           Case: 11-15905   Date Filed: 07/12/2012   Page: 1 of 13




                                                          [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                      ________________________

                             No. 11-15905
                         Non-Argument Calendar
                       ________________________

                D.C. Docket No. 8:10-cv-00894-JDW-TBM



STATE NATIONAL INSURANCE COMPANY,
STAR INSURANCE CO.,

                                                             Plaintiffs-Counter
                                                        Defendants-Appellants,

                                  versus

KEVIN WHITE,

                                                            Defendant-Counter
                                                            Claimant-Appellee.

                      ________________________

                Appeal from the United States District Court
                    for the Middle District of Florida
                      ________________________

                              (July 12, 2012)

Before HULL, JORDAN and ANDERSON, Circuit Judges.
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PER CURIAM:

      Plaintiff-Appellant State National Insurance Company (“State National”)

appeals the district court’s grant of summary judgment to Defendant-Appellee

Kevin White. A former administrative aide successfully sued Defendant White, a

Hillsborough County Commissioner, for sexual harassment. Plaintiff State

National filed this action seeking a declaratory judgment that it had no duty to

reimburse White for his defense costs under its insurance policy. The district

court, ruling on cross-motions for summary judgment, concluded that State

National had a duty under the policy to reimburse White for his defense costs.

After review, we affirm.

                           I. FACTUAL BACKGROUND

      We review first the terms of the relevant policy and then the underlying

litigation that gave rise to White’s claims for reimbursement of defense costs from

State National.

A.    The CGL Policy

      Plaintiff State National issued a commercial general liability (“CGL”)

insurance policy to Hillsborough County, as the “named insured,” and its

employees, including Defendant White, as “insureds.” The CGL policy contained

an endorsement that provided public officials and employees liability insurance

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(“POELI”). Under the POELI endorsement, State National agreed to “pay those

sums that the insured becomes legally obligated to pay as damages because of a

‘wrongful act’ to which this insurance applies.” (Emphasis added.) The POELI

endorsement also stated that State National had a “duty to defend any ‘suit’

seeking those damages.” (Emphasis added.)

      The POELI endorsement, however, excluded, among other things, any

claim: (1) “arising out of bodily injury, sickness, disease, death, or mental

anguish”; and (2) “arising from the willful violation of any statute, ordinance or

regulation.” (Emphasis added.)

      The CGL policy also contained a self-insured retention (“SIR”)

endorsement, which provided that the “named insured” (Hillsborough County)

would retain the sum of $350,000 as self-insured, “per occurrence and as respects

combined insured damages and insured allocated costs and expenses of

investigation, defense, negotiation and settlement applicable to such damages.”

And the SIR endorsement also provided that State National agreed to pay “its

otherwise applicable limit of liability” only if “any combined insured damages and

insured allocated costs and expenses . . . exceed, per occurrence,” the SIR amount.

B.    Underlying Ogden Litigation

      Alyssa Ogden, White’s former aide, sued White and Hillsborough County

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alleging constitutional claims of gender discrimination, sexual harassment and

retaliation based on the Equal Protection Clause and brought under 42 U.S.C.

§§ 1983 and 1988 against both defendants. Ogden’s complaint also alleged state

law claims of sexual harassment and retaliation, under the Florida Civil Rights Act

(“FCRA”), against only Hillsborough County.1 For each count, Ogden’s

complaint sought damages, including lost wages, benefits and other past and

future compensation, reinstatement, compensatory and punitive damages,

attorney’s fees and costs and other relief appropriate under federal or Florida law.

       The jury returned a verdict in Ogden’s favor, finding that she was subjected

to unwanted sexual advances and sexual harassment and that she was terminated

as part of the sexual harassment or because she rejected unwelcome sexual

advances. The jury awarded Ogden a total of $75,000 in compensatory damages,

representing $15,000 for medical expenses and $60,000 for mental anguish. The

jury did not award any lost wages or benefits. The trial court’s judgment ordered

that Ogden recover $75,000 from Hillsborough County and White. Ogden then

sought over $200,000 in attorney’s fees. Hillsborough County settled with Ogden

for $278,000, representing $75,000 to satisfy the judgment against Hillsborough


       1
        At the summary judgment stage, Ogden withdrew her retaliation claims under § 1983
and the FCRA and subsequently voluntarily dismissed her remaining FCRA claims before the
case was submitted to the jury.

