Hillsborough County v. Star Insurance Company

Case: 15-13701 Date Filed: 02/03/2017 Page: 1 of 28
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-13701
________________________
D.C. Docket No. 8:14-cv-02067-EAJ
HILLSBOROUGH COUNTY,
a political subdivision of the State of Florida,
JORGE L. DOMINGUEZ,
as Personal Representative of the Estate of Darcia Dominguez,
Plaintiffs - Appellees,
versus
STAR INSURANCE COMPANY,
a Michigan Corporation,
Defendant - Appellant.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(February 3, 2017)
Case: 15-13701 Date Filed: 02/03/2017 Page: 2 of 28
Before MARTIN and JORDAN, Circuit Judges, and COOGLER, * District Judge.
JORDAN, Circuit Judge.
Darcia Dominguez died from injuries sustained in an automobile accident
with a Hillsborough County employee in February of 2010. Jorge Dominguez, the
personal representative of Ms. Dominguez’s estate, filed a wrongful death suit
against Hillsborough County in state court, and that action, as far as we know, is
still pending. This federal diversity case involves an insurance dispute between the
County, Mr. Dominguez, and Star Insurance, the County’s excess carrier.
We confront an issue of first impression under Florida law—the interplay
between the limited waiver of sovereign immunity set forth in Fla. Stat.
§ 768.28(5) and the language of the self-insured retention limit (SIRL) contained in
an endorsement to the excess liability policy issued to the County by Star. One
Florida appellate court has acknowledged a virtually identical issue but declined to
resolve it given the case’s procedural posture. See State Nat’l. Ins. Co. v. Robert,
71 So. 3d 238, 241 (Fla. 4th DCA 2011).
The question, as best as we can briefly explain it, is whether the County and
Mr. Dominguez can settle the estate’s claim for the sum of $2.35 million—with the
County paying its SIRL of $350,000 and Star purportedly paying the remaining $2
*
The Honorable L. Scott Coogler, United States District Judge for the Northern District
of Alabama, sitting by designation.
2
Case: 15-13701 Date Filed: 02/03/2017 Page: 3 of 28
million (the policy limits)—without Star’s consent but subject to the Florida
Legislature approving a special claims bill for the $150,000 “gap” between the
$200,000 sovereign immunity cap established by § 768.28(5) and the $350,000
SIRL.
The district court, exercising diversity jurisdiction and ruling on
cross-motions for summary judgment that the parties submitted without the benefit
of discovery, held that any requirement that the Florida Legislature pass a claims
bill for the “gap” amount before coverage is triggered under the policy frustrates
the purpose of the County’s contract with Star. But it also ruled that the County
cannot unilaterally settle the estate’s claim for an amount within the policy limits
without Star’s consent. See D.E. 55 at 7-13. See also Hillsborough Cnty. v. Star
Ins. Co., No. 8:14-CV-2067-T-EAJ, 2015 WL12765535 (M.D. Fla. June 24, 2015)
(denying motion for reconsideration). In granting Mr. Dominguez’s motion for
entry of judgment, the district court clarified that, in concluding that the County
could not settle without Star’s consent, it necessarily ruled that, should Star
consent, the County could satisfy its SIRL without a claims bill by the Legislature.
See D.E. 82 at 3.
Two of the three parties before us are unhappy with the district court’s
ruling. Star argues that the district court committed reversible error by ruling,
pursuant to a frustration of purpose theory, that the requirement of a special claims
3
Case: 15-13701 Date Filed: 02/03/2017 Page: 4 of 28
bill is unenforceable. It also maintains that the County breached the terms of the
policy by entering into a settlement without its consent. The County says that the
district court did not go far enough, and asks us to hold that it does not need Star’s
consent to settle the claim with the estate. Mr. Dominguez—who would be the
other party to a settlement with the County—oddly calls for affirmance of the
district court’s judgment, which would mean that—absent a jury verdict in his
favor—he and the County need Star’s consent to consummate their settlement.
If this sounds like a mess, that is because it is.
I
We begin with the text of § 768.28(5) as it existed at the time of the deadly
accident, because it provides the backdrop for the parties’ dispute. See Hattaway
v. McMillan, 903 F.2d 1440, 1444 n.3 (11th Cir. 1990) (explaining that courts
apply the Florida sovereign immunity provisions in effect at the time a cause of
action accrues). We then turn to the language of the excess policy issued by Star,
the case’s procedural history, the parties’ contentions, and the district court’s
rulings.
