Bankers Insurance Company v. American Team Managers, Inc.
Filing
58
ORDER: Plaintiff's Dispositive Motion for Partial Summary Judgment 45 is granted in part and denied in part. Defendant's Dispositive Motion for Summary Judgment 46 is denied. Signed by Judge Virginia M. Hernandez Covington on 6/13/2012. (MEB)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
BANKERS INSURANCE COMPANY,
Plaintiff,
Case No. 8:10-cv-2650-T-33EAJ
v.
AMERICAN TEAM MANAGERS, INC.,
Defendant.
_______________________________/
ORDER
This matter comes before the Court pursuant to Plaintiff
Bankers Insurance Company’s Dispositive Motion for Partial
Summary Judgment (Doc. # 45), filed on February 10, 2012.
Defendant American Team Managers, Inc. (ATM) filed a response
in opposition to the motion on February 27, 2012 (Doc. # 48),
to which Plaintiff filed a reply on March 22, 2012 (Doc. #
51). Also before the Court is Defendant’s Dispositive Motion
for Summary Judgment (Doc. # 46), filed on February 10, 2012.
Plaintiff filed a response in opposition to the motion on
February 27, 2012 (Doc. # 47), to which Defendant filed a
reply on March 22, 2012 (Doc. # 52).
After due consideration and for the reasons stated in
this Order, Plaintiff’s motion for summary judgment is granted
in part and denied in part and Defendant’s motion for summary
judgment is denied.
I.
Factual Background
The following statement of facts is taken from the
parties’ Joint Pretrial Statement (Doc. # 56).
The relationship between Bankers, an insurance company,
and ATM, its former general managing agent, began on or around
September 20, 1998, when Bankers entered into a General Agency
Agreement with ATM, pursuant to which ATM was required to act
as Bankers’ General Agent to produce and administer insurance
policies underwritten by Bankers. The General Agency Agreement
authorized
ATM
to
write
policies
through
duly
licensed
insurance brokers, agents, producers or other such entities.
As
General
Agent,
ATM
had
authority
to
bind
coverage.
Pursuant to the Agreement and on behalf of Bankers, ATM issued
general commercial liability coverage, with a total policy
limit of $1 million, to Ollin International for the policy
period of June 19, 2002, to June 19, 2003.
Ollin applied for
this coverage through its broker, Warren Doctor and/or Doctor
Insurance Agency.
A July 15, 2002, brokerage agreement
defined the terms and scope of ATM’s relationship with Doctor.
Pursuant to that agreement, Doctor submitted Ollin’s insurance
application to ATM and ATM then procured and issued the
Bankers policy to Ollin.
On September 30, 2002, ATM terminated the brokerage
-2-
agreement with Doctor.
The termination letter left open the
opportunity for Doctor to seek renewal policies for existing
customers, but advised Doctor that he would not be entitled to
commissions.
terminated.
ATM did not inform Ollin that Doctor had been
On April 23, 2003, ATM wrote to Doctor offering
to renew Ollin’s Bankers policy upon receipt of a premium
payment on or before June 16, 2003.
Despite the provision in
the termination letter, ATM’s offer to Doctor to renew Ollin’s
policy included an offer to Doctor to receive a commission for
the renewal.
On June 19, 2003, Ollin’s policy expired.
On July 7,
2003, ATM wrote to Doctor confirming the lack of response to
ATM’s April 23, 2003, letter. ATM’s letter stated that no new
policy had been bound and offered to rewrite the risk as new
business upon the submission of a new application and a “no
loss” letter from Ollin. No new application or no loss letter
were ever submitted.
Also
on July
7,
2003,
by
facsimile
to
ATM,
Doctor
requested renewal of Ollin’s Bankers policy and advised that
the premium payment would be placed in the mail.
On July 8,
2003, Doctor mailed Ollin’s premium payment to ATM.
On July
28, 2003, ATM wrote to Doctor advising that it would not issue
a renewal of the Bankers policy and that no coverage had been
-3-
bound and returning the policy premium.
ATM did not directly
inform Ollin that its Bankers policy would not be renewed or
rewritten.
Notwithstanding this information and unbeknownst at the
time
to ATM
Liability
or Bankers,
Insurance
to
Doctor
Ollin
issued
stating
a
that
Certificate
coverage
of
from
Bankers was in place for the period of June 20, 2003, to June
20, 2004.
