           Case: 12-16261   Date Filed: 06/26/2013   Page: 1 of 7


                                                        [DO NOT PUBLISH]



            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 12-16261
                        Non-Argument Calendar
                      ________________________

                  D.C. Docket No. 0:11-cv-61577-CMA



OCEAN’S 11 BAR & GRILL, INC.,
a Florida corporation,

                                                              Plaintiff-Appellee,

                                  versus

INDEMNITY INSURANCE CORPORATION
OF DC, RISK RETENTION GROUP,

                                                         Defendant-Appellant,

INDEMNITY INSURANCE CORPORATION,
a foreign corporation, et al.,

                                                                    Defendants.

                      ________________________

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

                             (June 26, 2013)
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Before HULL, WILSON and ANDERSON, Circuit Judges.

PER CURIAM:

      After a bench trial, Defendant Indemnity Insurance Corporation of DC, RRG

(“Indemnity”) appeals the district court’s final judgment in favor of the insured,

Plaintiff Ocean’s 11 Bar & Grill, Inc. (“Ocean’s 11”), on its Florida law claims for

declaratory judgment and for damages for breach of contracts of insurance. After

review, we affirm the $5,000.00 judgment in favor of the Plaintiff insured.

                                I. BACKGROUND

A.    Insurance Applications and Contracts

      Joe Franco owns Ocean’s 11, which operates a restaurant and bar in Florida.

In 2009, Franco applied for and obtained liability insurance for Ocean’s 11 from

Indemnity. He repeated this process in 2010 and 2011. Each of the three

insurance applications, incorporated into their respective insurance policies,

contained a warranty stating, in relevant part, that the statements made in the

insurance application were true, correct and complete to the best of Franco’s

knowledge and belief:

      The undersigned represents and warrants, to the best of his/her
      knowledge and belief, based on reasonable inquiry, that the particulars
      and statements set forth on this application are true, correct and
      entirely complete, and there are no other risk factors that have not
      been disclosed herein. If any particulars or statements are materially
      misrepresented or material information has been omitted intentionally
      or accidentally, such misrepresentation or omission will void any
      issued coverages and the insurance company will have no duty to

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      defend any claims, pay any damages, or pay sums or perform acts or
      services.

      In 2011, a patron sued Ocean’s 11 for damages for assault and battery

sustained at its bar. After investigating, Indemnity advised Ocean’s 11 that it was

rescinding the three insurance contracts and declaring the insurance policies void

ab initio. Indemnity maintained that Franco had made various material

misrepresentations in the three insurance applications as to such things as square

footage, anticipated gross receipts, number of security personnel, employee

background checks and Franco’s years of experience. Indemnity did not provide

Ocean’s 11 with a defense to the bar patron’s pending suit or coverage for any

potential losses.

B.    District Court Proceedings

      Ocean’s 11 brought this diversity action seeking a declaration that Indemnity

had improperly rescinded the insurance contracts and for damages for breach of

contracts under Florida law. Following a bench trial, the district court entered final

judgment of $5,000, plus interest, in favor of Ocean’s 11 on both claims.

      The district court concluded, inter alia, that Indemnity had not sustained its

burden to show that any of the alleged misrepresentations in Ocean’s 11’s

applications were incorrect or material, as required by Florida Statutes § 627.409.

Section 627.409 provides in relevant part:



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      A misrepresentation, omission, concealment of fact, or incorrect
      statement may prevent recovery under the contract or policy only if
      any of the following apply:
             (a) The misrepresentation, omission, concealment, or statement
      is fraudulent or is material either to the acceptance of the risk or the
      hazard assumed by the insurer.

             (b) If the true facts had been known to the insurer pursuant to a
      policy requirement or other requirement, the insurer in good faith
      would not have issued the policy or contract, would not have issued it
      at the same premium rate, would not have issued a policy or contract
      in as large an amount, or would not have provided coverage with
      respect to the hazard resulting in the loss.
Fla. Stat. § 627.409(1)(a) & (b).

