Gomez v. Allied Prof'ls Ins. Co.

• Decision Date: 06 May 2020
• Docket Number: Case No. 19-cv-24994-BLOOM/Louis
• Citation: 457 F.Supp.3d 1351
• Court: U.S. District Court — Southern District of Florida
• Parties: Anibal GOMEZ, Plaintiff, v. ALLIED PROFESSIONALS INSURANCE COMPANY, Defendant.

457 F.Supp.3d 1351

Anibal GOMEZ, Plaintiff,

v.ALLIED PROFESSIONALS INSURANCE COMPANY, Defendant.

Case No. 19-cv-24994-BLOOM/Louis

United States District Court, S.D. Florida.

Signed May 6, 2020

Fred Alan Cunningham, Domnick Cunningham & Whalen, Palm Beach Gardens, FL, for Plaintiff.

Scott David Kirschbaum, Cole, Scott & Kissane, P.A., Miami, FL, for Defendant.

ORDER

BETH BLOOM, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court upon Defendant Allied Professionals Insurance Company's ("APIC") Motion to Compel Arbitration and Stay Proceedings, ECF No. [20] ("Motion"). Plaintiff filed a Response to the Motion, ECF No. [23] ("Response"), to which Defendant filed a Reply, ECF No. [26] ("Reply"). The Court has considered the Motion, the Response, the Reply, the record in the case, the applicable law, and is otherwise fully advised. For the reasons set forth below, the Motion is granted.

I. BACKGROUND

This matter stems from a lawsuit Plaintiff initiated in the Eleventh Judicial Circuit in and for Miami-Dade County, Florida against Defendant on November 11, 2019, ECF No. [1-1]. Defendant removed the case to this Court on December 4, 2019, ECF No. [1], based upon diversity jurisdiction pursuant to 28 U.S.C. §§ 1332, 1441, and 1446.

According to the Complaint, ECF No. [1-1], Defendant issued an insurance policy to its insured, Dr. Anthony Batillo ("Dr. Batillo"), "to cover and indemnify Dr. Batillo for professional liability for injuries arising out of the rendering of or the failure to render chiropractic services," with a policy limit of $1,000,000.00 per incident. Id. at ¶¶ 4-5. While the policy was in effect, Plaintiff underwent chiropractic treatment with Dr. Batillo and suffered a dissection of his right internal carotid artery, which caused him to suffer an ischemic stroke

. Id. at ¶ 7. Plaintiff alleges that Defendant was timely notified of the negligence claim against Dr. Batillo and had sufficient information to timely tender the $1,000,000.00 policy limits. Id. at ¶ 8. He maintains that Defendant "knew or should have known" that the value of Plaintiff's claim, "if not settled promptly, presented a risk of certain financial exposure" "well in excess of the" policy limit. Id. at ¶ 10. He adds that he provided Defendant "with at least three opportunities" to settle the claim within the policy limits, id. at ¶ 11, but these demands were rejected or ignored. Id. at ¶¶ 12-13.

Plaintiff alleges that on November 14, 2018, he obtained a final judgment against Dr. Batillo for approximately $3.7 million.

Id. at ¶ 14.¹ In his view, Defendant should have timely tendered the $1,000,000.00 policy limit to settle the underlying claim because "[d]oing so would have been proper pursuant to settled Florida bad faith law." Id. at ¶ 16. The Complaint alleges a single count for common law bad faith based on Defendant's alleged breach of its duties of good faith to Dr. Batillo, including its failure to settle Plaintiff's claim within policy limits "when it could have and should have done so." See id. at ¶¶ 18-24.²

Defendant now moves to compel arbitration to occur in California and to stay proceedings in the Southern District of Florida pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("FAA"), and Section V.C. of the subject insurance policy. See ECF No. [20]. Defendant argues that even though Plaintiff is not an insured under the policy and did not agree to the arbitration provision, Plaintiff is bound by it as a third-party beneficiary because his claims against Defendant "derive from the policy and APIC's obligations thereunder." Id. at 1. Specifically, Defendant represents that "[b]ut for the existence of the subject policy, [Plaintiff] would in fact have no claims against APIC as there is no other relationship between the two parties aside from the policy." Id. It adds that equitable estoppel principles apply to preclude Plaintiff from claiming benefits of the policy on the one hand while simultaneously attempting to avoid the burdens that the policy impose on the other hand. See id. at 2. In this respect, Defendant argues that Plaintiff is Dr. Batillo's "privy" and stands in his shoes for purposes of bringing this bad faith claim even though Plaintiff did not receive an assignment from him. Id. at 13-15.

In the Response, Plaintiff asserts that Defendant waived arbitration based on its alleged noncompliance with the notice requirement contained in the policy's arbitration provision. ECF No. [23] at 2. In particular, he contends that the arbitration provision is ambiguous in light of the policy's notice provision and that regardless of the ambiguity, Defendant did not timely notify Plaintiff that it would require the bad faith dispute be submitted to arbitration. See id. at 7. He further maintains that the arbitration clause does not apply to him because there was no assignment of the bad faith claim from Dr. Batillo. Instead, he maintains that the arbitration clause only applies to parties to the contract and not third-party beneficiaries. See id. at 2. He adds that subsequent to when the policy was in effect, Defendant has materially changed its arbitration provision to now include third-party beneficiaries to be specifically within the provision's scope. See id. at 9-10.

