Progressive Specialty Insurance v. McKnight Agency, Inc. ( 2008 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
January 23, 2008
No. 07-14521
THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 05-00438-CV-W-N
PROGRESSIVE SPECIALTY INSURANCE COMPANY,
Plaintiff-
Counter-Defendant-Appellant,
versus
MCKNIGHT AGENCY, INC.,
JOE MCKNIGHT,
Defendants-
Counter-Claimants-
Cross-Defendants-Appellees,
RICKY LANE,
RIVERSIDE TURF FARM
Defendants-
Counter-Claimants-
Cross-Claimants,
JANE HOLMES, individually and as the
personal representative of the Estate of Daisy
Beasley, deceased, et al.,
Defendants.
________________________
Appeal from the United States District Court
for the Middle District of Alabama
_________________________
(January 23, 2008)
Before ANDERSON, DUBINA and HULL, Circuit Judges.
PER CURIAM:
Appellant Progressive Specialty Insurance Company (“Progressive”)
appeals the district court’s final judgment entered on September 18, 2007. After
reviewing the record, and reading the parties briefs, we affirm the district court’s
final judgment.
I.
On July 6, 2004, Ricky Lane (“Lane”) was driving a truck for Riverside
Turf when he had an automobile accident that killed Daisy Beasley (“Beasley”).
At the time of the accident, Lane had automobile liability coverage through
Progressive, and McKnight was Lane’s insurance agent.
Both prior and subsequent to the accident, Progressive insured Lane with
$1,000,000 policy limits. Due to McKnight’s clerical error on the Progressive
computerized application for the 2004 policy, Progressive bound only $300,000 in
coverage. Both Lane and McKnight mistakenly believed the 2004 Progressive
coverage had been renewed with $1,000,000 limits. The insurance adjuster
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discovered the mistake when Beasley’s estate sued Lane, and Lane reported the
claim.
Subsequently, to minimize its exposure for a $1,000,000 policy limits claim
against Lane, Progressive filed a declaratory judgment action asking the court to
limit Progressive’s coverage to $300,000. Lane and McKnight filed counterclaims
seeking reformation of the Progressive Policy to reflect the parties’ true intent of
$1,000,000 policy limits. Thereafter, Progressive settled the suit against Lane for
the limits of the coverage intended by Lane and McKnight: $1,000,000.
Progressive and McKnight filed cross-motions for summary judgment, and
stipulated that there were no disputed issues of fact in relation to the claims before
the court. The district court held that the Progressive Policy should be reformed to
reflect $1,000,000 policy limits. The court also found that Progressive could
recover from McKnight the difference in premiums between a $1,000,000 limit
policy and a $300,000 limit policy, plus attorney’s fees and litigation costs. Later,
the district court changed its prior ruling on reformation because it found
McKnight had no standing to reform the policy. The district court then held that
Progressive was entitled to $2,821.76 in unpaid premiums, and $19,991.00 in
attorney’s fees and litigation costs, but it was not entitled to recover the $700,000
excess limits it paid.
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II.
This court reviews the district court’s grant or denial of summary judgment
de novo, applying the same legal standards that control the district court’s
decision. Shannon v. Jack Eckerd Corp., 113 F.3d 208, 210 (11th Cir. 1997).
III.
There is no question that McKnight made a clerical error in selecting the
intended coverage limits from a drop-down menu on Progressive’s application
software. Factually, it is undisputed that (1) Lane qualified for $1,000,000 policy
limits, (2) Lane and McKnight intended there to be $1,000,000 policy limits, and
(3) Progressive would have issued $1,000,000 policy limits but for the clerical
mistake. We agree with the district court that McKnight’s error may have resulted
in an underpaid premium to Progressive. Those damages flow naturally from the
breach. See Pate v. Rollison Logging Equip., Inc., 628 So. 2d 337, 345 (Ala.
1993). However, there is no proximate cause between McKnight’s clerical error
and Progressive’s obligation to pay an additional $700,000. Rather, we conclude
that Progressive is in the “same position it would have been” had the error not
occurred, with the exception of the additional premium due. See Wood v. Old
Security Life Insurance Co., 643 F.2d 1209 (5th Cir. 1981).1
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In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc), this court
adopted as binding precedent all decisions of the Fifth Circuit prior to October 1, 1981.
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For the above-stated reasons we affirm the district court’s September 18,
2007, final judgment.
AFFIRMED.
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