Am. Builders Ins. Co. v. Southern-Owners Ins. Co.

• Decision Date: 04 January 2023
• Docket Number: 21-13496
• Citation: 56 F.4th 938
• Parties: AMERICAN BUILDERS INSURANCE COMPANY, Plaintiff-Appellee, v. SOUTHERN-OWNERS INSURANCE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

56 F.4th 938

AMERICAN BUILDERS INSURANCE COMPANY, Plaintiff-Appellee,

v.SOUTHERN-OWNERS INSURANCE COMPANY, Defendant-Appellant.

No. 21-13496

United States Court of Appeals, Eleventh Circuit.

Filed: January 4, 2023

Philip M. Burlington, Adam J. Richardson, Burlington & Rockenbach, PA, West Palm Bch, FL, Richard M. Benrubi, Benrubi Law, PA, Boca Raton, FL, for Plaintiff-Appellee.

Kevin David Franz, Boyd & Jenerette, PA, Boca Raton, FL, Kansas R. Gooden, Boyd & Jenerette, PA, Miami, FL, Carri Leininger, Jessica Leigh Saltz, Williams Leininger & Cosby, PA, North Palm Beach, FL, for Defendant-Appellant.

Before William Pryor, Chief Judge, Rosenbaum, and Marcus, Circuit Judges.

Marcus, Circuit Judge:

Ernest Guthrie fell from a roof and became paralyzed from the waist down, never to walk again. Within months, his medical bills climbed past $400,000, and future costs projected into the millions. Three insurance companies potentially provided coverage for Guthrie. This appeal is a battle between two of them.

The primary insurer for Guthrie's company was Southern-Owners Insurance Company. At the time of the accident, Guthrie was performing subcontracting work for Beck Construction, which had a policy with American Builders Insurance Company and an excess policy with Evanston Insurance Company. American Builders investigated the accident, assessed Beck Construction's liability, and evaluated Guthrie's claim. Southern-Owners, in contrast, did little to nothing for months. When push came to shove, Southern-Owners refused to pay any amount to Guthrie to settle the claim, and American Builders and Evanston ponied up a million dollars apiece instead.

American Builders then sued Southern-Owners for common law bad faith under Florida's doctrine of equitable subrogation. Along the way, Southern-Owners moved for summary judgment, but the district court denied the motion. A federal trial jury heard the case and found in favor of American Builders. After the entry of final judgment, Southern-Owners sought judgment as a matter of law, or, in the alternative, a new trial. The district court denied those motions, too. On appeal, Southern-Owners challenges the denials of its summary judgment and post-trial motions.

After thorough review of the record and with the benefit of oral argument, we affirm.

I.

A.

Ernest Guthrie, an employee of Ernest Guthrie, LLC performing work for Beck Construction, slipped from the roof of a house on April 1, 2019, and crashed to the ground. He became paralyzed from the waist down. Guthrie's lawyer, Stuart Cohen, wrote to Beck Construction to assert the company's liability and request insurance information. Beck Construction, in turn, put its insurer, American Builders on notice on May 8. American Builders had issued a general liability policy to Beck Construction, with a limit of $1 million for each occurrence. American Builders’ claim specialist investigated the incident by meeting with the company and its outside investigator and collecting hospital records, rehabilitation facility records, and correspondences about the claim and injuries.

Cohen investigated his client's claim, too. He determined that Beck Construction instructed Guthrie to climb onto the roof without providing any fall protection, while two spotters focused on their phones. Guthrie had already sustained $400,000 in medical expenses, and Cohen calculated Guthrie's claim at $4 million to $5 million, even if Guthrie were partially liable. On September 5, Cohen demanded that American Builders pay its $1 million policy limit within thirty days in exchange for a release of Beck Construction from liability. American Builders requested an extension, and Cohen granted ten days, placing the deadline on October 14.

Cohen conditioned that demand on the lack of other available insurance. But, as it turns out, there were two other relevant policies: Evanston provided an excess policy worth $1 million per occurrence to Beck Construction, and Southern-Owners -- which would become the defendant in the instant bad-faith case -- sold Ernest Guthrie, LLC a policy that covered $1 million. Southern-Owners’ policy contained an endorsement naming Beck Construction as an additional insured for any work Ernest Guthrie, LLC performed for Beck Construction, and making its policy the primary insurer for claims arising from Beck Construction's work.