In the Reply, Defendant characterizes the Response as "meritless." ECF No. [26] at 2. It argues that it has not waived its right to arbitration under the FAA's two-part test. Specifically, Defendant maintains that it has never acted inconsistently with its arbitration right and that Plaintiff has not been prejudiced by any action taken by APIC that is otherwise inconsistent with its right to arbitrate. See id. at 2-7. Defendant asserts that it discussed arbitration with Plaintiff the day after the lawsuit was filed, id. at 4-5, and that it demanded arbitration as its first affirmative defense, which pleading was filed two days after the lawsuit was removed to this Court. Id. at 5. Defendant adds that the policy's notice provision is inapplicable to the instant dispute, and that no ambiguity exists in the arbitration provision. Id. at 7-10. Defendant further contends that the bad faith claim falls within the arbitration's scope, and that Plaintiff's invocation of Defendant's revised arbitration provision issued "years after" to a "different APIC insured" is "irrelevant to these proceedings" and the governing policy. Id. at 10-12.

The Motion, accordingly, is ripe for consideration.

II. LEGAL STANDARD

The presence of a valid arbitration provision raises a strong presumption of enforcement. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 630-31, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (stressing that the enforcement of a mutually agreed upon arbitration or forum-selection clause serves as an "indispensable precondition to the achievement of the orderliness and predictability essential to any international business transaction"). Indeed, the FAA, 9 U.S.C. § 1 et seq. , "embodies a ‘liberal federal policy favoring arbitration agreements.’ " Hemispherx Biopharma, Inc. v. Johannesburg Consol. Invs. , 553 F.3d 1351, 1366 (11th Cir. 2008) (quoting Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ). Accordingly, the FAA requires courts to "rigorously enforce agreements to arbitrate." Brandon, Jones, Sandall, Zeide, Kohn, Chalal & Musso, P.A. v. MedPartners, Inc. , 312 F.3d 1349, 1357-58 (11th Cir. 2002) abrogated on other grounds by Ray Haluch Gravel Co. v. Cent. Pension Fund of Int'l Union of Operating Eng'rs & Participating Emp'rs , 571 U.S. 177, 134 S. Ct. 773, 187 L.Ed.2d 669 (2014) (quoting Mitsubishi Motors , 473 U.S. at 625-26, 105 S.Ct. 3346 ); Hemispherx , 553 F.3d at 1366 ("The role of the courts is to rigorously enforce agreements to arbitrate.") (internal citation and quotation omitted). Under the FAA, a written agreement to arbitrate is "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2.

"Federal law establishes the enforceability of arbitration agreements, while state law governs the interpretation and formation of arbitration agreements." Emp'rs Ins. of Wausau v. Bright Metal Specialties, Inc. , 251 F.3d 1316, 1322 (11th Cir. 2001) (citing Perry v. Thomas , 482 U.S. 483, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987) ). "Federal law counsels that questions of arbitrability, when in doubt, should be resolved in favor of arbitration." Id. (citing Moses H. Cone Mem'l Hospital , 460 U.S. at 24, 103 S.Ct. 927 ). "[W]hile doubts concerning the scope of an arbitration clause should be resolved in favor of arbitration, the presumption does not apply to disputes concerning whether an agreement to arbitrate has been made." Dasher v. RBC Bank (USA) , 745 F.3d 1111, 1116 (11th Cir. 2014) ; see Granite Rock Co. v. Int'l Bhd. of Teamsters , 561 U.S. 287, 301, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2010) (directing courts to "apply [ ] the presumption of arbitrability only" to "a validly formed and enforceable arbitration agreement"). Therefore, "parties cannot be forced to submit to arbitration if they have not agreed to do so." Magnolia Capital Advisors, Inc. v. Bear Stearns & Co. , 272 F. App'x 782, 785 (11th Cir. 2008).

When presented with a motion to compel arbitration, a district court will consider three factors: (1) whether a valid agreement to arbitrate exists, (2) whether an arbitrable issue exists; and (3) whether the right to arbitrate was waived.

Nat'l Auto Lenders, Inc. v. SysLOCATE, Inc. , 686 F. Supp. 2d 1318, 1322 (S.D. Fla. 2010) aff'd , 433 F. App'x 842 (11th Cir. 2011) ; see also Sims v. Clarendon Nat'l Ins. Co. , 336 F. Supp. 2d 1311, 1326 (S.D. Fla. 2004) (citing Marine Envt'l Partners, Inc. v. Johnson , 863 So. 2d 423, 426 (Fla. 4th DCA 2003) ; and Seifert v. U.S. Home Corp. , 750 So. 2d 633 (Fla. 1999) ) ("Under both federal and Florida law, there are three factors for the...