Glades Correctional Development Corporation v. Sell & Melton, L.L.P.
Filing
28
OPINION AND ORDER denying 20 nonparty Medmarc Casualty Insurance Company's Motion to Stay These Proceedings. Signed by Judge John E. Steele on 12/19/2017. (KP)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
GLADES
CORRECTIONAL
DEVELOPMENT CORPORATION, a
Florida corporation,
Plaintiff,
v.
Case No:
2:17-cv-463-FtM-29MRM
SELL & MELTON, L.L.P., a
Georgia limited liability
partnership
and
R.
CHIX
MILLER, individually,
Defendants.
OPINION AND ORDER
This matter comes before the Court on the Motion to Stay
Proceedings (Doc. #20) filed by Medmarc Casualty Insurance Company
on November 15, 2017.
Plaintiff filed a Response in Opposition
(Doc. #21) on November 28, 2017.
For the reasons set forth below,
the Court denies the Motion to Stay.
I.
This is a legal malpractice suit in which Glades Correctional
Development
Corporation
(Glades
or
Plaintiff)
accuses
Sell
&
Melton, L.L.P. and one of its attorneys, R. Chix Miller (Miller),
of
negligently
providing
incorrect
advice
regarding
the
tax
implications of a set of revenue bonds Glades wanted to issue. 1
After
1
being
sued,
Sell
&
Melton
submitted
a
claim
under
an
Sell & Melton removed the case to this Court under 28 U.S.C. §
1441, asserting the existence of diversity jurisdiction pursuant
to 28 U.S.C. § 1332. (Doc. #1.)
insurance policy issued by Medmarc Casualty Insurance Company
(Medmarc).
(Doc. #20, p. 2.)
Medmarc is not a party to this
lawsuit but has been providing Sell & Melton with a defense under
a reservation of rights. 2
Recently,
Medmarc
(Doc. #21, p. 10.)
filed
suit
in
Georgia
federal
court
requesting a declaration that it owes Defendants no duty of defense
or indemnification in connection with this malpractice action. 3
(Doc. #20, p. 1.)
Medmarc now asks the Court to stay these
proceedings until the declaratory judgment action is resolved.
Plaintiff
opposes
a
stay
as
unwarranted
and
prejudicial.
Defendants have not responded to the Motion.
II.
It has long been observed that:
the power to stay proceedings is incidental to
the power inherent in every court to control
the disposition of the causes on its docket
with economy of time and effort for itself,
for counsel, and for litigants. How this can
best be done calls for the exercise of
judgment, which must weigh competing interests
and maintain an even balance.
Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936) (citations
omitted).
Despite a court’s discretion, it is “[o]nly in rare
circumstances [that] a litigant in one cause [should] be compelled
to stand aside while a litigant in another settles the rule of law
2
The original Complaint (Doc. #2) names only Sell & Melton as a
Defendant. Per the Court’s leave (Doc. #22), the Complaint has
been amended to assert claims against Miller. (Doc. #24.)
3
Medmarc Cas. Ins. Co. v. Sell & Melton LLP, Case No. 5:17-cv-449
(M.D. Ga.).
- 2 -
that will define the rights of both.”
Id.
A movant thus has a
heavy burden of convincing the court that a stay is warranted.
Id. (“[T]he suppliant for a stay must make out a clear case of
hardship or inequity in being required to go forward . . . .”).
In considering whether a stay is warranted, courts in this district
have considered a number of factors, including: “(1) whether a
stay will simplify the issues and streamline the trial; (2) whether
a stay will reduce the burden of litigation on the parties and the
court; and (3) whether the stay will unduly prejudice the nonmoving party.”
Shire Dev. LLC v. Mylan Pharm. Inc., No. 8:12-CV-
1190-T-36AEP, 2014 WL 12621213, at *1 (M.D. Fla. July 25, 2014)
(citing Lifewatch Servs., Inc. v. Medicomp, Inc., No. 6:09–cv–
1909–Orl–31DAB, 2010 WL 963202, at *1 (M.D. Fla. Mar, 16, 2010)).
To support the claim that this Court should exercise its stay
discretion here, Medmarc invokes a Georgia Court of Appeals case
commissioning the following procedure where an insurer contests
its coverage obligations:
Upon learning of facts reasonably putting it
on notice that there may be grounds for
noncoverage and where the insured refuses to
consent to a defense under a reservation of
rights, the insurer must thereupon (a) give
the insured proper unilateral notice of its
reservation of rights, (b) take necessary
steps to prevent the main case from going into
default or to prevent the insured from being
otherwise prejudiced, and (c) seek immediate
declaratory relief including a stay of the
main case pending final resolution of the
declaratory judgment action.
