26
Fla. L. Weekly Fed. C1159aTop of Form
Fla. L. Weekly Fed. C1159aTop of Form
Counties
— Wrongful death — Sovereign immunity — Insurance — Excess liability —
Insurance dispute between county, county’s excess carrier, and personal
representative of estate of individual who died from injuries sustained in
automobile accident with county employee — District court’s reliance on
frustration of purpose doctrine was misplaced when ruling that county, by
agreeing to pay its sovereign immunity cap of $200,000 plus an additional
$150,000, satisfied the policy’s $350,000 self-insured retention limit and
triggered excess liability coverage without the need for a special claims bill
from Florida Legislature for the $150,000 gap between the $200,000 sovereign
immunity cap and the $350,000 SIRL — Appellate court has no basis to address
interplay between limited waiver of sovereign immunity set forth in Section
768.28(5), Florida Statutes, and language of self-insured retention limit
contained in endorsement to excess liability policy issued to county, because
proposed settlement of wrongful death suit anticipates the need for and passage
of a special claims bill, whether or not a special claims bill is or is not
statutorily required before county can pay the gap amount to satisfy its SIRL
— District court correctly ruled that county cannot unilaterally settle
estate’s wrongful death claim for an amount within policy’s limit without
consent of excess liability insurer — No abuse of discretion in denying excess
insurer’s belated motion for discovery
— Wrongful death — Sovereign immunity — Insurance — Excess liability —
Insurance dispute between county, county’s excess carrier, and personal
representative of estate of individual who died from injuries sustained in
automobile accident with county employee — District court’s reliance on
frustration of purpose doctrine was misplaced when ruling that county, by
agreeing to pay its sovereign immunity cap of $200,000 plus an additional
$150,000, satisfied the policy’s $350,000 self-insured retention limit and
triggered excess liability coverage without the need for a special claims bill
from Florida Legislature for the $150,000 gap between the $200,000 sovereign
immunity cap and the $350,000 SIRL — Appellate court has no basis to address
interplay between limited waiver of sovereign immunity set forth in Section
768.28(5), Florida Statutes, and language of self-insured retention limit
contained in endorsement to excess liability policy issued to county, because
proposed settlement of wrongful death suit anticipates the need for and passage
of a special claims bill, whether or not a special claims bill is or is not
statutorily required before county can pay the gap amount to satisfy its SIRL
— District court correctly ruled that county cannot unilaterally settle
estate’s wrongful death claim for an amount within policy’s limit without
consent of excess liability insurer — No abuse of discretion in denying excess
insurer’s belated motion for discovery
HILLSBOROUGH
COUNTY, a political subdivision of the State of Florida, JORGE L. DOMINGUEZ, as
Personal Representative of the Estate of Darcia Dominguez,
Plaintiffs-Appellees, v. STAR INSURANCE COMPANY, a Michigan Corporation,
Defendant-Appellant. 11th Circuit. Case No. 15-13701. February 3, 2017. Appeals
from the U.S. District Court for the Middle District of Florida (No.
8:14-cv-02067-EAJ).
COUNTY, a political subdivision of the State of Florida, JORGE L. DOMINGUEZ, as
Personal Representative of the Estate of Darcia Dominguez,
Plaintiffs-Appellees, v. STAR INSURANCE COMPANY, a Michigan Corporation,
Defendant-Appellant. 11th Circuit. Case No. 15-13701. February 3, 2017. Appeals
from the U.S. District Court for the Middle District of Florida (No.
8:14-cv-02067-EAJ).
(Before
MARTIN and JORDAN, Circuit Judges, and COOGLER,* District Judge.)
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.
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) [36 Fla. L.
Weekly D2257d].
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) [36 Fla. L.
Weekly D2257d].
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 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.
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 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.
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 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.
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 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.
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.
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:
February of 2010, § 768.28(5) read in relevant part as follows:
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[.]
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
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) [34 Fla. L. Weekly S52b]. The sentence in italics
allows a municipality like the 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) [23 Fla. L. Weekly D665a].
But it also states that the purchase of insurance does not waive the defense of
sovereign immunity.
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) [34 Fla. L. Weekly S52b]. The sentence in italics
allows a municipality like the 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) [23 Fla. L. Weekly D665a].
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.
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 County to cooperate with Star “in the investigation,
settlement or defense of the claim or ‘suit.’ ” Id. at § IV.A.2.b(1)
& (3).
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 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.
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.
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.
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) [39
Fla. L. Weekly D1337e]. So no Florida Court has addressed Star’s obligations
under the policy.
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) [39
Fla. L. Weekly D1337e]. 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 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.
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 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.
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 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.
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 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.
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 the County to pay its SIRL of $350,000, which exceeds the
$200,000 sovereign immunity cap. Id. at ¶ 35.
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 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.
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.
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 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.
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 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.
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 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.
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 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 Star had refused to offer any
policy proceeds and was likely “to veto the proposed settlement.” Id. at
2.
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 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.
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.
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 $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.
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 $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.
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
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.
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.
at 11.
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.
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) [40 Fla. L. Weekly S302a], but the
district court found that case distinguishable. See Star Ins., 2015 WL
12765535, at *2.
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) [40 Fla. L. Weekly S302a], 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 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.
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 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.
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.
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) [19
Fla. L. Weekly Fed. C127a]. The same 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) [25 Fla. L. Weekly Fed. C949a].
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) [19
Fla. L. Weekly Fed. C127a]. The same 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) [25 Fla. L. Weekly Fed. C949a].
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.
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 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) [36 Fla. L. Weekly D229a] (“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) [35 Fla. L. Weekly D2856c] (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”).
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 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) [36 Fla. L. Weekly D229a] (“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) [35 Fla. L. Weekly D2856c] (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, §
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).
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, §
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
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
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[.]”
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 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).
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 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 governmental entities to settle claims up
to the limit of liability insurance they may carry”).3
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 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.
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.
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.
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.
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.
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.
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) [40 Fla. L. Weekly D2756a] (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, 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.
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) [40 Fla. L. Weekly D2756a] (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, 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) [21 Fla. L. Weekly
D1564e] (addressing the duties of primary and excess insurers with respect to
settlement proposals).
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) [21 Fla. L. Weekly
D1564e] (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 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
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 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.
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.
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.
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.
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
IN PART, VACATED IN PART, AND REMANDED.5
__________________
*The
Honorable L. Scott Coogler, United States District Judge for the Northern
District of Alabama, sitting by designation.
Honorable L. Scott Coogler, United States District Judge for the Northern
District of Alabama, sitting by designation.
1In
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.
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.
2Given
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.
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.
3One
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.
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.
4For
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.
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.
5As
to all other issues raised, we affirm without discussion.
to all other issues raised, we affirm without discussion.
* *
*
*