Also unknown at the time to ATM and Bankers, Doctor
retained the premium payment made by Ollin.
On October 28, 2003, Kenneth Bloor, a granite worker,
sustained serious injuries during the unloading of granite
slabs sold by Ollin to Bloor’s employer.
Bloor subsequently
filed suit against Ollin in Arizona state court, alleging
negligence in the loading of the granite slabs (the “Arizona
Case”). Ollin tendered defense of the Arizona Case to Bankers
in 2004.
Bankers declined coverage on multiple occasions and
refused to defend Ollin, without making a reservation of its
rights.
In exchange for Bloor’s agreement not to collect
against Ollin for any damages, Ollin agreed to submit the
matter to binding arbitration and to assign Ollin’s coverage
and bad faith rights against Bankers to Bloor.
The Arizona
Case ultimately resulted in a $9.5 million judgment against
Ollin and in favor of Bloor.
-4-
In 2006, in his capacity as assignee of Ollin’s rights,
Bloor sued Bankers in California state court alleging, among
other things, breach of contract and bad faith (the “Bad Faith
Case”). Bloor also named ATM and Doctor as defendants in the
Bad Faith Case, alleging various claims against all parties,
including negligence and fraud. ATM was subsequently dismissed
from the case after filing a motion to dismiss. Doctor was
voluntarily dismissed by Bloor.
In the Bad Faith Case, Bloor claimed that a renewal
policy had been created because Ollin paid Doctor a premium
for the renewal of the Bankers policy and at all material
times believed the policy had indeed been renewed.
Bloor
claimed that Doctor’s action in issuing the Certificate of
Liability Insurance and retaining the premium payment bound
Bankers because Doctor was acting as Bankers’ agent.
In the
alternative, Bloor alleged that Ollin never directly received
statutorily-required
notification
of
non-renewal
of
the
Bankers policy, thereby continuing the Bankers policy beyond
its original expiration by operation of California law and
affording coverage on the date of Bloor’s accident.
On
July
14,
2010,
citing,
among
other
things,
its
probable liability to Bloor due to certain adverse rulings
from the court and evidence developed in the Bad Faith Case,
-5-
Bankers
entered
into
a
settlement
agreement
with
Bloor,
pursuant to which Bankers agreed to pay Bloor $1.8 million. On
October 15, 2010, Bankers filed suit against ATM in Florida
state court. (Doc. # 1).
ATM removed the case to this Court
on November 23, 2010, and thereafter sought dismissal of
Bankers’ breach of contract and negligence counts. (Id.; Doc.
# 6).
Bankers filed an amended complaint on January 4, 2011,
eliminating the breach of contract and negligence counts and
alleging one count for contractual indemnification in the
amount of $1.8 million plus attorneys’ fees and costs for its
defense and settlement of the Bad Faith Case.
The parties’ cross motions for summary judgment are now
before the Court.
II.
Legal Standard
Summary
judgment
is
appropriate
“if
the
pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving
party
is
entitled
Fed.R.Civ.P. 56(c).
to
judgment
as
a
matter
of
law.”
A factual dispute alone is not enough to
defeat a properly pled motion for summary judgment; only the
existence of a genuine issue of material fact will preclude a
grant of summary judgment.
Anderson v. Liberty Lobby, Inc.,
-6-
477 U.S. 242, 247-48 (1986).
An issue is genuine if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.
Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742
(11th Cir. 1996)(citing Hairston v. Gainesville Sun Publ’g
Co., 9 F.3d 913, 918 (11th Cir. 1993)).
A fact is material if
it may affect the outcome of the suit under the governing law.
Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.
1997).
The moving party bears the initial burden of showing
the court, by reference to materials on file, that there are
no genuine issues of material fact that should be decided at
trial. Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256,
1260 (11th Cir. 2004)(citing Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986)).
“When a moving party has discharged
its burden, the non-moving party must then ‘go beyond the
pleadings,’ and by its own affidavits, or by ‘depositions,
answers to interrogatories, and admissions on file,’ designate
specific facts showing that there is a genuine issue for
trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590, 59394 (11th Cir. 1995)(citing Celotex, 477 U.S. at 324).
If there is a conflict between the parties’ allegations
or evidence, the non-moving party’s evidence is presumed to be
true and all reasonable inferences must be drawn in the non-7-
moving party’s favor.
