Estate of Arroyo v. Infinity Indem. Ins. Co.

• Decision Date: 18 January 2017
• Docket Number: Nos. 3D15–194 & 3D15–183,s. 3D15–194 & 3D15–183
• Citation: 211 So.3d 240
• Parties: IN RE: The ESTATE OF Jorge Luis ARROYO, Jr.; Delia Reyes, an incapacitated person, by and through Marta Reyes, her natural mother and court-appointed guardian, and Marta Reyes, as court-appointed guardian of Ignacio Reyes, a minor, and Isabella de Armas, a minor, Appellants, v. INFINITY INDEMNITY INSURANCE COMPANY, a foreign corporation, et al., Appellees.
• Court: Florida District Court of Appeals

211 So.3d 240

IN RE: The ESTATE OF Jorge Luis ARROYO, Jr.; Delia Reyes, an incapacitated person, by and through Marta Reyes, her natural mother and court-appointed guardian, and Marta Reyes, as court-appointed guardian of Ignacio Reyes, a minor, and Isabella de Armas, a minor, Appellants,

v.INFINITY INDEMNITY INSURANCE COMPANY, a foreign corporation, et al., Appellees.

Nos. 3D15–194 & 3D15–183

District Court of Appeal of Florida, Third District.

Opinion filed January 18, 2017

Ross & Girten, and Lauri Waldman Ross and Theresa L. Girten ; DeMahy, Labrador, Drake, and Pete L. DeMahy and Frank L. Labrador, for appellants.

White & Case LLP, and Raoul G. Cantero and Christopher W. Swift–Perez ; GrayRobinson, P.A., and Charles T. Wells (Orlando), for appellee Infinity Indemnity Insurance Company.

Before ROTHENBERG, LAGOA, and SALTER, JJ.

ROTHENBERG, J.

Delia Reyes ("Reyes") appeals: (1) the probate court's order granting Infinity Indemnity Insurance Company's ("Infinity") motion to intervene in the probate proceedings in the Estate of Jorge Luis Arroyo, Jr. ("the Estate"); (2) the probate court's subsequent order finding that the personal representatives of the Estate did not have the authority to settle Reyes's lawsuit against the Estate by entering into a Coblentz agreement¹ ; and (3) the circuit court's final judgment incorporating its order granting summary judgment in favor of Infinity on Reyes's bad-faith claim against Infinity.

We reverse the probate court's orders granting Infinity's motion to intervene and its subsequent determination regarding the authority of the personal representatives to settle Reyes's lawsuit because Infinity's alleged interest was not at issue in the probate proceedings at the time Infinity moved to intervene. We also conclude that even if intervention was properly granted, the probate court erred by determining the authority of the personal representatives to settle Reyes's lawsuit because when Reyes filed the lawsuit against the Estate, and the Estate tendered its defense to Infinity, its insurer, Infinity declined to defend the claim. Thus, the defenses Infinity subsequently raised in the probate court were barred and Infinity was prohibited from raising these defenses as a matter of law. We similarly find that the circuit court erred by considering and then granting Infinity's motion for summary judgment based on these barred defenses in the bad-faith lawsuit against Infinity. Accordingly, we reverse all three orders on appeal.

BACKGROUND

As the result of a car accident on October 9, 2009, Jorge Luis Arroyo, Jr. ("Arroyo") died and Reyes suffered severe incapacitating injuries. Arroyo's parents petitioned the probate court to open the Estate and to act as the Estate's personal representatives, which the probate court granted in January 2011.

On February 11, 2011, Reyes filed a personal injury negligence lawsuit ("the negligence lawsuit") in the circuit court against the Estate, but never filed a written claim in the probate court. Although the Estate tendered the defense of the negligence claim to Infinity, Infinity declined to defend the claim. In January 2013, the Estate settled the negligence lawsuit by entering into a Coblentz agreement with Reyes, in which Reyes and the Estate agreed to the entry of a consent judgment, Reyes agreed not to execute the judgment against the Estate, and the Estate assigned any rights it had against Infinity to Reyes. After Reyes and the Estate entered into the Coblentz agreement and obtained the consent judgment, Reyes sued Infinity in circuit court pursuant to the assignment of rights provision in the Coblentz agreement, alleging in part that Infinity had demonstrated bad faith by failing to defend the Estate in the negligence lawsuit ("the bad-faith lawsuit").²

Infinity attacked the bad-faith claim on two fronts. First, Infinity moved for entry of summary judgment in the circuit court's bad-faith lawsuit, arguing that, because Reyes failed to file a statement of claim in the probate court regarding the negligence lawsuit, she could no longer do so because the negligence lawsuit was barred by the statute of limitations, § 733.702, Fla. Stat. (2011), and the statute of repose, § 733.710, Fla. Stat. (2011), set forth in the probate code. Accordingly, Infinity claimed that: (1) the Estate was immune from Reyes's negligence suit at the time the personal representatives of the Estate settled the lawsuit; (2) the Coblentz agreement and the subsequent consent judgment were therefore unenforceable against the Estate; (3) the Estate was not exposed to an excess judgment because neither the Coblentz agreement nor the consent judgment were enforceable against the Estate; and (4) in order for Reyes to succeed in its bad-faith claim against Infinity, the Estate would need to be exposed to an excess judgment. Thus, Infinity contended that Reyes's bad-faith claim against Infinity failed because Reyes, standing as the assignee of the Estate, could not prove that the Estate was exposed to an excess judgment.

