Merique v. Progressive Select Insurance Company

Filing 10

ORDER granting 5 --motion to dismiss; denying 7 --motion to remand to state court; dismissing the action without prejudice; directing the clerk to CLOSE the case. Signed by Judge Steven D. Merryday on 10/4/2017. (BK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
JOSE PEREZ MERIQUE,
Plaintiff,
v.

CASE NO. 8:17-cv-1937-T-23JSS

PROGRESSIVE SELECT
INSURANCE COMPANY,
Defendant.
____________________________________/

ORDER
The vehicle of Progressive insured Eduardo Gonzalez allegedly struck a
vehicle occupied by Jose Merique, who submitted a claim to Progressive. Citing
Gonzalez’s purported failure to cooperate with a fraud investigation, Progressive
denied the claim. After the denial, Merique sued Gonzalez in state court.
Progressive allegedly refused to defend Gonzalez, who entered into a Coblentz
agreement with Merique for $170,000.
Merique sued Progressive in state court for “failure to provide coverage
and defense,” and Progressive removed (Doc. 1) the action. Although omitting
the phrase “bad faith,” the complaint (Doc. 2) appears to allege $170,000 in
damages from Progressive’s bad-faith failure to defend Gonzalez in the first action.
The confusion about the objective of this action results remarkably in each party’s
arguing — albeit for different reasons — against the adjudication of this action in

federal court. While Progressive argues (Doc. 5 at 8–9) that the action is not ripe,
Merique argues (Doc.7) for remand because Progressive fails to establish an amount
in controversy likely greater than $75,000. Also, Progressive moves (Doc. 5 at 1–7)
to dismiss for failure to state a claim.
DISCUSSION
First, Progressive argues (Doc. 5 at 8-9) that the absence of a ripe bad-faith
claim prohibits adjudicating this action.1 A bad-faith claim requires a determination
of both the insurer’s liability and the insured’s damages. Vest v. Travelers Ins. Co.,
753 So. 2d 1270, 1276 (Fla. 2000) (citing Blanchard v. State Farm Mut. Auto. Ins. Co.,
575 So. 2d 1289 (Fla. 1991)). The state and federal courts in Florida routinely hold
that the absence of a determination of the insurer’s liability and the insured’s
damages renders a bad-faith claim “premature” and consequently requires
dismissal. Vest, 753 So. 2d at 1276; Bele v. 21st Century Centennial Ins. Co.,
126 F.Supp.3d 1293, 1297 (M.D. Fla. 2015) (Byron, J.) (collecting decisions). The
complaint fails to allege a determination of Progressive’s liability, and the mention of
the Coblentz agreement fails to satisfy the requirement of Vest and Blanchard. Rather
than determine the insurer’s liability to the insured, a Coblentz agreement establishes
the insured’s liability to the injured third party. Spencer v. Assurance Co. of Am.,
39 F.3d 1146, 1148–49 (11th Cir. 1994) (applying Florida law).

1

Merique fails to respond to Progressive’s motion and declines to rebut Progressive’s
characterization of the claim, which appears to allege bad faith. Also, more than a month after the
motion to dismiss, Merique submits no request for leave to amend the complaint to allege a
determination of Progressive’s liability.

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“A claim is not ripe . . . if it rests upon contingent future events that may not
occur as anticipated, or indeed may not occur at all.” Texas v. United States, 523 U.S.
296, 300 (1994). Under a Coblentz agreement, the assignee of an insured’s bad-faith
claim typically sues and requests a declaratory judgment that the insurance policy
covers the underlying claim, but the declaratory-judgment suit might not succeed.2
For example, the insurer might argue successfully that the insurance policy excludes
coverage. See, e.g., Spencer, 39 F.3d at 1150 (affirming the district court’s refusal to
enter judgment on a Coblentz agreement because the insurance policy excluded
coverage). Because the bad-faith allegation ripens into a justiciable claim only after
the establishment of Progressive’s liability — an event that might not occur —
Article III prohibits adjudicating the action at this time. Ralston v. LM Gen. Ins. Co.,
2016 WL 6623728 at *2-*3 (M.D. Fla. Nov. 9, 2016) (Dalton, J.); Novak v. Safeco Ins.
Co. of Ill., 94 F.Supp.3d 1267, 1269 (M.D. Fla. 2015) (Mendoza, J.).3