A
In February of 2010, § 768.28(5) read in relevant part as follows:
4
Case: 15-13701 Date Filed: 02/03/2017 Page: 5 of 28
The state and its agencies and subdivisions shall be liable for tort claims
in the same manner and to the same extent as a private individual under
like circumstances, but liability shall not include punitive damages or
interest for the period before judgment. Neither the state nor its agencies
or subdivisions shall be liable to pay a claim or judgment by any one
person which exceeds the sum of $100,000 or any claim or judgment, or
portions thereof, which, when totaled with all other claims or judgments
paid by the state or its agencies and subdivisions arising out of the same
incident or occurrence, exceeds the sum of $200,000. However, a
judgment or judgments may be claimed and rendered in excess of
these amounts and may be settled and paid pursuant to this act up to
$100,000 or $200,000, as the case may be; and that portion of the
judgment that exceeds these amounts may be reported to the
Legislature, but may be paid in part or in whole only by further act
of the Legislature. Notwithstanding the limited waiver of sovereign
immunity provided herein, the state or an agency or subdivision thereof
may agree, within the limits of insurance coverage provided, to settle a
claim made or a judgment rendered against it without further action by
the Legislature, but the state or agency or subdivision thereof shall not
be deemed to have waived any defense of sovereign immunity or to have
increased the limits of its liability as a result of obtaining insurance
coverage for tortious acts in excess of the $100,000 or $200,000 waiver
provided above[.]
(emphasis added).1
The sentence in bold provides that any judgment or settlement above the
sovereign immunity waiver is payable, in whole or in part, only through a special
claims bill approved by the Florida Legislature. See Wallace v. Dean, 3 So. 3d
1035, 1041 n.9 (Fla. 2009). The sentence in italics allows a municipality like the
1
In April of 2010, the Florida Legislature amended § 768.28(5) to increase the sovereign
immunity caps to $200,000/$300,000 for claims arising on or after October 1, 2011. See 2010
Fla. Sess. Law Serv., Ch. 2010-26 (C.S.S.B. 2060), §§ 1-2. All references in this opinion to
§ 768.28(5), unless otherwise noted, are to the version in existence in February of 2010. Given
the way this case was litigated in the district court, we assume that the County’s sovereign
immunity cap was $200,000.
5
Case: 15-13701 Date Filed: 02/03/2017 Page: 6 of 28
County to purchase liability insurance and to settle a claim within the limits of
coverage (and above the stated sovereign immunity caps) without further action by
the Legislature. See Mich. Millers Mut. Ins. Co. v. Bourke, 607 So. 2d 418, 421-22
(Fla. 1992); Tramel v. Bass, 707 So. 2d 847, 848 (Fla. 1st DCA 1998). But it also
states that the purchase of insurance does not waive the defense of sovereign
immunity.
B
The County purchased an excess liability insurance policy (including excess
automobile coverage) from Star for the period spanning from October 1, 2009, to
October 1, 2010. The policy, which cost the County $527,360, has a $2 million
limit for each accident or occurrence, as well as a $350,000 SIRL. See Public
Entity Excess Liability Policy, D.E. 18-1, at Declarations Page.
The policy states that Star will “pay all sums” that the County “legally must
pay as damages because of ‘bodily injury’ or ‘property damage’ to which this
insurance applies, caused by an ‘accident’ and resulting from the ownership,
maintenance or use of a covered ‘auto.’” Id. at § II.A. It also provides that the
County cannot assume any obligation, make any payment, or incur any expense
“without [Star’s] consent, except at [the County’s] own cost,” and requires the
6
Case: 15-13701 Date Filed: 02/03/2017 Page: 7 of 28
County to cooperate with Star “in the investigation, settlement or defense of the
claim or ‘suit.’” Id. at § IV.A.2.b(1) & (3).
The SIRL endorsement, which applies to automobile excess coverage, states
that the County, “[i]n consideration of the premium charged and as a condition to
the issuance and continuation of the [p]olicy,” agrees to be responsible, “per
occurrence,” for the first $350,000 in “allocated costs and expenses of
investigation, defense, negotiation and settlement.” Id. at SIRL Endorsement, ¶ 1.
Star’s “limit of liability [of $2 million per occurrence] shall apply solely in excess”
of the County’s SIRL. Id.
Paragraph 4 of the SIRL endorsement provides that the County shall not
incur any costs or expenses, “other than for immediate first aid to others, . . .
except at [its] own cost, . . . without the written consent” of Star. Id. at ¶ 4. That
same paragraph requires the County to provide an “adequate defense and
investigation” of any action, and “accept any reasonable offer or settlement” within
the $350,000 SIRL. Id. at ¶ 4.A-B. If the County fails to comply with any of the
provisions of paragraph 4, Star “shall not be liable for any damages or costs or
expenses[.]” Id. at ¶ 4.
7
Case: 15-13701 Date Filed: 02/03/2017 Page: 8 of 28
C
Mr. Dominguez, in an attempt to have a Florida court determine the nature
and extent of coverage under Star’s excess policy, asserted a declaratory judgment
claim against the County and Star in his state-court wrongful death action. The
state trial court denied Star’s motion to dismiss, but in June of 2014 the Second
District granted Star’s petition for certiorari and reversed, holding that
Mr. Dominguez—who was not an insured under Star’s excess policy—had not
satisfied Florida’s non-joinder statute, Fla. Stat. § 627.4136(1), because he had not
yet obtained a judgment against, or settled with, the County. See Star Ins. Co. v.