Shotz v. City of Plantation, Fla., 344
F.3d 1161, 1164 (11th Cir. 2003). If a reasonable fact finder
evaluating the evidence could draw more than one inference
from the facts, and if that inference introduces a genuine
issue of material fact, the court should not grant summary
judgment.
Samples ex rel. Samples v. City of Atlanta, 846
F.2d 1328, 1330 (11th Cir. 1988)(citing Augusta Iron & Steel
Works, Inc. v. Employers Ins. of Wausau, 835 F.2d 855, 856
(11th Cir. 1988)).
consists
of
conclusional
However, if the non-movant’s response
nothing
“more
allegations,”
proper, but required.
than
summary
a
repetition
judgment
is
of
not
his
only
Morris v. Ross, 663 F.2d 1032, 1034
(11th Cir. 1981), cert. denied, 456 U.S. 1010 (1982).
III. Analysis
A.
Contractual Indemnity
In
this
case,
Bankers
is
seeking
contractual
indemnification from ATM for the $1.8 million settlement it
paid Bloor in the Bad Faith Case, pursuant to the following
provision of the parties’ General Agency Agreement:
The General Agent [ATM] agrees to indemnify and
hold the Company [Bankers], its subsidiaries,
successors
and
assigns,
and
shareholders,
directors, officers, agents and employees of any of
them (collectively, the “Company Indemnitees”),
harmless against and in respect of any and all
claim (which shall not include covered claims made
-8-
under any Policy properly issued in accordance with
this Agreement), demands, actions, proceedings,
liability, losses, damages, judgments, costs and
expenses, including, without limitation, attorneys’
fees, disbursements and court costs, made or
instituted against or incurred by the Company
Indemnities, or any of them, and which arise,
directly or indirectly out of any act or omission
of the General Agent or any Agent, or their
employees or representatives, in connection with
any obligation of the General Agent arising under
or relating to this Agreement, including any act or
omission of the General Agent regarding the
termination of any Agent pursuant to applicable
laws. The foregoing indemnification shall extend
to any loss incurred by the Company Indemnitees in
excess of policy limits as well as any extracontractual obligations, including but not limited
to
punitive,
exemplary,
compensatory
or
consequential damages suffered by the Company
Indemnitees arising out of, or resulting from,
alleged or bad faith or negligence of the General
Agent or any Agent, or their employees or
representatives, in discharging their obligations
hereunder or to the insured.
(Doc. # 14-1 at 8).
ATM
argues
that
Bankers
is
not
entitled
to
indemnification under this provision because the provision
does
not
contain
sufficient
language
to
require
ATM
to
indemnify Bankers for liability arising out of Bankers’ own
actions.
Faith
ATM argues that since the settlement in the Bad
Case
included
settlement
of
Bloor’s
claim
against
Bankers (and only Bankers) for Bankers’ bad faith claims
handling practices, Bankers is not entitled to indemnity for
any portion of the settlement.
-9-
Under Florida law, “contracts of indemnification which
attempt to indemnify a party against its own wrongful acts are
viewed with disfavor.”
Charles Poe Masonry, Inc. v. Spring
Lock Scaffolding Rental Equip. Co., 374 So. 2d 487, 489 (Fla.
1979).
if
Accordingly, “[s]uch contracts will be enforced only
they
express
indemnitee’s
terms.”
own
an
intent
wrongful
to
acts
indemnify
in
clear
against
and
the
unequivocal
Id.; see also Univ. Plaza Shopping Ctr. v. Stewart,
272 So. 2d 507 (Fla. 1973)(finding the use of general terms
“indemnify
against
any
and
all
claims”
insufficient
to
disclose an intention to indemnify for consequences arising
solely from the negligence of the indemnitee).
The Court
agrees with ATM that the indemnity provision at issue does not
contain such clear and unequivocal language necessary to
indemnify Bankers for its own negligence or wrongful conduct,
and Bankers does not contest this point.
The
Court
also
finds
the
provision
insufficient
to
require indemnity for any instances in which ATM and Bankers
may be jointly liable. See Charles Poe Masonry, Inc., 374 So.
2d at 490 (extending the holding of University Plaza to cases
where the indemnitor and indemnitee are jointly liable);
Leonard L. Farber Co. v. Jaksch, 335 So. 2d 847, 848-49 (Fla.
