Crowley Maritime Corporation v. National Union Fire Insurance Company of Pittsburg, PA.
ORDER granting 15 Motion for summary judgment. The Clerk shall enter judgment in favor of Defendant and against Plaintiff, terminate all pending motions and deadlines, and close the file. Signed by Judge Timothy J. Corrigan on 2/8/2018. (JJB)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
Case No. 3:16-cv-1011-J-32JBT
NATIONAL UNION FIRE
INSURANCE COMPANY OF
This insurance coverage dispute is before the Court on Defendant
National Union Fire Insurance Company of Pittsburg, Pennsylvania’s
converted Motion for Summary Judgment, (Doc. 15), to which Plaintiff Crowley
Maritime Corporation responded. (Docs. 20, 40). With the Court’s permission
National Union filed a reply. (Docs. 25, 43). On June 20, 2017, the Court held a
hearing on the motion, the record of which is incorporated herein. (Doc. 49). The
Magistrate Judge then conducted a settlement conference, but the parties
impassed. (Doc. 52). Thus, the case is ready for a decision.
National Union issued an Executive and Organization Liability
Insurance Policy to Crowley in November, 2007. (Doc. 1 ¶ 6; Doc. 1-1 at 2). 1 The
Policy limits coverage to “Claims that are first made . . . during the Policy period
and reported in writing to the insurer pursuant to the terms herein.” (Doc. 1-1
at 2). The Policy has a term of November 1, 2007 through November 1, 2008,
and a six year run-off period to report Claims, referred to as the Discovery
Period, which expired on November 1, 2013. (Doc. 1-1 at 59). The Policy also
contains a relation back provision, which states:
If during the Policy Period or during the Discovery Period (If
applicable) an Organization or an Insured shall become aware of
any circumstances which may reasonably be expected to give rise
to a Claim being made against an Insured and shall give written
notice to the Insurer of the circumstances . . . then a Claim which
is subsequently made against such Insured and reported to the
Insurer alleging, arising out of, based upon or attributable to such
circumstances . . . shall be considered made at the time such notice
of such circumstances was given.
(Doc. 1-1 ¶ 7(c)). The written notice upon which a Claim can relate back is
referred to as a “notice of circumstances.” (Doc. 36 at 18).
The Policy provides that the “criminal . . . investigation of an insured
In some of the pleadings, the page numbers used by the parties do not
correspond with those produced by the Court’s electronic filing system. For
consistency and ease of reference, this Order uses the Court filing’s page
person” triggers coverage once the “insured person is identified in writing” by
an “investigating authority as a person against whom” a criminal proceeding
has commenced. (Doc. 1-1 ¶ 2(b)(3)(i)). The “return of an indictment,
information or similar document” commences a covered criminal investigation.
(Doc 1-1 ¶ 2(b)(2)). The Policy defines an “Insured Person” as any “executive of
an organization; employee of an organization; or outside entity executive.” (Doc.
1-1 ¶ 2(o)). Regarding coverage of defense costs, the Policy provides, “[o]nly
those . . . Defense Costs which have been consented to by the Insurer shall be
recoverable as loss under the terms of this Policy.” (Doc. 1-1 ¶ 8). The Policy
further states that “[t]he Insurer’s consent shall not be unreasonably withheld.”
(Doc. 1-1 ¶ 8).
Department of Justice Search Warrant
On April 17, 2008, the Department of Justice executed a search warrant
at Crowley Liner Services, a wholly owned subsidiary of Crowley. (Doc. 1 ¶ 15).
The search warrant sought to collect various documents from Crowley Liner
and four named Crowley Liner employees. (Doc. 36-2 at 2, 7). Tom Farmer, a
vice president of Crowley Liner, was one of the named employees. (Doc. 36-2 at
2). Farmer was also issued a subpoena on April 17, 2008. (Doc. 36-19 at 4–5).
To support the issuance of the search warrant, FBI Special Agent Byron
Thompson wrote an Affidavit. (Doc. 36-2 at 10). The Affidavit listed Farmer as
a “subject” of the investigation. (Doc. 36-2 at 17). However, the Affidavit was
filed under seal and remained sealed until 2015. (Doc. 1 ¶ 17; Doc. 36-17 at 2).
