We have for review a question of Florida law certified by the United States Court of Appeals for the Eleventh Circuit in Koikos v. Travelers Insurance Co., 240 F.3d 1331, 1332-33 (11th Cir.2001), that is determinative of a cause pending in that court and for which there appears to be no controlling precedent. We have jurisdiction, see art. V, § 3(b)(6), Fla. Const., and rephrase the certified question as follows:
For the reasons that follow, we conclude that under the terms of the general liability policy at issue in this case, each shooting of a separate victim constitutes a separate occurrence. Therefore, we answer the certified question in the affirmative.
George N. Koikos, the insured, is the owner of a restaurant where shootings occurred that resulted in multiple injuries. The Eleventh Circuit's opinion sets forth the facts of the underlying case as follows:
On April 25, 1997, George Koikos rented his restaurant to the Florida A & M chapter of Alpha Kappa Psi Fraternity
Koikos, 240 F.3d at 1331.
The two shooting victims, Harris and Armstrong, filed separate lawsuits in state court against Koikos claiming negligent failure to provide security. Koikos in turn brought a declaratory action in state court against Travelers Insurance Company, which removed the case to the United States District Court for the Northern District of Florida.
In the declaratory judgment proceedings, the parties filed cross-motions for summary judgment, essentially asking the federal district court to decide whether the underlying shooting incident constituted one occurrence, subject to a limit of $500,000, or comprised two separate occurrences, for which Travelers would be liable for $500,000 per occurrence. Travelers asserted that the injuries resulted from Koikos's alleged negligence and that the negligence constituted a single "occurrence" under the terms of the policy. Koikos argued that the force that caused the injuries was the gunshots and, therefore, each shot injuring a victim was a separate occurrence.
The federal district court judge ruled that as a matter of law the underlying shooting incident constituted one occurrence. The district court judge reasoned that the claims at issue arose out of one basic event or series of events for which the insured was allegedly liable. Based on the fact that Koikos's liability arose out of his alleged negligence in failing to provide adequate security for the victims on the evening in question, the judge concluded that the underlying shooting incident constituted a single occurrence.
Koikos appealed the judge's ruling to the Eleventh Circuit, relying primarily upon American Indemnity Co. v. McQuaig, 435 So.2d 414 (Fla. 5th DCA 1983). The Eleventh Circuit concluded that McQuaig did not resolve the issue in this case for two reasons:
Koikos, 240 F.3d at 1332. Having determined that this case involved an unanswered question of state law and having found no clear, controlling precedent in the decisions of this Court, the Eleventh Circuit
The focus of the certified question is whether the incidents that gave rise to the litigation constitute one occurrence, or multiple occurrences as that term is defined in the policy of liability insurance issued by Travelers to Koikos, the insured. The resolution of a dispute regarding insurance coverage begins with a review of the plain language of the insurance policy as bargained for by the parties. See Prudential Prop. & Cas. Ins. Co. v. Swindal, 622 So.2d 467, 470 (Fla.1993). Thus, the Eleventh Circuit's first inquiry—the "effect—if any" of the policy's definition of "occurrence"—constitutes the threshold question.
The terms of the "Commercial General Liability" policy issued by Travelers to Koikos provide in pertinent part:
The Policy Declarations provide that the "Each Occurrence Limit" is $500,000. The policy explains that the "Each Occurrence Limit is the most we will pay for damages and medical expenses because of all `bodily injury' or `property damage' arising out of any one occurrence." There is also a "General Aggregate Limit" of $1,000,000 that is the limit of insurance for each annual twelve-month period.
"Occurrence" is defined in the policy as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." However, the term "accident" is not itself defined in the policy. In State Farm Fire & Casualty Co. v. CTC Development Corp., 720 So.2d 1072 (Fla.1998), we had occasion to discuss the use of the term "accident" in general liability insurance policies:
The policy in this case, like the policy in Gerrits, leaves the term "accident" undefined. The lack of a definition of an operative term in a policy does not necessarily render the term ambiguous and in need of interpretation by the courts. However, where policy language
Id. at 1075-76 (citations omitted) (emphasis supplied).
