HSV, Inc. (“Ultratec

HSV”), its parent company, Ultratec Special Effects, Inc. (“Ul-

tratec”), Ultratec’s employee, Mike Thouin, and an associated busi-

ness called MST Properties, LLC (“MST”). The Ultratec entities’

insurer, James River Insurance Company, then filed this declara-

tory judgment action, asking the district court to determine the

scope of James River’s obligations, if any, to defend and indemnify

the claims in the underlying lawsuit. The parties filed cross-mo-

tions for summary judgment, and the district court stayed the duty

to indemnify claim and granted summary judgment in Ultratec’s

favor on the duty to defend claim, concluding that James River had

a duty to defend Ultratec, as well as Thouin, and MST. James River

appealed. After careful review, and with the benefit of oral argu-

ment, we affirm.

I. BACKGROUND

Ultratec HSV and Ultratec operate the Alabama pyrotech-

nics plant that was the site of the catastrophic explosion that killed

two of the Employees and severely injured the third. The

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4 Opinion of the Court 20-11568

Employees are pursuing their tort claims in ongoing state court lit-

igation against Ultratec HSV, Ultratec, Thouin, MST, and several

other entities. James River currently is defending Ultratec, Thouin,

and MST (the “Insureds”) against the claims and paying litigation

costs, subject to a reservation of rights.

Although there remain factual issues pertinent to James

River’s obligations for the state court to resolve—like whether Ul-

tratec and its wholly-owned subsidiary Ultratec HSV are separate

entities—for this appeal the parties agree that the Employees were

injured in the course and scope of their employment and that only

one company employed them: Ultratec HSV. 1 Ultratec HSV car-

ried a Commercial General Liability insurance policy (the “Policy”)

issued by James River that listed both Ultratec companies as named

insureds. Thouin is covered by the Policy because he is an Ultratec

employee and not a co-employee of the Ultratec HSV Employees.

For purposes of this appeal, we assume without deciding that MST

is an additional named insured under the Policy.2

1 Ultratec has argued in state court that it and Ultratec HSV are a “single em-

ployer group” for workers’ compensation purposes. Ex parte Ultratec Special

Effects, Inc., 296 So. 3d 801, 805 (Ala. 2019). The state court found that there

was an “abundance of disputed facts” as to whether they are separate entities

and denied Ultratec’s petition for immunity under the Workers’ Compensa-

tion Act. Id. at 813.

2 The parties dispute whether MST is an additional insured under the Policy,

but this issue is not before us on appeal. Relevant on appeal is that fact that

James River is defending MST in the underlying action under a reservation of

rights and named it as a defendant here.

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20-11568 Opinion of the Court 5

The Policy provided commercial liability coverage for cer-

tain claims involving an occurrence of bodily injury. The Policy

limited coverage through an “Employer’s Liability Exclusion” (the

“Exclusion”). The Exclusion read: “This insurance does not apply

to any claim, suit, cost or expense arising out of ‘bodily injury’ to

. . . [a]ny employee of any Insured arising out of and in the course

of . . . [e]mployment by any insured[] or . . . [p]erforming duties

related to the conduct of any insured’s business.” Doc. 1-4 at 66. 3

The parties agree the Exclusion means that the Policy does not

cover the Employees’ claims against Ultratec HSV. They disagree

about whether the Exclusion excludes coverage for the Employees’

claims against the Insureds.

The Policy also contained a separation of insureds provision.

Such provisions are also known as severability of interests provi-

sions or severability clauses. The provision at issue in this case (the

“Separation of Insureds Provision”) stated: “[T]his insurance ap-

plies . . . [a]s if each Named Insured were the only Named Insured;

and . . . [s]eparately to each insured against whom claim is made or

‘suit’ is brought.” Id. at 17.

This case turns on the interpretation of these two provi-

sions, the Exclusion and the Separation of Insureds Provision.

James River, naming the Insureds and the Employees as de-

fendants, sought a declaratory judgment that it had neither a duty

3 “Doc.” numbers refer to district court docket entries.

