Hazen v. Allstate Ins. Co.

• Citation: 952 So.2d 531
• Decision Date: 17 January 2007
• Docket Number: No. 2D06-184.,2D06-184.
• Parties: JoAnn HAZEN, individually and as Trustee of the JoAnn Hazen Revocable Trust, Appellant, v. ALLSTATE INSURANCE COMPANY, Appellee.
• Court: Court of Appeal of Florida (US)

952 So.2d 531

JoAnn HAZEN, individually and as Trustee of the JoAnn Hazen Revocable Trust, Appellant, v. ALLSTATE INSURANCE COMPANY, Appellee.

No. 2D06-184.

District Court of Appeal of Florida, Second District.

January 17, 2007.

Rafael J. Nobo, III, and John Wesley Frost, II, of Frost Tamayo Sessums & Aranda, P.A., Bartow, for Appellant.

William B. Bracken, Jr. of Sidney M. Crawford, P.A., Lakeland, for Appellee.

WALLACE, Judge.

JoAnn Hazen, individually and as Trustee of the JoAnn Hazen Revocable Trust (Hazen), appeals the circuit court's final judgment that dismissed her action against Allstate Insurance Company (Allstate) with prejudice for noncompliance with section 627.4136, Florida Statutes (2002), commonly referred to as the "nonjoinder statute," and for lack of subject matter jurisdiction. Hazen sued Allstate for the breach of an alleged oral agreement to repair Hazen's vehicle. Hazen alleged that her vehicle was damaged as the result of the negligent operation of another vehicle that was insured by Allstate. Because Hazen failed to plead sufficient facts in her amended complaint to allege either compliance with the nonjoinder statute or that the statute was inapplicable, we affirm the circuit court's dismissal of Hazen's action.¹

I. FACTS AND PROCEDURAL HISTORY

Hazen sued Allstate in the Polk County Circuit Court. Allstate was the sole defendant named in Hazen's action. The circuit court granted Allstate's motion to dismiss Hazen's amended complaint without prejudice and gave Hazen ten days to amend. The order dismissing the amended complaint recited that Allstate's motion was granted "based upon Florida's Non-Joinder Statute and a lack of subject matter jurisdiction." After Hazen declined to amend, the circuit court entered a final judgment dismissing the action. This appeal followed.

The facts pertinent to our review of this case are alleged in Hazen's amended complaint. For purposes of our review, we must assume the factual allegations of the amended complaint to be true, and we construe them in the light most favorable to Hazen as the nonmoving party. See Williams v. Howard, 329 So.2d 277, 280 (Fla.1976); Hosp. Constructors Ltd. ex rel. Lifemark Hosps. of Fla., Inc. v. Lefor, 749 So.2d 546, 547 (Fla. 2d DCA 2000). We apply the de novo standard of review to our consideration of the final judgment dismissing Hazen's action with prejudice. See Smith v. City of Fort Myers, 898 So.2d 1177, 1178 (Fla. 2d DCA 2005).

Hazen is a resident of Polk County, Florida. Allstate is a foreign insurance company that maintains an office or offices in Polk County. On March 9, 2003, Hazen's 2001 Cadillac DeVille was involved in an accident with another vehicle in Mississippi. The owner of the other vehicle was insured by Allstate. The permissive user who drove the other vehicle was negligent. Allstate agreed that its insured was liable for the accident and the resulting property damage.

After Hazen returned to Florida, Allstate contacted her. Allstate agreed to have the Cadillac repaired and to provide Hazen with a rental vehicle. Hazen agreed, and Allstate authorized and paid for the repair of the Cadillac in Louisiana. When the Cadillac was returned to Florida, Hazen discovered that the attempted repairs were inadequate and incomplete. Hazen alleged that the repair effort authorized and paid for by Allstate was so deficient that the Cadillac was not safe to drive and that it was significantly diminished in value. Hazen asked Allstate to reimburse her for the diminished value of the Cadillac, but Allstate refused. Hazen initially stored the Cadillac, asserting that it was not safe to drive. She ultimately sold the Cadillac at what she claimed was a substantial loss.

In her amended complaint, Hazen alleged that Allstate had entered into an oral contract with her for the repair of the Cadillac and to pay such other benefits as were available under the Allstate policy. Hazen alleged further that Allstate had breached the oral contract. She claimed damages in excess of $15,000 for (1) the diminution in the value of the Cadillac, (2) loss of use/rental car costs, and (3) storage fees. Notably, Hazen did not allege that she had obtained a settlement or verdict against either Allstate's insured or the permissive user of the other vehicle.