Dominguez, 141 So. 3d 690, 691-92 (Fla. 2d DCA 2014). So no Florida Court has
addressed Star’s obligations under the policy.
In its amended complaint for declaratory relief in federal court, the County
alleged (and Star admitted) that Ms. Dominguez had died as a result of injuries
sustained in an automobile accident with a County employee (though the complaint
was silent about who was at fault and Star said it was without knowledge as to the
details of the accident); that Mr. Dominguez, as administrator of Ms. Dominguez’s
estate, had filed a wrongful death action in state court; that the case was then set
for trial in February of 2015; and that Star had issued a reservation of rights letter
in July of 2014. See Am. Compl., D.E. 18, at ¶¶ 5, 15; Answer and Defenses, D.E.
28, at ¶¶ 5, 15. In its reservation of rights letter, which was attached to the
8
Case: 15-13701 Date Filed: 02/03/2017 Page: 9 of 28
amended complaint, Star took the position that it was only obligated to pay those
sums that the County “legally must pay,” and that under § 768.28(5) the County
had sovereign immunity for any sums over $200,000 absent an act of the Florida
Legislature. Because the Florida Legislature had not taken any action (like passing
a special claims bill) that would make the County liable for (or allow the County to
pay) any claim over $200,000, and because the County had not exhausted (and
could not yet exhaust) its $350,000 SIRL, Star asserted that its excess coverage
under the policy had not been triggered. See Am. Compl., D.E. 18, Ex. 2.
The County also alleged in its amended complaint that the policy language
prohibited it from settling Mr. Dominguez’s action for any amount exceeding its
$350,000 SIRL without Star’s consent. It had asked Star for its consent to a
settlement with Mr. Dominguez over the amount of $350,000, but Star had refused
to agree. Star admitted both of these allegations. See Am. Compl., D.E. 18, at
¶¶ 16-17; Answer and Defenses, D.E. 28, at ¶¶ 16-17.
The amended complaint contained other significant factual allegations by the
County, but Star denied those allegations in its answer. For example, the County
alleged (and Star denied) that Mr. Dominguez had made a settlement demand on
the County for an amount “far in excess” of the $350,000 SIRL. See Am. Compl.,
D.E. 18, at ¶ 19; Answer and Defenses, D.E. 28, at ¶ 19. It also alleged (and Star
denied) that Star had “been made aware of the reasonable possibility of a verdict in
9
Case: 15-13701 Date Filed: 02/03/2017 Page: 10 of 28
the [wrongful death case] which far exceeds the amount of the coverage limits [in
the policy].” See Am. Compl., D.E. 18, at ¶ 41; Answer and Defenses, D.E. 28, at
¶ 41.
The County asked that the district court interpret § 768.28(5) “as juxtaposed
against” the language in Star’s excess policy. D.E. 18 at ¶ 12. The County
requested a ruling that § 768.28(5) gave it statutory authority to settle the action
filed by Mr. Dominguez within the limits of the excess policy without Star’s
consent. Id. at ¶ 24. According to the County, such a settlement did not void the
policy language because (a) if Star could “veto a settlement,” it “would be able to
thwart the public policy favoring settlement of disputes,” and the language in
§ 768.28(5) allowing settlement of a claim within the limits of insurance coverage
would have no effect; and (b) the policy language requiring that the County
exhaust its $350,000 SIRL—an amount over the $200,000 sovereign immunity
cap—constituted an “illusory, illegal condition” that was void as a matter of law.
Id. at ¶ 26-28.
The County also argued that, contrary to Star’s position, there was no need
for the Florida Legislature to pass a special claims bill in order to trigger excess
coverage under the policy. According to the County, if Star’s position were upheld
then coverage would only be triggered if Mr. Dominguez obtained a judgment over
the $350,000 SIRL and if the Legislature then passed a special claims bill allowing
10
Case: 15-13701 Date Filed: 02/03/2017 Page: 11 of 28
the County to pay its SIRL of $350,000, which exceeds the $200,000 sovereign
immunity cap. Id. at ¶ 35.
In its prayer for relief, the County asked the district court to declare that it
was allowed to settle the claim by Mr. Dominguez for an amount over $350,000
but within the policy limits without Star’s consent and without a special claims bill
by the Legislature; that such a settlement would not void the policy; that Star was
required to pay the excess insurance amount set forth in the policy in satisfaction
of the settlement; and that the policy language requiring the County’s payment of
the SIRL was void and illusory and should be severed from the policy because
§ 768.28(5) precluded such a payment. Id. at 10.