Dispute Over Coverage and Arbitration
On April 25, 2008, Crowley provided National Union notice of a Claim
under the Policy and sent National Union copies of the search warrant and
Farmer’s subpoena. (Doc. 36-5 at 2). Crowley also informed National Union that
the Affidavit was sealed. (Doc. 1 ¶ 18; Doc. 36-5 at 4). Crowley requested that
National Union advance Farmer’s defense costs. 2 (Doc. 36-5 at 4). On May 27,
2008, National Union responded to Crowley’s notice of the DOJ investigation,
asserting that “based on the documentation currently available” the Policy did
not provide coverage for Farmer because it did not identify Farmer “in writing
as a target of any investigation.” (Doc. 36-6 at 4). However, National Union
accepted Crowley’s communication as “a [N]otice of [C]ircumstances that may
give rise to a Claim being made against an Insured . . . .” (Doc. 36-6 at 4).
Following this response, Crowley continued to assert it had reported a Claim
and National Union maintained its position that the documents Crowley
submitted did not amount to a Claim. (See, e.g., Docs. 36-19, 36-20, 36-21).
Believing it was entitled to coverage, Crowley commenced an arbitration
action on March 7, 2012, to recover Farmer’s defense costs. (Doc. 1 ¶ 21). The
Crowley also requested coverage for itself and three other individuals
mentioned in the search warrant, but coverage of those Claims is not at issue
here. (See Doc. 36-5 at 2).
parties did not obtain the Affidavit during the arbitration, and, although
discussed during the proceeding, its content was not used to determine whether
Crowley had submitted a Claim. (See, e.g., Doc. 36-9 at 5–6, 25–26). In a
decision dated January 29, 2013, the arbitrators determined that from 2008
through 2012, “[t]he materials Crowley submitted to National Union [which did
not include the sealed Affidavit] did not constitute a Claim for Injured Persons
as the term ‘Claim’ is defined in the Policy.” (Doc. 36-7 at 10).
D. Farmer’s Acquittal and Crowley’s Lawsuit
During this time, the DOJ investigation continued, and in February, 2013
the government offered Farmer a plea deal, which identified him in writing as
a target of a government investigation. (Doc. 36-11 at 2–3). Consequently,
beginning in February, 2013, National Union agreed to cover Farmer’s
subsequent defense costs because the plea deal materialized before the end of
the Discovery Period. (Doc. 36-11 at 3).
Farmer did not accept the plea deal, and a jury acquitted him on May 8,
2015. (Doc. 36-32 at 2). Following Farmer’s acquittal, Crowley obtained a copy
of the unsealed Affidavit. (Doc. 36-32 at 2). Crowley then asked National Union
to cover Farmer’s defense costs from the original notice of a potential claim in
2008 until February, 2013 because in 2008 the Affidavit identified Farmer as
the subject of an investigation. (Doc. 36-32 at 2).
National Union continues to deny coverage and, thus, has not advanced
the defense costs Farmer accrued from April, 2008 to February, 2013, which are
alleged to be in excess of $2.5 million. (Doc. 36-33 at 2–3). Crowley filed this
breach of contract action to recover Farmer’s defense costs. (Doc. 1). National
Union moved to dismiss the complaint on the grounds that the action was
precluded by the prior arbitration and barred by the statute of limitations. (Doc.
15). The Court converted the motion to dismiss into one for summary judgment.
(Doc. 28). The parties conducted discovery and filed supplemental briefing. The
Court held a hearing on the motion. (Doc. 49).
National Union seeks summary judgment on three grounds. First,
National Union claims the arbitration award determined that Crowley had no
duty to pay Farmer’s defense costs from 2008 through 2012 and thus precludes
this action. 3 (Doc. 16 at 7–9). Second, National Union asserts that this breach
of contract action is barred by the five-year statute of limitations because it
alleges a breach occurring in 2008, but was not filed until 2016. (Doc. 16 at 10).
Third, National Union argues that the claim is untimely because the Affidavit
was unsealed and presented to it in 2015, after the Discovery Period. 4 (Doc. 25
Although the parties—and the wealth of case law—couch the issue as
one of res judicata, the Supreme Court has explained that res judicata often has
different and conflicting definitions. Baker v. Gen. Motors Corp., 522 U.S. 222,
233 n.5 (1998). Thus, this Court will use the more precise terminology adopted
by the Supreme Court: claim preclusion. Id.
