Attorney’s
fees — Insurance — Prevailing party — Trial court properly awarded
attorney’s fees to insured pursuant to section 627.428 following insurer’s
voluntary dismissal of declaratory judgment action in which insurer asserted
that insured was not entitled to defense of underlying tort action under policy
where insurer had continued to provide insured with defense while litigating
declaratory judgment action — Passenger was not entitled to recover statutory
attorney’s fees and costs where passenger did not receive recovery or any other
benefit from insurer

EXPLORER INSURANCE COMPANY, Appellant, v. RENOLD CAJUSMA,
QUILNER PADE, et al., Appellees. 5th District. Case Nos. 5D14-2608 and
5D14-2934. Opinion filed November 6, 2015. Appeal from the Circuit Court for
Orange County, Donald E. Grincewicz, Judge. Counsel: Donald J. Masten and Jason
M. Pugh, of Donald J. Masten, P.A., and David Popper, Orlando, for Appellant.
Chad A. Barr, of Law Office of Chad A. Barr, PA, Maitland and Earl I Higgs, Jr.
of Anthony-Smith Law, P.A., for Appellees.

(PALMER, Judge.) Explorer Insurance Company (Explorer)
timely appeals the final order entered by the trial court granting attorney’s
fees and costs in favor of Renold Cajusma (Case No.14-2608), and the final
order granting attorney’s fees and costs in favor of Quilner Pade (Case No.
14-2934). The appeals arise from two separate final orders requiring Explorer,
an automobile insurance company, to pay attorney’s fees and costs after
Explorer voluntarily dismissed its action for declaratory relief. We affirm as
to Cajusma, but reverse as to Pade.

Explorer issued an automobile insurance policy to Cajusma,
and Cajusma was in an automobile accident while driving the insured vehicle.
Cajusma had two passengers, Philogene and Pade. Cajusma’s vehicle collided with
Luma’s vehicle, which contained Johnson as a passenger. Cajusma, Pade, and Philogene
sought treatment at a chiropractic clinic called Lancaster.

Johnson and Luma filed a claim against Cajusma for
negligence. The terms of Cajusma’s insurance policy provided liability coverage
and required Explorer to defend and indemnify Cajusma in lawsuits covered by
the policy. In addition to the negligence claims, Pade and Philogene filed
Personal Injury Protection (PIP) claims under Cajusma’s insurance policy.

Explorer initially denied the claims filed by Johnson and
Luma. Thereafter, Johnson and Luma filed separate personal injury lawsuits
against Cajusma. Lancaster also filed separate lawsuits against Explorer,
seeking recovery for unpaid services provided to Cajusma and Pade. While the
aforementioned lawsuits remained pending, Explorer filed a declaratory judgment
action against Cajusma, Pade, Lancaster, Johnson, and Luma. The complaint
alleged that Explorer should be relieved from the obligation to pay benefits
and from providing liability coverage because material misrepresentations had
been made in connection with those claims.

During the pendency of Explorer’s declaratory judgment
action, Cajusma filed a lawsuit against Explorer, alleging breach of contract
for failure to pay his property damage claims and failure to provide him with a
defense in the personal injury lawsuits. Cajusma and Explorer eventually
entered into a settlement agreement in which Explorer paid Cajusma $10,250 in
satisfaction of his claims under the insurance policy and for attorney’s fees.

Cajusma and Pade filed motions for summary judgment in
Explorer’s still pending declaratory judgment action seeking attorney’s fees
and costs pursuant to section 627.428 of the Florida Statutes. At the summary
judgment hearing, Explorer entered an ore tenus motion to
voluntarily dismiss its action. The trial court granted Explorer’s motion to
dismiss, but expressly reserved its ruling regarding the pending claims for
attorney’s fees and costs.