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6 Opinion of the Court 20-11568

to defend nor a duty to indemnify the Insureds in the underlying

action because of the Exclusion. The Insureds and the Employees

(collectively, the “Defendants”) responded by asking the district

court to declare that James River had a duty to defend. The parties

filed cross-motions for summary judgment. When the district

court read the Exclusion in conjunction with the Separation of In-

sureds Provision, it concluded that the Exclusion did not exclude

coverage for the Employees’ claims against the Insureds, so James

River had a duty to defend. The court granted the Defendants’ mo-

tion for summary judgment, denied James River’s, and ordered

James River to continue defending the Insureds. The district court

did not address the duty to indemnify at this stage of the case, stay-

ing the claim because it was not ripe for adjudication until liability

was determined in the underlying state court action. James River

now appeals the district court’s interlocutory ruling.

II. STANDARD OF REVIEW

We review de novo a district court’s rulings on cross-mo-

tions for summary judgment, and we view the facts in the light

most favorable to the nonmoving party on each motion. Chavez v.

Mercantil Commercebank, N.A., 701 F.3d 896, 899 (11th Cir. 2012).

Summary judgment is appropriate when a movant shows that

there is “no genuine dispute as to any material fact,” such that “the

movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). “Once the movant adequately supports its motion, the bur-

den shifts to the nonmoving party to show that specific facts exist

that raise a genuine issue for trial.” Dietz v. Smithkline Beecham

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20-11568 Opinion of the Court 7

Corp., 598 F.3d 812, 815 (11th Cir. 2010). If the nonmovant’s evi-

dence is “not significantly probative,” summary judgment is appro-

priate. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50

(1986). A genuine dispute of material fact exists only when “the ev-

idence is such that a reasonable jury could return a verdict for the

nonmoving party.” Id. at 248. “The mere existence of a scintilla of

evidence in support of the [nonmovant’s] position will be insuffi-

cient; there must be evidence on which the jury could reasonably

find for the [nonmovant].” Id. at 252.

III. DISCUSSION

The parties do not contest our jurisdiction, but because we

have an independent duty to ensure that we have jurisdiction, we

begin our discussion with an examination of the basis for our juris-

diction over this interlocutory appeal from a declaratory judgment.

Then we address the merits of whether James River has a duty to

defend. We review Alabama’s contract interpretation principles

and case law before applying that law to the insurance policy before

us. 4 After doing so, we affirm the district court’s grant of summary

judgment to the Defendants in the declaratory judgment action

and hold that James River has a duty to defend the Insureds: Ul-

tratec, MST, and Thouin.

4 There is no dispute that Alabama law governs our interpretation of the in-

surance contract in this case. Although James River argued below that Ohio

law applied, it now looks to Alabama law and thus has waived any argument

that another state’s law applies.

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8 Opinion of the Court 20-11568

A. We Have Jurisdiction over This Appeal Despite Its Lack of

Finality Because of Its Injunctive Qualities.

We are obligated to review sua sponte whether we have ju-

risdiction. Thomas v. Blue Cross & Blue Shield Ass’n, 594 F.3d 814,

818 (11th Cir. 2010). We do so now.

The order before us on appeal is nonfinal and interlocutory

because James River’s request for a declaratory judgment on the

duty to indemnify remains pending before the district court. Ordi-

narily, we have jurisdiction only over final decisions, those that

“end[] the litigation on the merits and leave[] nothing for the court

to do but execute the judgment.” Quackenbush v. Allstate Ins. Co.,

517 U.S. 706, 712 (1996) (internal quotation marks omitted); 28

U.S.C. § 1291. But insurers often seek declaratory judgments on

their duty to defend and their duty to indemnify at the same time,

before the duty to indemnify becomes ripe. See, e.g., Hartford Cas.

Ins. Co. v. Merch. & Farmers Bank, 928 So. 2d 1006, 1013 (Ala.

2005). 5 Recognizing that the duty to indemnify cannot be

5The duty to defend—to pay the insured’s litigation costs in the underlying

action—is broader than the duty to indemnify—to cover the damages ulti-

mately awarded against the insured. See Ladner & Co. v. S. Guar. Ins. Co., 347

So. 2d 100, 102 (Ala. 1977). Under Alabama law, the duty to defend is deter-

mined primarily on the allegations in the complaint in the underlying action

against the insured. Hartford Cas. Ins. Co., 928 So. 2d at 1009. But often a court

can only determine whether there is coverage under the insurance policy—

and thus a duty to indemnify—based on facts adduced at the trial of the un-

derlying action. Id. at 1013. And there will be nothing to indemnify unless and

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20-11568 Opinion of the Court 9

determined at a “preliminary stage in the proceedings,” district

courts in our circuit have declined to address the duty to indemnify

when determining whether there is a duty to defend. Pa. Nat’l Mut.

