Continental Cas. Co. v. City of Jacksonville

• Decision Date: 11 September 2007
• Docket Number: No. 3:04-cv-1170-J-20MCR.,3:04-cv-1170-J-20MCR.
• Parties: CONTINENTAL CASUALTY COMPANY, et al., Plaintiffs, v. CITY OF JACKSONVILLE, et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

550 F.Supp.2d 1312

CONTINENTAL CASUALTY COMPANY, et al., Plaintiffs, v. CITY OF JACKSONVILLE, et al., Defendants.

No. 3:04-cv-1170-J-20MCR.

United States District Court, M.D. Florida, Jacksonville Division.

September 11, 2007.

COPYRIGHT MATERIAL OMITTED

Efe Poturoglu, John R. Gerstein, Gabriela Richeimer, Meredith Werner, Richard J. Pratt, Ross, Dixon & Bell, L.L.P., Virginia L. White-Mahaffey, James E. Rocap, III, Mark A. Black, Steptoe & Johnson, LLP, Washington, DC, H. Keith Thomerson, Jeffrey M. Moody, Hinshaw & Culbertson, LLP, Joseph T. Kissane, Cole, Scott & Kissane, PA, Richard Kyle Gavin, Rutledge Richardson Liles, Liles, Gavin, Costantino & George, Jacksonville, FL, Julie E. Nevins, Laura E. Besvinick, Parker D. Thomson, Hogan & Hartson, LLP, Ronald L. Kammer, Colleen Ann Hoey, Hinshaw & Culbertson, LLP, Miami, FL, Rebecca L. Ross, Ross, Dixon & Bell, LLP, Chicago, IL, for Plaintiffs.

Charles Wayne Alford, Alford Law Group, PA, John Sam Kalil, Law Office Of John S. Kalil, P.A., Derrel Quantrill Chatmon, Cindy A. Laquidara, General Counsel'S Office, B. Thomas Whitefield, Morford & Whitefield, PA, Jacksonville, FL, Dwight E. Jefferson, Dwight E. Jefferson, PLLC, Houston, TX, Grover G. Hankins, Hankins Law Firm, LLC, League City, TX, Helen K. Michael, Robert F. Ruyak, Robert H. Shulman, Howrey, Simon, Arnold & White, LLP, Washington, DC, Ralph Knowles, Robert E. Shields, Doffermyre, Shields, Canfield, Knowles & Devine, LLC, Atlanta, GA, William T. Jacks, Jacks Law Firm, Austin, TX, Richard Hugh Lumpkin, Ver Ploeg & Lumpkin, P.A., Miami, FL, Michael J. Baughman, Cohn, Baughman & Martin, Chicago, IL, Eric William Neilsen, Buckley & Fudge, P.A., St. Petersburg, FL, for Defendants.

ORDER

HARVEY E. SCHLESINGER, District Judge.

Before the Court is a Motion filed by Plaintiffs Continental Casualty Company and Transportation Insurance Company (jointly "Transportation") seeking Final Summary Judgment. (Doc. No. 367, filed July 9, 2007.) Plaintiffs also filed a Statement of Material Facts as to which there is no Genuine Dispute in support of the Motion. (Doc. No. 366, filed July 9, 2007.) Defendants City of Jacksonville, Duval County School Board, and JEA f/k/a Jacksonville Electric Authority (collectively "the City" or "the City defendants") filed a Response in Opposition to both the Summary Judgment Motion (Doc. No. 390, filed July 24, 2007) and to Plaintiffs' Statement of Material Facts (Doc. No. 389, filed July 24, 2007). On August 6, 2007, the Court heard oral argument on the Motion. After carefully considering the Plaintiffs' Motion and the Defendants' Opposition thereto, and upon having the benefit of oral argument, the Court finds that no genuine issue of disputed material fact remains as to the narrow issue of whether Plaintiffs exercised good faith and due diligence in attempting to bring about the Defendants' cooperation.¹ Based on the following reasoning, the Court finds the Plaintiffs fulfilled their duty, and accordingly, the Motion is Granted.

I. Background

Although the voluminous facts and tortured procedural history of this case need little introduction to the parties, the Court finds it necessary to fully recite and explain them because the parties have continued to argue two very different cases even though the Court has already resolved many of the outstanding issues. It seems the City has continued to repeat the same arguments as a means of preserving issues for appeal, because throughout the proceedings, and due to its disagreement with this Court's prior rulings, the City has all but vowed to seek an appeal.²

This matter had its genesis in a separate state court action, which was filed in Duval County Circuit Court on May 5, 2003, and captioned Nora Williams v. City of Jacksonville, Case No. 16-2003-CA-03263 ("Williams litigation," "Williams action," or "Williams plaintiffs"). The case was brought by the law firm of Doffermyre, Shields, Canfield & Knowles on behalf of a class of plaintiffs claiming physical and emotional injuries as a result of being exposed to lead, PCBs, arsenic, and other contaminants emanating from incinerators and dump sites owned and operated by the City. (Decl. of Richard Pratt, Ex. 1; Doc No. 245 at 2, filed Nov. 2, 2006.) Ten months later, on March 2, 2004, the City mailed notice of the Williams action to Transportation, and asked Transportation to provide a defense. (Id.) On May 18, 2004, after requesting and receiving an extension of time to respond, Transportation sent a response to the City via email informing the City that it would defend the City and pay "its fair share of reasonable and necessary expenses related to the defense" subject to a complete reservation of rights. (Id., Ex. 2.) Transportation stated that the issue of indemnification would be addressed at a later date after more information was obtained. (Id.)