Crowley claims that National Union’s argument based on the Discovery
Period should be rejected because National Union did not raise it until its reply.
(Doc. 36 at 17–18). However, the Court converted National Union’s motion to
at 6–7; Doc. 37 at 12–16).
Crowley contends that the arbitration panel only determined whether
Crowley had submitted a Claim to National Union at that time, and because
the Affidavit was sealed during arbitration, whether the Affidavit constitutes a
Claim could not have been adjudicated in the arbitration. (Doc. 20 at 2–3).
Further, Crowley argues that the 2015 demand for reimbursement of Farmer’s
defense costs relates back to its 2008 notice of circumstances, making it timely
under the Discovery Period. (Doc. 36 at 18; see Doc. 1-1 ¶ 7(c)). However,
Crowley also argues that the statute of limitations did not begin to run until
2015, when it presented the Affidavit to National Union. (Doc. 20 at 3).
The resolution of this case depends on when Crowley reported a Claim for
payment of Farmer’s defense costs based on the Affidavit. The answer is a catch22 for Crowley: if it was in 2008, then Crowley is precluded from relitigating
the issue; if it was in 2015, Crowley’s demand is barred by the plain text of the
Policy’s Discovery Period. As detailed below, the Court finds that Crowley’s
dismiss into a motion for summary judgment and allowed the parties to
supplement their briefing. (Doc. 28 at 1). National Union appropriately raised
the Discovery Period timeliness issue in its supplement. (Doc. 25 at 6–7). Thus,
National Union did not waive it. Further, both parties devoted additional
briefing to the issue, (Doc. 36 at 17–19; Doc. 37 at 1, 9, 12–16; Doc. 40 at 5; Doc.
43 at 5–6), and both parties addressed this issue during the hearing. (Doc. 49
at 36–46). Therefore, neither party can claim to be surprised or prejudiced by
the Court considering this issue.
demand for payment based on the Affidavit occurred in 2015, and, thus, was
untimely under the Policy.
Crowley’s Claim based on the Affidavit is not precluded by
the prior arbitration.
The Constitution’s Full Faith and Credit clause gives nationwide force to
valid state court judgments. Baker, 522 U.S. at 233. To determine the effect of
a state judgment in federal court, the rendering state’s preclusion rules apply.
Lozman v. City of Riviera Beach, 713 F.3d 1066, 1074 (11th Cir. 2013). The
arbitration award was rendered in Florida, (Doc. 36-7 at 2), and Florida equates
a valid binding arbitration award to a court judgment. See, e.g., Dadeland
Depot, Inc. v. St. Paul Fire & Marine Ins. Co., 945 So. 2d 1216, 1235 (Fla. 2006)
(implying that a prior arbitration containing the same four identities will
preclude the subsequent court action); Bank of Am., N.A. v. Beverly, 183 So. 3d
1099, 1102 (Fla. 4th DCA 2015) (holding that “res judicata and collateral
estoppel” apply to a prior arbitration if the two actions have the required
identities); Bates v. Betty & Ross Co., 46 So. 3d 615, 617 (Fla. 3d DCA 2010)
(“[A] determination made during an arbitration proceeding can provide an
appropriate foundation for the application of collateral estoppel.”) (quoting
Dadeland, 945 So. 2d at 1235); ICC Chem. Corp. v. Freeman, 640 So. 2d 92, 93
(Fla. 3d DCA 1994) (upholding the dismissal of a case because it was precluded
by a prior arbitration).
In Florida, claim preclusion bars a subsequent action for “matters
actually raised and determined in the original proceeding and also to matters
which could have properly been raised and determined.” Id. For claim
preclusion to apply the two actions must share four identities: “(1) identity of
the thing sued for; (2) identity of the cause of action; (3) identity of persons and
parties; and (4) identity of the quality [or capacity] of the persons for or against
whom the claim is made.” Lozman, 713 F.3d at 1074 (citations and internal
quotation marks omitted) (applying Florida law). Claim preclusion requires
that “the original claim was disposed on the merits.” Id. The party asserting
claim preclusion has the burden of proving that the four identities exist and
that the matter was formally adjudicated on the merits. State St. Bank & Tr.
