UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA PALM BEACH DIVISION. CASE NO.: 9:15-cv-81685

Transcription

1 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 1 of 18 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA PALM BEACH DIVISION CASE NO.: 9:15-cv THE PRINCETON EXCESS AND SURPLUS LINES INSURANCE COMPANY, a Delaware corporation, v. Petitioner, DM VENTURES USA LLC, d/b/a DIRTY MARTINI, a Florida Limited Liability Company, THE DIRTY MARTINI GRILLE, LLC, d/b/a DIRTY MARTINI, PAWN SHOP LOUNGE PALM BEACH, INC., a Florida corporation, THE PAWN SHOP LOUNGE PALM BEACH, LLC, d/b/a THE PAWN SHOP LOUNGE, a Florida corporation, EVA PEPAJ, TIFFANY TOTH, JESSICA HINTON, BROOKE JOHNSON a/k/a BROOKE TAYLOR, JESSE GOLDEN, DANIELLE RUIZ, JENNIFER ZHARINOVA, and PAOLA CANAS, Respondents. / PETITIONER S MOTION FOR JUDGMENT ON THE PLEADINGS Petitioner, THE PRINCETON EXCESS AND SURPLUS LINES INSURANCE COMPANY ( Princeton ), by and through undersigned counsel, pursuant to Federal Rule of Civil Procedure 12(c), hereby moves for judgment on the pleadings for Count I of its First Amended Petition for Declaratory Judgment, and states the following:

2 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 2 of 18 Case No. 9:15-cv Page 2 I. Introduction 1. In Count I of Princeton s First Amended Petition for Declaratory Judgment ( Petition ) Princeton requests that the Court apply a single exclusion within an endorsement from Princeton s policies of insurance to exclude coverage for the underlying lawsuit against Princeton s insureds. The underlying lawsuit alleges unauthorized use of models images in promotional materials for two bars/nightclubs. The endorsement within the policies, Exclusion Field of Entertainment, contains terms that exclude coverage for all claims arising out of the unauthorized use of images. 2. The pleadings are closed, and all of the relevant documents are before the Court for this determination. Attached to the Petition [DE#15] is the complaint in the underlying action [DE#15-1], the answer [DE#15-2], and the applicable insurance policies [DE#15-3, 15-4]. Respondents have admitted that these documents are attached. DE# 17, As shown below, the plain insurance policy terms exclude coverage for the underlying lawsuit. However, the Respondents are attempting to have the exclusion invalidated upon public policy grounds. More specifically, the Respondents argue in their affirmative defenses that the Field of Entertainment exclusion makes coverage illusory under the policies. DE#17 ( 49-56), #18 ( 54-63). Respondents are legally and factually incorrect that coverage is illusory under these policies because the coverage part at issue is not completely removed by the exclusion. The coverage part still provides significant coverage. Therefore, coverage cannot be found to be illusory as a matter of law. See e.g., First Mercury Ins. Co. v. Sudderth, 620 Fed. Appx. 826, 830 (11th Cir. 2015); Goldberg v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA., CIV, 2015 WL , at *12 (S.D. Fla. 2015). 2

3 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 3 of 18 Case No. 9:15-cv Page 3 4. None of Respondents defenses or affirmative defenses require discovery, or facts outside of the pleadings. 5. Respondents have also filed Counterclaims/Crossclaims. DE# 17, 18. These Counterclaim/Crossclaims request the same declaratory relief as sought in Princeton s Count I. Therefore, if the Court grants this Motion for Judgment on the Pleadings it will be dispositive of all pending causes of action in this case. II. Judgment on the Pleadings Standard 6. Federal Rule of Civil Procedure 12(c) permits a party to move for judgment on the pleadings. In evaluating a motion for judgment on the pleadings, a court will accept the facts in the complaint as true and view them in the light most favorable to the nonmoving party. See Cunningham v. Dist. Attorney's Office for Escambia County, 592 F.3d 1237, 1255 (11th Cir. 2010). Judgment on the pleadings is proper when no issues of material fact exist, and the moving party is entitled to judgment as a matter of law based on the substance of the pleadings and any judicially noticed facts. Id. 7. The applicability of a policy exclusion is a matter of law that can be properly resolved on the pleadings. See, e.g., Scottsdale Ins. Co. v. Pursley, 487 Fed.Appx. 508, 511 (11th Cir.2012); Driggers Eng'g Services Inc. v. CNA Fin. Corp., 8:14-CV-3155-T-30TBM, 2015 WL , at *4 (M.D. Fla. 2015). III. Analysis of the Duty to Defend Under Florida Law 8. The framework for this Court s analysis must be based upon the undisputed insurance policies applied to the underlying Complaint. It is well-settled in Florida that an insurer s duty to defend is determined solely by the allegations against the insured, not by the actual facts, nor the insured s version of the facts. Jones v. Florida Ins. Guar. Ass n, Inc., 908 So. 2d 435, 443 3