Cas. Ins. Co. v. Hethcoat & Davis, Inc., 339 F. Supp. 3d 1248, 1256–

58 (N.D. Ala. 2017). 6 Here, the district court stayed its decision on

the duty to indemnify and addressed only the duty to defend. Thus,

we must determine whether we have jurisdiction to review this

nonfinal order.

We have jurisdiction to review nonfinal orders in certain cir-

cumstances, including, as relevant here, when the nonfinal order

grants an injunction. 28 U.S.C. § 1292(a)(1). We may review orders

that do not expressly grant injunctions when they have certain

qualities of injunctions that make them immediately appealable—

for example, when the order is directed to a party, is enforceable

by contempt, and provides relief on the merits. 16 Charles Alan

Wright & Arthur R. Miller, Fed. Prac. & Proc. § 3922 (3d ed. 1977).

until damages are assessed against the insured in that action. See Ladner, 347

So. 2d at 104 (declining to decide whether the insurer had a duty to indemnify

because the plaintiffs in the underlying lawsuit could change the theory of lia-

bility and obtain judgment on a claim covered by the policy).

6 District courts in our circuit have withheld ruling on the duty to indemnify

in different ways. See, e.g., Am. Nat’l Prop. & Cas. Co. v. Gulf Coast Aerial,

LLC, 533 F. Supp. 3d 1110, 1113 (S.D. Ala. 2021) (staying decision on the duty

to indemnify claim); Auto-Owners Ins. Co. v. Toole, 947 F. Supp. 1557, 1565–

67 (M.D. Ala. 1996) (dismissing without prejudice the duty to indemnify

claim); Guar. Nat’l Ins. Co. v. Beeline Stores, Inc., 945 F. Supp. 1510, 1514–16

(M.D. Ala. 1996) (denying without prejudice the duty to indemnify claim).

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10 Opinion of the Court 20-11568

Sometimes these injunctive qualities are present in declaratory

judgments. Id. Such declaratory judgments have “the practical ef-

fect of granting or denying injunctions,” and thus we are permitted

to review them on interlocutory appeal. Abbott v. Perez, 138 S. Ct.

2305, 2319 (2018) (internal quotation marks omitted).

In this case, the district court not only denied James River a

declaratory judgment that it had no duty to defend; it granted sum-

mary judgment on the Insureds’ counterclaim for a declaratory

judgment in their favor. Previously, in a very similar context, we

held that the district court’s order granting summary judgment on

the insureds’ counterclaim was an appealable injunction. Nat’l Un-

ion Fire Ins. Co. of Pittsburgh, Pa. v. Sahlen, 999 F.2d 1532, 1535

(11th Cir. 1993). We said, “During the pendency of this case, the

district court granted a motion by the Insureds for partial summary

judgment and held that National Union was required to pay the

Insureds’ defense costs in the underlying suits until its claim for re-

scission was resolved. We find that this order of the district court

constituted an injunction for purposes of § 1292(a)(1).” Id.

It is true that the district court’s order in Sahlen was more

explicit in stating that the insurer “was required to pay the Insureds’

defense costs.” Id. But we find Sahlen instructive despite the differ-

ence in wording because the district court here likewise granted

summary judgment to the Insureds on their counterclaim for a de-

claratory judgment, thereby requiring James River to pay their de-

fense costs. The Insureds sought a declaratory judgment and other

appropriate relief, which includes injunctive relief. By entering an

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20-11568 Opinion of the Court 11

order declaring that the Insureds have a right to be defended by

James River, the district court made the declaratory judgment akin

to an injunction.7 See Wright & Miller, Fed. Prac. & Proc. § 3922.

We therefore have jurisdiction to entertain this appeal from the or-

der on the duty to defend even though it does not provide com-

plete relief because the duty to indemnify claim remains pending

before the district court.

