Acosta, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA., Case No. 1D09-3215 (Fla. App. 4/29/2010)
| Decision Date | 29 April 2010 |
| Docket Number | Case No. 1D09-3215. |
| Parties | ACOSTA, INC., a Delaware corporation, and ACOSTA SALES, LLC f/k/a ACOSTA SALES CO., INC. d/b/a ACOSTA SALES and MARKETING COMPANY, a Delaware limited liability corporation, Appellants, v. NATIONAL UNION FIRE INSURANCE COMPANY of PITTSBURGH, PA., a foreign corporation, ARROWOOD INDEMNITY COMPANY f/k/a ROYAL INDEMNITY COMPANY, a foreign corporation, NORTH RIVER INSURANCE COMPANY, a foreign corporation, UNITED STATES FIRE INSURANCE COMPANY, a foreign corporation, and AMERICAN INSURANCE COMPANY, a foreign corporation, Appellees. |
| Court | Florida District Court of Appeals |
Alan S. Wachs, Matthew P. McLauchlin, Chris T. Harris, and Michael M. Giel of Volpe, Bajalia, Wickes, Rogerson & Wachs, P.A., Jacksonville, for Appellants.
Steven J. Brodie and Jeffrey M. Cohen of Carlton Fields, P.A., Miami, for National Union Fire Insurance Co. of Pittsburgh, PA.; Kevin J. Kapusta, Anthony J. Russo, and Kathy Maus of Butler, Pappas, Weihmuller, Katz & Craig, LLP, Tampa, for Arrowood Indemnity Co. f/k/a Royal Indemnity Co.; Gerald W. Weedon of Marks & Gray, P.A., Jacksonville, for North River Insurance Co. and United States Fire Insurance Co.; Andrew E. Grigsby of Hinshaw & Culbertson LLP, Miami, for American Insurance Co.
This appeal arises from a final summary judgment issued in favor of Arrowood Indemnity Co. f/k/a Royal Indemnity Co. ("Arrowood") against Acosta, Inc. and Acosta Sales, LLC (collectively "Acosta"). In the order granting Arrowood's motion for summary judgment, the trial court held that Arrowood, a liability insurer for Acosta, properly denied coverage for a lawsuit ("the underlying suit") brought against Acosta by the Trustee of the Creditors' Trust of Marketing Specialists ("the Creditors' Trust"). In the same order, the trial court granted partial summary judgment for National Union Fire Insurance Co. ("National Union"), another liability insurer for Acosta. Acosta argued below, as it does here, that
National Union and Arrowood were obligated to indemnify it in the underlying suit. The trial court determined that National Union and Arrowood properly denied coverage under a "prior litigation" exclusion due to the relationship between the underlying suit and a suit brought by Marketing Specialists Sales Co. ("Marketing Specialists") against Acosta in 2001 ("the turnover suit"). Both Arrowood and National Union defend that decision in this appeal.1 For the reasons explained below, we agree with the trial court's decision, and accordingly, we affirm.
There are two policies at issue in this case: a Directors, Officers and Private Company Liability Insurance Policy issued to Acosta by National Union ("the National Union Policy"); and an Excess Directors and Officers Liability and Company Reimbursement Coverage Policy issued to Acosta by Arrowood ("the Arrowood Policy"). The effective period of the National Union Policy was November 1, 2002, to November 1, 2003. The Arrowood Policy provided for liability coverage in excess of the limits of the National Union Policy, and by its terms, it was subject to the same warranties, terms, conditions, and exclusions as the National Union Policy.
The prior litigation exclusion of the National Union Policy ("Exclusion 4(e)"), which is incorporated by reference into the Arrowood Policy,2 provides as follows:
The Insurer shall not be liable to make any payment for Loss in connection with a Claim made against an Insured:
. . . .
(e) alleging, arising out of, based upon[,] or attributable to as of the Continuity Date, any pending or prior: (1) litigation; or (2) administrative or regulatory proceeding or investigation of which an Insured had notice, or alleging any Wrongful Act which is the same or Related Wrongful Act to that alleged in such pending or prior litigation or administrative or regulatory proceeding or investigation[.]
The "Continuity Date" was November 1, 2001.
On June 26, 2001, a few months before the November 2001 continuity date, Marketing Specialists filed a Complaint for Turnover and Injunctive Relief against
Acosta3 in a United States Bankruptcy Court. In the complaint, Marketing Specialists identified itself as the debtor and debtor-in-possession in Chapter 11 proceedings that had been initiated on May 24, 2001.