4 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 4 of 18 Case No. 9:15-cv Page 4 (Fla. 2005) (quoting Irvine v. Prudential Prop. & Cas. Ins. Co., 630 So. 2d 579 (Fla. 3d DCA 1993)). The duty to indemnify is narrower than the duty to defend. Id.; see also Fun Spree Vacations, Inc. v. Orion Ins. Co., 659 So. 2d 419, 422 (Fla. 3d DCA 1995); Fed. Ins. v. Applestein, 377 So.2d 229, 231 (Fla. 3d DCA 1979). Therefore, there is no duty to indemnify if there is no duty to defend. Id. 9. To determine whether an insurer has a duty to defend, the court looks only to the allegations in the underlying complaint and the terms of the Policy. See Jones v. Florida Ins. Guar. Ass'n, Inc., 908 So.2d 435, (Fla. 2005). If the allegations in the underlying complaint do not establish coverage, there is no duty to defend. James River Ins. Co. v. Bodywell Nutrition, LLC, 842 F.Supp.2d 1351, 1354 (S.D.Fla.2012) (citing Posigian v. American Reliance Ins. Co. of New Jersey, 549 So.2d 751, 753 (Fla. 3d DCA 1989)). Unsupported and conclusory buzz words are insufficient to trigger coverage. State Farm Fire and Cas. Co. v. Steinberg, 393 F.3d 1226, 1230 (11th Cir. 2004). Inferences are insufficient to trigger coverage. Fun Spree Vacations, Inc. v. Orion Ins. Co., 659 So.2d 419, (Fla. 3d DCA 1995) ( [T]he allegations in the complaint control in determining the insurer's duty to defend...inferences are not sufficient. ) (citations omitted). 10. Insurance policies are contracts that should be construed in accordance with the plain language of the policies as bargained for by the parties. Prudential Property and Casualty Ins. Co. v. Swindal, 622 So. 2d 467, 470 (Fla. 1993). Where the language of the policy is plain and unambiguous, there is no[] need for judicial construction and the contract must be enforced as written. Siegle v. Progressive Consumers Ins. Co., 788 So. 2d 355, 359 (Fla. 4th DCA 2001) (quotation omitted). Courts must interpret insurance policies according to their plain language unless a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the 4

5 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 5 of 18 Case No. 9:15-cv Page 5 ordinary rules of construction. Id. (citing State Farm Mut. Auto. Ins. Co. v. Pridgen, 498 So. 2d 1245, 1248 (Fla. 1986)). Therefore, [a]n insurance policy can be unambiguous despite also being complex and requiring a detailed analysis of its provisions to determine the scope and extent of coverage. Royal Bahamian Ass'n Inc. v. QBE Ins. Corp., 750 F. Supp. 2d 1346, 1355 (S.D. Fla. 2010) (citing Garcia v. Federal Ins. Co., 969 So. 2d 288, 291 (Fla. 2007)). 11. However, if the pleadings show the applicability of a policy exclusion, the insurer has no duty to defend. State Farm Fire & Cas. Co. v. Tippett, 864 So.2d 31, 35 (Fla. 4th DCA 2003) review denied,885 So.2d 389 (Fla. 2004). [I]f a policy provision is clear and unambiguous, it should be enforced according to its terms whether it is a basic policy provision or an exclusionary provision. Taurus Holdings, Inc. v. U.S. Fid. and Guar. Co., 913 So. 2d 528, 532 (Fla. 2005). The applicability of a policy exclusion is a matter of law that can be properly resolved on the pleadings. See, e.g., Scottsdale Ins. Co. v. Pursley, 487 Fed.Appx. 508, 511 (11th Cir. 2012). 12. Florida courts favor swift resolutions of the coverage issues in declaratory actions because knowing whether coverage is afforded is in the best interest of all parties: Generally, an insurance carrier should be entitled to an expeditious resolution of coverage where there are no significant, countervailing considerations. A prompt determination of coverage potentially benefits the insured, the insurer and the injured party. If coverage is promptly determined, an insurance carrier is able to make an intelligent judgment on whether to settle the claim. If the insurer is precluded from having a good faith issue of coverage expeditiously determined, this interferes with early settlement of claims. The plaintiff certainly benefits from a resolution of coverage in favor of the insured. On the other hand, if coverage does not exist, the plaintiff may choose to cut losses by not continuing to litigate against a defendant who lacks insurance coverage. Britamco Underwriters v. Central Jersey Invests., Inc., 632 So.2d 138, 141 (Fla. 4th DCA 1994). 5

