Hattaway v. McMillian, 87-30419-RV.

• Decision Date: 17 June 1994
• Docket Number: No. 87-30419-RV.,87-30419-RV.
• Citation: 859 F. Supp. 560
• Parties: Betty L. HATTAWAY, et al., Plaintiff, v. Quinn A. McMILLIAN, Individually and as Sheriff of Walton County, Florida, Defendant.
• Court: U.S. District Court — Northern District of Florida

859 F. Supp. 560

Betty L. HATTAWAY, et al., Plaintiff, v. Quinn A. McMILLIAN, Individually and as Sheriff of Walton County, Florida, Defendant.

No. 87-30419-RV.

United States District Court, N.D. Florida, Pensacola Division.

June 17, 1994.

Clifford Higby, Bryant, Higby & Williams, Scott W. Clemons, Panama City, FL, for plaintiffs.

Beth F. Jacobi, Miami, FL, for garnishees.

Leonard Dietzen, III, Julius F. Parker, Jr., Parker, Skelding, McVoy, & Labasky, Tallahassee, FL, for defendants.

George Ralph Miller, DeFuniak Springs, FL, for Walton County.

W. Paul Thompson, DeFuniak Springs, FL, for McMillian.

ORDER

VINSON, District Judge.

This case keeps reappearing, like "some ghoul in a late-night horror movie that repeatedly sits up in its grave and shuffles abroad, after being repeatedly killed and buried."¹ The latest apparition is the Plaintiff's motion for a writ of garnishment or mandamus. (Doc. 244.) The Defendant and the Garnishee received notice of the motion and have responded. For the reasons set forth herein, the mandamus relief requested is GRANTED and the garnishment request is DENIED.

I. BACKGROUND

The Plaintiff, Betty L. Hattaway, as the duly appointed guardian of the person and property of Noah Lee Laningham, incompetent, holds a final judgment in the amount of $843,603.00 against the Defendant, Quinn A. McMillian, as Sheriff of Walton County, Florida (the "Sheriff"). That judgment is against McMillian as Sheriff, and not individually. The judgment was entered by this Court pursuant to a jury verdict that the Sheriff was liable to Hattaway under a state law negligence claim.

Hattaway has attempted to collect the full amount of her judgment from the Sheriff's insurers. Sheriff McMillian and other Florida sheriffs have set up a self-insurance pool to cover liability claims up to $100,000. This insurance pool is called the Florida Sheriffs' Self Insurance Fund (the "Sheriffs' Fund"). The Sheriffs' Fund has purchased additional, or excess, insurance, in the amount of $1,000,000. The excess insurance covers only liabilities exceeding the amount of $100,000. The effect of this is to provide the Sheriff with a total of $1,100,000 of liability insurance per "occurrence" within the policy period. The excess insurance is provided by a syndicate of insurance carriers, whom I will refer to as the "excess insurance carriers."

After various stays of execution on the judgment, pending appeal of this matter and proceedings in the companion case of McMillian v. Hattaway, No. 91-30103-RV, Hattaway has apparently collected that portion of the judgment for which the excess insurance carriers are liable. Hattaway now seeks to collect the final $100,000 of the judgment, plus accrued interest, from either the Sheriff or the Sheriffs' Fund. The Sheriff and the Sheriffs' Fund now maintain that Hattaway can collect nothing more than she has already collected from the excess insurance carriers, for reasons that are discussed below.

II. ANALYSIS

Throughout the post-judgment and appellate proceedings in this case, both this court and the Court of Appeals for the Eleventh Circuit acted on the assumption that the Sheriff, the Sheriffs' Fund, and perhaps even Walton County, were responsible for $100,000 of the $843,603 judgment. Florida's waiver of sovereign immunity statute § 768.28, Fla.Stat. seemed to dictate that the Sheriff was liable for $100,000 of the judgment, and his excess insurers were liable for the remainder of the judgment, up to, of course, the limit of insurance, which was assumed to be the face amount of the Sheriff's excess liability insurance policy.

Thus, the Eleventh Circuit, in granting in part and denying in part the Sheriff's motion to stay execution pending appeal, stated that "Walton County, which employs Sheriff McMillian, is directly liable for $100,000 of the $843,603 judgment. The remaining $743,603 is recoverable only by act of the Florida Legislature, or against the Sheriff's insurers." (Doc. 244 Ex. F) (citations omitted.) Similarly, in my order extending a stay in this matter, I stated that the Sheriffs' Fund was obligated on the judgment for $100,000, plus interest thereon at 9.2% per annum from December 23, 1988, and the excess insurance carriers were obligated for the remainder of the judgment. (Doc. 210.) Liability for the $100,000 plus interest was not challenged by the Sheriff or the Sheriffs' Fund, except insofar as the Sheriff challenged the jury verdict of liability.

