Mt. Hawley Insurance Company v. AIM Security Group, LLC

Background

Mt. Hawley Insurance Company brought this action seeking a declaratory judgment—a court ruling defining the parties’ legal rights—to establish that it had no duty to defend or indemnify AIM Security Group, LLC in an underlying case, Tyanna Brown et al. v. Cypress Courts Associates, LTD d/b/a Cypress Courts Apartments et al., Case No. 23-CA-000023, pending in the Circuit Court of the State of Florida, Lee County.

The opinion states that AIM was personally served with the summons and complaint on June 1, 2023. AIM was required to respond by June 22, 2023, but did not appear, retain counsel, answer, or otherwise respond. The Clerk entered AIM’s default on August 23, 2023.

Insurance Coverage Allegations

The complaint alleged that Mt. Hawley and AIM entered into an enforceable insurance agreement. The agreement provided coverage and a duty to defend only for suits involving bodily injury or property damage to which the insurance applied. It also excluded claims arising out of or involving operations concerning low-income housing, government-owned housing, H.U.D. housing, or Section 8 housing.

The agreement further excluded claims involving abuse or molestation and claims based on alleged negligent hiring, employment, investigation, supervision, reporting or failure to report, or retention of a person alleged to have committed abuse or molestation, or of an entity allegedly responsible for it.

The complaint alleged that AIM provided security services at a Section 8 housing facility. It also alleged that the underlying Florida action asserted negligent security, negligent supervision, negligent retention, and negligent hiring claims related to alleged abuse at the facility. According to the complaint, one of AIM’s security guards witnessed the abuse but did nothing because she was having an intimate relationship with the person who committed it. The complaint also alleged that AIM disagreed with Mt. Hawley’s position concerning the coverage exclusions.

Court’s Analysis

The court explained that a default judgment generally means the defendant has failed to respond, but that default does not automatically establish the plaintiff’s legal entitlement to judgment. Even after a defendant defaults, the court must determine whether the complaint’s well-pleaded factual allegations establish liability as a matter of law.

The court concluded that the complaint adequately alleged a valid and enforceable insurance contract and that the alleged underlying claims fell within the agreement’s exclusions. The court therefore granted default judgment on Mt. Hawley’s declaratory judgment claim.

Disposition

The court entered default judgment for Mt. Hawley Insurance Company against AIM Security Group, LLC. It declared that Mt. Hawley has no obligation to defend or indemnify AIM in connection with the underlying Florida action.