6 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 6 of 18 Case No. 9:15-cv Page 6 IV. Construction of the Policies 13. The insurance policies at issue are surplus lines insurer s policies. DE# 15-3 p. 2, # 15-4 p. 1. They have one coverage form, which is for commercial general liability ( CGL ). There are endorsements applicable to the CGL form. The CGL form is comprised of the following parts: Coverage A Bodily Injury and Property Damage Liability, Coverage B Personal and Advertising Injury, and Coverage C Medical Payments. Coverage B is the only potential coverage form implicated by the Lawsuit s allegations of unauthorized use of models images. 14. The insuring terms for Coverage B provide in pertinent part: Section I Coverages, Coverage B Personal and Advertising Injury, 1. Insuring Agreement a.: We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal and advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "personal and advertising injury" to which this insurance does not apply. DE#15-3, p. 9; DE#15-4, p In the Definitions section at number 14 Personal and advertising injury is defined: "Personal and advertising injury" means injury, including consequential "bodily injury", arising out of one or more of the following offenses: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. The wrongful eviction from, wrongful entry into, or invasion of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor; d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; e. Oral or written publication, in any manner, of material that violates a person's right of privacy; 6

7 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 7 of 18 Case No. 9:15-cv Page 7 DE#15-3, p. 18; DE#15-4, p. 18. f. The use of another's advertising idea in your "advertisement"; or g. Infringing upon another's copyright, trade dress or slogan in your "advertisement". 16. An advertisement is defined in Section V Definitions as follows: Advertisement means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters. For the purposes of this definition: a. Notices that are published include material placed on the Internet or on similar electronic means of communication; and b. Regarding web-sites, only that part of a web-site that is about your goods, products or services for the purposes of attracting customers or supporters is considered an advertisement. DE#15-3, p. 16; DE#15-4, p. 16. V. Analysis of the Field of Entertainment Exclusion 17. The Exclusion Field of Entertainment exclusion, which is contained in the General Policy Changes endorsement, reads as follows: EXCLUSION- FIELD OF ENTERTAINMENT This insurance does not apply to any loss, claim, "suit", cost, expense, or liability for damages, directly or indirectly based on, attributable to, arising out of, involving, resulting from or in any way related to: a. Actual or alleged activity which is claimed to be an intellectual property infringement or violation of any of the following rights or laws: copyright, patent, trade dress, trade secrets, trade name, trademark or service mark; b. Actual or alleged invasion of privacy; c. Actual or alleged libel, slander, or any form of defamation; d. Actual or alleged unauthorized use of titles, slogans, names, formats, ideas, characters, artwork, theme, plots or other material; e. Actual or alleged infringement of copyright or common law rights in literary, artistic or musical material, or actual or alleged infringement of literary, artistic or musical rights codes; DE#15-3, p. 49; DE#15-4, p. 49, [emphasis added]. 7