Co. v. Badra, 765 So. 2d 251, 253 (Fla. 4th DCA 2000).
Crowley and National Union acknowledge that three of the required
identities link the arbitration and current action: (1) the identity of the thing
sued for—Farmer’s defense costs from 2008 through 2012; (2) the identity of the
persons and parties—Crowley and National Union; and (3) the identity of the
quality of the persons for or against whom the claim is made—National Union
is the adverse party in both actions. (Doc. 25 at 3). Thus, National Union must
show that no genuine issue of material fact exists concerning the identity of the
cause of action. See Lozman, 713 F.3d at 1077; Badra, 765 So. 2d at 253.
To determine whether two proceedings share an identity of the cause of
action, the Court “must consider [whether] the relationship between the facts
and issues asserted  constitutes a single transaction.” AMEC Civil, LLC v. Fla.
Dep’t of Transp., 41 So. 3d 235, 240 (Fla. 1st DCA 2010) (citing Gordon v.
Gordon, 36 So. 2d 774 (Fla. 1948)). Further, Florida does not have an expansive
definition of “cause of action;” instead, “allegations of separate, wrongful acts
give rise to separate causes of action, even if the wrongful acts occurred within
the context of a larger set of facts or relationship.” Lozman, 713 F.3d at 1077.
Florida also uses a transaction test, which precludes actually litigated
causes of action and every other matter that might have been litigated within
that same transaction or series of transactions. See id. at 1078. However,
“[d]espite the broad ‘every other matter’ language, the transaction test is
‘narrow’ and extends to essentially connected claims that a defendant in a
former action failed to raise as a defense.” Id. at 1078 (quotations omitted).
Subsequent claims are only precluded if the facts and conditions at the
time of the first judgment are the same in relation to the legal rights and issues
of the second judgment. Badra, 765 So. 2d at 253 (citing Hialeah Race Course,
Inc. v. Gulfstream Park Racing Ass’n, Inc., 245 So. 2d 625, 628 (Fla. 1971)).
“When other facts or conditions intervene before the second suit, furnishing a
new basis for the claims and defenses of the respective parties, the issues are
no longer the same and the former judgment cannot be pleaded in bar of the
second action.” Id. at 254. In Badra, the trial court determined that State Street
failed to provide proper notice of acceleration of payment for a purchase money
mortgage. Id. at 253. Six days after trial, State Street sent a corrected notice of
acceleration, and eleven months later filed an identical complaint against
Badra. Id. In holding that the two suits did not share the identity of the cause
of action, the Fourth District Court of Appeal stated: “Since the first and second
actions involved different notices of acceleration and such letters were essential
to the maintenance of each action, there existed essential facts between the two
cases which differed.” Id. at 254.
Causes of action based on different evidence, especially facts occurring
after the initial suit, are not precluded by prior adjudications. Lozman, 713 F.3d
at 1076. In Lozman, the City of Riveria Beach filed an eviction action against
Lozman. Id. at 1070. Lozman’s second amended counterclaim alleged various
violations of his constitutional rights by the City. Id. The eviction claim was
severed from the counterclaim, which was subsequently dismissed without
prejudice based on an agreement between the parties. Id. Lozman then filed an
action in federal court. Id. at 1072. The Eleventh Circuit determined the federal
claims were not precluded by the state eviction action because the conduct
alleged in the two actions were distinct. Id. at 1076. Since the federal claim
relied on conduct that had not yet occurred when the state action was filed, the
causes of action were not identical. Id.
