Hous. Specialty Ins. Co. v. Vaughn

• Decision Date: 10 August 2018
• Docket Number: Case No. 2D17-2713
• Citation: 261 So.3d 607
• Parties: HOUSTON SPECIALTY INSURANCE COMPANY, Appellant, v. Enoch VAUGHN, individually, and as parent and natural guardian of M.V., a minor; All Florida Weatherproofing & Construction, Inc. ; Richard Fulford; Robert Mendenhall; and Joseph Pflieger, Appellees.
• Court: Florida District Court of Appeals

261 So.3d 607

HOUSTON SPECIALTY INSURANCE COMPANY, Appellant,

v.Enoch VAUGHN, individually, and as parent and natural guardian of M.V., a minor; All Florida Weatherproofing & Construction, Inc. ; Richard Fulford; Robert Mendenhall; and Joseph Pflieger, Appellees.

Case No. 2D17-2713

District Court of Appeal of Florida, Second District.

Opinion filed August 10, 2018

Rehearing Denied October 2, 2018

Robert M. Darroch and Chad W. Bickerton of Goodman McGuffey LLP, Sarasota, for Appellant.

Brad Salter of Salter, Healy, Bassett & Rivera, St. Petersburg, for Appellee Enoch Vaughn.

Weslee L. Ferron and Daniel A. Martinez of Martinez Denbo, LLC, St. Petersburg, for Appellee All Florida Weatherproofing & Construction, Inc.

Scott K. Hewitt of Mandelbaum, Fitzsimmons, Hewitt & Cain, P.A., Tampa, for Appellees Richard Fulford and Robert Mendenhall.

No appearance for Appellee Joseph Pflieger.

LaROSE, Chief Judge.

Houston Specialty Insurance Company appeals the trial court's order dismissing its intervention in a tort lawsuit brought by Enoch Vaughn against All Florida Weatherproofing & Construction, Inc., Richard Fulford, Robert Mendenhall, and Joseph Pflieger. We have jurisdiction. See Fla. R. App. P. 9.030(b)(1)(A) ; see also YHT & Assocs., Inc. v. Nationstar Mortg. LLC, 177 So.3d 641, 642-43 (Fla. 2d DCA 2015) (observing that the "the order denying intervention was a final order that could have been appealed" (citing In re S.N.W., 912 So.2d 368, 370 (Fla. 2d DCA 2005), for the conclusion that "an order denying a motion to intervene was a final order subject to appeal") ). Upon careful review of the record, and with the benefit of oral argument, we affirm.

Background

All Florida is in the business of pressure washing, roof coating, and ancillary roof-related services. Houston issued a commercial general liability insurance policy to All Florida. In 2012, while applying a protective coating to a mobile home's roof for All Florida, Mr. Vaughn fell; he is now a paraplegic. Individually, and on behalf of his minor son, Mr. Vaughn sued All Florida, along with Richard Fulford, the company's president, and Robert Mendenhall, a sales representative, in Pinellas County Circuit Court, alleging various tort claims.

Initially, Houston agreed to investigate and defend the claims. Houston later informed All Florida of a policy exclusion eliminating coverage for bodily injury to All Florida's employees, and an endorsement that would reduce the limits of any coverage if Mr. Vaughn was an independent contractor.

In May 2014, relying on the exclusion and endorsement, Houston filed a declaratory judgment action in the United States District Court for the Middle District of Florida seeking a determination as to Houston's duty to defend and indemnify All Florida. Houston also requested a declaration that Mr. Vaughn was an All Florida employee.

Shortly after filing the declaratory judgment action, Houston moved to intervene in the state court lawsuit. Houston wanted to submit special interrogatories and verdict forms relevant to Mr. Vaughn's employment status. Houston feared having to relitigate the entire tort lawsuit in its declaratory judgment action if a jury found in favor of Mr. Vaughn. Thus, Houston asserted that limited intervention was proper to avoid conflicting findings or verdicts and inconsistent results. All Florida and Messrs. Fulford and Mendenhall opposed intervention, insisting that permitting Houston to intervene as a party would potentially inflate any damages award. In September 2014, the trial court granted Houston's motion to intervene. The order specifically provided that "[a]ny party may file a motion to sever in the future in the event that circumstances change or that intervention otherwise subjects any party to unfair prejudice."

The state court lawsuit continued apace. In December 2014, All Florida and Mr. Fulford informed Houston that they had retained separate counsel and were rejecting Houston's defense. Further, due to Houston's position on coverage, All Florida, Mr. Fulford, and Mr. Mendenhall negotiated an agreement with Mr. Vaughn to resolve his claims through nonbinding arbitration.¹ The agreement provided for entry of a final judgment in favor of Mr. Vaughn and against the defendants in an amount to be determined by nonbinding arbitration. Houston opposed the agreement. The trial court ordered all parties, including Houston, to participate in arbitration.