8 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 8 of 18 Case No. 9:15-cv Page If the unnecessary wording is removed, the exclusion reads: This insurance does not apply to any "suit", or liability for damages, directly or indirectly based on, attributable to, arising out of, involving, resulting from or in any way related to: [1] actual or alleged activity which is claimed to be an intellectual property infringement; [2] Actual or alleged invasion of privacy; or [3] Actual or alleged libel, slander, or any form of defamation. 19. The term arising out of is broader in meaning than the term caused by and means originating from, having its origin in, growing out of, flowing from, incident to or having a connection with. Taurus Holdings, Inc., v. U.S. Fidelity and Gaur., 913 So. 2d 528, 5539 (Fla. 2005). The use of the term arising out of for all of Princeton s exclusions expands their application to all potential causes of action which arise from the same conduct. 20. In the Lawsuit, the conduct at issue is the unauthorized use of the models images on multiple occasions. DE#15-1, The causes of action alleged are not determinative of coverage, the duty to defend is determined solely by the allegations against the insured Jones v. Florida Ins. Guar. Ass n, Inc., 908 So. 2d 435, 443 (Fla. 2005) (quoting Irvine v. Prudential Prop. & Cas. Ins. Co., 630 So. 2d 579 (Fla. 3d DCA 1993)). 21. Despite a good faith research effort, the undersigned has been unable to find a Florida decision addressing the exact exclusion at issue here, the Field of Entertainment Exclusion. However, in one California case, filed by an insured against their insurer for breach of the duty to defend and indemnify, a similar exclusion was upheld to preclude coverage for a model s claims of unauthorized use of her image. Aroa Mktg., Inc. v. Hartford Ins. Co. of Midwest, 198 Cal. App. 4th 781, 784 (2011), as modified (Aug. 25, 2011). In that case the court analyzed an 8

9 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 9 of 18 Case No. 9:15-cv Page 9 insurance contract provision that specifically excluded coverage for personal and advertising injury arising out of any violation of any intellectual property rights. Id. at 784. The insured had a hired a model to make an exercise video to be used at a specific trade show, but then used her images for many other purposes. The model sued for statutory and common law misappropriation of likeness, breach of contract, unjust enrichment and unfair competition, because of the agency used her image for other selling and marketing efforts. Id. at 785. The defendant in the model s lawsuit, Aroa Marketing, Inc., then filed suit against their insurer, The Hartford, for coverage. 22. The Hartford s policy provided coverage for personal and advertising injury arising out of Aroa s business. Id. at 784. However, The Hartford policy also had an exclusion for personal and advertising injury arising out of any violation of any intellectual property rights, such as copyright, patent, trademark, trade name, trade secret, service mark, or other destination or origin or authenticity. Id. at 785 (emphasis added). The Court found that the claims 1 were in essence for right of publicity, which is derivative of the right of privacy, and those types of rights have been held to constitute intellectual property. Id. at 789. On that basis, [u]nder the intellectual property rights exclusion, that claim is precluded from coverage under the insurance policy. Id. 23. In the case at bar, all of the allegations and facts arise out of an unauthorized use of likeness claim, regardless of the causes of action alleged. As in the Aroa case, our policy precludes coverage for suits arising out of intellectual property infringement, as well as more specific causes of action. The Field of Entertainment exclusion precludes coverage for claims 1 The underlying lawsuit claims were for statutory and common law misappropriation of likeness, breach of contract, unjust enrichment, and unfair competition. Id. at

10 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 10 of 18 Case No. 9:15-cv Page 10 arising out of actual or alleged activity which is claimed to be an intellectual property infringement. All of the models claims arise out of intellectual property infringement. 24. Rights of privacy and publicity are intellectual property rights. See ETW Corp. v. Jireh Publ'g, Inc., 332 F.3d 915, 928 (6th Cir.2003) (stating that [t]he right of publicity is an intellectual property right of recent origin which has been defined as the inherent right of every human being to control the commercial use of his or identity ); Allison v. Vintage Sports Plaques, 136 F.3d 1443, 1448 (11th Cir. 1998) (concluding that the common law right of publicity is an intellectual property right for purposes of the first-sale doctrine); J. Thomas McCarthy, Melville B. Nimmer & the Rights of Publicity: A Tribute, 34 U.C.L.A. L.Rev. 1703, 1712 (1987) (stating that the right of publicity has matured into a distinctive legal category occupying an important place in the law of intellectual property ); Black's Law Dictionary 813 (7th ed.1999) (defining intellectual property as follows: A category of intangible rights protecting commercially valuable products of the human intellect. The category comprises primarily trademark, copyright, and patent rights, but also includes trade-secret rights, publicity rights, moral rights, and rights against unfair competition ); see also Almeida v. Amazon.com, Inc., 456 F.3d 1316, 1322 (11th Cir. 2006). 25. Under any interpretation, the Lawsuit Defendants use of the models images falls under Princeton s exclusions for liability arising from intellectual property infringement, invasion of privacy, and/or defamation. Therefore, the Field of Entertainment excludes coverage for the allegations in the Lawsuit. VI. The Field of Entertainment Does Not Make Coverage Illusory 26. Respondents allege that the Field of Entertainment exclusion makes coverage B personal and advertising injury illusory, and thus against public policy and unenforceable. DE#17 ( 49-10