National Union contends that this suit is the same cause of action as the
arbitration because it arises out of the same transaction or series of
transactions. (Doc. 16 at 8); see Trustmark Ins. Co. v. ESLU, Inc., 299 F.3d 1265
(11th Cir. 2002); AMEC, 41 So. 3d at 243. In Trustmark, the plaintiff filed a
breach of contract claim in state court. Trustmark, 299 F.3d at 1269–71. Later,
the plaintiff learned of additional breaches and attempted to amend its state
court complaint to include these additional claims. Id. The court denied the
motion to amend, and a jury returned a verdict in favor of the defendant. Id. at
1266–67. The plaintiff then filed a second suit in federal court asserting the
additional claims it previously attempted to include in the state court suit. Id.
at 1267. In affirming dismissal, the Eleventh Circuit noted, “[a] series of
breaches of the same contract, all occurring before filing suit, should be brought
in that suit.” Id. at 1270. 5
The precedential value of Trustmark for this case is unclear. Although
the underlying causes of action in Trustmark are likely Florida law claims,
neither the Eleventh Circuit, nor the district court, cited any Florida case law
when discussing claim preclusion. See Trustmark, 299 F.3d at 1269–71;
Trustmark Ins. Co. v. ESLU, Inc., 153 F. Supp. 2d 1322, 1328–32 (M.D. Fla.
2001). Both cases cite prior Eleventh Circuit opinions discussing claim and
issue preclusion under Eleventh Circuit precedent, not Florida precedent. See,
e.g., In re Piper Aircraft Corp., 244 F.3d 1289, 1296 (11th Cir. 2001). However,
the Supreme Court’s decision in Semtek International, Inc. v. Lockheed Martin
Corp., 531 U.S. 497 (2001) mandates that federal courts sitting in diversity,
such as this case, use the preclusion rules of the state in which they are located.
Although “[a] comparison between Florida rules and federal rules governing
claim and issue preclusion reveals that the relevant principles are largely
identical,” SFM Holdings, Ltd. v. Banc of Am. Sec., LLC, 764 F.3d 1327, 1337
(11th Cir. 2014), it appears that Trustmark was not decided under Florida
preclusion law. See Trustmark, 299 F.3d at 1269–71 (citing In re Piper, 244
Similarly, the First District Court of Appeal stated that when a cause of
action is breach of an indivisible contract, all claims of breach for that contract
should be brought in a single action. AMEC, 41 So. 3d at 243. In AMEC, the
parties’ contract established a dispute review board (“DRB”), but the DRB’s
decisions were not binding. Id. at 236. After submitting claims to the DRB,
AMEC filed suit in state court alleging breach of contract. Id. 237. While that
case was pending, AMEC filed an additional sixty claims with the DRB. Id. A
jury returned a verdict in AMEC’s favor, but the remaining DRB claims had
stalled. Id. at 238. When AMEC filed a second suit alleging the remaining
breaches of contract, the First District Court of Appeal barred the action. The
court held “[o]nly AMEC’s strategic choice prevented the joinder of all
claims. . . . [T]he numerous alleged breaches of the indivisible contract could
with propriety have been litigated and determined in a single action.” Id. at 243
(citations and quotations omitted).
National Union argues that the Affidavit arose out of the same
transaction as the issue arbitrated: “Crowley’s demand for coverage for Mr.
Farmer’s attorney’s fees and National Union’s denial of that demand.” (Doc. 37
at 7); see Trustmark, 299 F.3d at 1269–71. National Union’s framing of the
arbitration issue is flawed—it cannot be as broad as the demand and denial of
F.3d at 1296). Thus, its precedential value here is questionable.
Farmer’s attorneys’ fees. Shortly after the arbitration panel determined that
Crowley had not made a Claim under the Policy, National Union accepted
Farmer’s plea deal as sufficient to trigger coverage. (Doc. 37 at 4). If Farmer’s
plea deal was not precluded by the arbitration because it was a subsequent
trigger of coverage, then the Affidavit, unsealed and submitted years after the
arbitration, is also a separate Claim for coverage that is not precluded. See
Lozman, 713 F.3d at 1077; Badra, 765 So. 2d at 253; (Doc. 37 at 4).
Additionally, framing the arbitration issue as “recovery of the legal fees
incurred by  Farmer from 2008 through 2013” is also incorrect. (See Doc. 37 at
7). The arbitration panel only determined whether the documentation that
Crowley had submitted to National Union at that point in time constituted a
Claim under the Policy. (Doc. 36-7 at 6). 6 Crowley did not submit the Affidavit
to National Union because it was still sealed. (Doc. 36-7 at 6).