B. James River Has a Duty to Defend Under the Policy Because

the Exclusion Is Ambiguous.

The Employer’s Liability Exclusion in the Policy excluded

coverage for “any claim, suit, cost or expense arising out of ‘bodily

injury’ to . . . [a]ny employee of any Insured arising out of and in

the course of . . . [e]mployment by any insured[] or . . . [p]erforming

duties related to the conduct of any insured’s business.” Doc. 1-4 at

66 (emphasis added). James River argues that the Exclusion unam-

biguously applies equally to all the insureds—Ultratec HSV, Ul-

tratec, MST, and Thouin. Because the Employees’ claims arose out

of bodily injury they suffered while employed by one of the in-

sureds (“any Insured”), James River argues, none of the Employees

7 James River points out that the order is not expressly enforceable by con-

tempt; however, Wright & Miller sets out examples of characteristics that in-

dicate injunctive qualities rather than absolute requirements. See Wright &

Miller, Fed. Prac. & Proc. § 3922. And we doubt that, should James River fail

to comply with the order by not paying defense costs, there would be no con-

sequences. Indeed, in that event James River likely would be subject to con-

tempt proceedings, as the parties acknowledged during oral argument.

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12 Opinion of the Court 20-11568

is covered under the Policy. The Defendants respond that the Ex-

clusion is ambiguous because the phrase “any Insured” could also

be interpreted to apply only to the Employees’ claims against their

employer, Ultratec HSV. In other words, the Exclusion could ex-

clude coverage for claims that an Ultratec HSV employee brings

against her employer, Ultratec HSV, but not affect coverage for

claims an Ultratec HSV employee brings against another insured

who is not her employer. Under this interpretation, the Defendants

argue, the Insureds, all non-employers, are covered under the Pol-

icy for the Employees’ claims against them, and James River should

have a duty to defend them.

The Defendants further contend that, even if the Exclusion

were unambiguous on its own, it must be interpreted in light of the

Separation of Insureds Provision. The Separation of Insureds Pro-

vision directs that the Policy be read “[a]s if each Named Insured

were the only Named Insured; and . . . [s]eparately to each insured

against whom claim is made or ‘suit’ is brought.” Id. at 17. Accord-

ing to the Defendants, this provision means that we must read the

Policy and the Exclusion separately for each insured, as if that in-

sured were the only insured under the Policy. Read this way, the

Exclusion bars coverage only when the insured is sued by its own

employee; when it is sued by another insured’s employee, cover-

age exists under the Policy. Because Ultratec is being sued by an-

other insured’s employees and not its own, the Defendants say,

James River has a duty to defend it in the underlying action. The

same goes for MST and Thouin.

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20-11568 Opinion of the Court 13

We now turn to Alabama caselaw to interpret the Policy.

1. Principles of Alabama Law Regarding Ambiguity in the

Interpretation of Insurance Contracts

Alabama caselaw obliges us to conclude that James River has

a duty to defend the Insureds. Insurance policies are contracts, and

“like other cont[r]acts, [they are] governed by the general rules of

contracts.” Twin City Fire Ins. Co. v. Alfa Mut. Ins. Co., 817 So. 2d

687, 691 (Ala. 2001). Courts must construe them to give effect to

the intention of the parties. Id. To glean the parties’ intent, we ex-

amine “more than an isolated sentence or term”; instead, we “read

each phrase in the context of all other provisions.” Id. (internal quo-

tation marks omitted).

If a policy’s terms are unambiguous, the court must enforce

the policy as written. Johnson v. Allstate Ins. Co., 505 So. 2d 362,

365 (Ala. 1987). But when there is doubt about whether the policy

provides coverage, we must construe the policy language for the

benefit of the insured. St. Paul Mercury Ins. Co. v. Chilton–Shelby

Mental Health Ctr., 595 So. 2d 1375, 1377 (Ala. 1992). A policy term

is ambiguous only if, when applying the term’s ordinary meaning,

it is reasonably susceptible to different constructions. Safeway Ins.