11 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 11 of 18 Case No. 9:15-cv Page 11 56), #18 ( 54-63). While Florida case law supports the general proposition that an insurance policy must not be allowed to have illusory coverage by granting a coverage form and then completely removing the whole form, that is not the circumstance here. The coverage excluded by the endorsement at issue is a small portion of Coverage B Personal and Advertising Injury, and does not render that insuring provision absurd, contradictory, or illusory. As recently stated by the 11th Circuit Court of Appeals in rejecting the same type of argument advanced by Respondents here: Furthermore, exclusions are not necessarily harmful. Exclusions like this one allow creation of a policy that provides the insured the coverage it needs at a price it can afford. Without such exclusions, coverage would undoubtedly be more expensive. A company primarily needs insurance for risks it may be ill equipped to anticipate or prevent (e.g. property damage). Without an exclusion, a company would also have to pay for coverage of risks it can easily anticipate and avoid (e.g. violations of laws related to its business). And, coverage for violations of law creates a moral hazard that could substantially increase insurance costs, especially when the coverage is closely related to the company s business. Interline Brands, Inc., v. Chartis Specialty Ins. Co., 749 F. 3d 962 (11th Cir. 2014) (interpreting Florida law). 27. In Interline, the insurer denied coverage for junk fax lawsuits asserting violations of federal law against its insured on the basis of an exclusion for violation of statutes in connection with sending information. Id. at 964. The insured argued that the operative coverage exclusion eliminated coverage in total under the Personal and Advertising Injury Liability coverage, and thus made the policy a façade. Id. at 966. The 11th Circuit disagreed, and instead of focusing on the specific portions of Personal and Advertising Injury coverage that were eliminated by this exclusion, they relied upon the extensive coverage throughout the entire policy (including other coverages) that was not excluded in rejecting the insured s argument. The rationale of the Interline court was that while this is a significant Exclusion (especially in light 11

12 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 12 of 18 Case No. 9:15-cv Page 12 of Interline s business), it does not render the policy absurd or completely contradict the insuring provisions. 28. The same is true here, the Field of Entertainment Exclusion limits some coverage for personal and advertising injury, but it does not completely preclude coverage under the section, nor does it limit the coverage under other portions of the policy. As explained by the Ajax Bldg. Corp v. Hartford Fire Ins. Co., court: simply because one provision gives a general grant of coverage and another provision limits this coverage does not mean there is an ambiguity or inconsistency between the two. This is the very nature of an insurance contract; exclusions in coverage are expressly intended to modify coverage clauses and to limit their scope. [ ] Both the coverage clause and the exclusion clause are given equal dignity within the contract. We agree with the district court that in Florida exclusionary clauses are construed more strictly than coverage clauses, and if exclusions are ambiguous or susceptible of more than one meaning, they must be construed in favor of coverage.however, there is simply nothing about the exclusionary clause in this contract that is ambiguous. Consequently, the rule concerning ambiguities is not applicable. Florida law cautions that courts must not add meaning to the terms of an insurance policy to create an ambiguity where none exists. 358 F. 3d 795 (11th Cir. 2004) (applying Florida law, internal citations omitted and emphasis added). 29. The language in the Princeton policy is consistent with Ajax s description of the nature of insurance policies, and is certainly not ambiguous. As described above at paragraph 19, the exclusion at issue may be reduced to the following terms for brevity in this analysis: This insurance does not apply to any "suit", or liability for damages, directly or indirectly based on, attributable to, arising out of, involving, resulting from or in any way related to: [1] actual or alleged activity which is claimed to be an intellectual property infringement; [2] Actual or alleged invasion of privacy; or 12