Crowley’s suit is not precluded by the 2012 arbitration because the
arbitration award only determined that at that point in time, Crowley had not
made a “Claim,” as that term is defined by the Policy. See Lozman, 713 F.3d at
1074; (Doc. 36-7 at 6, 10). Similar to Badra, the documents submitted to the
The arbitration panel examined “the search warrant, the Farmer
subpoena, the Crowley subpoena, the Term Sheet, the [Crowley] Plea
Agreement, the [Crowley] Plea Agreement Supplement, and the Investigation
related thereto.” (Doc. 36-7 at 6).
arbitration panel did not include the Affidavit, 7 and because the Affidavit is
material to determining whether Crowley has made a Claim under the Policy,
the essential facts between the arbitration and this action differ. See Badra,
765 So. 2d at 253; (Doc. 36-7 at 6, 10).
Analyzing the facts of the two actions in relation to the issues and rights
of the parties, see Badra, 765 So. 2d at 253, the unsealing of the Affidavit made
Crowley’s 2015 demand a distinct “Claim.” See Lozman, 713 F.3d at 1077. As
the Eleventh Circuit explained in Lozman, a subsequent suit based on facts and
evidence not in existence during the prior suit is not precluded by the prior suit.
Id. at 1076. Therefore, the two actions would be separate breach of contract
claims alleging separate wrongful acts by National Union: (1) not paying
Farmer’s defense costs based on what Crowley had submitted to National Union
at the time of the arbitration; and (2) not paying Farmer’s defense costs based
on Crowley’s 2015 submission of the Affidavit. See id. (holding that Florida’s
definition of cause of action is narrow and that “separate, wrongful acts give
The Arbitration Award states that the content of the Affidavit was
inferable. (Doc. 36-7 at 3). However, the award concludes that “[t]he materials
Crowley submitted to National Union did not constitute a Claim for Insured
Persons as the term “Claim” is defined in the Policy.” (Doc. 36-7 at 10). As
Crowley was unable to submit the sealed Affidavit to National Union, it could
not have been considered by the arbitration panel. Further, National Union
itself argued to the panel that the Affidavit should not be considered as part of
the evidence in determining whether Crowley had made a claim as of that date.
(Doc. 36 at 10).
rise to separate causes of action, even if the wrongful acts occurred within the
context of a larger set of facts or relationship.”).
Although Trustmark and AMEC appear at first blush to dictate
preclusion of Crowley’s suit, those cases are distinguishable. Trustmark, 299
F.3d at 1270; AMEC, 41 So. 3d at 243. Both based their decisions on the theory
that known breaches of the same contract should be litigated together. See
Trustmark, 299 F.3d at 1271; AMEC, 41 So. 3d at 243. However, here neither
party knew the content of the Affidavit. 8 See Trustmark, 299 F.3d at 1272
(indicating that situations “in which the plaintiff had no means of knowing that
a party breached the contract” would not be barred); (Doc. 20 at 5; Doc. 37 at 7).
Contrary to National Union’s allegations that the Affidavit is “just the later
discovery of an old fact[,]” (Doc. 37 at 7) (emphasis in original), the Affidavit is
more like newly discovered evidence because neither party had a reasonable
ability to discover its content. See Hialeah Race Course, 245 So. 2d at 628; (Doc.
20 at 5; Doc. 37 at 7). National Union alleges that unattainable evidence known
National Union’s allegation that Crowley is to blame because it failed
to file a motion to unseal the Affidavit earlier is not persuasive. (Doc. 37 at 7
n.2). Given the factual background of the underlying case, and the Court’s
familiarity with federal criminal proceedings, it is unlikely that a court would
have been willing to jeopardize the ongoing investigation by unsealing the
Affidavit just to help Crowley get insurance coverage. See generally, Bennett v.
United States, No. 12–61499–CIV, 2013 WL 3821625, at *2–*8 (S.D. Fla. July
23, 2013) (explaining that the government’s compelling interest in preventing
prejudice to an ongoing investigation can outweigh the constitutional rights to
access court documents).
to exist should be treated the same as attainable evidence that a party fails to
discover. (Doc. 37 at 7). However, this would penalize Crowley for circumstances
outside of its control.