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County and $203,000 for Ogden’s attorney’s fees. The judgment against White

remains in effect.

      During the Ogden litigation, White paid for his own defense, incurring

$157,730.31 in legal fees and expenses. Hillsborough County incurred

$114,713.35 in legal fees and $98,275.83 in trial costs and related expenses, for a

total of $212,989.18. Hillsborough County’s total out-of-pocket was $490,989.18,

which included the $203,000 settlement for Ogden’s attorney’s fees, the $75,000

judgment and its own $212,989.23 in attorney’s fees and expenses.

      Ultimately, State National paid Hillsborough County $65,989.18 under the

CGL policy. This $65,989.18 amount was Hillsborough County’s total costs

($490,713.35), less the $75,000 judgment and the $350,000 SIR. When White

sought reimbursement for his legal fees, State National denied coverage and filed

this declaratory judgment action.

C.    Declaratory Judgment Action

      Plaintiff State National’s two-count complaint sought a declaration that: (1)

the POELI endorsement excluded coverage for the claims asserted against White

in the Ogden litigation (Count I); or (2) even if some claims were covered, State

National had no duty to reimburse White under the SIR endorsement because the

$350,000 SIR amount was not exceeded (Count II). White filed a counterclaim for

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breach of contract against State National, seeking reimbursement for his defense

costs in the Ogden litigation.

      After discovery, the parties filed cross-motions for summary judgment. The

parties did not dispute that White was an “insured” under the POELI endorsement

and that his acts giving rise to Ogden’s claims fell within the POELI

endorsement’s definition of a “wrongful act.” However, the parties disagreed as to

whether Ogden’s claims fell within the POELI endorsement’s exclusions for (1)

claims “arising out of bodily injury, sickness, disease, death or mental anguish” or

(2) “arising from the willful violation of any statute, ordinance or regulation.” The

parties also agreed that State National’s “duty to defend” under the POELI

endorsement was modified by the SIR endorsement to become a “duty to

reimburse” White’s defense costs if the SIR amount was satisfied. The parties

disputed, however, whether White could use only damages and costs directly

attributable to “covered” claims to satisfy the SIR amount.

      In its first summary judgment order, the district court granted White’s

summary judgment motion and denied State National’s summary judgment motion

as to Count I. The district court determined that, even if Ogden’s state-law FCRA

claims were excluded by the POELI endorsement as “claims arising from the

willful violation of a statute,” Ogden’s constitutional claims under the Equal

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Protection Clause, even though brought pursuant to § 1983, were not.

      The district court further found that not all of Ogden’s claims in her

complaint were excluded by the POELI endorsement as “claims arising out of . . .

mental anguish.” The district court concluded that State National’s duty to

reimburse White for legal fees under the SIR endorsement depended upon the

claims alleged in Ogden’s complaint, not on the outcome of the litigation.

Although the jury awarded Ogden damages only for medical expenses ($15,000)

and mental anguish ($60,000), Ogden’s complaint had alleged other claims that

did not “arise out of” her mental anguish, but out of her termination (i.e., her

“tangible employment action” sexual harassment and retaliation claims), and her

complaint had sought other relief, including lost wages, reinstatement and

attorney’s fees and costs. Therefore, some of Ogden’s federal § 1983 claims were

covered by the POELI endorsement. As such, the district court concluded that,

under Florida law, State National had a duty to reimburse White under the SIR

endorsement if the SIR amount was exhausted.