4th DCA 1976)(finding the language “occasioned wholly or in
-10-
part by any act or omission of [indemnitor]” sufficiently
clear and unequivocal to hold the indemnitor liable for the
joint negligence of itself and the indemnitee); Gulfstream
Park Racing Ass’n, Inc. v. Gold Spur Stable, Inc., 820 So. 2d
957, 963 (Fla. 4th DCA 2002)(same).
Again, Bankers does not
contest that the instant provision is insufficient to require
indemnity for any joint liability between ATM and Bankers.
Instead, Bankers maintains that it does not seek to
recover for any liability arising from its own actions, in
whole or in part, but rather seeks to recover for liability
that arose solely out of ATM’s and/or Doctor’s actions, both
of
which
are
covered
by
the
indemnity
provision.
Specifically, Bankers argues that “ATM failed to fulfill its
supervisory obligations to oversee Doctor’s activities” and
that “ATM’s mishandling and purported renewal of an expiring
Bankers liability policy caused the exposure Bankers incurred
by the settlement in the Bad Faith Suit. These actions caused
Bankers to face a claim under a policy - the Renewal Policy that was improperly issued.”
(Doc. # 47 at 5).
In other
words, Bankers argues that had ATM not committed errors in
overseeing Doctor and in handling the renewal of the policy,
the insured would never have mistakenly believed its Bankers
policy had been renewed and Bankers would never have faced
-11-
exposure, either contractual or bad faith, for Bloor’s claim
that came after the expiration of the original policy.
In this lawsuit, Bankers seeks recovery of the full
amount of its $1.8 million settlement paid to Bloor. However,
in its motion, Bankers seeks only partial summary judgment for
the amount it claims represents the policy limits, $1 million.
Bankers leaves the question of indemnity for the remaining
$800,000 of the settlement, which it claims represents the
amount paid to settle the bad faith count, for trial.
ATM argues that, under Florida law, an indemnitor must be
entirely without fault in order to be entitled to indemnity.
See Weissman v. Boating Magazine, 946 F.2d 811, 813 (11th Cir.
1991) (“A weighing of the relative fault of tortfeasors has no
place in the concept of indemnity for one seeking indemnity
must be without fault.”)(citations omitted).
ATM argues that
even if ATM’s actions were the cause of a portion of the
settlement, Bankers cannot recover any amounts it paid in
settlement because Bankers was solely at fault for
the bad
faith claims-handling practices that constituted a portion of
the settlement.
ATM further contends that apportionment
between ATM’s liability and Bankers’ liability is not allowed
under Florida law. See id.
The Court finds that ATM’s argument against apportionment
-12-
pertains to common law indemnity claims only and, as such, is
inapplicable
to
the
instant
contractual
indemnity
case.
Rather, “[i]n cases involving contractual indemnity, the terms
of the agreement will determine whether the indemnitor is
obligated to reimburse the indemnitee for a particular claim.”
Camp, Dresser & McKee, Inc. v. Paul N. Howard Co., 853 So. 2d
1072, 1077 (Fla. 5th DCA 2003).
ATM’s arguments to the
contrary, under this principle, Florida courts have allowed a
party to seek indemnity for the covered portion of its damages
caused solely by the indemnitor’s conduct, even though the
indemitee’s conduct may have caused other portions of the
incurred damages.
For
example,
in
Metropolitan
Dade
Cty.
v.
Florida
Aviation Fueling Co., Inc., 578 So. 2d 296 (Fla. 3d DCA 1991),
the court considered whether the defendant was required to
indemnify the plaintiff, Dade County, for the full amount paid
by the County to settle an underlying case.
As here, the
defendant argued that because the indemnity provision did not
cover the County’s own negligence, the County was barred from
recovering any portion of the settlement payment. Noting that
“in reality [the underlying] plaintiff proceeded against the
County
on
a
claim
for
vicarious
liability
as
well
as
negligence,” the court determined that “[u]nder the indemnity
-13-
clause at issue, the County is entitled to indemnity for the
former, but not the latter.”
Id. at 298.
With this in mind,
the court ruled that “when a settlement is paid, the party
seeking indemnification has the burden to show that the
settlement, or portions thereof, [fall] within the coverage of
the
indemnity
clause”
and
remanded
the
case
for
a
determination of what portion of the settlement was covered
under the indemnity agreement.
Id.