D
In their joint case management report, the parties told the district court that
the issues presented were legal in nature and that as a result “no discovery [wa]s
needed.” See D.E. 27 at 1. Those representations, as we later explain, would turn
out to be mistaken.
About three weeks after the entry of the scheduling order, the County filed a
motion for summary judgment. See D.E. 30. Attached to the motion were several
letters which referred to a proposed settlement agreement “in principle” between
Mr. Dominguez and the County. Neither the motion nor the letters set forth the
11
Case: 15-13701 Date Filed: 02/03/2017 Page: 12 of 28
precise terms of the proposed settlement, except to note that the County would,
subject to Star’s consent, satisfy the $350,000 SIRL, and that the settlement was
within the limits of Star’s excess policy. The County’s Board of Commissioners,
according to the motion, would soon vote on the proposed settlement.
The County’s argument was short and to the point. Given the language of
§ 768.28(5), the County could settle Mr. Dominguez’s wrongful death claim within
the limits of the excess policy without Star’s consent. Under Florida law, it
argued, Star had to act in the County’s best interests and had to give “fair
consideration” to the proposed settlement. The County broadly asserted that “Star
has a legal duty to settle the [wrongful death action] for an amount within the
policy limits,” and “has no valid authority, as a matter of law, to ‘veto’ a settlement
to which the parties in [that action] have agreed.” But it failed to provide any
evidence on critical factual issues such as who was at fault in the accident that took
Ms. Dominguez’s life, why its own liability was likely or certain, what the
damages were expected to be, or why the proposed settlement (the terms of which
were still not specified) was reasonable.
Mr. Dominguez filed his own motion for summary judgment. See D.E. 37.
Like the County, Mr. Dominguez argued that § 768.28(5) trumped the language in
Star’s policy. But, unlike the County, Mr. Dominguez asserted that the statute
allowed the County to settle his claim within the limits of the policy if it obtained a
12
Case: 15-13701 Date Filed: 02/03/2017 Page: 13 of 28
special claims bill from the Florida Legislature for the $150,000 “gap” between the
$200,000 sovereign immunity cap and the $350,000 SIRL. Mr. Dominguez also
claimed that the policy language Star was relying on (the “legally must pay”
language) and the SIRL were at best ambiguous and should therefore be construed
against Star. As Mr. Dominguez saw things, it was useless for the County to have
excess insurance if it could not use that insurance to settle a claim.
Star opposed the motions of the County and Mr. Dominguez and filed its
own cross-motion for summary judgment. See D.E. 38, 50. Attached to Star’s
summary judgment motion was an agenda item on the consent calendar for a
County Commission meeting scheduled for January 7, 2015. The item was a
proposal to authorize the County Attorney’s Office to “propose” a $2.35 million
settlement offer in the wrongful death action comprised of three payments: the
County would pay $200,000 out of its self-insurance general liability fund; an
additional $150,000 would be “paid by the County, if approved by the Legislature
in a [c]laims [b]ill”; and Star would pay $2 million. The staff recommendation for
the consent item explained that, if Star rejected the proposed settlement, the case
would be tried “to a verdict which the County Attorney’s Office projects, based on
focus group studies, will exceed the amount of the proposed settlement offer.”
See D.E. 38, Ex. C, at 1. The background section of the agenda item noted that
13
Case: 15-13701 Date Filed: 02/03/2017 Page: 14 of 28
Star had refused to offer any policy proceeds and was likely “to veto the proposed
settlement.” Id. at 2.
Star’s summary judgment motion, like the County’s, was devoid of
evidence. It said nothing about the cause of deadly accident, the likelihood of the
County’s liability, the calculation of damages, or the reasonableness of the
proposed settlement.
In a supplemental filing, Star submitted the affidavit of Michael McNabb,
the County’s risk and safety manager. In that affidavit, which had first been filed
in a separate case in federal court, Mr. McNabb stated that he was familiar with the
policies issued to the County by Star and by State National Insurance. Those
policies, according to Mr. McNabb, had a $350,000 SIRL, and because of the
SIRL “the County receive[d] a discount on the overall policy premium.” D.E. 52,
Ex. 1, at ¶ 12.
According to Star, the district court had to enter summary judgment in its
favor as a matter of law for a number of reasons. First, coverage under the excess
policy is triggered only when the County is legally obligated to pay more than
$350,000, and without a special claims bill from the Florida Legislature the County
had no legal obligation to pay any sum over $200,000, including the $150,000
“gap” amount. In fact, the County had sovereign immunity for any amount over
14
Case: 15-13701 Date Filed: 02/03/2017 Page: 15 of 28
$200,000. Second, the County had not exhausted its $350,000 SIRL, and until it
did so there was no coverage. Third, the County did not have a unilateral right to
settle the case for the policy limits without Star’s consent. Fourth, the County had
breached the policy by (a) failing to provide an adequate defense, (b) refusing to
cooperate with Star, and (c) agreeing to make payments pursuant to the proposed
settlement without Star’s consent. Aside from the agenda item, Star did not
provide any evidence to support its contentions on the County’s alleged breaches.
