Insurance
— Automobile liability — Costs — Trial court did not err in adjudicating
insurer jointly and severally liable with its insured for plaintiff’s taxable
litigation costs — Insurer’s claim that cost judgment was defective because it
did not contain sufficient findings to support court’s joinder of insurer was
not preserved for appellate review where insurer did not file motion for
rehearing to alert court to alleged defect — Even if preserved, the claim is
without merit — There is no merit to claim that insurer was improperly joined
in the judgment because plaintiff failed to comply with statutory notice
provision — Because insurer chose to litigate, policy afforded coverage for
taxable litigation costs under supplemental payments section, which provided
that insurer would pay other reasonable expenses incurred at insurer’s request
— Conflict certified

NEW HAMPSHIRE INDEMNITY COMPANY, Appellant, v. JOHN GRAY, DAMIL BELIZAIRE
& DALINE BELIZAIRE, jointly & severally, Appellees. 1st District. Case
No. 1D14-3348. Opinion filed October 8, 2015. An appeal from the Circuit Court
for Duval County. W. Gregg McCaulie, Judge. Counsel: Shelley H. Leinicke of
Wicker, Smith, O’Hara, McCoy & Ford, P.A., Ft. Lauderdale; Michael C.
Clarke of Kubicki Draper, P.A., Tampa, for Appellant. Brandon G. Cathey and
Stephanie M. Miles of Swope, Rodante P.A., Tampa, for Appellee John Gray.

Factual Background

Mr. Belizaire was involved in a motor vehicle collision resulting in a
catastrophic injury to Appellee, John Gray, who in turn sued Belizaire for
damages. NHIC provided a defense to Belizaire under the subject insurance
policy and the matter went to trial, resulting in a jury verdict of $2.3
million in damages, in Appellee’s favor.

The trial court entered a final judgment against Belizaire, reserving
jurisdiction to award costs. Appellee then moved to tax costs against
Belizaire, serving the motion on his attorneys, who represented him at the cost
hearing. The trial court granted the motion in December 2013, and awarded costs
of more than $127,000. Approximately one week later, Appellee filed a motion
asking the court to enter a final judgment for the taxable costs awarded and to
join NHIC in the judgment. Appellee served the motion, not on NHIC, but on
Belizaire’s NHIC-retained attorneys. Ten days later, Appellee filed another
motion to tax costs related to litigation that ensued after Belizaire objected
to aspects of Appellee’s prior cost motion. This, too, he served on Belizaire’s
attorneys.

In June 2014, NHIC, through independent counsel, filed a “Memorandum in
Response and Opposition” to Appellee’s motion. NHIC asserted that Appellee
failed to comply with section 627.4136(4), Florida Statutes, by not serving
NHIC with the joinder motion by certified mail. NHIC also argued that it could
not be joined as a party because it was not responsible for Appellee’s costs
under the policy’s terms.

Appellee filed a “Supplemental Certificate of Service” dated June 26, 2014
(the same day NHIC filed its memorandum in opposition to joinder), indicating
that a copy of Appellee’s motion was furnished by email to the attorneys who
filed the opposition memorandum, and by certified mail to “AIG Insurance.”1 Appellee filed a copy of this supplemental
certificate in the trial court on September 18, 2014. The court held a hearing
on the matter four days later at which counsel for NHIC, Belizaire, and
Appellee appeared. NHIC argued against joinder on the same grounds asserted in
its memorandum in opposition.

Appellee’s counsel expressed her appreciation for NHIC’s memorandum,
because it alerted her to the procedural defect and allowed her time to rectify
it, which she asserted was achieved by filing a copy of the motion and a
supplemental certificate of service via certified mail before the hearing.
NHIC’s counsel indicated that he had not received either document and asserted
that it was insufficient to serve a motion on a Thursday before a Monday
hearing. Appellee responded that the statute does not provide when a joinder
motion must be served, only how, and that the carrier was represented by
counsel and had been for the entirety of the litigation. The court took the
matter under advisement and ultimately entered the judgment on appeal that
adjudicated NHIC jointly and severally liable for costs in excess of $135,000.

Legal Analysis

I. NHIC’s
Procedural Challenges

NHIC asserts two procedural grounds against the trial court’s judgment: 1)
NHIC was improperly joined in the judgment, because Appellee failed to comply
with the statutory service provision found within section 627.4136(4), Florida
Statutes; and 2) the court erred by failing to “articulate any basis” for
adding NHIC to the judgment and not making any finding that the policy covered
Appellee’s taxable costs.