Similarly, in Association for Retarded Citizens v. State
Dep’t of Health & Rehabilitation Service, 619 So. 2d 452 (Fla.
3d DCA 1993), the court reversed summary judgment in favor of
the indemnitee, HRS, in order to determine what portion of the
settlement agreement was actually covered by the parties’
indemnity contract.
The court reasoned:
There is no question that, under Florida law, the
particular indemnification agreement at issue could
not require ARC to indemnify HRS for HRS’ own
negligence. In other words, there could be no
indemnification for damages stemming from the
second category of claims (HRS’ direct liability),
while there could be indemnification for damages
stemming from the first category of claims
(vicarious liability due to ARC’s negligence). . .
The dilemma then becomes how to go about
apportioning the proceeds of the private settlement
agreement between the distinct types of claims,
when such apportionment becomes necessary in order
to subsequently determine liability as to other
causes of action and/or other parties. This
dilemma, which requires us to balance the rights of
codefendants to fairly apportion liability against
-14-
the public policy which encourages settlements, is
not unfamiliar to the courts of this state.
Id. at 454.
The Court also finds the brief opinion articulated by
Florida’s Fourth District Court of Appeal in American Chambers
Life Insurance Co. v. Power, 690 So. 2d 683 (Fla 4th DCA
1997), to be on point and instructive.
In Power, the court
reversed the trial court’s dismissal of American Chambers’
claim for indemnity against its agent, Power, stating:
We note that this cause of action against Power may
extend only to damages arising out of American
Chambers’ contractual liability to its insured,
incurred as a result of unauthorized acts and fault
of the agent.
Indemnity may not
be sought for
damages awarded the insureds for the subsequent bad
faith conduct of American Chambers.
Id. at 683-84.
Accordingly, based on these decisions and the unambiguous
terms
of
Agreement,
the
the
indemnity
Court
provision
finds
that
in
the
Bankers
General
is
Agency
entitled
to
indemnity from ATM for the portion, if any, of the settlement
paid to Bloor which was not caused, in whole or in part, by
Bankers’ own conduct, but instead was caused solely by ATM’s
and/or Doctor’s conduct. The Court grants Bankers’ motion and
denies ATM’s motion on this issue.
B.
Covered Claim Exception
-15-
ATM next argues that even if Bankers could establish
entitlement to indemnity under the General Agency Agreement
provision,
the
claim
falls
within
the
“covered
claim”
exception to the provision, such that indemnity is precluded.
The indemnity clause in the Agreement expressly states that it
does
not
“include
covered
claims
made
under
any
properly issued in accordance with this Agreement.”
14-1 at 8).
Policy
(Doc. #
Although no finding of coverage was ever made in
the Bad Faith Case, ATM argues that Bankers’ settlement of the
case evinces that the claim was covered.
Specifically, ATM
argues that “Either [Bankers] settled a bad faith claim (in
which case, its recovery is precluded because the indemnity
language it drafted does not cover its own fault), or it
settled and paid on a ‘covered claim.’” (Doc. # 46 at 20).
The Court is not convinced.
The mere fact that Bankers
settled the Bad Faith Case does not in and of itself mean that
the claim that formed the basis of the lawsuit was covered by
the Bankers policy. “Because parties often make offers to
settle for economic reasons, an offer is not treated like an
admission of liability.”
Sullivan v. Galske, 917 So. 2d 412,
414 (Fla. 2d DCA 2006); see also Mortg. Guar. Ins. Corp. v.
Stewart,
427
So.
2d 776,
780
(Fla. 3d
DCA
1983)(“[T]he
settlement here could not, as urged, constitute a binding
-16-
admission by the plaintiff . . . that it was at fault in the
instant tort incident as alleged in the original complaint;
settlements or offers of settlement have never been considered
admissions against interest binding on the parties making
them.”).
Given the numerous reasons Bankers may have had to
settle the Bad Faith Case, the Court will not treat its
settlement of the case as an admission that it engaged in bad
faith or that the Ollin claim was covered under either the
original policy or any purported renewal policy.
ATM further argues that Bankers’ failure to send a
written notice of non-renewal to the insured as required by
California Insurance Code § 678.1(b)-(d) caused the original
“properly issued” policy to “continue” by operation of law.1
ATM asserts that because the Ollin claim was made under the
“continued” properly issued original policy, the claim is
covered and, therefore, excluded by the indemnity provision.