II. DISCUSSION

A. The Issue

Under the nonjoinder statute, an injured third party may not file a direct action against a liability insurer for a cause of action covered by a liability insurance policy without first satisfying either one of two conditions precedent: (1) obtaining a settlement against the insured or (2) obtaining a verdict against the insured. In this regard, subsection (1) of the nonjoinder statute provides:

It shall be a condition precedent to the accrual or maintenance of a cause of action against a liability insurer by a person not an insured under the terms of the liability insurance contract that such person shall first obtain a settlement or verdict against a person who is an insured under the terms of such policy for a cause of action which is covered by such policy.

§ 627.4136(1) (emphasis supplied). Hazen argues that her acceptance of Allstate's oral offer to provide her with a rental car and to repair her Cadillac was a "settlement" that satisfied one of the two alternative conditions precedent of the statute. Hazen also argues—somewhat inconsistently—that the settlement agreement with Allstate "ma[de] the Florida Non-Joinder Statute inapplicable." In response, Allstate contends that Hazen did not meet either of the conditions precedent of the statute because Hazen has not obtained a settlement or a verdict against its insured. According to Allstate, the "settlement" referred to in the statute must be against the insured, not with the insurance company.

These arguments raise a question of apparent first impression in Florida concerning whether a presuit undertaking by an automobile insurance carrier with a third party for the repair of property damage and the payment of incidental costs caused by the negligence of the carrier's insured is sufficient either to satisfy one of the conditions precedent described in the subsection (1) of the nonjoinder statute or to render the statute itself inapplicable.² To answer this question, we will begin with a brief look at the history of the nonjoinder statute.

B. A Brief History

Florida's first nonjoinder statute was enacted as section 627.7262 in 1976. See ch. 76-266, § 12, at 726, Laws of Fla. This statute was a legislative response to the decisions in Shingleton v. Bussey, 223 So.2d 713 (Fla.1969), and Beta Eta House Corp. of Tallahassee v. Gregory, 237 So.2d 163 (Fla.1970). In Shingleton, our supreme court approved the filing of direct actions by injured third parties against liability insurers in motor vehicle cases under a third-party beneficiary theory. 223 So.2d at 715. In Beta Eta House, the court declared that the principles announced in Shingleton applied "not only to automobile liability insurance but also to other forms of liability insurance." 237 So.2d at 165. This first nonjoinder statute was subsequently declared unconstitutional. See Markert v. Johnston, 367 So.2d 1003 (Fla.1978).

In 1982, the legislature enacted another version of the nonjoinder statute that was also numbered as section 627.7262, Florida Statutes. See ch. 82-243, § 542, at 1553, Laws of Fla. This version of the nonjoinder statute survived a constitutional challenge. See VanBibber v. Hartford Accident & Indem. Ins. Co., 439 So.2d 880 (Fla.1983). Subsection (1) of the 1982 version of the nonjoinder statute provided:

It shall be a condition precedent to the accrual or maintenance of a cause of action against a liability insurer by a person not an insured under the terms of the liability insurance contract, that such person shall first obtain a judgment against a person who is an insured under the terms of such policy for a cause of action which is covered by such policy.

§ 627.7262 (emphasis supplied). Thus, under the 1982 version of the nonjoinder statute, the condition precedent to an injured third party's right to file a direct action against an insurer differed significantly from the version of the statute under review in this case. The 1982 version of the statute required the obtaining of a judgment against the insured as the condition precedent for a direct action against the liability insurer.

In 1990, the legislature amended subsection (1) of the nonjoinder statute by deleting the word "judgment" and substituting in its place the words "settlement or verdict." See ch. 90-119, § 38, at 393, Laws of Fla. At the same time, the legislature further amended the nonjoinder statute by adding a new subsection (4) that addresses the procedure for the joinder of a liability insurer in existing litigation with the insured once either of the conditions precedent of subsection (1) has been satisfied. This new subsection (4) provides:

At the time a judgment is entered or a settlement is reached during the pendency of litigation, a liability insurer may be joined as a party defendant for the purposes of entering final judgment or enforcing the settlement by the motion of any party, unless the insurer denied coverage under the provisions of s. 627.426(2) or defended under a reservation of rights pursuant to s. 627.426(2). A copy of the motion to join the insurer shall be served on the insurer by certified mail. If a judgment is reversed or remanded on appeal, the insurer's presence shall not be disclosed to the jury in a subsequent trial.

Id. at 393-94. In 1992, section 627.7262 was transferred and renumbered as section 627.4136. See ch. 92-318, § 37, at 3110, Laws of Fla.³

C. Two Lessons From History

At this point, we pause to note two lessons that we glean from this brief history of the nonjoinder statute. First, the 1982 version of the statute required the entry of a judgment against the insured as a condition...