United States Fidelity & Guaranty Company v. Essex Insurance Company and Federal Insurance etc , 188 So. 3d 906 ( 2016 )

IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
UNITED STATES FIDELITY NOT FINAL UNTIL TIME EXPIRES TO
& GUARANTY COMPANY, FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
Appellant,
CASE NO. 1D15-0808
v.
ESSEX INSURANCE
COMPANY and FEDERAL
INSURANCE COMPANY,
Appellees.
_____________________________/
Opinion filed March 21, 2016.
An appeal from the Circuit Court for Duval County.
James L. Harrison, Judge.
Mark D. Tinker of Banker, Lopez, Gassler, P.A., St. Petersburg, Scott W.
McMickle and Elenore Klingler of McMickle, Kurey & Branch, LLP, Alpharetta,
GA, for Appellant.
Meagan L. Logan of Marks Gray, P.A., Jacksonville, for Appellee Essex Insurance
Company.
PER CURIAM.
Appellant, United States Fidelity & Guaranty Company (USF&G), appeals
the trial court’s grant of summary judgment, requiring USF&G to give $600,000 it
received from Federal Insurance (Federal) to Essex Insurance Company (Essex).
Because the record does not provide an adequate basis for equitable subrogation,
we reverse the order granting summary judgment.
This case arose out of an agreement between USF&G, Essex, and Federal to
settle underlying litigation involving mutual insureds through a jointly-funded
settlement. The agreement provided that the insurers could litigate among
themselves if any of them wished to reallocate the settlement funds. USF&G and
Essex were substituted as plaintiffs for the insured in an action against Federal, but
USF&G and Essex maintained separate and independent claims against Federal.
Before trial, USF&G settled its claim with Federal for $600,000. Essex and Federal
proceeded to trial, where the trial court found in favor of Federal in the amount of
$2 million, Federal’s contribution to the settlement proceeds. Essex entered into a
post-judgment settlement with Federal, but has kept the terms of the settlement
confidential. Subsequently, Essex asserted a claim against USF&G to recover the
$600,000 settlement money USF&G received from Federal.
USF&G and Essex filed cross motions for summary judgment. The trial
court granted summary judgment in favor of Essex, finding that Essex, as the
excess carrier, should receive the settlement funds.
In order to support recovery under a theory of equitable subrogation, Essex
must establish: “(1) that it made the payment at issue to protect its own interests,
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(2) the payment was non-voluntary, (3) it was not primarily liable for the debt paid,
(4) it paid the entire debt, and (5) subrogation would not work any injustice to the
rights of a third party.” Nova Info. Sys., Inc. v. Greenwich Ins. Co., 365 F.3d 996,
1005 (11th Cir. 2004) (quoting Dade Cty. Sch. Bd. v. Radio Station WQBA, 731
So. 2d 638, 646 (Fla. 1999)). Essex cannot establish the fourth element as it did not
pay the entire settlement in the underlying tort litigation.
In light of the independent nature of their respective claims against Federal,
the trial court erred in determining Essex was entitled to the settlement money
USF&G received from Federal. Accordingly, we reverse the trial court’s order
granting summary judgment.
WETHERELL and WINOKUR, JJ., CONCUR; MAKAR, J., CONCURS WITH
OPINION.
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MAKAR, J., concurring with opinion.
Three insurers collectively contributed $9 million to settle and pay claims
arising from a motor vehicle accident, voluntarily entering an agreement stating
that the insurers would be “subsequently litigating among themselves how the
settlement amount should be paid and allocated among the policies under Florida
law.” The subsequent litigation that resulted was done independently amongst the
insurers, each against the other, none cooperating or coordinating with the others.
Weighing the risks and costs of litigation, USF&G entered a settlement with and
received $600,000 from Federal. The dispute between Essex and Federal went to
trial, resulting in a $2 million judgment against Essex in Federal’s favor (later
settled for an undisclosed amount).
In this appeal, the issue is what legal right does Essex now have to the
$600,000 of settlement funds that USF&G received from Federal, funds that
USF&G sought and successfully obtained at its own expense through its
independent litigation efforts against Federal? None, it appears. Contractual
subrogation doesn’t apply because no contractual relationship exists between the
parties (the trial court’s reference to the Essex policy notwithstanding); and neither
equitable subrogation nor equitable contribution was established on this record to
support Essex’s claimed entitlement to the settlement funds that USF&G procured
for itself. In essence, the parties’ three-page agreement says the three insurers may
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litigate “how the settlement amount” is to be allocated, but it leaves ambiguous by
what legal yardstick that is to be measured. The record does not indicate whether
this is a common or uncommon way for insurers to resolve disputes of this
magnitude, and no party has pointed us to any statute or case that specifies the
standards or manner by which such disputes are required to be resolved. Absent a
definitive guidepost, the parties would have us resolve their dispute by applying
general principles of equity. As such, I agree that the trial court should not have
awarded to Essex the funds that USF&G obtained through its own independent
efforts from Federal, such that the judgment against USF&G should be vacated and
judgment entered in its favor.
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