Koikos argues that the event that was neither expected nor intended from his standpoint was the shooting and not his own negligent failure to provide security. Thus, Koikos asserts under the policy there were two occurrences because there were two shootings resulting in separate injuries to the two victims. On the other hand, Travelers contends that the occurrence was Koikos's negligence and, therefore, in this case there was but a single occurrence—the failure to provide security on the evening in question.
To support its argument, Travelers points to the "continuous or repeated exposure" clause in the definition of "occurrence" as limiting language. Travelers argues that in this case, the "accident" that caused the bodily injury to Armstrong and Harris was their continuous "exposure to substantially the same general harmful condition"—i.e., Koikos's negligent failure to keep his premises safe. We disagree.
As this Court explained in CTC Development Corp., the "continuous or repeated exposure" language was intended to broaden coverage:
720 So.2d at 1075 (alteration in original) (citations omitted). Courts in other jurisdictions have reasoned similarly. See, e.g., Broadwell Realty Servs., Inc. v. Fidelity & Cas. Co., 218 N.J.Super. 516, 528 A.2d 76, 84 (App.Div.1987) overruled on other grounds Morton Int'l Inc. v. General Accident Ins. Co., 134 N.J. 1, 629 A.2d 831, 847
Other jurisdictions have further explained that the expansive language was intended to apply to ongoing exposure to harmful environmental phenomena, and not to an insured's tortious omission. For example, in Metropolitan Life Insurance Co. v. Aetna Casualty & Surety Co., 255 Conn. 295, 765 A.2d 891 (2001), the Connecticut Supreme Court stated:
Id. at 900 (second alteration in original) (second emphasis supplied) (citations omitted).
Similarly, in Lee v. Interstate Fire & Casualty Co., 86 F.3d 101, 104-05 (7th Cir.1996), the Seventh Circuit Court of Appeals rejected the insurer's argument that the "continuous exposure" language rendered a priest's molestation of one child during two policy years and in two distinct places one occurrence, and held that Rhode Island law "would not treat negligent supervision as invariably one `occurrence.' " The Seventh Circuit reasoned:
Id. at 104 (alteration in original) (emphasis supplied).
We conclude that the inclusion of the "continuous or repeated exposure" language does not restrict the definition of "occurrence" but rather expands it by including ongoing and slowly developing injuries, such as those in the field of toxic torts. Therefore, we reject Travelers' reliance on the "continuous or repeated exposure" language as a basis for concluding that Koikos's negligent failure to provide security constitutes a single occurrence under the terms of the policy. The victims were not "exposed" to the negligent failure to provide security. If the victims were "exposed" to anything, it was the bullets fired from the intruder's gun. Cf. H.E. Butt Grocery Co. v. Nat'l Union Fire Ins. Co., 150 F.3d 526, 533 (5th Cir.1998) ("[E]ach child was `exposed' to the pedophilic employee, not to [the insured's] negligent employment practices."); Interstate
The relevant inquiry in determining the number of occurrences in this case is the meaning of "occurrence" as "[a]n accident." As previously noted, the policy issued to Koikos defines "occurrence" as an "accident," but leaves the term "accident" undefined. Consistent with our opinion in CTC Development Corp., the term "accident" in Travelers' policy is susceptible to varying interpretations including not only an "accidental event" but also "injuries or damage" that are "neither expected nor intended from the standpoint of the insured." CTC Development Corp., 720 So.2d at 1076. As we explained in CTC Development Corp.:
720 So.2d at 1075-76.
With these principles in mind, we consider the second inquiry posed by the Eleventh Circuit in determining the number of occurrences under the insurance policy issued to Koikos. That inquiry is whether this State has embraced the "cause theory," and whether in using the "cause theory," the focus should be on Koikos's alleged negligence or on Bell's separate gunshots. See Koikos, 240 F.3d at 1332. Absent explicit policy language, most jurisdictions apply the "cause theory," which looks to the cause of the injuries, rather than the "effect theory," which looks to the number of injured plaintiffs. See McQuaig, 435 So.2d at 415. Indeed, in an "occurrence-based" policy, as distinguished from a per person/per accident policy, the limits of liability are defined by the occurrence and not on a per person basis.