E
The district court, after concluding that there was an actual case or
controversy, granted in part and denied in part the parties’ three summary
judgment motions. See D.E. 55. In so doing, it made two significant rulings.
First, the district court held that
a requirement that a legislative claims bill is passed before triggering
the coverage provided by Star frustrates the purpose of the [policy] as
such a requirement would prohibit the settlement of any tort claims
brought against the County where the $200,000 sovereign immunity
cap is applicable. As the passage of a claims bill is not within the
County’s control and remains an uncertainty, the County in this case
could never benefit from the coverage provided for in the [p]olicy.
By paying $200,000[ ] and agreeing to support a claims bill for
$150,000[ ], the County has met the [SIRL] requirements of the Star
[p]olicy in this action.
Id. at 11.
15
Case: 15-13701 Date Filed: 02/03/2017 Page: 16 of 28
Second, the district court ruled that there was no conflict between the
language of § 768.28(5) and provisions in the policy requiring that Star consent in
writing “before it is liable under the policy.” And it declined to say whether the
proposed settlement reached by the County without Star’s participation was
reasonable or whether any of the parties had breached the terms of the policy.
“These issues,” explained the court, “involve factual disputes and are not ripe for
determination on the present record.” Id. at 12.
Star moved for reconsideration, arguing in part that the County had breached
the terms of the policy by reaching a settlement without its consent. See D.E. 58.
The district court rejected Star’s argument, noting that the County had conditioned
the proposed settlement on Star’s consent. See Star Ins., 2015 WL 12765535, at
*1. Star also claimed that it was entitled to judgment under the Florida Supreme
Court’s decision in Plancher v. UCF Athletics Ass’n, Inc., 175 So. 3d 724 (Fla.
2015), but the district court found that case distinguishable. See Star Ins., 2015
WL 12765535, at *2.
Mr. Dominguez subsequently moved for entry of judgment. He asserted that
the district court’s orders had addressed each of the requests for declaratory relief,
and noted that Star had not filed any counterclaim or sought any form of
affirmative relief. As a result, there was nothing left to adjudicate. See D.E. 65.
Star opposed this motion, arguing that it had affirmative defenses that needed to be
16
Case: 15-13701 Date Filed: 02/03/2017 Page: 17 of 28
addressed (such as the County’s alleged breaches) and that, according to the
district court, fact issues remained to be resolved. See D.E. 78. Star specifically
asked the court for the opportunity to conduct discovery, although it continued to
assert that there are “no fact issues and discovery is not necessary.” Id. at 10.
The district court granted Mr. Dominguez’s motion for entry of judgment,
ruling that Star’s affirmative defenses were not independent causes of action that
sought affirmative relief. The court explained that, in concluding that the County
could not settle without Star’s consent, it necessarily ruled that, should Star
consent, the County could satisfy its SIRL without a special claims bill. See D.E.
82.
The final judgment declared that the policy’s $350,000 SIRL, “which
exceeds the County’s sovereign immunity cap of $200,000, . . . frustrates the
purpose of the County’s insurance contract as the County cannot itself pass a
legislative claims bill enabling it to satisfy its [SIRL], but [§] 768.28(5) does not
provide the County a right to unilaterally settle a claim within the limits of its
insurance policy without the agreement of [Star].” D.E. 83.
II
The district court’s summary judgment order is subject to de novo review.
See, e.g., Ellis v. England, 432 F.3d 1321, 1325 (11th Cir. 2005). The same
17
Case: 15-13701 Date Filed: 02/03/2017 Page: 18 of 28
plenary standard applies to the district court’s interpretation of § 768.28(5) and
reading of Star’s policy under Florida law. See Hegel v. First Liberty Ins. Corp.,
778 F.3d 1214, 1219 (11th Cir. 2015).
A
We first address the district court’s ruling that the County, by agreeing to
pay its sovereign immunity cap of $200,000, plus an additional $150,000, satisfied
the policy’s $350,000 SIRL (and triggered Star’s coverage) without the need for a
special claims bill from the Florida Legislature for the $150,000 “gap.” The
district court relied on the frustration of purpose doctrine, but on this barren record
its reliance was misplaced.
1
Under Florida law, “‘[f]rustration of purpose’ refers to that condition
surrounding the contracting parties where one of the parties finds that the purpose
for which [it] bargained, and which purposes were known to the other party, have
been frustrated because of the failure of consideration or impossibility of
performance by the other party.” Crown Ice Machine Leasing Co. v. Sam Senter
Farms, Inc., 174 So. 2d 614, 617 (Fla. 2d DCA 1965). The doctrine, however, has
limits. For example, “if knowledge of the facts making performance impossible
were available to the promisor, he cannot invoke them as a defense to
18
Case: 15-13701 Date Filed: 02/03/2017 Page: 19 of 28
performance.” Shore Inv. Co. v. Hotel Trinidad, Inc., 29 So. 2d 696, 697 (Fla.