Co. of Ala. v. Herrera, 912 So. 2d 1140, 1144 (Ala. 2005). In deter-

mining whether a term is ambiguous, we cannot consider the term

in isolation; we must consider the policy as a whole. State Farm

Fire & Cas. Co. v. Slade, 747 So. 2d 293, 309 (Ala. 1999).

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14 Opinion of the Court 20-11568

In this case, we must decide whether the Exclusion unam-

biguously excludes coverage under the Policy. The insurer has the

burden of establishing that an exclusion excludes coverage for a

claim. Acceptance Ins. Co. v. Brown, 832 So. 2d 1, 12 (Ala. 2001).

Exclusions must be interpreted “as narrowly as possible in order to

provide maximum coverage for the insured, and must be con-

strued most strongly against the company that drew the policy and

issued it.” Nationwide Mut. Ins. Co. v. Thomas, 103 So. 3d 795, 805

(Ala. 2012) (internal quotation marks omitted).

The Alabama Supreme Court has twice considered an exclu-

sion using the term “any insured” and deemed it ambiguous on its

face. Transp. Indem. Co. v. Wyatt, 417 So. 2d 568, 571 (Ala. 1982);

Wilson v. State Farm Mut. Auto. Ins. Co., 540 So. 2d 749, 752 (Ala.

1989). 8 In addition, Alabama caselaw applies a minority rule for

separation of insureds provisions, interpreting them to mean that

the whole policy, including exclusions, should be read as if each

insured has its own separate insurance. U.S. Fire Ins. Co. v. McCor-

mick, 243 So. 2d 367, 375 (Ala. 1970) (superseded by statute on

other grounds); see also Wyatt, 417 So. 2d at 570. Applying Ala-

bama law and reading the Separation of Insureds Provision with

8Wilson interpreted an exclusion that used the phrase “an insured.” Wilson,

540 So. 2d at 750–51 (emphasis added). But because “‘an insured’ unambigu-

ously means ‘any insured,’” according to the Alabama Supreme Court, we

equate Wilson’s interpretation of “an insured” with Wyatt’s interpretation of

“any insured.” See State Farm Fire & Cas. Co. v. Davis, 612 So. 2d 458, 466

(Ala. 1993) (internal quotation marks omitted).

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20-11568 Opinion of the Court 15

the Exclusion, we conclude that the Exclusion is ambiguous and

therefore must be construed in favor of the insured.

2. The Exclusion’s “Any Insured” Language Is Ambiguous.

The Alabama Supreme Court’s Wyatt and Wilson decisions

held that the phrase “any insured” was ambiguous when used in an

employer’s liability exclusion. Wyatt was injured in the scope of his

employment and sued his employer and its executive officers for

his injuries. Wyatt, 417 So. 2d at 568. The employer corporation

and the officers were insured by the same commercial general lia-

bility policy, which included an employer’s liability exclusion that

read: “This insurance does not apply . . . [t]o any OCCURRENCE

which caused BODILY INJURY to any employee of any INSURED

arising out of or in the course of his employment by any

INSURED.” Id. at 569 (emphases added). The policy defined both

the corporation and its officers as insureds. Id. at 568. The parties

agreed that Wyatt was an employee of the corporation but not of

the officers. Id. at 570. When the officers demanded that the insurer

defend them against Wyatt’s lawsuit, the insurer denied coverage.

Id. at 568–69. It filed a declaratory judgment action in which it ar-

gued that “any insured” as used in the exclusion unambiguously

meant that the policy covered claims against neither the corpora-

tion nor its officers when an employee was injured while working

for the corporation, and thus the insurer had no duty to defend

against Wyatt’s claims. Id. at 570.

The trial court disagreed and concluded that “the term ‘any

INSURED’ is ambiguous on its face” because it could refer to “any

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16 Opinion of the Court 20-11568

one of the insureds” instead of all the insureds. Id. The Alabama

Supreme Court agreed that the term was ambiguous because it

“could be interpreted either to mean only singularly ‘any one of the

insureds’ or could apply collectively to the whole group of in-

sureds.” Id. at 571. Because it is “axiomatic” that courts must con-

strue ambiguities in favor of coverage for the insured, the Court

held that the insurer had a duty to defend the officers. Id. (internal

quotation marks omitted).