Determining that the focus of an "occurrence-based policy" is on the "cause" of the damage, however, does not answer the certified question because, as the Eleventh Circuit points out, there are two possible causes that resulted in injury in this case: (1) the underlying tortious omission of the insured—Koikos's failure to provide security and failure to warn; or (2) the intervening intentional acts of the third party— the intruder's gunshots. Koikos argues that the focal point for determining the number of occurrences is the "immediate cause" of the injury—the gunshots. However, Travelers argues that the focal point is the "insured's underlying activity."
In McQuaig, upon which Koikos relies, the insured, who claimed insanity, fired several shots within a two-minute period and argued that each shot constituted a
Id. Further, in rejecting the argument that the insured's insanity was the single cause of all the injuries, the Fifth District explained:
Id. at 416. The question is whether the McQuaig approach should apply if the insured is being sued for negligent failure to provide security and the shooter is a third party who directly causes the injuries to the victims.
This approach is consistent with the Third District's recent decision in New Hampshire Insurance Co. v. RLI Insurance Co., 807 So.2d 171 (Fla. 3d DCA 2002), notice invoking discretionary jurisdiction filed, No. SC02-460 (Fla. Feb. 26, 2002). In RLI, the aggressor fired three shots at separate times and places within the apartment complex and injured three separate persons, killing two.
Relying on its prior opinion of Phillips v. Ostrer, 481 So.2d 1241, 1247 (Fla. 3d DCA 1985), the Third District concluded that "[t]he act which causes the damage constitutes the occurrence." RLI Ins. Co., 807 So.2d at 172 (emphasis supplied). Accordingly, the Third District focused on the shots fired, not the insured's underlying negligence, and concluded that the gunshots themselves were separate occurrences.
Id. at 171-72.
Mindful of the policy's definition of occurrence in this case, we agree with the Third District's analysis in RLI. It is the act that causes the damage, which is neither expected nor intended from the standpoint of the insured, that constitutes the "occurrence." The insured's alleged negligence is not the "occurrence"; the insured's alleged negligence is the basis upon which the insured is being sued by the injured party. Focusing on the immediate cause—that is the act that causes the damage—rather than the underlying tort—that is the insured's negligence—is also consistent with the interpretation of other forms of insurance policies. See, e.g., Queen Ins. Co. v. Globe & Rutgers Fire Ins. Co., 263 U.S. 487, 492, 44 S.Ct. 175, 68 L.Ed. 402 (1924) ("[T]he common understanding is that in construing [marine insurance] policies we are not to take broad views but generally are to stop our inquiries with the cause nearest to the loss. This is a settled rule of construction, and if it is understood, does not deserve much criticism, since theoretically at least the parties can shape their contract as they like.").
Finally, this approach is consistent with a reading of the various provisions of Travelers' policy in this case. Reading the relevant policy terms together, Travelers has entered into a contract with Koikos to pay those sums that Koikos becomes legally obligated to pay as damages because of "bodily injury," caused by an "occurrence" (i.e., an accident) that takes place in the coverage territory, during the policy period. The accident—the event that was neither expected nor intended from Koikos's standpoint—was the shooting incident and not Koikos's own failure to provide security. Although Koikos's alleged negligence in failing to provide security is the basis for which liability is sought to be imposed, it was the shooting that gave rise to the injuries that were neither expected nor intended from the insured's standpoint.
Further, even if we accepted Travelers' construction of the policy as a reasonable interpretation, the insurance policy would be considered ambiguous because the relevant language would be susceptible to more than one reasonable interpretation—one providing coverage and the other limiting coverage. See Auto-Owners, 756 So.2d at 34. "Ambiguous policy provisions are interpreted liberally in favor of the insured and strictly against the drafter who prepared the policy." Id.; see also CTC Dev. Corp., 720 So.2d at 1076 ("[W]here policy language is subject to differing interpretations, the term should be construed liberally in favor of the insured and strictly against the insurer.").
We conclude, consistent with the "cause theory," that in the absence of clear language to the contrary, when the insured is being sued for negligent failure to provide security, "occurrence" is defined by the immediate injury-producing act and not by the underlying tortious omission.