The trial court thereafter entered separate orders granting
the attorney’s fees and costs motions. In the order granting attorney’s fees
and costs to Cajusma, the trial court ruled:

The
Court finds the payment of the property damage and the agreement to provide Mr.
Cajusma with a defense in the liability lawsuits operated as a confession of
judgment regarding insurance coverage under the policy. Additionally, the Court
finds Explorer’s voluntary dismissal of its declaratory judgment action
triggered Mr. Cajusma’s entitlement to attorney’s fees and costs. See Coppola
v. Federated Nat. Ins. Co., 939 So. 2d 1171, 172-73 (Fla. 4th DCA 2006)
(holding the liability insurer’s voluntary dismissal of a declaratory judgment
action conferred a benefit on the insured by providing a defense in the tort
action, was thus the functional equivalent of a confession of judgment or
verdict in favor of the insured, and entitled the insured to attorney’s fees as
the prevailing party — when the insurer dismissed the action, the insured
received the benefit of representation in the underlying tort suit); Mercury
Ins. Co. of Florida v. Cooper,
919 So. 2d 491, 493 (Fla. 3d DCA 2005) (holding the insurer’s unilateral
decision to settle an insurance claim and dismiss a related declaratory
judgment action triggers the insured’s entitlement to attorney fees under the
statute requiring court to award attorney fees upon rendition of a judgment or
decree against an insurer and in favor of an insured); Unterlack v. Westport Insurance Co., 901 So. 2d 387, 389 (Fla. 4th
DCA 2004) (holding the liability insurer’s voluntary dismissal of a declaratory
judgment action against insured before settling suits against it was the
functional equivalent of a confession of judgment or verdict in favor of the
insured and entitled the insured to attorney’s fees under statute requiring the
insurer to pay attorney’s fees upon the rendition of a judgment or decree
against insurer); O’Malley v. Nationwide
Insurance Co., 890 So. 2d 163, 165 (Fla. 4th DCA 2003) (holding insured was
entitled to award of attorney’s fees as prevailing party following the
liability insurer’s voluntary dismissal of its declaratory judgment action that
sought determination as to whether there was a duty to defend or coverage
regarding the tort action and settled claim; the insurer provided precisely
what the insurer contended the insured was not entitled to in the declaratory
judgment action, and the dismissal was the functional equivalent of a
confession of judgment or verdict in favor of the insured).

In granting Pade’s motion for attorney’s fees and costs, the
trial court ruled:

The
Court finds the payment of the property damage and the agreement to provide Mr.
Cajusma with a defense in the liability lawsuits operated as a confession of
judgment regarding insurance coverage under the policy. Additionally, the Court
finds Explorer’s voluntary dismissal of its declaratory judgment action
triggered Mr. Pade’s entitlement to attorney’s fees and costs.

Because this appeal concerns the trial court’s application
of a statutory provision, the standard of review is de novo. See Do v. GEICO Gen. Ins. Co., 137 So. 3d
1039, 1042 (Fla. 3d DCA 2014) (citing Jerkins
v. USF&G Specialty Ins. Co., 982 So. 2d 15, 16 (Fla. 5th DCA 2008)).
Section 627.428 of the Florida Statutes provides, in relevant part:

627.428
Attorneys’ Fees

(1)
Upon the rendition of a judgment or decree by any of the courts of this state
against an insurer and in favor of any named or omnibus insured or the named
beneficiary under a policy or contract executed by the insurer, the trial court
or, in the event of an appeal in which the insured or beneficiary prevails, the
appellate court shall adjudge or decree against the insurer and in favor of the
insured or beneficiary a reasonable sum as fees or compensation for the
insured’s or beneficiary’s attorney prosecuting the suit in which the recovery
is had.

§ 627.428(1), Fla. Stat. (2014).

Our court has provided the following guidance regarding
section 627.428:

Section
627.428 provides for the award of attorney’s fees to an insured upon the
rendition of a judgment against an insurer in an action between the insurer and
its insured. § 627.428, Fla. Stat. “By using the legal fiction of a ‘confession
of judgment,’ our supreme court extended the statute’s application” to cases in
which the insurer settles or pays a disputed claim before rendition of
judgment. Basik Exports & Imports,
Inc. v. Preferred Nat’l Ins. Co., 911 So. 2d 291, 293 (Fla. 4th DCA 2005)
(citing Wollard v. Lloyd’s & Cos. of
Lloyd’s, 439 So. 2d 217 (Fla. 1983)). When the insurer has agreed to settle
a disputed case, “it has, in effect, declined to defend its position in the
pending suit,” and its “payment of the claim is . . . the functional equivalent
of a confession of judgment or a verdict in favor of the insured.” Wollard, 439 So. 2d at 218. For the
confession of judgment doctrine to apply, the insurer must have unreasonably
withheld payment under the policy, id. at 219 n.2, or engaged in some other
wrongful behavior that forced the insured to sue, Gov’t Emps. Ins. Co. v. Battaglia, 503 So. 2d 358, 360 (Fla. 5th
DCA 1987); see also Jerkins
v. USF & G Specialty Ins. Co., 982 So. 2d 15, 17 (Fla. 5th DCA 2008).

Tampa
Chiropractic Ctr., Inc. v. State Farm Mut. Auto. Ins. Co.,
141 So. 3d 1256, 1258 (Fla. 5th DCA 2014)(footnote omitted); see also
Shirtcliffe v. State Farm Mut. Auto.,
160 So. 3d 555, 556 (Fla. 5th DCA 2015); Jerkins, 982 So. 2d at 17. We
explained the confession of judgment doctrine as follows:

The
confession of judgment doctrine turns on the policy underlying section 627.428:
discouraging insurers from contesting valid claims and reimbursing insureds for
attorney’s fees when they must sue to receive the benefits owed to them. Pepper’s Steel & Alloys, Inc. v. United
States, 850 So. 2d 462, 465 (Fla. 2003).

Jerkins,
982 So. 2d at 17.

The instant case is factually similar to O’Malley v. Nationwide Insurance Company,
890 So. 2d 1163 (Fla. 4th DCA 2003). O’Malley sought attorney’s fees following
Nationwide’s voluntary dismissal of its declaratory judgment action, which
sought a determination as to whether there was duty to defend or provide
coverage in a tort action involving O’Malley. While the declaratory judgment
action was pending, the injured claimant obtained a low jury verdict in the
tort action which was less than the offer of judgment. Id. at 1164. Nationwide then voluntarily dismissed the
declaratory judgment action. In response, O’Malley moved for attorney’s fees
and costs pursuant to section 627.428, asserting that the dismissal of the
declaratory judgment action made her the prevailing party. The trial court denied
the motion, holding that, under the facts in the case, O’Malley had not
prevailed in the declaratory judgment action. On appeal, the Fourth District
reversed:

The
trial court’s denial of fees in the present case, grounded on the fact that the
tort claimant was paid no money, does not take into account the benefit
received by the insured. If Nationwide had obtained a judgment in the
declaratory action, the insured would have been responsible for furnishing her
own defense and resolving the tort claim. As it turned out, however, Nationwide
furnished the insured a defense and settled the claim. Nationwide, in that
action, provided the insured precisely what Nationwide was contending the
insured was not entitled to in the declaratory action. When Nationwide dismissed
the declaratory action, it was thus the “functional equivalent of a confession
of judgment or a verdict in favor of the insured” in the declaratory action.

Id.
at 1164.

Here, like the insurer in O’Malley, Explorer filed a
separate declaratory judgment action seeking a determination of whether it was
required to provide Cajusma a defense and whether it was required to pay his
claims under the insurance policy. Also, like the insurer in O’Malley,
Explorer asserted that Cajusma was not entitled to a defense under the policy;
however, it continued to provide him with a defense in the tort action while
litigating the declaratory judgment action. Like the actions in O’Malley,
the tort actions in the instant case were ultimately dismissed. Finally, like
the insurer in O’Malley, Explorer provided Cajusma with a defense
despite contending, in the declaratory judgment action, that it was not
obligated to do so. Accordingly, Cajusma received a benefit and was entitled to
recover his attorney fees and costs upon Explorer’s dismissal of its
declaratory judgment suit.

In contrast, Pade did not receive a recovery or any other
benefit, did not receive a defense from Explorer, and Explorer did not pay
anyone on behalf of Pade. Accordingly, Pade was not entitled to recover
statutory attorney’s fees and costs.

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