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(Doc. #20, pp. 2-3 (quoting Richmond v. Ga. Farm Bureau Mut. Ins.
Co., 231 S.E.2d 245, 248 (Ga. Ct. App. 1976)).)
Medmarc believes
a stay is the “fairest” approach here; otherwise, it will be
“forced to defend a lawsuit for an insured while, at the same time,
litigating
a
suit
against
the
insured.”
(Id.
pp.
4,
5.)
Furthermore, Medmarc believes that the answer to whether coverage
is available under the Policy for Plaintiff’s claims “could very
well effect [sic] the resolution” of this case.
(Id. p. 4.)
The Court does not agree that a stay is warranted here.
Even
assuming Richmond, a Georgia state case, applies in the Middle
District of Florida, it is not clear that the case is instructive
in this instance. 4
The Richmond court was troubled by insurers’
practice of “giv[ing] an insured a unilateral notice of reservation
of rights and thereupon proceed[ing] with a complete defense of
4
Plaintiff’s Response in Opposition argues that Richmond addresses
a Georgia procedural matter and has no binding application on any
federal court, let alone one in Florida. (Doc. #21, p. 3 (quoting
Markel Int'l Ins. Co. v. O'Quinn, 566 F. Supp. 2d 1374, 1378 (S.D.
Ga. 2008) (“[T]he Court's decision on the motion to stay . . . .
is procedural, not substantive, and the Court's decision on
the motion to stay is not controlled by state law pursuant
to Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), and its
progeny.”)).) To the extent Florida state law may apply, see
State Farm Fire & Cas. Co. v. LeBlanc, 494 F. App'x 17, 23 (11th
Cir. 2012), it seems clear that whether to stay an underlying suit
pending resolution of an insurer’s declaratory judgment action
falls within a court’s sole and sound discretion. See Canal Ins.
Co. v. Reed, 666 So. 2d 888, 892 (Fla. 1996) (“[W]e must
also stress that [a declaratory judgment as to insurance coverage]
will not automatically result in a stay in the independent
underlying cause of action. . . . because the underlying . . .
action is separate and distinct from the insurance coverage
dispute. The trial judge has the discretion to stay the underlying
action between the parties pending resolution of the appeal or to
permit it to continue concurrently with the appeal process.”).
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the main claim absent [the] insured's express or implied consent.”
Richmond, 231 S.E.2d at 248 (emphasis added).
As such, the
obligations described above are triggered only if the “insured
refuses to consent to a defense under a reservation of rights.”
Id.; LeBlanc,
494
F.
App'x
at
23
(observing
that
Richmond’s
requirements do not apply “if the insured party does not object to
the reservation of rights”).
There is no allegation or indication
that Defendants have objected to Medmarc’s reservation of rights.
Nor are the traditional factors supporting a stay present
here.
There
Medmarc’s
is
no
insurance
compelling
coverage
evidence
action
that
will
resolution
simplify
of
issues
implicated in, or otherwise streamline the resolution of, this
legal malpractice suit.
It is, of course, conceivable that a
declaration of no duty to defend or indemnify on Medmarc’s part
could
affect
Defendants’
strategy
in
this
case.
However,
Defendants have not responded to the Motion to Stay, and Plaintiff
has asserted that it “unequivocally intends” to pursue its claims,
regardless of the outcome of the declaratory judgment action.
(Doc. #21, pp. 10-11.)
What is more, the losing party in Medmarc’s
action may choose to appeal that decision, potentially prolonging
a stay in this case.
Finally, the Court is not convinced that Medmarc, which is
already defending this case and accruing the costs associated
therewith, will be significantly prejudiced without a stay.
If
anything,
to
this
case’s
continuance
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should
motivate
Medmarc
proceed expeditiously with its declaratory judgment action in
Georgia federal court.
See Reed, 666 So. 2d at 892 (“[I]t would
be in the best interests of all the parties for coverage issues to
be resolved as soon as possible.”).
Accordingly, it is hereby
ORDERED:
Nonparty Medmarc Casualty Insurance Company’s Motion to Stay
These Proceedings is DENIED.
DONE and ORDERED at Fort Myers, Florida, this 19th day of
December, 2017.
Copies:
Counsel of Record
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