The City then chose the law firm of Steel, Hector & Davis as its defense counsel and Transportation assented to this choice. (Id.) As it had promised in its email transmission, Transportation funded the defense, eventually paying Steel, Hector & Davis approximately $3.9 million in attorneys' fees and costs. (See Doc. No. 179.) On May 21, 2004, the City responded to Transportation agreeing to a defense funded by Transportation, yet the City asserted that since Transportation had tendered the defense under a reservation of rights, the City had the right to control the defense. (Doc. No. 179; Doc. No. 127, Ex. C.)

On October 5, 2004 and October 6, 2004, Transportation transmitted five letters via certified mail, fax, and regular mail, explaining in detail the reasoning behind its reservation of rights with respect to certain claims asserted by the Williams plaintiffs. (Doc. No. 179; Doc. No. 127, Ex. E.) One of the bases for its reservation of rights was that Transportation had reason to believe that the City had potentially breached the cooperation clause provided in the insurance contract. (Doc. No. 127, Ex. E.) The cooperation clause of the insurance contract provides:

Assistance and Cooperation of the Insured: The insured shall cooperate with the company and upon the company's request, shall attend hearings and trials and shall assist in effecting settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for such immediate medical and surgical relief to others as shall be imperative at the time of accident.

(Id.) Transportation also revealed that it had reason to believe the City had been formulating a settlement with the Williams plaintiffs "without providing to Transportation sufficient information for Transportation to be able to assess the claims made against the City." (Id.) Transportation warned "[i]f the City settles the [Williams action] without the consent of Transportation, it will be considered a breach of the cooperation clause." (Id.)

The City issued a pointed response to Transportation's letters, outlining the City's disagreement with Transportation's reservations of rights. (Doc. No. 179; Doc. No. 127, Ex. F.) The City also implied that Transportation had acted unprofessionally in handling the claim, and in particular, the City took issue with the way Transportation had approached settlement, by asserting that Transportation's "representatives to the three mediation sessions ha[d] either been absent entirely (the first session) or scribes (the second and third sessions). Transportation asked no questions of either the plaintiffs, who are available to answer these questions, or the City."³ (Doc. No. 127, Ex. G.) Thereafter on November 5, 2004, Transportation filed the instant declaratory judgment action seeking a declaration as to the scope and nature of Transportation's obligations, if any, to the City under the relevant insurance policies. (Doc. No. 1.)

Almost immediately after the Complaint was filed in this declaratory judgment action, the City and the Williams plaintiffs entered into a Joint Defense Agreement.⁴ (Decl. of Richard Pratt, Exs. 3, 4.) Under the terms of the defense agreement, the City and the Williams plaintiffs agreed to share privileged and confidential information, and to otherwise cooperate in defending the claims asserted by Transportation. (Id., Ex. 4.) Pursuant to the agreement, the City and the Williams plaintiffs initiated communications regarding settlement of the Williams action. (Id., Exs. 4, 5.) Transportation was not made a party to these settlement discussions.⁵ (Id.) During the course of the settlement negotiations, the City and the Williams plaintiffs discussed what they referred to as either a "two tier" settlement proposal or a Coblentz agreement.⁶

In early December 2004, Mr. Shields, lead counsel for the Williams plaintiffs, proposed a "two tier" settlement structure where the City would pay a certain amount (tier one), then enter into a consent judgment for a much higher amount (tier two) that would only be enforced against the insurers. On December 8, 2004, and coincidentally after the City and the Williams plaintiffs had entered into their Joint Defense Agreement, Mr. Shields provided a copy of this "two tier" settlement structure to the City. (Id., Exs. 3, 8.) The City, however, did not provide Transportation a copy of the "two tier" settlement approach. (Id., Exs. 3, 9, 10, 13.)

On December 10, 2004, Transportation attended a mediation of the Williams action. At the mediation, Transportation stated that it would contribute $1 million towards settlement of the claims. (Id., Exs. 11, 13.) Transportation also informed the City that Transportation would offer more based on additional information that was supposed to be forthcoming. (Id., Exs. 16, 17.) During the course of the mediation, the City and the Williams plaintiffs held a brief meeting, in which Transportation was not in...