Section 678.1, Cal. Ins. Code, provides, in relevant
part, as follows:
(c) An insurer, at least 60 days, but not more than
120 days, in advance of the end of the policy
period, shall give notice of nonrenewal, and the
1
The parties agree that, while Florida law applies to
the interpretation and application of the indemnity provision,
California law applies to any issues relating to the merits,
if any, of the Bad Faith Case. (Doc. # 56 at 28).
-17-
reasons for the nonrenewal, if the insurer intends
not to renew the policy. . .
(d) If an insurer fails to give timely notice
required by subdivision (c), the policy of
insurance shall be continued, with no change in its
terms or conditions, for a period of 60 days after
the insurer gives the notice.
§ 678.1(c)-(d), Cal. Ins. Code.
Bankers, on the other hand, maintains that the failure to
send a non-renewal notice created a separate “renewal” policy,
not a continuation of the original policy, and contends that,
due to ATM’s and Doctor’s errors, the renewal policy was not
“properly issued” such that any claim made under it falls
outside the exception to the indemnity provision.
of
its
argument,
Bankers
cites
various
In support
California
court
holdings which provide that an insurer’s failure to give
notice of non-renewal operates as an automatic renewal of the
policy, although none of Bankers’ cited cases specifically
addresses Section 678.1(b)-(d), Cal. Ins. Code.
Bankers also
asserts that any failure to send a non-renewal notice was
caused by ATM, who Bankers contends was the party in the best
position to send the notice according to the industry standard
of care.
Bankers argues that “ATM cannot rely on its failure
to provide the insured with a statutory notice of non-renewal
to
now
claim
that
its
numerous
-18-
errors
resulted
in
the
continuation of the original policy.”
(Doc. # 51 at 2).
Notably, Bankers also argues that the provisions of
Section 678.1(b)-(d) do not apply where the insurer has made
a written offer to the insured to renew the policy.
678.1(f)(6), Cal. Ins. Code.
See §
Indeed, it is undisputed that
ATM sent a letter to Doctor prior to the expiration of the
original policy, offering to renew the policy upon payment of
the premium by a date certain. However, Doctor failed to
timely respond to the letter or send the premium payment prior
to the policy’s expiration.
Based on this offer of renewal
which ATM extended on Bankers’ behalf, the Court finds that
Bankers did not intend to non-renew the policy, such that
Sections
678.1(c)-(d),
which
only
apply
“if
the
insurer
intends not to renew the policy,” do not apply in this case.
Thus, the Court finds that the original policy did not
“continue” by operation of law based on the failure to send a
notice of non-renewal.
Accordingly, the Ollin claim was not
brought under a policy that was “properly issued” and the
“covered claim” exception to the indemnity provision does not
apply.
Thus, Bankers summary judgment motion is granted and
ATM’s summary judgment motion is denied on this issue.
C.
Amount of Indemnity
As previously stated, “when a settlement is paid, the
-19-
party seeking indemnification has the burden to show that the
settlement, or portions thereof, [falls] within the coverage
of the indemnity clause.” Metro. Dade Cty., 578 So. 2d at 298.
Again, Bankers paid $1.8 million to Bloor to settle the Bad
Faith Case. In its motion, Bankers argues that it is entitled
to a summary judgment finding that ATM must indemnify $1
million of the settlement, which Bankers contends represents
the policy’s limit.
“Once a legal obligation has been established in the
underlying
action
on
the
part
of
the
indemnitee,
the
indemnitor will become bound by a settlement agreement in a
suit against the indemnitee if the indemnitor was given notice
of the claim and was afforded an opportunity to appear and
defend the claim, as long as the settlement was not the result
of fraud or collusion.” Heapy Eng’g, LLP v. Pure Lodging,
LTD., 849 So. 2d 424, 425 (Fla. 1st DCA 2003); see Bagley v.
W. Cas. & Sur. Co., 505 So. 2d 678, 680 (Fla. 1st DCA 1987).
Thus, “where notice has been given to the indemnitor and the
indemnitor has elected not to act to protect himself, he, in
effect, consents to allow the indemnitee to act for him and
will not be heard to complain about the outcome except in the
very limited circumstance where the indemnitee was not, in
fact, at risk, but nevertheless paid money that it would never
-20-
have owed to the plaintiff.” Camp, Dresser & McKee, Inc., 853
So. 2d at 1083.
