June 16th, 2017

Be Our Guest or “At Our Request”? : Interpreting the Additional Payment/Supplementary Payment Provisions in Requesting Attorney’s Fees and Costs

By, Molly Chafe Brockmeyer, Esq.

The Florida Supreme Court is currently reviewing the issue of whether the policy language “all investigative and legal costs incurred by us” and “all reasonable costs incurred by an insured at our request” allows for an insurer to be added to a cost judgment pursuant to section 768.79, Florida Statutes, the offer of judgment statute. See Order Accepting Jurisdiction, Government Employees Ins. Co. v. Macedo, No. SC16-935 (Fla. Oct. 19, 2016)(certifying as direct conflict and express and direct conflict).

In Government Employees Insurance Company v. Macedo, GEICO challenged a final judgment in an automobile insurance case holding it liable for a plaintiff’s attorney fees and costs after GEICO had rejected, on behalf its insured defendant, a $50,000 settlement proposal made by the plaintiff pursuant to section 768.79, Florida Statutes.  190 So. 3d 1155, 1156 (Fla. 1st DCA 2016), review granted (Oct. 19, 2016).  Plaintiff succeeded in obtaining a jury verdict in her favor, receiving more than four times the amount of the proposal. Id. The plaintiff then added GEICO to the judgment pursuant to section 627.4136(4), Florida Statutes, and sought taxable fees and costs pursuant to the offer of judgment statute. Id. The trial court added GEICO to the judgment, making GEICO jointly and severally liable with its insured. Id.

The First District Court of Appeal, upholding its decision in New Hampshire Indemnity Company v. Gray, 177 So. 3d 56 (Fla. 1st DCA 2015), stated that GEICO’s policy with the insured gave it the sole right to litigate and settle claims, and thus contractually obligated it to pay for “all investigative and legal costs incurred by us” and “all reasonable costs incurred by an insured at our request.” Id. at 1156. The court further stated that the policy did not provide a definition of legal or other costs, nor exclude, for example, costs and fees awarded to a plaintiff driver pursuant to the offer of judgment statute. Id. Further the court restated its holding in Gray:

[U]nder 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 … 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.”

Id. at 1156-57, (quoting Gray, 177 So. 3d at 63 (internal citation omitted)).

However, the court, in certifying conflict to the Florida Supreme Court, recognized the conflict with the Second District’s opinion in Steele v. Kinsey, which held that the same language was unambiguous and that the words at issue here, “reasonable expenses incurred at our request,” can only mean that the insurer must request the product or service that incurs the expense. 801 So. 2d 297, 300 (Fla. 2d DCA 2001).

On October 19, 2016, the Florida Supreme Court accepted jurisdiction. The appeal is perfected as of January 24, 2017, and the Court has dispensed with Oral Argument.

June 5th, 2017

Insurer Fails in Attempt to Escape Its Obligation to Pay An Insureds Attorneys’ Fees Under §627.428, Florida Statutes

By, Justin M. Thomas, Esq.

In W&J Group Enterprises, Inc. v. Houston Specialty Ins. Co., the insureds, W&J, appealed an order denying their motion for attorney’s fees under section 627.428, Florida Statutes, following a settlement that was comprised of $650,000.00 payment from the insurer and $3,000.00 paid by the insured.  2017 WL 1279045 (11th Cir. April 6, 2017) (Unpublished).  Florida has extended the statutory entitlement to attorney’s fees under section 627.428, Florida Statutes, to apply beyond the obtaining of a judgment by an insured against an insurer. Such entitlement also applies under a theory referred to as the “confession of judgment rule” which arises based on the conduct of an insurer prior to a judgment.  See Wollard v. Lloyd’s & Cos. of Lloyd’s, 439 So.2d 217, 218-19 (Fla. 1983).

Though Wollard involved a first-party coverage dispute, Florida’s intermediate appellate courts have expanded the “confession of judgment rule” to the third-party context.  E.g., Mercury Ins. Co. of Fla. v. Cooper, 919 So. 2d 491 (Fla. 3rd DCA 2005); Unterlack v. Westport Ins. Co., 901 So.2d 387 (Fla. 4th DCA 2005); O’Malley v. Nationwide Mut. Fire Ins. Co., 890 So.2d 1163 (Fla. 4th DCA 2004).  CooperUnterlack and O’Malley all stand for the principle that when an insurer settles a third-party liability claim, which is contrary to the coverage position taken by the insurer against its insured, the result amounts to a confession of judgment sufficient to trigger the operation of entitlement under §627.428, Fla. Stat., for the insureds to recover their attorneys’ fees.

Interestingly, in the face of the foregoing decisions, the insurer, Houston Specialty Ins. Co. (“HSIC”), advanced the position that the court’s use of the word unilateral in Cooper was to be viewed in such a manner as to limit the confession of judgment theory to only those circumstances when it is solely the insurer who contributes to the settlement.  W&J Group at 2.  The court recognized HSIC’s position as inconsistent with the progeny of cases recognizing confessions of judgment in the third-party context.  Id.  The crux of the court’s holding was twofold.  First, an insured’s contribution to the settlement was so infinitesimal that it was insufficient to meaningfully constitute a basis to depart from the sound reasoning in Cooper, Untlerlack and O’MalleyId. at 3.  Second, to take HSIC’s position all the way through to its logical conclusion would require that the insured reject the facially reasonable settlement for purposes of preserving its rights under section 627.428, Florida Statutes.  Id.  Such a requirement, as the Court recognized, flies directly in the face of the intent of the statute and the policy concerns that have been previously discussed by the Florida Supreme Court.  Id.  After all, the instant statute exists to provide an avenue to level the playing field between insurers and insureds.

The takeaway seems to leave a sense of the pro-policy holder stance that has long been recognized in Florida jurisprudence.  Notably, however, one cannot help but wonder what effect that this decision will have on settlement positioning in the frequent dynamic of liability actions with the commonly filed companion coverage litigation.

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