      After supplemental briefing, the district court entered a second order

granting summary judgment in favor of White on Count II and on White’s

counterclaim. The district court determined that the SIR endorsement was

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ambiguous as to what damages, costs and expenses—only those attributable to

covered claims or also those attributable to non-covered claims—could be used to

exhaust the $350,000 SIR amount. Construing the ambiguous SIR endorsement

liberally in favor of the insured, as required by Florida law, the district court

concluded that the entire $490,989.18 paid by Hillsborough County as a result of

the Ogden litigation could be used to satisfy the SIR. Because the $350,000 SIR

was satisfied by Hillsborough County’s payments, the district court determined

that State National had a duty to reimburse White for his defense costs of

$153,730.31. State National filed this appeal.2

                                     II. DISCUSSION

A.     Coverage Under the POELI Endorsement

       On appeal, State National argues that Ogden’s § 1983 claims were excluded

from coverage by the POELI endorsement’s exclusion for “willful violation of any

statute.”3 We agree with the district court that Ogden’s federal gender

       2
        We review the grant of summary judgment, as well as the interpretation of an insurance
contract, de novo. See James River Ins. Co. v. Ground Down Eng’g, Inc., 540 F.3d 1270, 1274
(11th Cir. 2008). In this diversity case, Florida law governs as to the insurance policy. See
Dempsey v. Auto Owners Ins. Co., 717 F.2d 556, 559 (11th Cir. 1983).
       3
        On appeal, State National does not challenge the district court’s conclusions that: (1)
some of Ogden’s claims for damages were not excluded by the mental anguish exclusion; (2)
State National’s duty to reimburse under the SIR endorsement was determined by the allegations

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discrimination and sexual harassment claims arose from violation of the U.S.

Constitution and did not “arise from” a violation of a “statute.” Section 1983 is a

remedial statute that “creates no substantive rights,” but merely provides a means

to bring claims of constitutional violations, in this case the Equal Protection

Clause of the U.S. Constitution. See Barfield v. Brierton, 883 F.2d 923, 934 (11th

Cir. 1989). The POELI endorsement unambiguously excluded only those claims

arising from violations of statutes. Cf. Penzer v. Transportation Ins. Co., 545 F.3d

1303, 1310 (11th Cir. 2008) (explaining that phrase “arising out of a willful

violation of a penal statute” in an exclusion “easily and logically can be read as

limited to the statute giving rise to liability”). Under Florida law, insurance

contracts are to be construed “in accordance with the plain language of the policies

as bargained for by the parties.” Auto-Owners Ins. Co. v. Anderson, 756 So.2d 29,

34 (Fla. 2000). If State National had wanted to exclude claims arising from

constitutional violations, it could have easily done so. As drafted, the exclusion

for statutory violations did not exclude Ogden’s equal protection claims brought

pursuant to § 1983.


in Ogden’s complaint and not by the jury’s verdict; and (3) State National’s duty to reimburse in
excess of the SIR was triggered if any of the claims in Ogden’s complaint were covered under the
POELI endorsement.

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      State National argues that because White’s underlying “wrongful act”

violated a state statute, the FCRA, any separate federal claim arising from that

same wrongful act is also excluded, “regardless of the legal avenue through which

relief is sought.” We disagree. We recognize State National’s exclusion is for any

claim “arising from the willful violation of a statute.” Under Florida law, the

phrase “arising out of” in an exclusion means “originating from” or “flowing

from” and requires some causal connection, but not proximate cause. See Taurus

Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So.2d 528, 539-40 (Fla. 2009).

Similarly, Ogden’s federal claims “arose from” White’s conduct toward, and

termination of, Ogden, which she claimed violated the Equal Protection Clause.

Her federal claims did not arise from her state FCRA claims.

      In essence, State National asks us to construe the exclusion to mean that the

POELI endorsement does not apply to any claims arising from conduct that is also

a willful violation of a statute. As the district court explained, “[a]t best, this

argument suggests an ambiguity that must be construed against the Insurer[ ],”

rather than in its favor. See Auto-Owners Ins. Co., 756 So.2d at 34 (explaining

that ambiguous exclusionary clauses are construed strictly against the insurer).

B.    Satisfaction of the SIR

      Alternatively, State National argues that the SIR can be satisfied only by

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defense costs and damages for covered claims.