Additionally, the Policy is not an indivisible contract like the one analyzed
in AMEC. See AMEC, 41 So. 3d at 240 (explaining an indivisible contract); see
also 15 Williston on Contracts § 45:16 (4th ed.). The Policy contemplated
insurance for different insureds and multiple potential covered liabilities. (See
Doc. 1-1 at 8–10). As Williston notes, when items are valued separately and
distinctly in an insurance policy, the contract is divisible as to each different
type, even if the premium is paid in gross. Williston § 45:16. An insurance
contract that insures multiple parties for multiple different occurrences cannot
be treated like the indivisible policy in AMEC. See AMEC, 41 So. 3d at 240;
Williston § 45:16. Such treatment would require an insured to “save up” all of
his breach claims until the end of the reporting period, otherwise the insured
would risk losing the ability to sue for subsequent breaches.
Therefore, Crowley’s 2015 reporting of a Claim for Farmer’s defense costs
based on the Affidavit is not precluded by the prior arbitration because the
report was based on new factual circumstances. See Badra, 765 So. 2d at 253.
However, precisely the reason that the Claim based on the Affidavit is not
precluded by the arbitration—it was not reported until 2015 based on the new
circumstances of the unsealing of the Affidavit—renders the Claim and its
reporting untimely under the Policy. It is to this issue the Court now turns.
Crowley’s claim is untimely.
Although National Union and Crowley each argue whether the statute of
limitations bars this claim, the Court need not address those arguments
because under the plain language of the Policy, Crowley’s reporting of the Claim
is untimely. (See Doc. 1-1 at 59). Endorsement #14 of the Policy states: “The
Named Entity shall have the right to a period of six  years following the
Effective Date (herein referred to as the Discovery Period) in which to give
written notice to the insurer of any Claim . . . .” (Doc. 1-1 at 59). The Effective
Date of the Policy is November 1, 2007 and the Discovery Period ended
November 1, 2013. (Doc. 36 at 19).
A claims-made-and-reported policy is a policy that provides coverage for
the specific acts and omissions outlined in the policy that are reported during
the policy term. Jennings Constr. Servs. Corp. v. ACE Am. Ins. Co., 783 F. Supp.
2d 1209, 1212–13 (M.D. Fla. 2011); Gulf Ins. Co. v. Dolan, Fertig & Curtis, 433
So. 2d 512, 514 (Fla. 1983). Contrary to an occurrence policy, where “failure to
timely report a claim . . . may not preclude coverage unless prejudice is
established[,]” under a claims-made-and-reported policy, “if the claim is not
reported during the policy period, no liability attaches.” Jennings, 783 F. Supp.
2d at 1212–13 (citations and quotations omitted). The first page of the Policy
states that coverage is limited to those claims that occur and are reported
“pursuant to the terms herein.” (Doc. 1-1 at 2) (emphasis added). Because
Endorsement #14 provides a Discovery Period for when all Claims must be
made, the Policy is a claims-made-and-reported policy. (Doc. 1-1 at 2, 59).
Crowley argues that even though it was unable to present the content of
the Affidavit to National Union until July 22, 2015, the Affidavit has a “Claim”
date of April 25, 2008— the date Crowley first provided notice of a claim. (Doc.
36 at 18). Crowley relies on section 7(c) of the Policy, which allows a subsequent
Claim to relate back to an earlier filed notice of circumstances. (Doc. 1-1 at 16).
Thus, Crowley alleges that the July 22, 2015 disclosure of the content of the
Affidavit relates back to the April 25, 2008 Notice of Circumstances. (Doc. 36 at
However, Crowley cannot contend that the Affidavit was included in the
2008 Notice of Circumstances, making it timely under the Policy, but was not
part of the 2008 materials for preclusion purposes. Compare (Doc. 36 at 10)
(Crowley stating that the Affidavit was not included as part of the claim
arbitrated because it was under seal until 2015) with (Doc. 36 at 18) (Crowley
stating that the DOJ investigation was reported to National Union in 2008 and
the Affidavit was part of that investigation). Crowley reported the Claim based
on the Affidavit in 2015—after the Discovery Period ended. If the reporting of
the Claim based on the Affidavit were to relate back to the 2008 Notice of
Circumstances, as Crowley argues, then it would be precluded by the
The arbitrators determined that everything Crowley had
submitted to National Union through 2012 did not amount to a Claim. (See Doc.