1947). See also Ferguson v. Ferguson, 54 So. 3d 553, 556 (Fla. 3d DCA 2011)
(“Because of the central importance placed upon the enforceability of contracts in
our culture, the defense of impossibility (and its cousins, impracticability and
frustration of purpose) must be therefore applied with great caution if the
contingency was foreseeable at the inception of the agreement.”); 1700 Rinehart,
LLC v. Advance Am., 51 So. 3d 535, 537-38 (Fla. 5th DCA 2010) (explaining that
the lack of consideration/frustration of purpose doctrine “has no proper application
in a case . . . in which the particular potential obstacle was not only foreseen by the
parties, but as to which they specifically bargained”); Home Design Ctr.—Joint
Venture v. Cnty. Appliances of Naples, 563 So. 2d 767, 769-70 (Fla. 2d DCA
1990) (noting that the “doctrines of impossibility of performance and commercial
frustration of purpose . . . should be employed with great caution if the relevant
business risk was foreseeable at the inception of the agreement and could have
been the subject of an express contractual agreement”).
It is true, as the district court observed, that the County cannot itself pass a
special claims bill for the “gap” amount of $150,000 which would allow it to
satisfy its SIRL and trigger coverage by Star under the excess policy. But that
does not mean that the frustration of purpose doctrine dooms the $350,000 SIRL.
Both the County and Star knew (or should have known) that, in 2009 and 2010,
19
Case: 15-13701 Date Filed: 02/03/2017 Page: 20 of 28
§ 768.28(5) established a sovereign immunity cap of $200,000 for municipalities
and other government entities. And both the County and Star knew that the
$350,000 SIRL exceeded the $200,000 sovereign immunity cap. Because the
County purchased excess insurance of $2 million, the parties were aware of (or
certainly should have foreseen) a scenario where the County could be liable for an
amount over $350,000, in which case the $150,000 “gap” amount would have to be
accounted for in some way or another (e.g., through the passage of a special claims
bill).
Maybe the County and Star believed (or understood) things differently, but
neither party submitted any evidence (aside from the affidavit of Mr. McNabb
indicating that the $350,000 SIRL allows the County to receive a reduced
premium) concerning their negotiations, their agreement to fix the SIRL at
$350,000 as opposed to some other figure, or their understanding of how the policy
provisions would operate given § 768.28(5) in a case like this one. Without such
evidence, the district court should not have applied the frustration of purpose
doctrine. 2
2
Given our ruling, we need not consider the other arguments advanced by Star in opposition to
the district court’s use of the frustration of purpose doctrine.
20
Case: 15-13701 Date Filed: 02/03/2017 Page: 21 of 28
2
It is nevertheless possible that, despite the $350,000 SIRL, a special claims
bill may not be required to trigger Star’s coverage under the excess policy. The
last sentence of the February 2010 version of § 768.28(5)—the sentence italicized
in our earlier block quote—reads as follows: “Notwithstanding the limited waiver
of sovereign immunity provided herein, the state or an agency or subdivision
thereof may agree, within the limits of insurance coverage provided, to settle a
claim made or a judgment rendered against it without further action by the
Legislature, but the state or agency or subdivision thereof shall not be deemed to
have waived any defense of sovereign immunity or to have increased the limits of
its liability as a result of obtaining insurance coverage for tortious acts in excess of
the $100,000 or $200,000 waiver provided above[.]”
Maybe this sentence means that, when a government entity which has
sovereign immunity purchases insurance, it can settle a claim within the limits of
its insurance coverage without a special claims bill by the Legislature (i.e.,
“without further action by the Legislature”). In the words of the Fourth District,
“the claims bill procedure was intended only as a means of securing additional
recovery directly against the government, rather than a third-party, such as a
liability insurer or insurance agent. Indeed, no claims bill [is] necessary if excess
insurance [is] purchased and the [plaintiffs] f[i]nd it necessary to proceed directly
21
Case: 15-13701 Date Filed: 02/03/2017 Page: 22 of 28
against the excess carrier.” Martin v. Nat’l Union Fire Ins. Co., 616 So. 2d 1143,
1145 (Fla. 4th DCA 1993) (involving the 1985 version of § 768.28 and addressing
claim against insurance agents for failure to procure excess insurance for a
government entity after trial resulted in judgment against entity exceeding the
sovereign immunity caps).