In Wilson the Alabama Supreme Court found similar lan-

guage to be ambiguous. There, the Court interpreted an em-

ployer’s liability exclusion that excluded coverage for any bodily

injury to “any employee of an insured ” arising from the em-

ployee’s employment. Wilson, 540 So. 2d at 750–51 (emphasis

added). The ambiguity in the exclusion arose because “there are

multiple insureds and the injured party is an employee of one or

some, but not all.” Id. at 752. Construing the ambiguity in favor of

the insured, the Court held that the insurer had a duty to defend.

Id.

These cases compel us to conclude that the Exclusion in the

Policy is ambiguous. The Exclusion is nearly identical to the am-

biguous exclusion in Wyatt. In Wyatt and Wilson, the policies cov-

ered multiple insureds, and the injured parties were not employees

of all the insureds. Wyatt, 417 So. 2d at 568; Wilson, 540 So. 2d at

751. Here, similarly, the Policy covers multiple insureds—Ultratec

HSV, Ultratec, MST, and Thouin—and the injured Employees

were employed by only one insured, Ultratec HSV. Wyatt and

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20-11568 Opinion of the Court 17

Wilson found ambiguity in employer’s liability exclusions that in-

cluded the term “any insured” when injured employees sued an in-

sured who was not their employer. Wilson, 540 So. 2d at 751; Wy-

att, 417 So. 2d at 572. In this case, the same ambiguity exists because

the Employees sued insureds who were not their employer. 9

According to Wyatt, “any insured” can be interpreted singu-

larly as “any one of the insureds,” or collectively as “the whole

group of insureds.” See Wyatt, 417 So. 2d at 571. Reading “any in-

sured” singularly means that the Policy does not cover any claim

arising out of bodily injury to any employees of Ultratec arising out

of their employment with Ultratec. The Employees were not em-

ployed by Ultratec, so the Exclusion does not bar coverage for their

claims against Ultratec for employment-related bodily injury. Un-

der this reading, James River would have a duty to defend Ultratec.

Reading “any insured” collectively produces the opposite re-

sult: the Policy excludes coverage for any claim for bodily injury to

any employees of any of the four insureds, Ultratec, Ultratec HSV,

MST, or Thouin, arising out of the course of their employment.

Because the Employees were employed by one of those insureds,

the Exclusion applies to their claims against all the insureds. Under

this reading, James River would have no duty to defend.

9It is undisputed that the Exclusion excludes coverage under the Policy for the

Employees’ claims against their employer, Ultratec HSV, and therefore James

River has no duty to defend Ultratec HSV.

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18 Opinion of the Court 20-11568

The Exclusion is ambiguous under Alabama law because it

is reasonably open to either interpretation. We must construe the

ambiguous provision in favor of coverage. Therefore, we adopt the

first interpretation and conclude that the Exclusion does not ex-

clude coverage, and thus James River has a duty to defend the In-

sureds.

James River argues that Wyatt is inapposite because the pol-

icy in that case featured an automobile exclusion that contributed

to the employer’s liability exclusion’s ambiguity. But in Wyatt the

Alabama Supreme Court determined that the employer’s liability

exclusion was ambiguous on its own; the Court’s analysis ignored

the automobile exclusion. Wyatt, 417 So. 2d at 571. We are thus

obliged to follow Wyatt on this question of state law. 10

In this case, the district court concluded that the Exclusion

was unambiguous on its own but ambiguous when read together

with the Separation of Insureds Provision. As we explain in the next

subsection, we agree with the district court that the provisions,

read together, are ambiguous. Although we do not agree with the

district court that the Exclusion is unambiguous on its own, we can

affirm the court’s ruling on any ground that is supported by the

record. Thomas v. Cooper Lighting, Inc., 506 F.3d 1361, 1364 (11th

Cir. 2007).

10 We are bound by the decisions of the Alabama Supreme Court on questions

of Alabama law. See Gonzalez v. Governor of Ga., 978 F.3d 1266, 1271 (11th

Cir. 2020) (citing 28 U.S.C. § 1652).

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20-11568 Opinion of the Court 19

3. The Separation of Insureds Provision Adds Ambigu-

ity.