We address the second argument first, which we find unpreserved. NHIC
argues that the judgment is defective, because it does not contain sufficient
findings to support the court’s joinder of NHIC. Even if correct, any such
defect necessarily first appeared on the face of the judgment itself. Because
NHIC did not file a motion for rehearing to alert the court to the alleged
defect, NHIC’s arguments in this regard are unpreserved for appellate review. See,
e.g., Pensacola Beach Pier, Inc. v. King, 66 So. 3d 321, 325-26
(Fla. 1st DCA 2011) (holding, where “Appellants did not file a motion for
rehearing asking the court to make a finding regarding [certain] statements,”
they failed to preserve the argument). See also Williamson v.
Cowan, 49 So. 3d 867 (Fla. 5th DCA 2010) (holding, “[b]ecause Appellant
never challenged the adequacy of the findings in a motion for rehearing . . .
the issue was not properly preserved for appellate review.”). We state once
again: When errors appear for the first time in a judgment, the party harmed by
the error must assert its grounds in a motion for rehearing to allow the trial
court an opportunity to rectify the error.

Even if preserved, however, the judgment was not defective for failing to
include the findings NHIC asserts were necessary. First, there was no dispute
below that Appellee obtained a verdict against Belizaire, or that Belizaire was
an insured under the policy, something NHIC acknowledged in its reply brief.
Furthermore, both parties relied on diametrically opposed interpretations of
the same policy provision in support of their respective positions on the
substantive issue of joinder based, as discussed below, on conflicting district
court opinions. Therefore, by granting Appellee’s joinder motion, it is
apparent that the court was persuaded by the authority on which Appellee
relied.

Turning to NHIC’s first procedural argument, section 627.4136(4) provides,
in relevant part:

(4) At the time
a judgment is entered . . . a liability insurer may be joined as a party
defendant for the purposes of entering final judgment . . . by the motion of
any party . . . . A copy of the motion to join the insurer shall be served on
the insurer by certified mail. . . .

In GEICO General Insurance Company v. Williams, 111 So. 3d 240,
246-47 (Fla. 4th DCA 2013), the court explained that a carrier is timely added
as a party at the time a final judgment for fees and costs is entered, citing Ulrich
v. Eaton Vance Distributors, Inc., 764 So. 2d 731, 733 (Fla. 2d DCA 2000),
and section 627.4136, Florida Statutes. We agree with the analysis of the
Fourth District in Williams. A judgment on the merits of a suit is not
final for purposes of determining the collateral issues of attorney’s fees and
litigation costs until those issues are resolved.

Here, although it is undisputed that Appellee did not serve a copy of the
motion directly on NHIC at the time he first filed the motion in January 2014,
Appellee asserts that he complied with this provision by sending a supplemental
certificate in which he averred that he sent a copy of the motion via certified
mail on the same day NHIC filed its memorandum in opposition to the motion.
Appellee also argues that the statute requires the insurer to be joined by
sending the insurer a copy of the motion via certified mail at or before the
time the final judgment to which it is joined is entered, which he did. NHIC
argues that Appellee’s last-minute amended certificate of service of the motion
never reached its attorneys before the hearing, and that there still is no
evidence that the motion was actually mailed by certified mail, because the
card indicating as much is not in the record.

NHIC relies on ACE American Insurance Company v. HCP IIII of Bradenton,
Inc., 913 So. 2d 1280 (Fla. 2d DCA 2005), in support of its position that
failure to “timely” serve NHIC via certified mail is fatal to the judgment at
issue. This reliance is misplaced. In that case, ACE and two other carriers
tendered checks to satisfy a judgment against their insured, but the plaintiff
filed a motion asserting the amounts paid were deficient and sought an order
directing ACE pay the deficiency. Id. at 1281. The trial court entered
such an order and the appellate court reversed, holding that “[t]he trial court
had no in personam jurisdiction over ACE because it is undisputed that ACE was
never served and was never a party to the suit.” Id. Critically, the
court explained: “Although, pursuant to section 627.4136(4), Florida Statutes
(2004), a liability carrier may be joined at or before the time judgment is
entered against its insured, there was no such joinder in the present case.” Id.

In ACE, therefore, unlike here, the plaintiff made no attempt to
join the carrier at or before the time the plaintiff asked the court for an
order instructing the carrier to pay the alleged deficiency at issue; thus, the
carrier was not a party against whom the court could issue an order to enforce
the judgment. It was for that reason that the court lacked in personam jurisdiction.