36-7 at 6). If the Affidavit were to relate back to 2008 (even though its content
was unknown), then it would not be a change in circumstances or new evidence
from that considered by the arbitrators—and the identity of the cause of action
would be the same. 10 See Lozman, 713 F.3d at 1076. Conversely, once the
Affidavit was unsealed in 2015, it became a change in circumstances because
its content was previously unknown, and the Claim based upon its content was
not reported to National Union until that time. See Jennings, 783 F. Supp. 2d
at 1212–13; Badra, 765 So. 2d at 253; Lozman, 713 F.3d at 1076.
Such an outcome is not unfair. The Policy has a limited period in which
Claims can be reported, and Claims reported outside of that period—regardless
National Union continually argues that the Policy does not allow
relation back to a “Claim” that predates a notice of circumstances. (Doc. 37 at
15). It contends that Crowley provided a notice of circumstances on April 25,
2008, but that the Affidavit was a “Claim” on April 16, 2008. (Doc. 37 at 15).
This argument is unavailing because National Union cannot have the Affidavit
be a “Claim” in 2008 for preclusion and relation back purposes, but a “Claim”
in 2015 as it relates to the Discovery Period.
Crowley concedes as much by stating that under the relation back
provision, the claim related to the Affidavit would be “considered made when
the notice of circumstances was given (i.e. April 25, 2008) because it involves
the same or related Wrongful Acts as those involved in the April 2008 notice to
[National Union].” (Doc. 36 at 19) (quotations omitted). If the Affidavit is
considered a Claim reported in 2008 and involves the same wrongful acts as
those arbitrated, then it would be precluded. But, it is not precluded because
the unsealing of the Affidavit was not reported until 2015.
of the circumstances—are not covered. See Jennings, 783 F. Supp. 2d at 1212–
13; (Doc. 1-1 at 2, 59). The parties are sophisticated businesses that agreed to
the Policy. See Gulf Ins., 433 So. 2d at 514–15 (explaining that claims-madeand-reported policies are not against public policy and that the parties can
negotiate the reporting period in relation to the premium).
Crowley asserts that National Union’s argument prevents recovery under
any circumstance because its demand would be untimely under either the
statute of limitations if made in 2008, or the Discovery Period if made in 2015.
(Doc. 40 at 4–5; Doc. 49 at 39–46). This is only true here because Crowley made
the strategic decision to arbitrate without knowing the content of the Affidavit.
Crowley’s 2008 Notice of Circumstances was not a demand for payment until it
insisted that the materials submitted constituted a “Claim,” and elected to
arbitrate. Had Crowley won the arbitration it would not have filed this suit. But
it lost. Had Crowley waited until it had actual evidence identifying Farmer as
the subject of an investigation—such as when Farmer received his plea
agreement in February, 2013 (before the Discovery Period expired)—its Claim
likely would have been covered for the entire period. 11
Had Crowley forgone arbitration, the unsealing of the Affidavit in 2015
could relate back to the 2008 Notice of Circumstances. By only granting
prospective defense costs after receiving Farmer’s plea agreement, National
Union would be partially breaching the contract. This breach would have
occurred in 2013—the date of Farmer’s plea agreement—and, thus, the fiveyear statute of limitations would not bar the current suit. The 2015 unsealing
Although the Affidavit existed in 2008, its content was unknown and
unattainable until 2015, and it was at that time that Crowley demanded
coverage based upon the Affidavit. But at that time, the Discovery Period had
expired so Crowley’s reporting of the Claim was untimely. Alternatively, if,
contrary to the Court’s decision, the Claim based on the Affidavit is deemed
reported in 2008, Crowley is precluded from bringing this action because of the
intervening arbitration decision. Either way, Crowley cannot recover.
Accordingly, it is hereby
Defendant National Union’s converted Motion for Summary
Judgment (Doc. 15) is GRANTED.
The Clerk shall enter judgment in favor of Defendant, National
Union Fire Insurance Company of Pittsburgh, Pa. and against Plaintiff Crowley
Maritime Corporation, terminate all pending motions and deadlines, and close
of the Affidavit would relate back to the 2008 Notice of Circumstances and be
timely under the Discovery Period. But this is not what Crowley chose to do.
DONE AND ORDERED in Jacksonville, Florida this 8th day of
Counsel of record
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