       The SIR endorsement provides that Hillsborough County retains, as a self-

insured retention, $350,000 per occurrence “as respects combined insured

damages and insured allocated costs and expenses of investigation, defense,

negotiation and settlement applicable to such damages.”4 Further, State National

agreed to pay if “any combined insured damages and insured allocated costs and

expenses exceed, per occurrence” the $350,000 retention. The SIR endorsement

does not define the phrases “combined insured damages” and “insured allocated

costs and expenses.”

       State National contends that “insured” in these two phrases should be read

to mean covered under the POELI endorsement, such that only damages for

covered claims and costs and expenses related to those damages can satisfy the

SIR amount. This is one possible interpretation of the SIR endorsement.5

       4
         State National does not challenge the district court’s determination that, because the SIR
endorsement required Hillsborough County, as named insured, to retain $350,000 per occurrence
and not per insured, if the SIR amount was satisfied as to Hillsborough County, it was also
satisfied as to White.
       5
          The district court pointed out that State National’s interpretation may be unreasonable
for two reasons. First, it is inconsistent with the district court’s earlier ruling that, under Florida
law, an insurer’s duty to reimburse under a SIR endorsement, like an insurer’s duty to defend
under a liability policy, is triggered if any alleged claim is covered. See, e.g., Baron Oil Co. v.
Nationwide Mut. Fire Ins. Co., 470 So.2d 810, 815 (Fla. 1st DCA 1985) (explaining that an
insurer has a duty to defend the entire action if some alleged claims are covered and some are
not, at least until the covered claims are eliminated from the suit). Second, it may not be possible
or appropriate to apportion defense fees and costs between covered and non-covered claims

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       However, the district court noted another reasonable interpretation, that is,

that the phrase “insured damages” means damages incurred by the named insured

(or perhaps any insured), as opposed to those incurred by the insurer or a third

party. The district court noted that this interpretation “is more consistent with the

general purpose of the SIR Endorsement and the Policies as a whole,” to limit the

exposure of Hillsborough County and its employees to $350,000 per occurrence.

See U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871, 883 (Fla. 2007) (explaining

that an insurance policy must be read “as a whole, endeavoring to give every

provision its full meaning and operative effect”). Under this interpretation, the

SIR endorsement could be satisfied by defense costs and expenses for both

covered and non-covered claims incurred by Hillsborough County.

       Accordingly, we agree with the district court that the SIR endorsement is

ambiguous as to which damages and costs count toward the SIR. See Travelers

Indem. Co. v. PCR Inc., 889 So.2d 779, 785 (Fla. 2004) (explaining that language

in an insurance policy is ambiguous if it “is susceptible to more than one


given that Ogden’s § 1983 and FCRA claims were governed by the same standards of liability
applicable in employment discrimination cases. See Rice-Lamar v. City of Ft. Lauderdale, 232
F.3d 836, 843 n.11 (11th Cir. 2000) (noting that § 1983 gender discrimination claim involves the
same analysis as a Title VII disparate treatment claim); Harper v. Blockbuster Entm’t Corp., 139
F.3d 1385, 1387 (11th Cir. 1998) (noting same for FCRA gender discrimination claims). We
need not address this question, however, because even assuming State National’s interpretation is
reasonable, it is not the only reasonable interpretation and, thus, the SIR endorsement is
ambiguous and must be construed in favor of the insured.

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reasonable interpretation, one providing coverage and the other limiting

coverage.” (internal quotation marks omitted)). And, given that the SIR

endorsement is ambiguous, the district court properly construed it in favor of

coverage. See Auto-Owners, 756 So.2d at 34 (“[A]mbiguous insurance policy

exclusions are construed against the drafter and in favor of the insured.”).

Therefore, the district court did not err in concluding that Hillsborough County’s

$490,989.18 in costs and expenses incurred in the Ogden litigation, whether or not

directly attributable to covered claims, satisfied the SIR amount and that State

National was required under the SIR endorsement to reimburse White for his own

defense costs and expenses.

      AFFIRMED.




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