Infinity's second front for attacking the bad-faith claim was waged in the probate court. Infinity filed a motion for leave to intervene in the Estate proceedings pursuant to Florida Rule of Civil Procedure 1.230 for the purpose of determining whether the Estate's personal representatives had the authority to settle the negligence lawsuit in the circuit court by entering into the Coblentz agreement. When Infinity moved to intervene, the Estate's proceedings in probate court were uncontested, with no adversarial motions pending before it and minimal record activity. The probate court granted Infinity's motion to intervene after concluding that Infinity was an interested party regarding the Coblentz agreement, but limited Infinity's intervention to the issue of "the applicability of Part VI of Florida Statute Chapter 733 to the Personal Representative's execution of the Settlement Agreement." Infinity then filed a motion to determine the personal representatives' right to enter into the Coblentz agreement ("motion to determine"), and Reyes was also permitted to intervene to oppose this motion.

After allowing Infinity to intervene, the probate court ruled on Infinity's motion to determine and entered an order finding that section 733.710 of the Florida Statutes protects an estate from any claim filed more than two years after the death of the decedent, and that Reyes failed to file a claim against the Estate within two years of Arroyo's death. Accordingly, the probate court concluded that the personal representatives did not have the authority to enter into the Coblentz agreement in the negligence lawsuit because at the time the personal representatives entered into the Coblentz agreement, the Estate enjoyed absolute immunity from Reyes's claim, and thus, the consent judgment was unenforceable against the Estate.³ Reyes has appealed this order and the order granting Infinity's motion to intervene.

Meanwhile, although the original circuit court judge denied Infinity's motion for summary judgment, a successor circuit court judge reconsidered Infinity's motion and entered a written order granting Infinity's motion for summary judgment. The successor circuit court judge concluded that "Reyes's bad[-]faith claim against Infinity was dependent upon the Estate being liable for the consent judgment in excess of any policy limits," and thus, "Reyes's failure to timely file a claim against Arroyo's Estate relieved the Estate of any liability for the consent judgment." The circuit court's order concluded that a bad-faith claim requires the insured to be exposed to an excess judgment,⁴ and, because the consent judgment could not be the source of an excess judgment against the Estate, Reyes's bad-faith claim against Infinity failed as a matter of law.

Reyes and Infinity entered into a stipulation pending this appeal voluntarily dismissing the breach of contract claim in the complaint without prejudice. Thereafter, the circuit court entered a final judgment, and Reyes timely appealed. We have consolidated the two appeals from the circuit court and probate court orders.

ANALYSIS

1. The Probate Court's Orders

Infinity moved to intervene pursuant to Florida Rule of Civil Procedure 1.230. Rule 1.230, however, does not apply to the probate proceedings in this case because Florida Probate Rule 5.010 precludes the application of the Florida Rules of Civil Procedure unless provided for within the Florida Probate Rules. The only Florida Probate Rule incorporating rule 1.230 is rule 5.025(d)(2), which states that in an adversary probate proceeding , "[t]he Florida Rules of Civil Procedure govern, except for rule 1.525." There is no equivalent probate rule that would allow the application of rule 1.230 in non-adversary probate proceedings . It is, therefore, clear that in a non-adversary proceeding in probate court, rule 1.230 does not govern, and because the Estate's probate proceedings were dormant and non-adversarial when Infinity moved to intervene, Infinity could not rely on rule 1.230 to intervene in the probate proceedings. Accordingly, it was reversible error for the probate court to grant Infinity's motion to intervene pursuant to rule 1.230. See Zayas–Hood v. Jusino , 44 So.3d 626 (Fla. 1st DCA 2010) (reversing the probate court's order suspending a prior order and holding that Florida Rule of Civil Procedure 1.540 was not available in a non-adversary probate proceeding because it was not provided for within the Florida Probate Rules).

Were it not for preservation and waiver issues, we would have reversed the probate court's order granting Infinity's motion to intervene based on rule 5.010 alone.⁵ However, Reyes failed to properly preserve this error for appeal. Reyes failed to raise this rule 5.010 argument before the probate court and also failed to raise it in her initial brief. Because Reyes failed to object to the applicability of rule 1.230 in the probate proceedings, we have...