USCA11 Case: 22-13603 Document: 21-1 Date Filed: 07/07/2023 Page: 1 of 8
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-13603
Non-Argument Calendar
____________________
CHABAD OF KEY BISCAYNE, INC.,
Plaintiff-Appellant,
versus
SCOTTSDALE INSURANCE COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 1:21-cv-24043-DPG
____________________
USCA11 Case: 22-13603 Document: 21-1 Date Filed: 07/07/2023 Page: 2 of 8
2 Opinion of the Court 22-13603
Before NEWSOM, GRANT, and ANDERSON, Circuit Judges.
PER CURIAM:
Chabad of Key Biscayne appeals the district court’s grant of
Scottsdale Insurance Company’s motion for summary judgment.
Chabad had brought suit after Scottsdale refused to pay more than
$5000 in damages for Chabad’s loss of $247,584.74 from water
damage.
Chabad filed a claim under its all-risks commercial policy
with Scottsdale after “a drain or sewer pipe broke due to wear and
tear, deterioration, and settling, and water accidentally discharged
or leaked causing damage.” Scottsdale denied the claim under the
general water damage exclusion but offered $5000 under the “Wa-
ter Backup or Overflow of Sewers and Drains” extension.
The all-risks policy contains an exclusion for damages
caused by water:
B. Exclusions
1. We will not pay for loss or damage caused directly
or indirectly by any of the following. Such loss or
damage is excluded regardless of any other cause or
event that contributes concurrently or in any se-
quence to the loss.
...
g. Water
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22-13603 Opinion of the Court 3
(1) Flood, surface water, waves (including tidal wave
and tsunami), tides, tidal water, overflow of any body
of water, or spray from any of these, all whether or
not driven by wind (including storm surge);
...
(3) Water that backs up or overflows or is other-
wise discharged from a sewer, drain, sump, sump
pump or related equipment;
(4) Water under the ground surface pressing on, or
flowing or seeping through:
(a) Foundations, walls, floors or paved surfaces;
(b) Basements, whether paved or not; or
(c) Doors, windows or other openings; or
...
This exclusion applies regardless of whether any of
the above, in Paragraphs (1) through (5), is caused by
an act of nature or is otherwise caused.
Doc. 17-1 at 92-93. Scottsdale relied on subsection (3).
The policy also includes an exclusion for damages caused by
wear and tear (B.2.d.(1)) but includes the following caveat: “But if
an excluded cause of loss that is listed in 2.d.(1) through (7) re-
sults in a ‘specified cause of loss’ . . ., we will pay for the loss or
damage caused by that ‘specified cause of loss’.” Id. at 94. The
policy defines “specified cause of loss” (G.2.) to include water dam-
age and defines water damage (G.2.c.) as:
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4 Opinion of the Court 22-13603
(1) Accidental discharge or leakage of water or steam
as the direct result of the breaking apart or cracking
of a plumbing, heating, air conditioning or other sys-
tem or appliance (other than a sump system including
its related equipment and parts), that is located on the
described premises and contains water or steam; and
(2) Accidental discharge or leakage of water or water-
borne material as the direct result of the breaking
apart or cracking of a water or sewer pipe caused by
wear and tear, when the pipe is located off the de-
scribed premises and is connected to or is part of a
potable water supply system or sanitary sewer system
operated by a public or private utility service provider
pursuant to authority granted by the state or govern-
mental subdivision where the described premises are
located.
Id. at 101. The definition continues:
But water damage does not include loss or damage
otherwise excluded under the terms of the Water
Exclusion.
...
To the extent that accidental discharge or leakage
of water falls within the criteria set forth in c.(1) or
c.(2) of this definition of “specified causes of loss,”
such water is not subject to the provisions of the
Water Exclusion which preclude coverage for sur-
face water or water under the surface of the
ground.
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22-13603 Opinion of the Court 5
Id. Finally, the policy contained an endorsement that defined
“drain” and “sewer:”
1. “Sewer” means any underground pipe, channel or
conduit for carrying water, wastewater or sewage on
or away from the premises described in the Declara-
tions;
2. “Drain” means any pipe, channel or conduit for car-
rying water, wastewater or sewage on or away from
the premises described in the Declarations to a
“sewer.”
Id. at 117.
The parties and the district court refer to B.1.g.(3) (see bold
type above) as the Water Exclusion. They also refer to the caveat
to the B.2.d.(1) Wear and Tear Exclusion (quoted in bold above) and
the two provisions of the definitions of “specified cause of loss”
and “water damage” (quoted above in bold) as the Water Damage
Exception to the Water Exclusion.