Here, however, Appellee did move to join NHIC, and did so before the judgment
on costs was entered. Additionally, there is no dispute that NHIC received a
copy of Appellee’s joinder motion before the hearing, as indicated by the fact
that it retained separate counsel, who filed a memorandum in opposition to
joinder. NHIC was also represented by counsel at the hearing on that motion and
did not seek a continuance or otherwise indicate more time was needed to
prepare a defense to the legal question of whether NHIC could properly be
joined under the statute. Furthermore, the arguments made by counsel were
identical to those raised in the opposition memorandum. Under these
circumstances, even if NHIC did not receive the certified mail copy of the
motion before the hearing, it did not suffer any prejudice as a result, and the
court did not abuse its discretion by not dismissing the joinder motion and
ruling on the merits.

This leaves the substantive question of whether the insurance policy at
issue affords coverage for the taxable litigation costs included in the
judgment at issue and, thus, whether joining NHIC in the judgment was proper.

II. NHIC’s
Coverage Challenge

The “Supplementary Payments” section of the policy at issue provides that,
in addition to liability coverage, NHIC would “pay on behalf of an Insured funds
toward the cost of a bail bond”; “[p]remiums on appeal bonds and bonds to
release attachments in any lawsuit we defend”; “[i]nterest accruing after a
judgment is entered in any lawsuit we defend” (with a proviso that this duty
ends when the carrier offers “to pay that part of the judgment that does not
exceed our limit of liability”); limited funds for an insured’s loss of wages
or salary “because of attendance at hearings or trials at our request”;
and, finally, “Other reasonable expenses incurred at our request.” (Emphasis
in original.) Taken together, these all fall under the category of “litigation
expenses.” It is the “other reasonable expenses” provision upon which both
parties rely for their respective positions as to whether NHIC can be added to
a judgment for taxable costs awarded to a prevailing plaintiff and taxed to
NHIC’s insured defendant, with the phrase “at our expense” being the critical
language at issue. The parties’ mutual reliance on the same provision to reach
opposite outcomes is based on the conflicting opinions of Florida Insurance
Guaranty Association, Inc. v. Johnson, 654 So. 2d 239 (Fla. 4th DCA 1995)
(relied upon by Appellee), and Steele v. Kinsey, 801 So. 2d 297 (Fla. 2d
DCA 2001) (relied upon by NHIC).

In Johnson, Florida Insurance Guaranty Association, Inc. (FIGA),
standing in the place of the insolvent insurer, contested a cost award in favor
of the prevailing plaintiff as being in excess of the underlying insurance
policy’s limits. 654 So. 2d at 239. FIGA relied on that portion of the policy
defining the limits of liability coverage. Id. at 240. The plaintiff
argued:

the ‘costs’
which it seeks are, in fact, consistent with the terms of the existing
policy. The [plaintiff] contends that the ‘costs’ are covered within the
‘Supplementary Payments’ provision of the insolvent insured’s policy, which
provides, in pertinent part: ‘[i]n addition to our limit of liability, we will
pay on behalf of a covered person . . . [o]ther reasonable expenses incurred
at our request.’

Id. (emphasis in original). The
plaintiff argued that the “request” referred to in this provision “took the
form of [the insurer’s] election to litigate” the matter, and contended
that, “having thus chosen to litigate, the taxable costs entered against
the insured were, therefore, expenses covered under the terms of the policy.
The award of taxable costs in this case are reasonable expenses incurred by the
plaintiff, and charged to the defendant, as a result of the litigation of the
action.” Id. (emphasis in original).

The Fourth District agreed, holding that FIGA “made the decision to defend
this action,” and, because the carrier “had sole discretion regarding the
decision to defend the lawsuit, it is obvious that the expenses incurred by the
plaintiff in litigating the action were as a result of the insurance company’s
choice not to settle the action. Thus, those expenses were incurred at the
insurer’s request.”2 Id.

In Kinsey, the tortfeasor was insured under a policy that,

in common with
most auto liability policies, gave the insurer exclusive control over settling
or litigating any claim against the insured for damages covered by the policy.
The policy also had a supplementary payments provision stating that the insurer
would pay certain costs relating to litigation, e.g., bail bonds and
post-judgment interest, including ‘[o]ther reasonable expenses incurred at our
request.’