      The district court noted that, as a general rule, under § 627.409 an insurer

may void a policy for misstatements or omissions without regard to whether they

are intentional or accidental. The district court determined, however, that under

Florida law, an insurer who includes the modifier “to the best of his knowledge and

belief” in an insurance application has agreed to a lesser knowledge standard than

the one in § 627.409. See Green v. Life & Health of Am., 704 So. 2d 1386, 1389-

91 (Fla. 1998); William Penn Life Ins. Co. of N.Y. v. Sands, 912 F.2d 1359, 1362-

64 (11th Cir. 1990). “To permit an insurer to rescind a policy containing

‘knowledge and belief’ language due to an unknowing misstatement not only

contravenes the terms of the contract itself, but is unfair as well.” Green, 704 So.

2d at 1391 (quoting Sands, 912 F.2d at 1364 n.7) (emphasis added). The district

court noted that an insurance applicant “faced with a policy that unambiguously

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stated that it could be voided for unknowing misstatements might have rejected

those terms and sought another policy.” See id. In other words, because

Indemnity included the “to the best of his/her information and belief” language in

the warranty, Indemnity could void the policies only for statements Franco knew

were incorrect when he made them, but not for Franco’s unknowing misstatements.

      The district court found credible Franco’s testimony about how he

interpreted the insurance application questions and then answered them. The

district court further found that: (1) many of the questions in Indemnity’s insurance

application were poorly drafted and ambiguous, (2) a reasonable person in

Franco’s shoes could have read them as Franco had, and (3) Franco had provided

truthful answers to the questions as Franco had reasonably interpreted them.

Accordingly, the district court concluded that: (1) Indemnity was not entitled to

rescind the insurance contracts and void the policies ab initio; (2) Indemnity

breached the insurance contracts by failing to provide a defense to any state court

suits against Ocean’s 11; (3) Indemnity failed to prove its last-minute affirmative

defense of unclean hands; and (4) Ocean’s 11 was entitled to damages in the

amount of $5,000 on its breach of contracts claim.

                                 II. DISCUSSION

      After review of the record and the parties’ briefs, we affirm the district

court’s final judgment on the declaratory judgment and breach of contract claims


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for the reasons outlined in the district court’s thorough and well-reasoned order

dated November 2, 2012.1 We briefly address Indemnity’s argument on appeal

that the district court’s “analysis . . . d[id] not take into account the entirety of the

Warranty’s language.”

       Specifically, Indemnity points to the warranty’s second sentence, which

follows the “to the best of his/her knowledge and belief” language. That sentence

provides that Indemnity could void the policies “[i]f any particulars or statements

are materially misrepresented or material information has been omitted

intentionally or accidentally.” Indemnity argues that by including “or

accidentally,” in the second sentence, the parties “contracted around the Green

holding upon which the District Court relied” and “place[d] Ocean’s 11’s

insurance policy [back] within the purview of Florida Statutes section 627.409.”

Thus, according to Indemnity, the warranty as a whole “unambiguously” allowed

Indemnity “to void any issued coverages for any particulars or statements

materially misrepresented or material information omitted regardless of the

applicant’s intentions.”

       Indemnity’s construction of the second sentence of the warranty is doubtful

given that it would render the first sentence a nullity. See City of Homestead v.


       1
          “After a bench trial, we review the district court’s conclusions of law de novo and the
district court’s factual findings for clear error.” Proudfoot Consulting Co. v. Gordon, 576 F.3d
1223, 1230 (11th Cir. 2009); see also Fed. R. Civ. P. 52(a)(6).
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Johnson, 760 So. 2d 80, 84 (Fla. 2000) (explaining that provisions of a contract

should be read harmoniously to give effect to all portions thereof). Further, to the

extent these two sentences in the warranty seem to impose different standards, the

warranty is ambiguous, and the district court was required to construe it against

Indemnity and in favor of coverage. See Flores v. Allstate Ins. Co., 819 So. 2d

740, 744 (Fla. 2002) (explaining that language in an insurance policy that is subject

to multiple interpretations is ambiguous and must be construed in favor of the

insured and strictly against the insurer as drafter). Accordingly, we find no error in

the district court’s construction of the warranty.

      AFFIRMED.




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