759 F.

2d 873

NATIONAL UNION FIRE INSURANCE COMPANY OF

PENNSYLVANIA,
Plaintiff-Appellant,
v.
CARIB AVIATION, INC., and Gregg C. Fiddyment,
Defendants-Appellees.
No. 84-5636
Non-Argument Calendar.

United States Court of Appeals,

Eleventh Circuit.
May 7, 1985.

Thornton, David & Murray, P.A., Kathleen M. O'Connor, Miami, Fla., for
plaintiff-appellant.
Robert J. Schaffer, Coral Gables, Fla., for Carib Aviation, Inc.
Richard A. Friend, Ordonez & Friend, Miami, Fla., for G. Fiddyment.
Appeal from the United States District Court for the Southern District of
Florida.
Before RONEY, FAY and JOHNSON, Circuit Judges.
PER CURIAM:

National Union Fire Insurance Company of Pittsburgh, Pa. (National) appeals

the summary judgment granted by the district court in favor of National's
insureds, Carib Aviation, Inc. (Carib) and Gregg Fiddyment (Fiddyment). The
district court found that an exclusionary clause in the insurance policy at issue
was ambiguous and did not insulate National from liability because in Florida
"only those exclusions that are clearly delineated by the express language of
the policy" are effective. National Union Fire Insurance Co. v. Carib Aviation,
566 F.Supp. 1489, 1491 (S.D.Fla.1983). We, however, conclude that the
language of the exclusion is unambiguous and clearly excludes coverage under

the facts of this case. We therefore reverse.

I. FACTUAL BACKGROUND
2

The essential facts in this case are not in dispute. We thus consider it
appropriate to quote the following from the district court's opinion:

This case concerns the crash of an airplane at sea during the attempted
smuggling of marijuana into the United States. At the time of the crash, the
airplane was leased by ... [Carib]. It was insured by National.... The airplane
had been rented to a third party pilot/smuggler [Marchand] who had stated that
he intended to fly from Tamiami Airport in Miami to Orlando and back. The
pilot actually flew to the Bahamas. Had Carib known of his intention to fly
outside of the United States, it would have required additional documentation.

On the return from the Bahamas, the airplane crashed in the Atlantic Ocean,
twenty nautical miles east of Fort Lauderdale. The pilot and a passenger were
rescued from a liferaft found floating amid several bales of marijuana. The pilot
pled guilty to conspiracy to possess with intent to distribute marijuana and was
sentenced to five years in prison.

The insurance policy named Carib and ... Fiddyment ... as insureds. The policy
provided coverage for property damage to the aircraft, but contained the
following exclusion: "This policy does not apply to: ... loss or damage due to
conversion, ... by any person in possession of the aircraft under a bailment,
lease, ... or other encumbrance, nor for any loss or damage during or resulting
therefrom.

Id. at 1490 (emphasis added).

After the crash, Carib and Fiddyment demanded that National pay for the loss
of the airplane. National refused, and filed a complaint seeking a declaratory
judgment to the effect that coverage was excluded under the policy. The
defendants, on the other hand, argued that the language of the coverage
exclusion is ambiguous, and, therefore, should be strictly construed against
National so as to provide coverage. The district court, faced with cross-motions
for summary judgment, ruled against National. This appeal followed.

National argues on appeal that the district court erred in granting the insured a
summary judgment because, based on the unambiguous language of the
exclusion, there is no coverage provided under the policy for damages resulting

from a conversion of the airplane by anyone in possession of the airplane under

a lease. In National's view, the only real question in this case is, based on the
undisputed facts, did Marchand "convert" the airplane under Florida law?
Appellees, on the other hand, contend that the district court acted properly
since the conversion exclusion in question is ambiguous. Specifically, appellees
argue that: (1) the phrase "in possession" really means "in lawful possession;"
(2) the phrase "under a lease" really means "under a valid lease;" and (3)
Marchand did not "convert " the airplane within the meaning of the exclusion.
II. THE LAW
9