13 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 13 of 18 Case No. 9:15-cv Page 13 [3] Actual or alleged libel, slander, or any form of defamation. 30. The insuring provisions of Personal and Advertising Injury that are removed by the Field of Entertainment Exclusion are shown below with a strikethrough the term. Terms without strikethroughs are unaffected by the Field of Entertainment Exclusion. "Personal and advertising injury" means injury, including consequential "bodily injury", arising out of one or more of the following offenses: a. False arrest, detention or imprisonment; b. Malicious prosecution; c. The wrongful eviction from, wrongful entry into, or invasion of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor; d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services; e. Oral or written publication, in any manner, of material that violates a person's right of privacy; f. The use of another's advertising idea in your "advertisement"; or g. Infringing upon another's copyright, trade dress or slogan in your "advertisement". 31. As shown above, the Field of Entertainment exclusion excludes coverage for subparts d, e, f, and g. The Field of Entertainment exclusion does not limit coverage for subparts a, b, and c. Therefore, the Field of Entertainment Exclusion is not void as ambiguous or against public policy, and it does not make Coverage B illusory. VII. Insureds Affirmative Defenses 32. Excepting two, all of the affirmative defenses pleaded by the Insureds and Models deal with policy language and public policy, therefore they require no discovery. The remaining two affirmative defenses are also both capable of determination upon this motion without discovery, but require some analysis, as discussed below. 13

14 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 14 of 18 Case No. 9:15-cv Page The Insureds have affirmatively pleaded the doctrine of reasonable expectations. DE#18, 63. However, the Insureds withdrew that defense [DE#22] after receiving notice that the Florida Supreme Court has specifically declined to adopt the doctrine of reasonable expectations in the context of insurance contracts QBE Ins. Corp. v. Chalfonte Condo. Apartment Ass'n, Inc., 94 So. 3d 541, 549 (Fla. 2012); Deni Associates of Florida, Inc. v. State Farm Fire & Cas. Ins. Co., 711 So. 2d 1135, 1140 (Fla. 1998) ( We decline to adopt the doctrine of reasonable expectations ). Therefore, the Insureds may not prevail on that defense as a matter of law. 34. The Insureds also invoked promissory estoppel. DE#18, 62. However, the factual basis pleaded is insufficient as a matter of law to invoke promissory estoppel. The Insured s affirmative defense reads in full: PRINCETON, through its agents, promised it would provide coverage for the INSUREDS businesses, and the INSUREDS reasonably relied on that promise. PRINCETON has now changed that position by denying coverage. Had the INSUREDS known that PRINCETON S policies excluded coverage entirely for slander, libel and invasion of privacy, they would have obtained substitute coverage. As such, PRINCETON is promissorily stopped from denying coverage for the claims and lawsuit of the CLAIMANTS. 35. Under Florida law, it is well established that the doctrine of waiver and estoppel based upon the conduct or the action of the insurer (or an agent) is not applicable to matters of coverage as distinguished from grounds for forfeiture. Doe on Behalf of Doe v. Allstate Ins. Co., 653 So. 2d 371, 373 (F1a. 1995) (citations omitted) (emphasis in original). That is, while an insurer may be estopped by its conduct from seeking a forfeiture of a policy, the insurer's coverage or restrictions on the coverage cannot be extended by the doctrine of waiver and estoppel.'' Id. (citations omitted) (emphasis in original). Florida courts do, however, recognize a 14

15 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 15 of 18 Case No. 9:15-cv Page 15 limited exception to this general rule, allowing for an extension of insurance coverage through promissory estoppel where to refuse to do so would sanction fraud or other injustice.'' Id. (citing Crown Life Ins. Co. v. McBride, 517 So. 2d 660 (F1a. 1987)). 36. Promissory estoppel is established where there is a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance '' W.R. Grace & Co. v. Geodata Services, 547 So. 2d 919, 924 (Fla. 1989) (quoting Restatement (Second) of Contracts j 90 (1979)). In other words, the elements of promissory estoppel are met where there is (1) a representation as to a material fact that is contrary to a later-asserted position; (2) a reasonable reliance on that representation; and (3) a change in position detrimental to the party claiming estoppel caused by the representation and reliance thereon.'' FCCI Ins. Co. v. Cayce 's Excavation, Inc., 901 So. 2d 248, 251 (F1a. 2d DCA 2005) (citations omitted). 37. The Insureds allegation that PRINCETON, through its agents, promised it would provide coverage for the INSUREDS businesses cannot satisfy the first element of promissory estoppel of a representation. Florida law charges a first-party insured, such as [the Insureds] with knowledge about the terms and conditions of his insurance policies, including applicable coverage limits. Brannan v. GEICO Indem. Co., 569 F. App'x 724, 728 (11th Cir. 2014). The Insureds may not claim ignorance of the unambiguous policy terms to create estoppel. As explained by the Florida Supreme Court, the law of written contracts, including the statute of frauds, would be substantially changed if we approved the application of promissory estoppel under the facts of this case. It would also become extremely difficult for parties to fully understand or be advised of their rights and obligations under written contracts. W.R. Grace & Co. v. Geodata Servs., Inc., 547 So. 2d 919, 925 (Fla. 1989). Black-letter Florida law holds that 15

