Florida East Coast Holdings Corporation v. Lexington Insurance Company

── Florida East Coast Holdings Corporation v. Lexington Insurance Company ── Court: Court of Appeals for the Eleventh Circuit Date: May 29, 2026 Category: NEW USCA11 Case: 24-11479 Document: 49-1 Date Filed: 05/29/2026 Page: 1 of 26 FOR PUBLICATION In the United States Court of Appeals For the Eleventh Circuit ____________________ No. 24-11479 ____________________ FLORIDA EAST COAST HOLDINGS CORPORATION, Plaintiff-Appellant, versus LEXINGTON INSURANCE COMPANY, d.b.a. American International Group Inc., ASPEN SPECIALTY, HOUSTON CASUALTY, ALLIED WORLD, IRONSHORE SPECIALTY, et al., Defendants-Appellees. ____________________ Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 3:21-cv-00747-TJC-PDB ____________________ Before WILLIAM PRYOR, Chief Judge, and BRANCH and ABUDU, Circuit Judges. USCA11 Case: 24-11479 Document: 49-1 Date Filed: 05/29/2026 Page: 2 of 26 2 Opinion of the Court 24-11479 BRANCH, Circuit Judge: In 2017, Florida East Coast Holdings Corporation (“Florida East Coast”), which operates a railroad in Florida, learned that Hurricane Irma was likely to hit Florida and could cause significant physical damage to its property—damage which would, in turn, slow its operations for weeks. As a precautionary measure, Florida East Coast removed the crossing gates from the tracks at around 600 locations before the storm and then replaced them after Irma had passed. Florida East Coast believed that its preventative measures were covered by its insurance policy, but the insurers eventually denied its claim, concluding that the relevant deductible swallowed up any covered expenses. In the ensuing lawsuit, the district court agreed with the insurers and granted them summary judgment. After careful consideration and with the benefit of oral argument, we conclude that the district court correctly identified the policy provisions offering coverage but erred in calculating the deductible. We therefore affirm in part, vacate the grant of summary judgment, and remand for further proceedings consistent with our opinion. USCA11 Case: 24-11479 Document: 49-1 Date Filed: 05/29/2026 Page: 3 of 26 24-11479 Opinion of the Court 3 I. Background A. Factual background1 Florida East Coast insured its railroad through a policy with Lexington Insurance Company and other underwriters (“the insurers”). The policy ran from March 1, 2017, through March 1, 2018, and covered, among other things, Florida East Coast’s property related to its railroad operations. In early September 2017, Florida East Coast learned that Hurricane Irma had formed over the Atlantic Ocean and was likely to hit Florida. Anticipating that the storm would cause significant damage to its railway crossing gates—and that broken gates might cause collateral damage to other structures and people—Florida East Coast removed crossing gates from around 600 locations and stored them. Without gates at the railroad crossings, human personnel were needed to man crossings, and trains had to run at significantly slower speeds. Thanks to these precautions, however, Hurricane Ir