At that time, Marketing Specialists and Acosta were competitors in the food brokerage industry. After Marketing Specialists filed for bankruptcy, it attempted to negotiate a sale of its business to Acosta. However, Acosta would not agree to buy the business because, as Marketing Specialists alleged in the turnover complaint, Acosta believed "it would ultimately get the business anyway." As a result of the negotiations with Marketing Specialists, Acosta agreed to a transition agreement under which it would enter into new broker agreements with certain of Marketing Specialists' clients, commit to fund a portion of the back pay Marketing Specialists owed its employees, and pay for "its use of any assets of Marketing Specialists," as it was phrased in the turnover complaint.
Based on this agreement, on May 28, 2001, Marketing Specialists executed an interim agreement with Acosta, subject to execution of a final agreement, board approval, and approval by the bankruptcy court. The agreement was memorialized on a document the parties refer to as the "Term Sheet." Marketing Specialists filed a motion to have the Term Sheet approved, but it withdrew that motion on June 7, 2001. After the motion was withdrawn, Acosta hired approximately 1,800 of
Marketing Specialists' former employees and entered into agreements with certain clients Marketing Specialists had represented. In the two weeks that followed, Marketing Specialists tried to determine what, if any, assets Acosta would be interested in acquiring.
During the same time period, Marketing Specialists proceeded to close offices across the country. In the turnover complaint, Marketing Specialists made the following allegations about its office-closure procedures:
In connection with these closures, Marketing Specialists has discovered a number of incidents involving employees of Acosta wrongfully removing files and equipment from Marketing Specialists' offices. In particular, on June 13, 2001 at approximately 5:00 p.m., an Acosta van took an entire load of files, copy paper and a shelf unit from the Seattle Office. Marketing Specialists is now missing 25 file cabinets filled with files, 10 laptops, 3 to 5 monitors, and 2 printers from that office. In addition, last week Acosta employees removed all of the files from Marketing Specialists' Atlanta offices and placed them in Acosta's Marietta office. In Dallas, Acosta employees have also loaded up and taken away approximately ten boxes of files from the Marketing Specialists' offices. . . .
. . . In addition, virtually all of the Journadas (in excess of 2,000) and laptops have been removed by former employees, many of which have gone to work for Acosta.
Marketing Specialists further alleged that Acosta employees had filed change of address forms with the United States Postal Service to have Marketing Specialists' mail, including checks from clients, sent to Acosta offices. The complaint referenced one form in particular, which was dated June 13, 2001.
Based on the events detailed above, Marketing Specialists set forth three causes of action: one for injunctive relief; one for a temporary restraining order; and one for turnover. In count one, Marketing Specialists alleged that the "files, equipment, mail[,] and other personal property of Marketing Specialists" were "necessary to the successful reorganization or liquidation of the estate." It further alleged that "[t]he property rights involved [were] unique and irreplaceable" and that Acosta had no legal interest in Marketing Specialists' property. Marketing Specialists requested that the court enjoin "Acosta . . . from taking any action to seize, possess, hold, control, assign, transfer, sell[,] or in any way whatsoever affect the interests of Marketing Specialists in and to its property, including, but not limited to, its equipment, computers, files, records, mail[,] and checks." In count two, Marketing Specialists requested a "temporary restraining order to prevent the immediate and irreparable injury described above and the consequences to the Debtor's estate flowing therefrom." In count three, Marketing Specialists requested "the immediate turnover of all property of Marketing Specialists in the possession of Acosta, its affiliates, shareholders, directors, officers, employees[,] and agents."
The turnover suit was resolved by agreement of the parties without any formal adjudication. At a hearing in the turnover suit held on July 31, 2001, the bankruptcy judge found no evidence to suggest any wrongdoing on Acosta's part.
In May 2003, the Creditors' Trust filed the underlying suit, and it named Acosta as a defendant in April 2004. After several amendments, the complaint in the underlying suit asserted twenty-seven claims, fifteen of which were against Acosta.
In the introductory allegations of the complaint, the Creditors' Trust asserted that Acosta had "violated automatic stay provisions after Marketing Specialists filed for bankruptcy protection and provided financial and other forms of compensation to encourage and assist the misappropriation of Marketing Specialists' intangible property by its former employees." It further alleged that Acosta and other "Competitor Defendants" were unjustly enriched by the transfer of a substantial portion of Marketing Specialists' business without consideration. According to the complaint in the underlying suit, Acosta and other competitors had worked with...
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