As the Florida Supreme Court has put it, the “within the limits of insurance
coverage provided” language in § 768.28(5) “reflects that the [L]egislature
specifically recognized that the [sovereign immunity] limits under the statute were
discretionary and could be increased if insurance coverage was provided. . . . [T]he
[L]egislature has determined that, in addition to allowing discretionary recovery
through a legislative claims bill, the limits of the sovereign immunity statute may
be exceeded when insurance coverage is available.” Mich. Millers, 607 So. 2d at
422 (involving a settlement amount over the sovereign immunity cap). As a result,
in at least some scenarios, a municipality’s excess insurer is not able to rely on the
sovereign immunity of the municipality to avoid coverage. See id. (“We find that
the immunity defense available under [§] 768.28 is not absolute within the
meaning of the term ‘legally entitled to recover’ [in the uninsured motorist statute]
so as to allow such a defense to be raised substantively by an insurance carrier.”).
See also Tramel, 707 So. 2d at 848 (explaining that § 768.28(5) “expressly permits
22
Case: 15-13701 Date Filed: 02/03/2017 Page: 23 of 28
governmental entities to settle claims up to the limit of liability insurance they may
carry”). 3
On the other hand, maybe a special claims bill is needed for the $150,000
“gap” amount that must be satisfied as part of the County’s SIRL. Star cites to a
footnote in Plancher, a case which involved the death of a college football player
at a Florida university, to support this argument. In Plancher, the Florida Supreme
Court held that the UCF Athletics Association was entitled to limited sovereign
immunity under § 768.28(5). See Plancher, 175 So. 3d at 727-29. In a footnote,
the Florida Supreme Court rejected, as “without any merit,” the argument of the
plaintiffs—who had obtained a judgment of $10 million against the UCF Athletics
Association—that the Association’s liability insurer was “still responsible for the
entire judgment amount.” See id. at 728 n.4. The Florida Supreme Court cited to
Stuyvesant Ins. Co. v. Bournazian, 342 So. 2d 471, 472 n.3 (Fla. 1976), and
§ 768.28(5) in the footnote, but did not mention, much less discuss, its prior
decision in Michigan Millers. So it is unclear what effect, if any, Plancher has on
Michigan Millers, particularly on the record we have here.
3
One Florida intermediate appellate court has suggested that under the post-1987 version of
§ 768.28(5), the liability of a government entity is limited to the sovereign immunity caps
“regardless of whether [the entity] carried liability insurance in excess of those amounts.” City
of Winter Haven v. Allen, 541 So. 2d 128, 131 (Fla. 2d DCA 1989) (holding that 1987 version of
§ 768.28 could not be applied retroactively). But Allen was issued before Florida Supreme
Court’s decision in Michigan Millers, so it is unclear what resonance this language still has.
23
Case: 15-13701 Date Filed: 02/03/2017 Page: 24 of 28
The uncertainty is all the greater because neither Michigan Millers nor
Plancher appeared to involve an SIRL, like the one here, which exceeds the
sovereign immunity cap. Moreover, § 768.28(5) says that by obtaining insurance a
government entity does not waive the defense of sovereign immunity and does not
increase the limits of liability. It is not at all clear what this language means in a
case like this one.
Given the way this case was litigated and presented to the district court on
summary judgment, we need not resolve this difficult issue. The settlement
proposal approved by the Board of Commissioners states that it is subject to Star’s
consent, and also provides that the $150,000 “gap” amount will be “paid by the
County, if approved by the Legislature in a claims bill.” So, whether a special
claims bill is or is not statutorily required before the County can pay the “gap”
amount to satisfy its SIRL of $350,000, the proposed settlement between the
County and Mr. Hernandez anticipates the need for, and passage of, such a bill by
the Legislature. It is not our place to rewrite the terms of the proposed settlement
so that we can address whether, under a certain set of facts, the County can pay the
$150,000 “gap” amount (and trigger Star’s excess coverage) without a special
claims bill. And we would be providing an impermissible advisory opinion if we
addressed the interplay of § 768.28(5) and the SIRL on facts not before us.
24
Case: 15-13701 Date Filed: 02/03/2017 Page: 25 of 28
B
The County argues that it does not need Star to agree to the proposed
settlement, and asserts that it can settle with Mr. Dominguez for an amount within
the policy limits without Star’s approval, because § 786.28(5) supersedes the
consent requirement set forth in the policy. See Br. for Hillsborough County at
10-12. Like the district court, we reject this argument.
In relevant part, § 768.28(5) states that a government entity “may agree,
within the limits of insurance coverage provided, to settle a claim in certain
circumstances where there is insurance coverage, a government entity can settle a
claim . . . against it without further act of the [L]egislature.” We recognize that,
under Florida law, a contractual provision that is contrary to a statute may be
invalid, see Freeman v. Am. Integrity Ins. Co. of Fla., 180 So. 3d 1203, 1208 (Fla.