Instead, what was challenged was whether Hattaway's judgment should be limited to $100,000. That question turned on the legal issue of whether the Sheriff, as a result of the Sheriffs' Fund's purchase of excess insurance, had waived his sovereign immunity beyond the statutory waiver (which is limited to $100,000). The Eleventh Circuit answered that question adversely to the Sheriff in Hattaway v. McMillian, 903 F.2d 1440 (11th Cir.1990). The Eleventh Circuit rejected the Sheriff's claim that judgment should be limited to $100,000, and held as follows:

The statutes that allow the sheriffs to purchase excess liability insurance have been interpreted as a waiver of sovereign immunity up to the amount of the policy. Consequently, the fund's purchase of the $1,000,000 policy constitutes a waiver of sovereign immunity up to that amount. The district court correctly refused to limit the judgment to $100,000.

Id. at 1455 (footnotes omitted).

The Sheriff and the Sheriffs' Fund now argue that neither of them is liable to Hattaway for the unsatisfied portion of the judgment. Their argument is that the Sheriff only waived his sovereign immunity in an amount up to the limits of his insurance coverage, so that is the limit of his liability. Because the Sheriff's insurance allegedly has been exhausted by the payment of attorney's fees and defense costs (in addition to the amount of the judgment), the judgment has been satisfied, according to the Sheriff and the Sheriffs' Fund.

The key point in this argument is that the Sheriff's insurance apparently operates somewhat differently than I was earlier led to believe. It was heretofore assumed by this court and by the Eleventh Circuit that the Sheriffs' Fund indemnified the Sheriff for liabilities up to $100,000, and the excess insurance purchased by the Sheriffs' Fund indemnified for $1,000,000 of liability in excess of the underlying limit of $100,000. This would mean that the Sheriff had purchased a total of $1,100,000 of liability insurance.

The amount of the Sheriff's liability insurance is the magic number in the case, for it is that amount that determines the extent of the Sheriff's waiver of sovereign immunity. This was explained in the Eleventh Circuit's opinion in this case, and by a key decision of the Supreme Court of Florida on which the Eleventh Circuit relied. By statute, the sovereign immunity of an entity such as the Sheriff is waived for tort claims up to $100,000. § 768.28(5), Fla.Stat. When, however, a political entity such as the Sheriff purchases liability insurance, that purchase constitutes a waiver of sovereign immunity up to the limits of insurance coverage. Hattaway, supra, 903 F.2d at 1453; Avallone v. Board of County Comm'rs, 493 So.2d 1002, 1004-05 (Fla.1986).

Because the insurance-purchase waiver is "in addition to" the general statutory $100,000 waiver Hattaway, supra, 903 F.2d at 1453, the amount of the Sheriff's waiver of sovereign immunity is equal to the amount of insurance coverage, or $100,000, whichever is greater. Because the Eleventh Circuit was led to believe, as was I, that the Sheriff had purchased a total of $1,100,000 of liability insurance, the Eleventh Circuit concluded its opinion by saying that "the Sheriffs' Fund's purchase of the $1,000,000 policy constitutes a waiver of sovereign immunity up to that amount." Id. at 1455.

The fly in the ointment is that the Sheriff's insurance does not indemnify the Sheriff for liabilities up to $1,100,000. Instead, the Sheriff's insurance indemnifies the Sheriff for liabilities up to that amount, including defense costs, which include attorney's fees and court costs. The amount of the Sheriff's insurance is, of course, a matter of contract between the Sheriff and his insurers. Both the Sheriffs' Fund contract and the excess liability insurance contract expressly provide that their limits of coverage include loss adjustment expenses and defense costs, and that such costs and expenses are included within the stated limits of the policy, and not in addition to the stated limits.

The effect of this is that the Sheriff has actually purchased indemnity for $1,100,000, less defense costs, which include attorney's fees and costs. Thus, if the insurers expend $300,000 in costs adjusting and defending a covered claim, then the Sheriff has only $800,000 of indemnity available for that claim. In such a case, $800,000 would be the amount of insurance coverage available to the Sheriff to pay a claim, so $800,000 would be the extent of the waiver of sovereign immunity. Once the tort plaintiff in that example had collected $800,000 on a judgment arising out of that claim (regardless of whether the judgment exceeded $800,000, or exceeded $1,100,000), then the judgment against the Sheriff would have been satisfied. This is because the Sheriff's liability for the claim can be no greater than the amount of his waiver of sovereign immunity, and the amount of that waiver is set by the limit of insurance coverage available for the claim ($800,000 in this example).

To carry the example one step further, suppose that the defense costs and adjustment expenses for the above claim totaled $1,050,000. That would mean that the Sheriff would have only $50,000 of indemnity available to cover the claim. Because that amount ($50,000) is less than the statutory $100,000 waiver, the amount of the Sheriff's waiver of sovereign immunity for that claim would be $100,000 (the greater of the statutory $100,000 or the...