Florida law is clear that "[o]nce the insured establishes a loss apparently within
the terms of an 'all risks' policy, the burden shifts to the insurer to prove that the
loss arose from a cause which is excepted." Hudson v. Prudential Property &
Casualty Insurance Co., 450 So.2d 565, 568 (Fla. 2nd Dist.Ct.App.1984).
Moreover, ambiguities in exclusionary provisions must be construed in favor of
the insured since the insurer usually drafts the policy. See Excelsior Insurance
Co. v. Pomona Park Bar & Package Store, 369 So.2d 938, 942 (Fla.1979);
Southeastern Fire Insurance Co. v. Lehrman, 443 So.2d 408, 409 (Fla. 4th
Dist.Ct.App.1984); Collins v. Royal Globe Insurance Co., 368 So.2d 941, 942
(Fla. 4th Dist.Ct.App.1979); accord, Ideal Mutual Insurance Co. v. C.D.I.
Construction, 640 F.2d 654, 657 (5th Cir. Unit B 1981) (applying Florida law).
If, however, the language found in the policy is not ambiguous or otherwise
susceptible of more than one meaning, the court's task is simply to apply the
plain meaning of the words and phrases used to the facts before it. Lehrman,
443 So.2d at 408-09; see also Excelsior, 369 So.2d at 942 (rule of strict
construction in favor of insured is apposite "[o]nly when a genuine
inconsistency, uncertainty, or ambiguity in meaning remains after resort to the
ordinary rules of construction"); Denman Rubber Manufacturing Co. v. World
Tire Corp., 396 So.2d 728, 729 (Fla. 5th Dist.Ct.App.1981) (same); Ideal
Mutual, 640 F.2d at 657-58 (same). In other words, a court is not free to rewrite
an insurance policy or add meaning to it that really is not there. Excelsior, 369
So.2d at 942; Ideal Mutual, 640 F.2d at 658.

III. APPLICATION OF THE LAW

10

Appellees' first argument in support of the district court's judgment is that the
exclusion is not effective because Marchand, who misrepresented his true
intentions to Carib, was never "in possession" within the meaning of the
exclusion. Appellees contend that Florida courts have consistently held that
"lawful possession" of the insured property must exist before the exclusion is
triggered. In support of this position, appellees refer us to National Casualty Co.

v. General Motors Acceptance Corp., 161 So.2d 848 (Fla. 1st

Dist.Ct.App.1964); Security Insurance Co. v. Investors Diversified Ltd., 407
So.2d 314 (Fla. 4th Dist.Ct.App.1981), and Progressive American Insurance
Co. v. Florida Bank, 452 So.2d 42 (Fla. 5th Dist.Ct.App.1984). We have
reviewed these decisions and find them clearly distinguishable from the case
sub judice.
11

In National Casualty Co., the insurer issued an insurance policy to the

purchaser of an automobile. The policy contained a mortgage clause in favor of
G.M.A.C. as the lienholder. The purchaser, who had defaulted in making
payments pursuant to the purchase contract, deliberately drove the insured
vehicle off a bridge into the waters of Pensacola Bay. G.M.A.C. brought suit to
recover for the loss; the insurer defended on the ground that the acts of the
purchaser constituted a conversion of the automobile within the meaning of an
exclusion similar1 to the one involved in this case. In holding that the
purchaser's acts did not constitute conversion of the lienholder's interest, the
court noted that the "words 'embezzlement or secretion,' as used in [the
exclusion], suggest crimes falling within the general category of theft or
larceny, the difference being that the original possession was obtained by
lawful means." Id. at 852 (emphasis added); see Progressive American
Insurance Co., 452 So.2d at 45 (quoting same).

12

We agree with appellant that National Casualty Co. and a recent case relying on
that decision, Progressive American Insurance Co., do not hold as appellees
would have us believe. The portion of National Casualty Co. discussing "lawful
possession" was clearly directed only to the policy language dealing with
"embezzlement or secretion." Conversion, however, can be committed by
someone who wrongfully acquires possession of the property. See W. Prosser,
Law of Torts 84 (3rd ed. 1964). The reference in National Casualty Co. to
"lawful possession" accordingly does not counsel holding that a conversion
exclusion will be ineffective unless the converter lawfully acquired possession
of the insured property.