The arbitrator rendered an award in June 2015, finding that Mr. Vaughn was not an employee of All Florida. Further, the arbitrator found Mr. Vaughn to be eighty percent liable for his own injuries. The arbitrator awarded net damages to Mr. Vaughn of $2,131,087, individually, and $200,000 for Mr. Vaughn's minor son's claim for loss of consortium. Houston objected to the award. In July 2015, it filed a motion for trial de novo. Mr. Vaughn moved to confirm the arbitration award and sought a final judgment in his favor. Mr. Vaughn also filed a motion to dismiss Houston's intervention, which Houston opposed. In February 2016, the trial court granted Houston's motion for trial de novo and denied Mr. Vaughn's motions.

Meanwhile, in September 2015, during the parties' imbroglio over arbitration, Houston filed a second declaratory judgment action in federal court. Houston sought a declaration that there was no coverage because All Florida and Messrs. Fulford and Mendenhall had failed to cooperate with Houston in defending the state court lawsuit. In September 2017, the district court entered summary judgment against Houston, concluding that it was estopped from asserting such a claim. Houston's appeal of the summary judgment is currently pending before the United States Court of Appeals for the Eleventh Circuit. See Houston Specialty Ins. Co. v. Vaughn, No. 17-14526 (11th Cir. filed Oct. 9, 2017).

While the state court lawsuit inched forward, a federal court jury returned a December 2015 verdict in the first declaratory judgment action, finding that Mr. Vaughn was an independent contractor at the time of the accident. Houston unsuccessfully appealed that judgment. See Houston Specialty Ins. Co. v. Vaughn, 726 Fed. Appx. 750 (11th Cir. 2018).

As a result of the federal court developments, Mr. Vaughn filed a second motion to dismiss Houston's intervention. Mr. Vaughn also filed another motion for entry of final judgment based upon the earlier arbitration award. The trial court entered a June 2017 order granting Mr. Vaughn's motion to dismiss Houston's intervention and denying his motion for entry of final judgment.

Analysis

The order on appeal reversed the trial court's prior order granting intervention. Did the trial court err in dismissing Houston's intervention? We think not. Because the order before us dismisses Houston as a party, it is the functional equivalent of an order denying a motion to intervene. "This court reviews an order denying a motion to intervene for an abuse of discretion." Harbor Specialty Ins. Co. v. Schwartz, 932 So.2d 383, 386 (Fla. 2d DCA 2006). Houston contends that the trial court failed to properly consider its interests under the test recounted in Union Central Life Insurance Co. v. Carlisle, 593 So.2d 505 (Fla. 1992).

Florida Rule of Civil Procedure 1.230 provides that "[a]nyone claiming an interest in pending litigation may at any time be permitted to assert a right by intervention, but the intervention shall be in subordination to, and in recognition of, the propriety of the main proceeding, unless otherwise ordered by the court in its discretion." Despite the rule's seemingly expansive language, intervention is not unrestrained.

The Florida Supreme Court established a two-part test for determining whether intervention is proper. The trial court must first make a preliminary determination whether "the interest asserted is appropriate to support intervention." Carlisle, 593 So.2d at 507.

[T]he interest which will entitle a person to intervene ... must be in the matter in litigation, and of such a direct and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment. In other words, the interest must be that created by a claim to the demand in suit or some part thereof, or a claim to, or lien upon, the property or some part thereof, which is the subject of litigation.

Id. (alteration in original) (quoting Morgareidge v. Howey, 75 Fla. 234, 78 So. 14, 15 (1918) ). The trial court must then exercise its sound discretion whether to permit intervention. Id. In this second part of the test, the trial court "should consider a number of factors, including the derivation of the interest, any pertinent contractual language, the size of the interest, the potential for conflicts or new issues, and any other relevant circumstance." Id. at 507-08. This two-step analysis is a compromise among the competing and fluid interests that are often at stake in tort litigation. See id.; Humana Health Plans v. Lawton, 675 So.2d 1382, 1385 (Fla. 5th DCA 1996) ("In [ Carlisle ], the supreme court agreed with this court in [ Southland Insurance Co. v. Abelove, 556 So.2d 805 (Fla. 5th DCA 1990) ] that an insurance company must be given a meaningful opportunity to assert and protect its interests but also agreed with the fourth district [in Union Central Life Insurance Co. v. Carlisle, 566 So.2d 1335 (Fla. 4th DCA 1990), approved, Carlisle, 593 So.2d 505,] that an insurance company cannot be permitted to interfere with or participate in the trial between claimant and tort feasor.").

By way of example, we observe that an insurer's interest in protecting its subrogation rights may warrant intervention in its insured's tort litigation. See Harbor Specialty, 932 So.2d at 386-87 (first citing Carlisle, 593 So.2d at 505 ; then citing Provident Life & Accident Ins. Co. v. Prichard, 636 So.2d 731, 733 (Fla. 4th DCA 1993) ; and then citing Abelove, 556 So.2d at 806 ).

Carlisle and Abelove involved health insurers whose...