Accordingly, as to indemnified claims that
are settled, the indemnitee is entitled to indemnity upon
proof of its potential liability to the original plaintiff and
the reasonableness of the settlement. Metro. Dade Cty., 578
So. 2d at 298; Mortg. Guar. Ins. Corp., 427 So. 2d at 780 n.2.
The Court finds that ATM was given sufficient notice of
the Bad Faith Case because ATM was an original party to the
case prior to obtaining its dismissal.
Furthermore, prior to
settling with Bloor, Bankers sent a letter to ATM advising ATM
of Bankers’ indemnity claim under the General Agency Agreement
and inviting ATM to attend mediation with Bankers and Bloor.
(Doc. # 45-4 at 85-86).
ATM’s general agent, Christopher
Micheals, admitted receiving this letter and testified that
ATM did not attend the mediation upon advice of counsel. (Id.
at 82).
Accordingly, ATM had sufficient notice of Bankers’
indemnity demand and an opportunity to participate in the
settlement discussions, but declined to do so.
Thus, ATM is
bound by the settlement agreement, and Bankers is required to
prove potential, not actual, liability to Bloor and the
reasonableness of the settlement.
Bankers asserts that there are no genuine issues as to
any material fact that it is entitled to indemnity for at
-21-
least the $1 million policy limit.
Bankers argues that its
“risk of liability for $1 million, representing the renewal
policy limit . . . was clearly connected to the acts and
omissions of ATM and/or Doctor, triggering ATM’s indemnity
liability
for
settlement.”
at
least
that
part
of
the
$1.8
million
(Doc. # 45 at 23-24).
The Court notes that the settlement agreement does not
apportion
the
contractual
$1.8
damages
million
payment
and
faith
bad
in
any
damages,
way
nor
between
does
it
attribute any of the damages to ATM or Doctor. (Doc. # 45-10).
Bankers
bases
its
apportionment
of
the
damages
on
the
testimony of its representative, Steven Strus, who testified
that “in [his] mind,” $1 million of the settlement was for the
limits of the policy and the remaining $800,000 was for extracontractual damages.
However,
(Strus Dep. Doc. # 45-11).
regardless
of
the
apportionment
between
contractual damages and bad faith damages, the Court finds
that a genuine issue of material fact exists regarding whether
Bankers is entitled to indemnity for contractual damages.
As
the Court has previously explained, Bankers is entitled to
recover only that portion of the $1.8 million settlement
caused solely by ATM’s or Doctor’s conduct and not for any
portion caused solely or partially by Bankers’ own conduct.
-22-
Although Bankers argues that ATM’s and Doctor’s errors
and omissions in essence effected a renewal policy upon which
Bankers became liable, Bankers has not demonstrated that its
own acts or omissions did not also contribute to the creation
of a renewal policy.
For example, Bankers argues that based
on the industry standard of care, ATM was in the best position
to
send
a
notice
of
non-renewal
to
Ollin
following the
termination of its brokerage agreement with Doctor and cites
to
the
deposition
argument.
of
Elliot
Rothman in
support
of
that
However, Mr. Rothman’s deposition has not been
filed on the record and the Court is unable to consider his
testimony.
Bankers cites no other evidence proving that it
was not also at fault for any of the contractual damages, a
burden Bankers must meet in order to establish entitlement to
indemnity under the General Agency Agreement.
Further, it is not undisputed that ATM’s and/or Doctor’s
conduct was the sole cause of the contractual liability
Bankers incurred.
(Doc. # 56 at 10).
Accordingly, in light
of the genuine issue of material fact regarding whether
Bankers was at fault, either wholly or in part, for any
contractual damages paid in settlement of the Bad Faith Case,
the Court denies Banker’s summary judgment motion as to this
issue.
-23-
Accordingly, it is now
ORDERED, ADJUDGED, and DECREED:
(1)
Plaintiff Bankers Insurance Company’s Dispositive Motion
for Partial Summary Judgment (Doc. # 45) is granted in
part and denied in part as detailed herein.
(2)
Defendant’s Dispositive Motion for Summary Judgment (Doc.
# 46) is denied.
DONE and ORDERED in Chambers in Tampa, Florida, this 13th
day of June, 2012.
Copies:
All Counsel of Record
-24-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?