1st DCA 2015) (citing cases), but here there is no clash between § 768.28(5) and
the policy’s consent requirement. Putting aside the issue of the need (or lack
thereof) for a special claims bill, the statutory text quoted above does not conflict
with (and therefore does not abrogate) a policy provision which requires that the
insurer consent to any settlement within policy limits. First, the words “insurance
coverage” in § 768.28(5) indicate that one must look to the terms of the policy to
determine what is covered, and here the policy clearly requires that Star consent to
any settlement that would trigger coverage. See Excess Liability Policy, D.E. 18-1,
25
Case: 15-13701 Date Filed: 02/03/2017 Page: 26 of 28
at § IV.A.2.b(1) & (3). Second, if the County’s position were correct, a
government entity could, notwithstanding policy language requiring the insurer’s
consent, unilaterally agree to settle a claim on terms that are unjustified or
unreasonable, and thereby put the insurer—which has lost any say on the matter—
on the hook.
This does not mean, however, that an insurer like Star can arbitrarily veto (or
withhold its consent from) any settlement within policy limits so that it will not
have to pay anything. Under Florida law, Star, as an excess insurer, has a duty of
good faith to evaluate settlement proposals, and it cannot “arbitrarily reject a
reasonable settlement offer.” N. Am. Van Lines, Inc. v. Lexington Ins. Co., 678 So.
2d 1325, 1332 (Fla. 4th DCA 1996) (addressing the duties of primary and excess
insurers with respect to settlement proposals).
Unfortunately, we cannot apply this good faith duty here, as we agree with
the district court that a number of material factual issues are not ripe for resolution.
The parties, for reasons known only to them, chose not to conduct discovery. As a
result, they failed to present critical evidence to the district court with respect to the
accident and the proposed settlement. No one knows who (if anyone) was at fault
in the accident that resulted in Ms. Dominguez’s death; or what reasonable
inferences might be drawn on the issue of fault; or the age or earning capacity of
Ms. Dominguez; or the way that likely damages under Florida wrongful death law
26
Case: 15-13701 Date Filed: 02/03/2017 Page: 27 of 28
were calculated by the County and Mr. Dominguez in arriving at their proposed
settlement; or the reason the County feared (or expected) a judgment in excess of
the $350,000 SIRL if the case were to go to trial. We could go on, but these
examples are sufficient to make the point. 4
C
Possibly appreciating its predicament, Star says that the district court should
have granted its belated motion for discovery. Reviewing for abuse of discretion,
see Benson v. Tocco, Inc., 113 F.3d 1203, 1208 (11th Cir. 1997), we are not
persuaded. The parties told the district court that they did not need discovery, and
the court was entitled to rely on that representation. In addition, Star waited until
the district court had denied its motion for reconsideration to request discovery.
Finally, even when it requested discovery, Star told the district court that it still
believed that discovery was not necessary.
4
For the same reason, Star cannot prevail on its contention that the district court erred by not
reaching its arguments that the County breached the terms of the policy by failing to provide an
adequate defense, refusing to cooperate, and agreeing to a settlement (a voluntary payment)
without its consent. See Br. for Star Insurance at 34-40. Star did not present any evidence to the
district court with respect to what the County did (or did not do) in investigating or litigating the
deadly accident in the underlying state-court wrongful death suit. Nor did it present any
evidence as to what cooperation or information the County failed to render or provide. With
respect to Star’s contention that the proposed settlement violated the voluntary payments
provision of the policy, the agenda item that Star presented to the district court stated that the
proposal was subject to Star’s consent. If the proposal was ultimately subject to Star’s consent—
a consent which has not been given—then there was no unilateral settlement that breached the
policy. Star essentially admits as much in its brief. See Br. for Star Insurance at 28-34.
27
Case: 15-13701 Date Filed: 02/03/2017 Page: 28 of 28
III
The district court’s final judgment, and the summary judgment order on
which it was based, are affirmed in part and vacated in part as follows: (1) We
affirm the portions of the summary judgment order and final judgment which (a)
declare that the County cannot unilaterally settle Mr. Dominguez’s claim within
policy limits without Star’s consent, and (b) explain that other issues related to the
proposed settlement are unripe for resolution on the current record; (2) We vacate
the portion of the summary judgment order and the final judgment which declares
that the $350,000 SIRL can be satisfied without the passage of a special claims
bill. On this record, the district court’s reliance on the frustration of purpose
doctrine was misplaced, and we have no basis to address the interplay between
§ 768.28(5) and the policy’s SIRL because the proposed settlement between the
County and Mr. Dominguez anticipates the need for, and passage of, a special
claims bill; and (3) We affirm the district court’s denial of Star’s belated motion
for discovery.
The case is remanded to the district court with instructions to amend the
final judgment in accordance with this opinion.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED. 5
5
As to all other issues raised, we affirm without discussion.
28