Travelers asserts that regardless of whether the focus is on the acts of the shooter or Koikos's alleged negligence, all of the shots should be considered one "occurrence" due to the close proximity in time and place of the individual shots fired. We disagree. To hold that the number of occurrences is determined by the time between each shot would turn an insurance coverage issue into an intensive fact-based inquiry requiring the selection of an arbitrary time interval to distinguish a single occurrence from multiple occurrences. See McQuaig, 435 So.2d at 416 n. 3 ("Had [the insured] shot Pope, then left, and hours or days later shot McQuaig, there would be little argument that this was more than one occurrence. The only difference is that here, the time interval was relatively short."). Although we agree with the dissent that "[t]ime and place are essential facts" in determining coverage under a liability policy, see dissenting op. at 275, we conclude that using the number of shots fired as the basis for the number of occurrences is appropriate because each individual shooting is distinguishable in time and space. See 8A John Alan Appleman & Jean Appleman, Insurance Law and Practice § 4891.25 at 18-19 (1981).
Travelers had several means by which to effectively limit its liability under the policy, including policy exclusions, the $500,000 per occurrence limit, and the policy's $1,000,000 "aggregate limit."
The recent case of SR International Business Insurance Co. v. World Trade Center Properties LLC, 222 F.Supp.2d 385 (S.D.N.Y.2002), illustrates the type of language Travelers could have used to unambiguously indicate that several shootings related in time and place should be considered one occurrence. In SR International, the insurance policy defined occurrence as:
Id. at 398 (emphasis supplied). Based on this language, the federal district court held that under the terms of the insurance policy, the two planes hitting the World Trade Center within sixteen minutes of
Contrary to SR International, there is no unambiguous language in Travelers' policy that would have put Koikos on notice that a "series of similar causes" would be considered one occurrence. The policy's definition of occurrence as applied to the facts of this case is susceptible to more than one reasonable interpretation. "Occurrence" can reasonably be stated to refer to the entire shooting spree or to each separate shot that resulted in a separate injury to a separate victim. Accordingly, we construe the term "occurrence" in Travelers' policy in favor of the insured.
We emphasize that we reach our decision by looking at the language of the policy in a manner consistent with precedent regarding the construction of insurance policies in this State. We look not to the number of injuries or victims, i.e., we do not apply the "effect theory," but rather we focus, under the "cause theory," on the independent immediate acts that gave rise to the injuries and Koikos's liability. In this case, each shooting constitutes a separate occurrence subject to the "Each Occurrence Limit" of $500,000 and the "General Aggregate Limit" of $1,000,000. Accordingly, we answer the rephrased certified question in the affirmative and return this case to the United States Court of Appeals for the Eleventh Circuit.
It is so ordered.
ANSTEAD, C.J., LEWIS and QUINCE, JJ., and SHAW, Senior Justice, concur.
WELLS, J., dissents with an opinion, in which HARDING, Senior Justice, concurs.
WELLS, J., dissenting.
It is a fundamental rule of construction of contracts, including contracts of insurance, that terms of an insurance policy must be construed to promote a "reasonable, practical, and sensible interpretation consistent with the intent of the parties." United States Fire Ins. Co. v. Pruess, 394 So.2d 468, 470 (Fla. 4th DCA 1981). Bearing in mind this rule, I conclude that, under the facts presented by the Eleventh Circuit, the firing of "two separate—but nearly concurrent—rounds" by a single gunman was a single occurrence, even though the rounds struck more than one individual. Koikos v. Travelers Ins. Co., 240 F.3d 1331, 1331 (11th Cir.2001).
I find no reason to revise the Eleventh Circuit's concise question, which is:
Id. at 1332. To answer the question we must, of course, first examine the insurance
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury....
The policy declarations provide that "each occurrence limit" is $500,000. The policy also states:
b. Medical expenses under Coverage C because of all "bodily injury" and "property damage" arising out of any one occurrence.