After agreeing with the parties that B.1.g.(3) of the Water
Exclusion excluded the damage at issue, the district court found
that the Water Damage Exception did not apply. The court found
that the Water Damage Exception applied only to surface water
(B.1.g.(1)) or to water under the surface of the ground (B.1.g.(4)),
while Chabad’s damage fell under damage from sewer or drain
backup or overflow (B.1.g.(3)). It cited several other district court
decisions that had interpreted the same contract language the same
way. Finally, it distinguished a Florida case, Cheetham v. Southern
Oak Insurance Co.,
114 So.3d 257 (Fla. 3d DCA 2013), and a case
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6 Opinion of the Court 22-13603
from this court, Cameron v. Scottsdale Insurance Co.,
726 F. App’x 757
(11th Cir. 2018), because neither of the policies in those cases in-
cluded the definition of drain and sewer found in the Endorsement
in the policy here.
Florida substantive law applies because we are sitting in di-
versity. Admiral Ins. Co. v. Feit Management Co.,
321 F.3d 1326, 1328
(11th Cir. 2003). Under Florida law, the interpretation of an insur-
ance policy is a question of law for the court. Penzer v. Transporta-
tion Ins. Co.,
29 So.3d 1000, 1005 (Fla. 2010). As a general rule, clear
and unambiguous policy terms should be given their plain, ordi-
nary and generally accepted meaning. Taurus Holdings, Inc. v. U.S.
Fid. & Guar. Co.,
913 So.2d 528, 532 (Fla. 2005). When applying the
“plain meaning” rule, courts must not construe insurance policy
provisions in isolation, but instead should read all terms in light of
the policy as a whole, with every provision given its full meaning
and operative effect. Auto–Owners Ins. Co. v. Anderson,
756 So.2d 29,
34 (Fla. 2000). Finally, “[b]ecause they tend to limit or avoid liability,
exclusionary clauses are construed more strictly than coverage
clauses.” Category 5 Mgmt. Grp., LLC v. Companion Prop. & Cas. Ins.
Co.,
76 So. 3d 20, 23 (Fla. Dist. Ct. App. 2011) (citation omitted).
As the district court noted, Chabad agrees that the Water
Exclusion (B.1.g.(3)) applies initially to exclude the loss. Chabad’s
only argument on appeal is that the Water Damage Exception op-
erates as an exception to the Water Exclusion in B.1.g.(3), so as to
save coverage.
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22-13603 Opinion of the Court 7
We agree with the district court that there is no coverage
here for the damage suffered. The Water Exclusion bars coverage
for water that backs up or is discharged from a sewer and the policy
defines sewer and drain to mean “pipe, channel or conduit for car-
rying water, wastewater or sewage on or away from the premises.”
The Water Damage Exception applies to the Wear and Tear Exclu-
sion and its language must be interpreted through the lens of the
provisions of the Wear and Tear Exclusion, including its exceptions.
The exception explicitly states that it exempts from the Water Ex-
clusion damage from surface water or water under the surface of
the ground. That corresponds to B.1.g.(1) and B.1.g.(4) of the pol-
icy. 1 But the parties agree that B.1.g.(3)—water discharged from a
drain or sewer—is the exclusion at issue. Because the exception to
the exclusion at issue here does not apply, there is no coverage. 2
1See the Water Damage Exception quoted in bold type above: “such water is
not subject to the provisions of the Water Exclusion which preclude coverage
for surface water [B.1.g.(1)] or water under the surface of the ground
[B.1.g.(4)].”
2 Contrary to Chabad’s arguments, the exception is not illusory. The excep-
tion actually operates as an exception to the exclusions for surface water and
for water under the surface of the ground when a pipe (either offsite or within
the premises) breaks due to wear and tear. Further, Chabad’s reliance on
Cheetham is misplaced because, although the court interpreted a similar (but
not the same) policy, the court held that language in a water exclusion similar
to B.1.g.(3) in our case applied only to “damage caused by water originating
from somewhere other than the residence premises’ plumbing system.”
114
So. 3d at 263. Chabad in this case does not argue that the Water Exclusion
does not apply because the water originated from within its own plumbing
system. Also, as the district court found, Cheetham is distinguished because it
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8 Opinion of the Court 22-13603
AFFIRMED
did not include the definition in this case of “sewer” and “drain” pipes (which
clearly encompass pipes both on- and off-premises) and, unlike this case, did
not include the “Water Backup or Overflow of Sewers and Drains” extension
of coverage (which clearly contemplates that the Water Exclusion in B.1.g.(3)
would apply to exclude coverage but then adds back such coverage with a
$5000 limit). In any event, Chabad has acknowledged in this case that B.1.g.(3)
would apply to exclude coverage unless the exception applies to save cover-
age, thus making the holding of Cheetham irrelevant for this case.