Regardless of whether the Exclusion taken on its own is am-

biguous, we agree with the district court that the Exclusion does

not unambiguously apply when we interpret it in conjunction with

the Separation of Insureds Provision, also known as a severability

of interests provision. James River argues that we should not read

the provisions together. The district court disagreed, concluding

that the Alabama Supreme Court’s McCormick and Wyatt deci-

sions required it to read the Policy and Exclusion as if each Insured

had its own, separate policy. Based on this reading, the court deter-

mined that the Exclusion did not exclude coverage, and therefore

James River had a duty to defend the Insureds. We agree.

McCormick established that Alabama courts read em-

ployer’s liability exclusions and severability of interests provisions

together. 11 In that case, as in this one, injured employees sued a

11 James River contends that the district court erred in assuming Alabama

would follow the minority rule for interpreting a severability of interests pro-

vision and an exclusion excluding coverage for “any insured.” True, most

courts that have addressed the issue have concluded that a separation of in-

sureds provision in a general policy does not nullify an exclusion’s “any in-

sured” language contained in an endorsement that changes the general policy.

See Doc. 169 at 17 n.17 (collecting cases). But other courts have concluded

otherwise, holding that a separation of insureds provision requires the whole

policy, including exclusions and other endorsements, to be read as if each in-

dividual seeking coverage is the only insured. See id. at 17–18. The Alabama

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20 Opinion of the Court 20-11568

defendant who was not their employer but was insured under the

same policy as their employer. McCormick, 243 So. 2d at 369. The

policy included an employer’s liability exclusion and a separation

of insureds provision, styled there as a severability of interests pro-

vision. Id. at 373. The provision read: “Severability of Interests. The

term ‘the insured’ is used severally and not collectively.” Id. The

Alabama Supreme Court concluded that a severability of interests

provision means that a court must consider “each insured sepa-

rately, independently of every other insured.” Id. at 375. Using that

provision to interpret the exclusion, the Court stated that “the un-

qualified word ‘insured’” in the exclusion at issue “means only the

person claiming coverage.” Id.

Wyatt followed McCormick, finding the severability provi-

sions in the two cases to be similar. Wyatt, 417 So. 2d at 571. Be-

cause McCormick controlled, the Wyatt court read the employer’s

liability exclusion and the severability of interests provision to-

gether, so the word “insured” referred only to the person or entity

claiming coverage. Id. Having already determined that the exclu-

sion was ambiguous, the Court concluded that reading the provi-

sions together “also creates ambiguity in determining the extent of

Supreme Court chose to follow this minority rule in McCormick, where it

acknowledged the “decided split of authority” before concluding that the sev-

erability of interests provision applied to the exclusion. McCormick, 243 So.

2d at 373, 375. The district court did not assume Alabama courts would follow

the minority rule; it merely applied the rule they had already adopted.

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20-11568 Opinion of the Court 21

coverage.” Id. Applying Alabama law, we, too, read the provisions

together.

The Separation of Insureds Provision in the Policy is similar

to the severability of interests provision in McCormick. It reads:

“[T]his insurance applies . . . [a]s if each Named Insured were the

only Named Insured; and . . . [s]eparately to each insured against

whom claim is made or ‘suit’ is brought.” Doc. 1-4 at 17. As with

the policies in the cases discussed above, this means that each

named insured has a separate insurance policy; one insured’s con-

duct will not affect another insured’s coverage. Thus, we read the

Policy as if it applies separately to Ultratec HSV, Ultratec, MST,

and Thouin—as if each one is the only named insured. Applying

this reading to the Exclusion, we conclude that the Policy does not

apply to bodily injury to an employee of Ultratec arising out of and

in the course of employment by Ultratec. But the Exclusion does

not exclude coverage for Ultratec in this case because the Employ-

ees were not Ultratec’s employees. James River therefore has a

duty to defend Ultratec. Substituting Thouin or MST for Ultratec

leads to the same conclusion: James River has a duty to defend

them.

IV. CONCLUSION

For the foregoing reasons, we affirm the district court’s or-

der granting summary judgment in part in favor of the Defendants

and holding that James River has a duty to defend the Insureds:

Ultratec, MST, and Thouin.

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22 Opinion of the Court 20-11568

AFFIRMED.