Florida Ins. Guar. Ass'n v. Giordano
| Citation | 485 So.2d 453,11 Fla. L. Weekly 558 |
| Decision Date | 04 March 1986 |
| Docket Number | No. 84-2384,84-2384 |
| Parties | 11 Fla. L. Weekly 558 FLORIDA INSURANCE GUARANTY ASSOCIATION, Appellant/Cross-Appellee, v. Rose GIORDANO, as Personal Representative of the Estate of Salvatore Giordano, deceased, Appellee/Cross-Appellant. |
| Court | Court of Appeal of Florida (US) |
Marlow, Shofi, Smith, Connell, DeMahy & Valerius and Joseph H. Lowe, Miami, for appellant/cross-appellee.
Feldman & Levy and David L. Magidson, Daniels & Hicks and Barbara Green, Miami, for appellee/cross-appellant.
Before HENDRY, NESBITT and FERGUSON, JJ.
Appellant Florida Insurance Guaranty Association (FIGA) contests a final summary judgment entered against it for the sum of $150,000. Appellee Rose Giordano cross-appeals a final summary judgment entered in favor of FIGA on her claims for attorney's fees, prejudgment interest and costs of the first action. We affirm in part and reverse in part.
In 1973, Salvatore Giordano died as a result of burns suffered in a gas explosion. His wife, Rose, filed a wrongful death action in 1975 on behalf of his estate against Rego Valve Company (Rego), an Illinois corporation doing business in Florida, who manufactured the gas valve which allegedly caused Mr. Giordano's death. Rego was insured with Reserve Insurance Company, with policy limits of $300,000. Rego also had excess coverage with Employer's Reinsurance Company.
Reserve undertook the defense of Giordano's suit against its insured until May 31, 1979, when Reserve was declared insolvent. The claim was then sent to FIGA pursuant to section 631.57, Florida Statutes (1979). In January, 1980, FIGA learned that the insured was an Illinois corporation. While FIGA was officially listed as the primary carrier for purposes of the lawsuit until July, 1980, FIGA had adopted the position in January, 1980, that pursuant to section 631.57(2), the Illinois Guaranty Fund (IGF), with statutory coverage limits of $150,000, was the "primary" carrier and FIGA, with statutory coverage limits of $300,000, was an "excess" carrier with no obligations owed to the insured. IGF took over the defense of the lawsuit.
Trial on the wrongful death action was set for October 27, 1980. In mid-September, settlement negotiations began between the plaintiff and Rego, IGF and Employer's Reinsurance. FIGA knew of the on-going settlement negotiations and by mid-October knew that IGF would tender its policy limits of $150,000. 1
An attorney for FIGA appeared in court on the day of the trial. The other parties announced that they had reached an agreement. The attorney for FIGA, however, stated emphatically that FIGA did not approve of the settlement, did not authorize it and did not agree with the amount of money agreed upon as a stipulated judgment in the case. The parties (not including FIGA) then drafted a settlement agreement in which Rego agreed to the entry of a $525,000 judgment against it. Payments were assessed from IGF ($150,000), Employer's Reinsurance ($225,000) and FIGA ($150,000). Rego assigned its rights against FIGA, including the $150,000 judgment, plus attorney's fees, costs, interest and punitive damages, to Mrs. Giordano. Mrs. Giordano agreed not to execute her judgment against Rego. Rego would not receive a satisfaction of judgment until the judgment was paid in full. After a hearing, at which FIGA was represented, the trial court entered a final judgment adopting the terms of the settlement agreement. Subsequently, the trial court entered a $12,177 cost judgment against the insured (Rego), which was assigned to Mrs. Giordano.
In May, 1981, FIGA notified Mrs. Giordano that it would not make any payment of the judgment. Mrs. Giordano then filed the instant lawsuit asserting 1) her rights, as assignee of Rego, for the enforcement of FIGA's statutory obligations and the judgments entered on the settlement agreement and 2) that FIGA's course of conduct had been willful, wanton, reckless and a denial of due process and equal protection. The latter count was dismissed with prejudice. Both parties moved for summary judgment on Count I. The trial court granted Mrs. Giordano's motion, finding that FIGA had a duty to defend Rego and a duty to pay the settlement. It also held that Mrs. Giordano was not entitled to any attorney's fees or costs. This appeal and cross-appeal ensued.
The two sections of Chapter 631, Florida Statutes, which are relevant to our consideration are the following:
631.57 Powers and duties of the association.--
(1) The association shall:
(a) Be obligated to the extent of the covered claims existing:
1. Prior to the adjudication of insolvency and arising within 30 days after the determination of insolvency, ...
but such obligation shall include only that amount of each covered claim which is in excess of $100 and is less than $300,000; ...
(b) Be deemed the insurer to the extent of its obligation on the covered claims, and, to such extent, shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent.
631.61 Nonduplication of recovery.--
(2) Any person having a claim which may be recovered under more than one insurance guaranty association or its equivalent shall seek recovery first from the association of the place of residence of the insured, ... Any recovery under this part shall be reduced by the amount of recovery from any other insurance guaranty association or its equivalent.
As these provisions make clear, when Reserve Insurance Company became insolvent, FIGA moved into Reserve's place and "stood in the shoes" of Reserve as if it had not become insolvent. FIGA became obligated to the insured (Rego) up to its policy limit of $300,000 (which was Reserve's policy limit also) and it acquired all of Reserve's rights, duties and obligations to the insured. Because the insured was an Illinois resident, however, and because Illinois has an insurance guaranty association also, the plaintiff and the insured were directed by section 631.61(2), Florida Statutes (1979), to seek payment first from IGF and then the balance from FIGA.
We can find no cogent basis to support FIGA's assertion that because there existed another state insurance guaranty association, FIGA was absolutely relieved of its statutory obligations to the insured. Nothing in the statute provides for that position. The statute clearly states that FIGA shall be deemed the insurer to the extent of its obligations on the covered claims and shall have all rights, duties and obligations of the insolvent insurer. § 631.57(1)(b), Fla.Stat. (1979) (e.s.). Since FIGA did not dispute that the wrongful death action was a "covered claim," then under the statute, FIGA had no discretion as to whether it would defend the insured. Reserve Insurance had been defending the wrongful death action for four years before its insolvency. When FIGA stepped into Reserve's place upon Reserve's insolvency, FIGA was under a statutorily imposed duty to continue the defense of the insured.
Furthermore, it is well settled in Florida that the duty of an insurer to defend its insured is broader than, and distinct from, its duty to pay. Baron Oil Co. v. Nationwide Mutual Fire Insurance Co., 470 So.2d 810 (Fla. 1st DCA 1985); Keller Industries, Inc. v. Employers Mutual Liability Insurance Co., 429 So.2d 779 (Fla. 3d DCA 1983); Florida Farm Bureau Mutual Insurance Co. v. Rice, 393 So.2d 552 (Fla. 1st DCA 1980), review denied, 399 So.2d 1142 (Fla.1981). If the allegations of the complaint leave any doubts regarding the duty to defend, the question must be resolved in favor of the insured requiring the insurer to defend. Baron Oil v. Nationwide Mutual, 470 So.2d at 814. Clearly, the question of who eventually was going to pay the judgment against the insured was extrinsic to the question of who had a duty to defend the insured. We find, therefore, that FIGA had a coextensive duty with IGF, as a primary carrier, to defend the insured.
FIGA's second argument, that the insured was not harmed by FIGA's failure to defend it because IGF took over the defense and carried it through to settlement, is also wrong. In...
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