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Key v. Allstate Ins. Co.

August 01, 1996


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

Before Cox and Barkett, Circuit Judges, and Bright *, Senior Circuit Judge. Cox, Circuit Judge, dissenting.

Author: Barkett

BARKETT, Circuit Judge:

Appellant-plaintiff Esther Key brought this suit against Appellee-defendant Allstate Insurance Co. seeking insurance coverage for a bodily injury claim resulting from an accident involving one of her vehicles. The district court granted summary judgment in favor of Allstate, and Key appeals. We reverse the decision of the district court.


In May 1990, Key owned two cars: a Hornet, which was insured by Underwriters Guarantee Insurance Company ("Underwriters"), and an Astro, which was insured by Allstate. In January 1991, Key sold her Hornet, and purchased a Fiesta on January 19, 1991. The Fiesta replaced the Hornet under her Underwriters' policy, which covered personal injury and property damages; however, she did not purchase bodily injury coverage from Underwriters. On January 23, 1991, the Fiesta was involved in an accident in which Norma Rowe was injured and the Fiesta was totaled. Norma Rowe sued Key and in April 1994 the jury awarded Rowe $465,404.25. On March 6, 1991, Key added the Fiesta to her Allstate policy effective March 5, 1991, and she subsequently incurred a premium increase of $20.10 for the period March 5, 1991 to April 16, 1991.

The Allstate policy on her Astro includes a "newly acquired ownership" provision, which reads:

Additional four wheel private passenger or utility autos you acquire ownership of during the premium period. This auto will be covered if we insure all other private passenger or utility autos you own. You must, however, notify us within 60 days of acquiring the auto and pay any additional premium.

Key sought coverage from Allstate for the bodily injury damages, claiming that on the day of the accident her Fiesta was a "newly acquired vehicle" pursuant to her Allstate policy. Allstate denied coverage. Key subsequently sued Allstate seeking damages, interest, costs and attorneys fees resulting from Allstate's refusal to defend, negotiate, settle, and provide coverage on Norma Rowe's claim against her.

On appeal, Key argues that according to the plain language of Allstate's "newly acquired automobile" provision, an automobile is covered under the policy if four criteria are met: (1) the automobile at issue was acquired during the policy's premium period; (2) Allstate insured all other autos owned by the insured at the time of acquisition; (3) the insured notified Allstate within 60 days of acquiring the new automobile; and (4) the insured pays any additional premium. Key argues that these four elements were met with respect to the Fiesta, and therefore, her Allstate policy covered the Fiesta at the time of the accident.

Allstate argues that the Fiesta was not covered in light of the purpose of the contract provision and the intent of the parties. Allstate contends that the purpose of the "newly acquired automobile" clause is to afford an insured a temporary, reasonable opportunity to acquire specific coverage upon purchase of a new vehicle. According to Allstate, as soon as Key obtained specific insurance coverage for the Fiesta with Underwriters, the Fiesta lost its status as a "newly acquired automobile" and became a "described automobile," i.e., an automobile described in some insurance policy. Thus, the Fiesta was not covered by Allstate at the time of the accident. Moreover, Allstate contends that when Key purchased insurance from Underwriter she manifested her intent to forgo coverage under the Allstate policy. In the alternative, Allstate argues that even if coverage is determined by the four criteria discussed above, Key failed to meet conditions (2) and (4).


Under ordinary principals of contract interpretation, a court must first examine the natural and plain meaning of a policy's language. Dahl-Eimers v. Mutual of Omaha Life Ins. Co., 986 F.2d 1379, 1382 (11th Cir.1993). Under Florida law, if the terms of an insurance contract are clear and unambiguous, a court must interpret the contract in accordance with its plain meaning, and, unless an ambiguity exists, a court should not resort to outside evidence or the complex rules of construction to construe the contract. Rigel v. National Casualty Co., 76 So. 2d 285, 286 (Fla.1954); Old Dominion Ins. Co. v. Elysee, Inc., 601 So. 2d 1243, 1245 (Fla. 1 DCA1992); Southeastern Fire Ins. Co. v. Lehrman, 443 So. 2d 408, 408-09 (Fla. 4 DCA1984); see also Dahl-Eimers, 986 F.2d at 1382; United Nat'l Ins. Co. v. Waterfront New York Realty Corp., 994 F.2d 105, 108-09 (2d Cir.1993); National Fidel. Life Ins. Co. Karaganis, 811 F.2d 357, 361 (7th Cir. 1987); Carey v. State Farm Mutual Ins. Co., 367 F.2d 938, 941 (4th Cir.1966); Imperial Casualty & Indemnity Co. v. Relder, 308 F.2d 761, 764-65 (8th Cir.1962). This is so because the terms of a contract provide the best evidence of the parties' intent, see McGhee Interests, Inc. v. Alexander Nat'l Bank, 102 Fla. 140, 135 So. 545, 547 (1931), and where the language is plain a court should not create confusion by adding hidden meanings, terms, conditions, or unexpressed intentions, see Dahl-Eimers, 986 F.2d at 1382; Carey, 367 F.2d at 941. Moreover, in determining whether a contract is ambiguous, the words should be given their natural, ordinary meaning, Emergency Assoc. of Tampa v. Sassano, 664 So. 2d 1000, 1003 (Fla. 2 DCA1995); Continental Casualty Co. v. Borthwick, 177 So. 2d 687, 689 (Fla. 1 DCA1965), and ambiguity does not exist simply because a contract requires interpretation or fails to define a term, Dahl-Eimers, 986 F.2d at 1382.

If, on the other hand, a court determines that the terms of an insurance contract are ambiguous, or otherwise not susceptible to a reasonable construction, a court may look beyond the contractual language to discern the intent of the parties in making the agreement. In general, ambiguities in contracts are construed against their drafters. Hurt v. Leatherby Ins. Co., 380 So. 2d 432, 434 (Fla.1980). With respect to insurance policies in particular, which are often long, detailed, and difficult for most insureds to decipher, insurers, as drafters of insurance policies, have an obligation to state explicitly their intentions to limit coverage upon the happening of certain events or under certain circumstances. Fireman's Fund Ins. Co. v. Vordermeier, 415 So. 2d 1347, 1350 (Fla. 4 DCA1982); National Merchandise Co., Inc. v. United Service Automobile Assoc., 400 So. 2d 526, 530 (Fla. 1 DCA1981); see also Carey, ...

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