During American Builders’ investigation, it discovered these additional policies. So, on September 12, it tendered the defense of and indemnity for Guthrie's claim to Southern-Owners. In its letter to Southern-Owners, American Builders attached the certificate of insurance listing Beck Construction as an additional insured on Ernest Guthrie, LLC's policy; the initial notice of the claim to American Builders; and Cohen's September 5 demand letter. A couple weeks later, on September 25, Southern-Owners’ counsel sent letters to Cohen, American Builders, and Beck Construction, requesting additional incident reports, medical records, workers’ compensation records, potentially applicable insurance policies, applicable construction contracts, and transcripts or recordings of statements by Guthrie and Beck Construction. She also asked Cohen for a forty-five-day extension on the September 5 demand.

Two days later, Cohen provided Southern-Owners with Guthrie's medical records and bills, American Builders’ insurance policy, and correspondences from Cohen to American Builders in May and June that explained the accident. Cohen did not respond to the forty-five-day extension request, but, that same day, American Builders requested an extension for American Builders until November 4, which Cohen granted. In his letter granting the extension, Cohen explained that he recently became aware that Southern-Owners and Evanston might also provide coverage for the accident. Because of this new information, Guthrie would now only execute a release of American Builders that reserved his rights to pursue claims against either Evanston or Southern-Owners.

On October 10, American Builders retained counsel to address Cohen's new stipulation. Working quickly, the attorney concluded in a few days that Guthrie's claim was worth around $20 million to $30 million, far exceeding any applicable policy's coverage even if Beck Construction were largely not responsible. On October 14, he then informed Cohen that American Builders was prepared to pay its $1 million policy limit but that it could not accept Cohen's new stipulation because it provided only a partial release.

During the early weeks of October, the record does not reflect that Southern-Owners did anything, other than request extensions. But on October 18 -- over a month after receiving notice of Guthrie's injury -- Southern-Owners contacted the lawyer that American Builders had retained for Beck Construction to set up an interview with Russell Beck, the company's principal. Southern-Owners and the attorney spent the rest of October and all of November trying to set up a time to talk.

On November 25, still struggling to set up a meeting with Beck, Southern-Owners wrote Cohen, describing the setback and noting that it had no written documentation on the claim. Southern-Owners also requested until December 20 to respond to the September 5 demand letter. That same day, Southern-Owners told American Builders that it would agree to a defense of Beck Construction under a reservation of rights, but only after it spoke with someone from Beck Construction and completed its investigation. The letter noted that Southern-Owners’ policy included an employer liability exclusion, which might bar coverage. American Builders passed along the contents of that letter to Beck Construction the same day. Also on November 25, Beck Construction's lawyer offered November 26 or 27 for an interview with Beck, but Southern-Owners declined because this was not enough notice. He then proposed a telephone conference, but Southern-Owners demanded an in-person meeting.

Meanwhile, Cohen continued his attempts to secure payment for Guthrie. On November 18, he wrote to Evanston's claims manager, attaching the September 5 demand letter, the medical records, and other relevant documents, and made a new demand: a $2 million payout in exchange for a complete release of both American Builders and Evanston, with a decision due by December 18. American Builders received a copy of the November 18 demand letter two days later.

On December 10, nearly three months after it received notice of the claim, Southern-Owners finally met with Beck. Beck told Southern-Owners that Ernest Guthrie, LLC employed Guthrie; Guthrie was performing subcontracting work for Beck Construction; the other people on site were not responsible for spotting Guthrie; Guthrie did not request fall protection; and Guthrie admitted that he "f*cked up" and "stepped off the roof." Based on that conversation, Southern-Owners believed it had a strong liability defense. One week later, Southern-Owners decided it should talk with the other two workers present. At that time, Southern-Owners’ counsel was "in the process of reaching out" to them.

Also on December 10, Evanston told American Builders’ counsel -- who was no longer involved in the case -- that it planned to tender its full policy to Guthrie, even though it was not the primary insurer. After reactivating his file, counsel saw the November 18 demand letter. With only eight days until that letter's deadline, he once again worked fast, reviewed the 2,700-page file, and concluded that American Builders should tender its policy limit to avoid a bad-faith claim.

On December 17, after internal discussions, American Builders decided to tender its limit. It then called Cohen to request a one-day extension and discuss the Southern-Owners policy. It learned that Guthrie did "not wish to pursue coverage under the [Southern-Owners] Policy and desire[d] to move forward with settlement without involving [Southern-Owners], directly." American Builders’ cou...