801 So. 2d at 298. Kinsey, the insured, was involved in an accident
causing injury to Steele and, during the course of the litigation and pursuant
to the offer of judgment statute, Steele offered to settle the matter for the
policy’s $10,000 limit. This offer was refused. Id. at 299. At one
point, Kinsey and the tortfeasor’s insurer “entered into a joint stipulation
and settlement agreement” pursuant to which the trial court was to decide “the
insurer’s liability for bad faith before adjudicating the underlying tort
action. The parties’ stipulation also contemplated that the trial court would
decide whether [the policy] covered, by virtue of the above-quoted language
from the supplementary payments provision, any section 789.79 attorney’s fees
and costs which she might owe Mr. Steele.” Id. The trial court
“concluded that the policy provided no such coverage,” and Kinsey appealed. Id.

The Kinsey court held that “the language ‘expenses incurred at our
request’ is clear on its face and should be applied according to its generally
understood meaning,” and recognized that its “resolution of this issue puts us
in conflict with the Fourth District’s opinion in Johnson.” Id.
The Kinsey court explained:

The common
meaning of “request” is “the act of asking, or expressing a desire, for
something; solicitation or petition.” Webster’s New World College Dictionary
1218 (4th ed. 2001). The legal meaning of the word is “[a]n asking or
petition. The expression of a desire to some person for something to be granted
or done, particularly for the payment of a debt or performance of a contract.” Black’s
Law Dictionary 1172 (5th ed. 1979). Both of these commonly understood
definitions reinforce the clear use of the term within the context of the
policy-that the insurer intended to pay for expenses that it had authorized and
over which it had control, such as the selection of a service or product of
known value and cost.

Id. The Kinsey court certified
conflict with Johnson.

Although the Florida Supreme Court accepted jurisdiction, it later
decided: “Upon reflection and further consideration, we now conclude that
review was improvidently granted. Accordingly, this review proceeding is
dismissed.” Steele v. Kinsey, 840 So. 2d 1023 (Fla. 2003).

In an opinion issued two years later, however, the supreme court held that
FIGA was bound by the terms of an insolvent insurer’s supplementary payments
provisions and, thus, “liable for interest on judgments entered to the same
extent as [the insurer] would have been liable,” even if this resulted in
payments in excess of the policy’s liability limits. Jones v. Fla. Ins.
Guar. Ass’n, Inc., 908 So. 2d 435, 454 (Fla. 2005). The court explained:

Indeed, courts
in Florida have assessed costs in excess of limits of liability against FIGA
through supplementary payment provisions. In Johnson, the district court held
FIGA responsible for court costs in excess of the underlying policy’s liability
limits. The court applied the court costs through a supplementary payment
provision that obligated the insolvent insurer to pay on behalf of a covered
person reasonable expenses incurred in the litigation. The district court
reasoned that the insurer had decided against settling the claim and that the
resulting litigation expenses were therefore a responsibility to be covered.

Id. at 454-55 (citations omitted). The
court then observed:

In Steele v.
Kinsey, the Second District reached the opposite conclusion, not on the
basis that fees and costs in excess of policy limits could not be assessed
against FIGA through supplementary payment provisions, but based on its
conclusion that the language promising payment of expenses incurred at the
insurer’s request could not be reasonably interpreted to include litigation
expenses.

Id. at 455 (citation omitted). The
court noted in a footnote its prior acceptance of Kinsey and subsequent
decision to discharge jurisdiction. Id. at n.7.

The remainder of Jones addressed the issue of FIGA’s responsibility
for judgment interest which, the court explained, existed due to the FIGA Act’s
purpose “to avoid financial loss to claimants or policyholders due to the
insolvency of the insurer. See § 631.51(1).” Jones, 908 So. 2d at
454. The court also emphasized, however, that the insured’s predicament was due
to “FIGA’s abdication of its statutory and contractual duties, one of which was
a supplementary payment coverage obligation to pay interest on judgments
entered against the insured.” Id. at 455.

We cannot speculate why the supreme court opted to discharge its conflict
jurisdiction in Kinsey, but as we read Jones, Johnson is
still good law and we agree with the conclusion in that case. In our view, the
court in Kinsey too narrowly interpreted the word “request”: “The common
meaning of ‘request’ is ‘the act of asking, or expressing a desire, for
something; solicitation or petition.’ ” Kinsey, 801 So. 2d at 299
(emphasis added). The court also noted the legal definition of the word,
explaining that it means “ ‘[t]he expression of a desire to some person for
something to be granted or done, . . . .’ ” Id.