13

Security Insurance Co. is also inapposite. In that case, the exclusionary clause
referred to "loss ... resulting from misappropriation ... or any dishonest act on
the part of ... any person ... to whom the property may be entrusted." Security
Insurance Co., 407 So.2d at 315-16 (emphasis deleted). After framing the issue
as whether the insured could "entrust" property to a thief, the court held that the
policy exclusion did not encompass larceny by trick. Id. at 316. The court
arrived at this conclusion by likening "entrustment" to "lawful possession." See
id. (relying on Collins, 368 So.2d 941, a case interpreting a policy exclusion
with "lawful possession" language).

14

Appellees fail to appreciate that the exclusion in this case refers only to
"possession," not "misappropriation" by one to whom property has been
"entrusted" or "lawful possession". No amount of judicial alchemy can change
these fundamental distinctions in policy language. In our view, neither Security
Insurance Co., nor its predecessor, the Collins case, support appellees' position.

15

We also are unpersuaded by appellees' contention that the exclusion contains a

hidden requirement that the converter be in possession of the property under a
"valid" lease. The exclusion states that it applies "to loss [occurring during or
resulting from] conversion ... by any person in possession of the aircraft under a
... lease." The exclusion does not mention any requirement that the agreement
initially giving rise to the possession be legally enforceable. Since it is
undisputed that the airplane was leased to Marchand, we discern no sound
reason for holding the exclusion ineffective simply because the lease
agreement arguably 2 was tainted. 3

16

Appellees' final argument in support of the district court's judgment is twopronged. They contend that (1) Marchand did not "convert" the airplane within
the meaning of the exclusion since there is no evidence that he intended to steal
the airplane; and (2) in any event, the loss of the insured property was due to a
loss of fuel and not "due to conversion." We address these points seriatim.

17

Appellees, again relying on National Casualty Co., 161 So.2d 848, assert that
"conversion," as used in the exclusion, refers to criminal, rather than civil,
conversion. We agree that National Casualty Co. supports this view.4 That
decision, however, is not etched in granite.

18

Whatever Florida law may have been in 1964, the year National Casualty Co.
was decided, the fact remains that since that time the Florida legislature has
extensively revised the criminal code. For example, in 1977 the Florida AntiFencing Act, Fla.Stat. Secs. 812.012-.037, was enacted. Under that legislation,
"[a] person is guilty of theft if he knowingly obtains or uses ... the property of
another with intent to ... [d]eprive the other person of a right to the property or a
benefit therefrom." Id. Sec. 812.014(1)(a) (emphasis added). "Obtains or uses"
is defined as "[c]onduct previously known as stealing; larceny; purloining;
abstracting; embezzlement; misapplication; misappropriation; conversion; or
obtaining money or property by false pretenses, fraud, or deception." Id. Sec.
812.012(2)(d)1 (emphasis added). It is clear, therefore, that prior to 1982, the
year in which the parties executed the instant insurance policy, "conversion in
the criminal sense," National Casualty Co., 161 So.2d at 852, had been
subsumed under the more general category of "theft," as defined by the
omnibus theft statute. We accordingly have little difficulty concluding that, as

used in the policy exclusion, "conversion" denotes civil, as well as criminal,

conversion. National Casualty Co. simply is not controlling.
19

The argument that the loss of the airplane was caused by a loss of fuel, and
therefore not "due to conversion" within the meaning of the exclusion, is more
easily dismissed. Appellees ignore that part of the exclusion which excludes
coverage for "loss or damage during or resulting" from conversion. "If damage
occurs during conversion the policy does not cover it." Gelder v. Puritan
Insurance Co., 668 P.2d 1117, 1118, (N.M.Ct.App.1983) (construing identical
policy exclusion).