Based upon this policy and the facts that occurred at the time of this shooting, I believe that it is logically inescapable that there was but one occurrence. The majority's decision reduces to making an occurrence equate to the number of individuals struck by the rounds or the number of shots fired by the gunman. It seems to me obvious that this is an incorrect analysis. If this gunman had used an automatic weapon and merely kept squeezing the trigger, injuring 100 people, it would be plain that there was but one occurrence because the liability of the insured covered by the policy would arise from the insured's singular failure to prevent the gunman from shooting his weapon. If, rather than negligently providing security against a gunman, the restaurant had negligently entrusted its vehicle to a person who intentionally drove the vehicle into the restaurant, injuring two people, plainly there would be but one occurrence. See Truck Ins. Exchange v. Rohde, 49 Wn.2d 465, 303 P.2d 659 (1956).
I do not find the sexual molestation cases cited by the majority to be persuasive. First, H.E. Butt Grocery Co. v. National Union Fire Insurance Co., 150 F.3d 526 (5th Cir.1998), does not have a majority opinion. The opinion quoted in the present majority opinion was the opinion of only one member of the panel. Moreover, that case had to do with sexual assaults on two children, which occurred on different days, by an employee of the insured. Interstate Fire & Casualty Co. v. Archdiocese of Portland in Oregon, 35 F.3d 1325, 1329 (9th Cir.1994), involved issues of policy periods during which the molestation of different children occurred over a four-year period. I further note that New Hampshire Insurance Co. v. RLI Insurance Co., 807 So.2d 171 (Fla. 3d DCA 2002), notice invoking discretionary jurisdiction filed, No. SC02-460 (Fla. Feb. 26, 2002), is a two-to-one split decision of the Third District, in which this very issue is certified to this Court. Moreover, as set
The section of Insurance Law and Practice cited by the majority specifically states: "A single uninterrupted cause which results in a number of injuries or separate instances of property damage generally is only one accident or occurrence." 8A John Alan Appleman & Jean Appleman, Insurance Law and Practice § 4891.25 at 17 (1981).
I agree with the Eleventh Circuit that the Fifth District's decision in American Indemnity Co. v. McQuaig, 435 So.2d 414 (Fla. 5th DCA 1983), does not control the present case. The fact that in that case it was the insured who did the shootings in three separate firings of the weapon gave rise to separate liability on the part of the insured. In other words, the insured committed three acts which gave rise to coverage, and thus there were three occurrences. A case which is on point is Travelers Indemnity Co. v. Olive's Sporting Goods, Inc., 297 Ark. 516, 764 S.W.2d 596 (1989). This was a case in which the sporting goods company sold weapons to a person who used the weapons in an incident in which he shot a policeman, killed and wounded several others persons, and then committed suicide. The Arkansas Supreme Court held there was a single occurrence under the policy, which insured the sporting goods company's liability arising from the sale of the weapons. Another case on point was decided by the Appeals Court of Massachusetts in RLI Insurance Co. v. Simon's Rock Early College, 54 Mass.App.Ct. 286, 765 N.E.2d 247 (2002). In that case, a student went on a "shooting spree," and the insurance coverage arose from the college's alleged negligent failure to provide security. The "shooting spree ... lasted eighteen minutes, spanned approximately a quarter of a mile, and resulted in the killing of two and the injuring of four individuals." Id. at 287, 765 N.E.2d 247. The Court held: "It is this alleged failure or inadequacy of the college's policy that forms the basis of the insureds' liability here, and constitutes a single occurrence for insurance coverage purposes." Id. at 295, 765 N.E.2d 247. I find no court from across the country that has found multiple occurrences under facts similar to this case.
Based upon this reasoning, I concur fully with the order of United States District Court Judge William Stafford in this case. In his order, Judge Stafford stated:
While it appears that Florida courts have not addressed the issue before this court, other courts have adopted the definition urged by Defendants—namely, that the "cause of an occurrence" is an act or event that results in the insured becoming legally obligated to pay damages for bodily injury or property damage. See Home Indem. Co. v. City of Mobile, 749 F.2d 659 (11th Cir.1984) (finding that, under Alabama law, the cause of an occurrence refers to the
I believe that the adoption of Judge Stafford's order would align Florida with the majority of other jurisdictions on this issue.
HARDING, Senior Justice, concurs.
Koikos, 240 F.3d at 1332-33.