As both the Johnson and Kinsey courts acknowledge, under
insurance policies such as the one here, insurers enjoy the sole right to
settle or litigate claims against their insureds; therefore, choosing to
litigate is no different than a request or “expressing a desire” to do so. Any
such expression, or request, necessarily encompasses incurring litigation
costs, which may mean not only the insurer’s litigation costs, but also those
incurred by the opposing party should that party prevail. It is the insurer’s
choice to litigate — a decision only it can make — that results in these
costs being incurred; thus, “those expenses [are] incurred at the insurer’s
request.” Johnson, 654 So. 2d at 240.

Insurers have a statutory right not to be named as a defendant in an
action brought by a person claiming damages as a result of an insured’s
negligence unless “such person shall first obtain a settlement or verdict
against a person who is an insured . . . for a cause of action which is covered
by such policy.” § 627.4136(1), Fla. Stat. Insurers enjoy this right so as to
avoid the prejudice likely to occur if a jury is aware of an insurance
company’s interest in the case. As interpreted by the court in Kinsey,
however, pursuant to policy language such as that here, when an insurer opts to
litigate “on behalf” of its insured defendant, it not only avoids being named
as a defendant, it is also cloaked with immunity from paying the prevailing
plaintiff’s costs resulting from the insurer’s choice to litigate. These costs
are then imposed on the insured, who had no say in the decision to litigate. In
our view, this is an abuse of an insurer’s right under section 627.4136(1).
Indeed, under the court’s interpretation in Kinsey, an insurer that
chooses litigation over settlement can be held liable for a prevailing
plaintiff’s litigation costs only if the insurer had specifically requested the
plaintiff to incur those costs — an unlikely scenario, to say the least.

The Fourth District’s interpretation in Johnson is much more
consistent with the concern expressed by the supreme court in Jones, in
which it noted that the insured was in this predicament precisely because
of the insurer’s actions, and not the insured’s actions. It is also
particularly compelling when, as in this case, the taxable costs incurred
exceed by ten times the insured’s liability limits. Indeed, the Kinsey
interpretation of this common insurance policy provision runs counter to the
very purpose of buying insurance — to minimize liability exposure — and
instead results in an insured actually purchasing greater financial exposure
than he may have faced without insurance. This results in an absurd
interpretation of the policy provision, in our view, which we must avoid. See,
e.g., King v. Bray, 867 So. 2d 1224 (Fla. 5th DCA 2004) (“The
courts generally agree that where one interpretation of a contract would be
absurd and another would be consistent with reason and probability, the
contract should be interpreted in the rational manner.”). We find it difficult
to conceive that an insured who purchases an automobile liability policy does
so with the intent that he is granting the insurer not only the right to decide
whether to litigate a claim brought against him, but also to potentially
subject the insured to a cost judgment well in excess of his policy limits,
solely because the insurer elected to exercise the right to litigate for the insured’s
benefit.

We note, too, that, given that the purpose of the offer of judgment
statute, section 768.69, Florida Statutes, which is to discourage excessive or
frivolous litigation, the Kinsey court’s interpretation of the policy
language in question undermines that statutory purpose, because it applies the
adverse financial disincentives of the statute to the insured who had no choice
in the matter, rather than the insurer who engaged in the meritless litigation.

Conclusion

Based on the foregoing, we AFFIRM the trial court’s final judgment
adjudicating NHIC jointly and severally liable with its insured for Appellee’s
taxable litigation costs. We also certify conflict with Steele v. Kinsey,
801 So. 2d 297 (Fla. 2d DCA 2001).

AFFIRMED; CONFLICT CERTIFIED. (WETHERELL and RAY, JJ., CONCUR.)

__________________

1AIG is the company listed on the cover page of the policy at issue and is
apparently NHIC’s parent company.

2The Johnson court also noted that the plaintiff argued that the
policy provision at issue was unambiguous but that, if the court disagreed and
it was in fact ambiguous, then long-standing Florida decisional law provided
that “any uncertainty must be construed against the insurer and in favor of the
insured. Thus, the ‘Supplementary Payments’ provisions obviously have the
intent of extending coverage and, therefore, must be construed liberally in
favor of the insured. Accordingly, we affirm the trial court’s judgment in this
regard.” 654 So. 2d at 240 (citations omitted).

* * *