20

There is little doubt that, under Florida law, Marchand converted the aircraft. "
[C]onversion is an unauthorized act which deprives another of his property
permanently or for an indefinite time." Senfeld v. Bank of Nova Scotia Trust
Co. (Cayman), 450 So.2d 1157, 1160-61 (Fla. 3rd Dist.Ct.App.1984) (footnote
omitted) (citing Star Fruit Co. v. Eagle Lake Growers, Inc., 33 So.2d 858
(Fla.1948) (en banc)). The essence of the tort is not the acquisition of the
property; rather, it is the wrongful deprivation. Star Fruit Co., 33 So.2d at 860.
Apropos to this case, "[t]he wrongful destruction ... of personal property by a
bailee, contrary to the terms [of the bailment], terminates the trust ... and [an]
action for conversion will lie." Id.

21

It is clear that Carib leased the aircraft to Marchand only after he represented
that he wished to make an inland flight from Miami to Orlando, and return. It is
equally clear that he ditched the airplane in the ocean after attempting to
smuggle contraband from the Bahamas. In our view, Marchand's unauthorized
use of the aircraft, culminating in its destruction, constitutes conversion under
Florida law.5 IV. CONCLUSION

22

We conclude that the language of National's exclusion clause is unambiguous

and not otherwise susceptible of more than one meaning. We further conclude,
after applying "the plain meaning of [the] words and phrases" found in the
exclusion, Lehrman, 443 So.2d at 409, that the insured property was lost or
damaged during its conversion by someone possessing it under a lease. The
conversion exclusion therefore applies and no coverage is available to
appellees.6

23

The decision of the district court is REVERSED and judgment is hereby

entered in favor of National.

The exclusion stated in part " 'that the conversion, embezzlement or secretion

The exclusion stated in part " 'that the conversion, embezzlement or secretion
by the lessee, mortgagor or purchaser in possession of the property insured
under a bailment lease, conditional sale, mortgage or other encumbrance is not
covered under such policy.' " National Casualty Co., 161 So.2d at 852

Appellees assert that because of Marchand's misrepresentation, the lease was

"invalid." As we understand appellees' position, however, Marchand's
misrepresentations simply induced Carib to lease him the airplane. Properly
viewed, the lease contract therefore was most likely "voidable" and not "void"
or "invalid." See 1 A. Corbin, Corbin on Contracts Sec. 6, at 12 n. 6 (1963)
(emphasis added) (A contract that is fraudulently induced is voidable by the
defrauded party. "He has the power of avoidance; but he also has a power to
'ratify,' and the contract is enforceable against the wrongdoer. Such a contract,
therefore, has a considerable degree of legally operative effect--that is,
validity."); see also Columbus Hotel Corp. v. Hotel Management Co., 116 Fla.
464, 156 So. 893, 898 (1934) (fraudulently induced contract not illegal per se);
Leitman v. Boone, 439 So.2d 318, 321 n. 3 (Fla. 3d Dist.Ct.App.1983)
(contract induced by fraud still exists, and, even though later found voidable or
void, certain of its provisions may be operative)

Appellees' reliance on United States Fidelity & Guar. Co. v. J.D. Johnson Co.,
438 So.2d 917 (Fla. 1st Dist.Ct.App.1983) is misplaced. In that case Johnson, a
wholesaler of heating and air conditioning equipment, had a long-standing
credit arrangement with Padgett, a retailer in the same business. Padgett's
employees would routinely go to Johnson's warehouse to pick up equipment
whenever it was needed. Padgett regularly visited the warehouse to pay off a
portion of the outstanding indebtedness. A dispute eventually arose concerning
the amount Padgett owed Johnson. Johnson claimed that, pursuant to the credit
arrangement, $76,000.00 worth of property was delivered to Padgett or
Padgett's employees. Padgett, however, insisted that $64,000.00 worth of
equipment was unaccounted for
When Padgett refused to pay, Johnson looked to USF & G to recover on an allrisk insurance policy it had issued. USF & G, however, asserted that it was not
liable for any loss by virtue of an exclusion which provided that there would be
no coverage for "[p]roperty sold by [Johnson] under conditional sale ... after
delivery to customers." Id. at 919. The court stated that in these circumstances
the exclusion "for loss of property sold pursuant to a long-standing credit
arrangement necessarily contemplates a valid sales transaction and delivery of
the property incident to such sale." Id. at 920-21. The court accordingly held
that "[p]roperty delivered ... as a result of ... misrepresentation would not be
pursuant to a valid sale transaction within the meaning of [the exclusion]." Id.
at 921.