16 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 16 of 18 Case No. 9:15-cv Page 16 estoppel may not be used affirmatively against an insurer to create or extend coverage otherwise lacking in the policy. State Farm Mut. Auto. Ins. Co. v. St. Godard, 936 So. 2d 5, 9 (Fla. 4th DCA 2006); see JN Auto Collection, Corp. v. U.S. Sec. Ins. Co., 59 So. 3d 256, 257 (Fla. 3d DCA 2011). Therefore, the Court may grant judgment over the Insureds promissory estoppel defense that does not state a prima facie claim for promissory estoppel. 38. In the alternative, if the Court cannot grant a judgment on the pleadings on this affirmative defense, Princeton requests that the Court grant a partial judgment on the pleadings as to Count I, and the case to proceed solely on that affirmative defense. VIII. Jurisdiction and Choice of Law 39. This Court has jurisdiction to hear this case pursuant to 28 U.S.C. 1332, as complete diversity exists between the parties and the amount in controversy has been met. In diversity actions, this Court must apply the substantive law of the state in which it sits, "except in matters governed by the Federal Constitution or by acts of Congress." Erie Railroad v. Tompkins, 304 U.S. 64, 78 (1938). Therefore, Florida law governs the disposition of this case. 40. The Florida Supreme Court has long adhered to the rule of lex loci contractus. State Farm Mut. Auto. Ins. Co. v. Roach, 945 So.2d 1160, 1163 (Fla. 2006). In the context of insurance contracts, that rule provides that the law of the jurisdiction where the contract was executed governs the rights and liabilities of the parties in determining an issue of insurance coverage. Id. The place where the contract was executed is generally considered to be the place where the policy is delivered. Adolfo House Distributing Corp. v. Travelers Property and Casualty Ins. Co., 165 F. Supp. 2d 1332, 1335 (S.D. Fla. 2001). The policies of insurance were delivered in Florida to Florida corporate entities, and the underlying actions occurred in Florida. DE # 15-3, Thus, this matter should be resolved in accordance with Florida Law. 16

17 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 17 of 18 Case No. 9:15-cv Page 17 WHEREFORE, Princeton requests that the Court grant its Motion for Judgment on the Pleadings, and find that Princeton s Field of Entertainment Exclusion precludes coverage and a duty to defend for the Insureds and Models, and any other relief this Court deems just and equitable. Dated: February 16, 2016 Respectfully submitted, BY: _/s/ Joseph M. Winsby MICHAEL M. MULLEN, ESQ. Fla. Bar No mmullen@gaebemullen.com JOSEPH M. WINSBY, ESQ. Fla. Bar No.: jwinsby@gaebemullen.com GAEBE, MULLEN, ANTONELLI & DIMATTEO 420 South Dixie Highway, Third Floor Coral Gables, FL Tel Fax

18 Case 9:15-cv DMM Document 27 Entered on FLSD Docket 02/16/2016 Page 18 of 18 Case No. 9:15-cv Page 18 CERTIFICATE OF SERVICE I HEREBY certify that a true and correct copy of the foregoing was filed using the CM/ECF system, which will automatically send notification of such filing to the following attorney: Joseph M. Winsby, Gaebe, Mullen, Antonelli & DiMatteo, jwinsby@gaebemullen.com, 420 S. Dixie Highway, 3 rd Floor, Coral Gables, FL BY: _/s/ Joseph M. Winsby MICHAEL M. MULLEN, ESQ. Fla. Bar No mmullen@gaebemullen.com JOSEPH M. WINSBY, ESQ. Fla. Bar No.: jwinsby@gaebemullen.com GAEBE, MULLEN, ANTONELLI & DIMATTEO 420 South Dixie Highway, Third Floor Coral Gables, FL Tel Fax