2

Stated more completely, a Coblentz agreement generates three actions. First, the injured
third party sues the insured. After the insurer refuses to defend the insured, the insured settles with
the third party. This settlement, which often results in a consent judgment, establishes the insured’s
damages. In consideration for the third party’s agreeing not to attempt execution on the judgment,
the insured assigns to the third party the insured’s breach-of-insurance-policy claim, the insured’s
bad-faith claim, or both. Second, the third party sues the insurer and requests a declaratory judgment
that the insurance policy covers the claim in the first action. Of course, the insurer is indispensable
to, and necessarily knows about, this action. If successful, the declaratory-judgment action
establishes the insurer’s liability. Third, the third party sues the insurer for bad faith and cites the
Coblentz agreement and the action that establishes the insurer’s liability. On this occasion,
Progressive explains that Merique never sued for a declaratory judgment and never established
Progressive’s liability.
3

Also, the failure to allege a determination of the insurer’s liability subjects the bad-faith
claim to attack under Rule 12(b)(6), Federal Rules of Civil Procedure. But this order need not decide
the most precise, useful, or theoretically correct label for the dismissal. Whether for failure to state a
claim under Rule 12(b)(6) or for lack of “ripeness” under Rule 12(b)(1) and the “case or controversy”
clause of Article III, Merique’s action warrants dismissal without prejudice.

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Second, Merique moves (Doc. 7) to remand and argues that the complaint
demonstrates an amount in controversy not more than $75,000. The prayer requests
damages of $15,000 (Doc. 2 at ¶ 28), but the request for $15,000 deserves little or no
weight for two reasons. See Roe v. Michelin N.A., Inc., 613 F.3d 1058, 1062 (11th Cir.
2010) (“[T]he district court is not bound by the plaintiff’s representations regarding
[the value of the plaintiff’s] claim.”). First, the prayer conflicts with other allegations
in the complaint. The first paragraph states that “this is an action for damages which
exceed fifteen[-]thousand dollars.” (Doc. 2 at ¶ 1) And the complaint presumably
mentions the $170,000 Coblentz agreement (Doc. 2 at ¶ 27, which observes that the
$170,000 Coblentz agreement remains unsatisfied) because Merique aspires to collect
$170,000 (or more) from Progressive. Second, Merique sued in the Circuit Court for
Hillsborough County. Under Sections 26.012 and 34.01, Florida Statutes, a circuit
court lacks jurisdiction over an action for $15,000 in damages; to invoke circuit-court
jurisdiction, the plaintiff must allege (as Merique alleges in the first paragraph of the
complaint) that damages exceed $15,000. Because the complaint on its face reveals
an amount in controversy likely greater than $75,000 on the day of removal, the
motion to remand warrants denial. See Roe, 613 F.3d at 1058 (affirming the denial of
a motion to remand where “common sense dictate[d] that the value of [the plaintiff’s]
claim[] (as pled) more likely than not exceed[ed]” $75,000).

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CONCLUSION
The complaint alleges that Merique and a third party entered into a Coblentz
agreement for $170,000, but the complaint fails to allege a determination of
Progressive’s liability. Because an allegation of bad-faith ripens into a justiciable
action only after a determination of the insurer’s liability, Progressive’s unopposed
motion (Doc. 5) to dismiss the action under Rules 12(b)(1) or (6), Federal Rules of
Civil Procedure, is GRANTED. Merique’s motion (Doc. 7) to remand the action is
DENIED. Because Merique neither responds to the motion to dismiss nor requests
leave to amend the complaint to allege a determination of Progressive’s liability, the
action is DISMISSED WITHOUT PREJUDICE, and the clerk is directed to close
the case.
ORDERED in Tampa, Florida, on October 4, 2017.

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