Even a superficial reading of J.D. Johnson Co. reveals that it is distinguishable

from this case. First, the language of the exclusions found in the two cases is
markedly different. Second, the J.D. Johnson Co. decision was informed by the
existence of a long-standing credit arrangement. Here, Marchand simply
approached Carib and thereafter acquired possession of an airplane for the
stated purpose of flying to Orlando. Unlike J.D. Johnson Co., no past practice is
involved in this case.
4

The court stated that "in using the word 'conversion' in connection with the
words 'embezzlement and secretion' [the insurer] had reference to conversion in
the criminal sense rather than as a tort." National Casualty Co., 161 So.2d at
852

Our conclusion is reinforced by two decisions nearly on all fours with the case
sub judice. In Swish Mfg. Southeast v. Manhattan Fire & Marine Ins. Co., 675
F.2d 1218 (11th Cir.1982), Swish leased a plane on which it carried insurance
to Wings, Inc. Thereafter, the president of Wings piloted the plane to the
Bahamas for the purpose of smuggling marijuana into this country. The plane,
which was seized by Bahamian authorities, was damaged while in Bahamian
control
Swish demanded payment from the insurer. The insurer refused on the basis of
an exclusionary clause identical to the one in this case. After examining
Georgia case law and the Restatement (Second) of Torts Secs. 222A-242
(1965), the Swish court held that, as a matter of law, the airplane had been
converted. Swish therefore was unable to recover from the insurance company.
Similarly, in Gelder, 688 P.2d 1117, Gelder leased an airplane to a lessee who
agreed not to use the plane for unlawful purposes. The plane, piloted by the
lessee, crashed upon take-off just after its cargo of marijuana had been
unloaded. The insurer refused to indemnify Gelder for the loss. As in Swish,
the insurer grounded its refusal on an exclusionary clause identical to the one in
this case. Relying on Sec. 228 of the Restatement, supra, New Mexico
precedent, and the Swish decision, the Gelder court also concluded that a
conversion had taken place. Gelder, therefore, was not entitled to payment from
the insurer.
Although Swish and Gelder were decided by reference to the law of Georgia
and New Mexico, respectively, not Florida law, we discern no material
difference in the law of conversion in the three forums. We therefore find the
reasoning employed in those two decisions to be highly persuasive and
applicable to the facts of this case.

The district court discussed, although it did not base its decision on, Fla.Stat.

Sec. 627.409(2). Carib, 566 F.Supp. at 1491. This statute provides in part:
A breach or violation by the insured of any ... provision of any ... contract of
insurance ... shall not render void the ... contract, or constitute a defense to a
loss therefrom, unless such breach or violation increased the hazard by any
means within the control of the insured.
Fla.Stat. Sec. 627.409(2) (emphasis added). The district court noted that even
though smuggling drugs could increase the risk of loss of an airplane, National
failed to offer any proof of this fact. The court also declined to take judicial
notice of the fact. In its motion for reconsideration, however, National did
tender to the court an affidavit of an underwriting expert who stated that use of
an aircraft to transport illegal substances unquestionably increases the risk of
loss from an insurance underwriting standpoint. Record at 116-17. The court, in
denying National's motion, again stated its belief that the dangerousness of drug
smuggling via aircraft was not a proper subject of judicial notice. Id. at 120.
Although the district court explicitly refused to base its decision on Sec.
627.409, we note that subsection (2) embraces only "[a] breach or violation by
the insured." National has never argued that Carib or Fiddyment somehow
breached or violated the contract of insurance. National simply denied coverage
on the basis of an exclusionary provision. In our view, the statute, Proprietors
Ins. Co. v. Siegel, 410 So.2d 993 (Fla. 3d Dist.Ct.App.1982), and Pickett v.
Woods, 404 So.2d 1152 (Fla. 5th Dist.Ct.App.1981), review denied, 412 So.2d
465 (Fla.1982), are therefore inapposite.