Insurance
— Equitable subrogation — Where three insurers settled underlying litigation
through a jointly-funded settlement under an agreement that provided that the
insurers could litigate among themselves regarding reallocation of the
settlement funds, insurer which was determined to be liable to another insurer
after trial was not entitled to recover from third insurer the money it had
recovered in settlement before trial from insurer which prevailed at trial —
Insurer which did not pay the entire settlement in underlying tort litigation
was not entitled to equitable subrogation

UNITED STATES FIDELITY & GUARANTY COMPANY, Appellant, v.
ESSEX INSURANCE COMPANY and FEDERAL INSURANCE COMPANY, Appellees. 1st District.
Case No. 1D15-0808. Opinion filed March 21, 2016. An appeal from the Circuit
Court for Duval County. James L. Harrison, Judge. Counsel: Mark D. Tinker of
Banker, Lopez, Gassler, P.A., St. Petersburg, Scott W. McMickle and Elenore
Klingler of McMickle, Kurey & Branch, LLP, Alpharetta, GA, for Appellant.
Meagan L. Logan of Marks Gray, P.A., Jacksonville, for Appellee Essex Insurance
Company.

(PER CURIAM.) Appellant, United States Fidelity &
Guaranty Company (USF&G), appeals the trial court’s grant of summary
judgment, requiring USF&G to give $600,000 it received from Federal
Insurance (Federal) to Essex Insurance Company (Essex). Because the record does
not provide an adequate basis for equitable subrogation, we reverse the order
granting summary judgment.

This case arose out of an agreement between USF&G,
Essex, and Federal to settle underlying litigation involving mutual insureds
through a jointly-funded settlement. The agreement provided that the insurers
could litigate among themselves if any of them wished to reallocate the
settlement funds. USF&G and Essex were substituted as plaintiffs for the
insured in an action against Federal, but USF&G and Essex maintained
separate and independent claims against Federal. Before trial, USF&G
settled its claim with Federal for $600,000. Essex and Federal proceeded to
trial, where the trial court found in favor of Federal in the amount of $2
million, Federal’s contribution to the settlement proceeds. Essex entered into
a post-judgment settlement with Federal, but has kept the terms of the
settlement confidential. Subsequently, Essex asserted a claim against USF&G
to recover the $600,000 settlement money USF&G received from Federal.

USF&G and Essex filed cross motions for summary
judgment. The trial court granted summary judgment in favor of Essex, finding
that Essex, as the excess carrier, should receive the settlement funds.

In order to support recovery under a theory of equitable
subrogation, Essex must establish: “(1) that it made the payment at issue to protect
its own interests, (2) the payment was non-voluntary, (3) it was not primarily
liable for the debt paid, (4) it paid the entire debt, and (5) subrogation
would not work any injustice to the rights of a third party.” Nova Info.
Sys., Inc. v. Greenwich Ins. Co., 365 F. 3d 996, 1005 (11th Cir. 2004)
(quoting Dade Cty. Sch. Bd. v. Radio Station WQBA, 731 So. 2d 638, 646
(Fla. 1999)). Essex cannot establish the fourth element as it did not pay the
entire settlement in the underlying tort litigation.

In light of the independent nature of their respective
claims against Federal, the trial court erred in determining Essex was entitled
to the settlement money USF&G received from Federal. Accordingly, we
reverse the trial court’s order granting summary judgment. (WETHERELL and
WINOKUR, JJ., CONCUR; MAKAR, J., CONCURS WITH OPINION.)

__________________

(MAKAR, J., concurring with opinion.) Three insurers
collectively contributed $9 million to settle and pay claims arising from a
motor vehicle accident, voluntarily entering an agreement stating that the
insurers would be “subsequently litigating among themselves how the settlement
amount should be paid and allocated among the policies under Florida law.” The
subsequent litigation that resulted was done independently amongst the
insurers, each against the other, none cooperating or coordinating with the
others. Weighing the risks and costs of litigation, USF&G entered a
settlement with and received $600,000 from Federal. The dispute between Essex
and Federal went to trial, resulting in a $2 million judgment against Essex in
Federal’s favor (later settled for an undisclosed amount).

In this appeal, the issue is what legal right does Essex now
have to the $600,000 of settlement funds that USF&G received from Federal,
funds that USF&G sought and successfully obtained at its own expense
through its independent litigation efforts against Federal? None, it appears.
Contractual subrogation doesn’t apply because no contractual relationship
exists between the parties (the trial court’s reference to the Essex policy
notwithstanding); and neither equitable subrogation nor equitable contribution
was established on this record to support Essex’s claimed entitlement to the
settlement funds that USF&G procured for itself. In essence, the parties’
three-page agreement says the three insurers may litigate “how the settlement
amount” is to be allocated, but it leaves ambiguous by what legal yardstick
that is to be measured. The record does not indicate whether this is a common
or uncommon way for insurers to resolve disputes of this magnitude, and no
party has pointed us to any statute or case that specifies the standards or
manner by which such disputes are required to be resolved. Absent a definitive
guidepost, the parties would have us resolve their dispute by applying general
principles of equity. As such, I agree that the trial court should not have
awarded to Essex the funds that USF&G obtained through its own independent
efforts from Federal, such that the judgment against USF&G should be
vacated and judgment entered in its favor.