Jones v. Florida Ins. Guar. Ass'n, Inc.

Decision Date07 July 2005
Docket NumberNo. SC03-1259.,SC03-1259.
Citation908 So.2d 435
PartiesBetty JONES, etc., Petitioner, v. FLORIDA INSURANCE GUARANTY ASSOCIATION, INC., Respondent.
CourtFlorida Supreme Court

George A. Vaka of Vaka, Larson and Johnson, P.L., Tampa, FL, for Petitioner.

Richard Burton Bush and Barbara Debelius of Bush, Augspurger and Lynch, P.A., Tallahassee, FL, for Respondent.

PER CURIAM.

We have for review Florida Insurance Guaranty Ass'n, Inc. v. Jones, 847 So.2d 1020 (Fla. 1st DCA 2003), which expressly and directly conflicts with the decision in Florida Insurance Guaranty Ass'n v. Giordano, 485 So.2d 453 (Fla. 3d DCA 1986). We have jurisdiction. See art. V, § 3(b)(3), Fla. Const. For the reasons stated herein, we quash the decision of the district court of appeal along with the denial of petitioner's motion for attorneys' fees. We hold that the duty of the Florida Insurance Guaranty Association (FIGA) to defend a claim against an insured party is identical to that of the insolvent insurer, and, as such, is triggered when the complaint alleges facts that fairly and potentially bring the action within policy coverage.1 We reject the contention that the immunity provision of FIGA's enabling act precludes the initiation of actions for FIGA's breach of its duty to defend, as such actions flow from FIGA's statutory and contractual duties. We do recognize, however, that no viable cause of action for bad faith may be asserted against FIGA. With regard to permissible damages in a duty to defend action, we hold that FIGA's liability shall not exceed the policy limits of the insolvent insurer (up to the statutory maximum), plus interest from the date of judgment against the insured (if the payment of such interest is provided for under the policy's supplementary payment provision), as well as statutory interest from the date of judgment against FIGA and any attorneys' fees resulting from FIGA's denial of coverage.

We direct the district court to remand the case to the circuit court with instructions to reinstate the final summary judgment in favor of petitioner, Betty Jones, and to recalculate the damage award in accordance with the limitations set forth in this opinion. We further instruct the district court of appeal to enter an award of attorneys' fees in favor of Jones and remand the case to the trial court to determine the amount of fees to be assessed for services rendered at the trial and all appellate levels.

BACKGROUND AND FACTS

The instant action arises from a decision reversing the final summary judgment entered in favor of Jones. See Jones, 847 So.2d at 1022. The case below involved an action by Jones to satisfy a $75,000,000 judgment obtained in a wrongful death action against Michael Pratt, one of FIGA's insureds. FIGA is an insurance guaranty association created by and governed under sections 631.50-631.70 of the Florida Statutes. See §§ 631.50-.70, Fla. Stat. (1995) (the "FIGA Act"). The facts underlying the instant matter are not complex but are very simple and clear.

On May 18, 1994, a vehicle operated by Heath Gilliam collided with the vehicle operated by Althea Jones, resulting in her death. Betty Jones, the personal representative of Althea's estate, initiated a wrongful death action against Heath Gilliam and Althea's uninsured motorist insurance carrier. The car Gilliam was driving at the time of the accident was connected to Spruill Auto Sales, an enterprise owned by Michael Pratt. Pratt's business was insured under a "garage policy" issued by Dealers Insurance Company. The policy provided, among other coverages, automobile liability insurance coverage with a coverage limit of $25,000, plus supplemental payment provisions, and was in effect at the time of the collision. Several months after the accident, Dealers Insurance was declared insolvent in December 1994, at which time FIGA stepped into the shoes of the insolvent insurance company.

On September 28, 1995, Jones' counsel timely submitted a proof of claim form in conformity with the applicable statute against Dealers Insurance to Dealers' receiver. In the fall of 1995, Jones' counsel also transmitted a copy of the wrongful death complaint filed against Gilliam to the FIGA claims adjuster, James Leezer. At this time, neither Pratt, Spruill Auto Sales, nor FIGA were joined as parties in the wrongful death action.

On March 15, 1996, Jones amended the complaint in the wrongful death action to include Michael Pratt, d/b/a Spruill Auto Sales as a party defendant. Count I of the amended complaint reiterated the negligence claim against Heath Gilliam. Count II asserted a negligence claim against Pratt, alleging that at the time of the accident, Michael Pratt owned Spruill Auto Sales and had given his consent to an employee, Anthony Dixon, to drive one of the "for sale" vehicles on the lot. Dixon, in turn, permitted Heath Gilliam to drive one of these cars, which was the vehicle that collided with the automobile driven by Althea Jones. On this basis, the complaint contended that Pratt and Spruill Auto Sales were legally responsible for Gilliam's negligence.

FIGA investigated Jones' claim and Pratt's insurance policy, and asserted a position that the claim was not a "covered claim" under the FIGA Act. On May 16, 1996, FIGA sent a letter to Jones advising that FIGA denied coverage to Pratt and Spruill Auto Sales in connection with this accident. In this letter, FIGA asserted as grounds for denying the claim that Pratt (1) never reported the accident to FIGA or Dealers Insurance; (2) failed to cooperate in defense of the claim by failing to answer certified letters sent by FIGA and adjusters assigned to investigate the case; (3) made a material misrepresentation on his insurance application; (4) neither owned nor possessed the car in question at the time of the incident; and (5) failed to notify FIGA of the service of process in the wrongful death action. For those asserted reasons, FIGA simply failed and refused to defend Pratt even though the allegations of the complaint invoked coverage under the insurance policy for which FIGA assumed all obligations.

Due to FIGA's failure to act no defense was presented and the trial court correctly proceeded to enter a default against Pratt in the wrongful death action. Thereafter, a jury was empaneled and returned a verdict on damages, and the trial court entered final judgment pursuant to the jury verdict on May 16, 1997, for $75,000,000. Subsequently, Michael Pratt assigned all of his rights against Dealers Insurance and FIGA to the estate of Althea Jones.

On September 11, 1998, Jones filed a three-count complaint against FIGA seeking payment of the judgment entered in the underlying action. Jones filed the complaint in the dual capacities as the personal representative of the estate of Althea Jones and as personal representative of the estate as Pratt's assignee. Count I alleged that FIGA was "deemed the insurer" to the extent of Dealers Insurance's obligations on the claims within coverage of the policy, and that FIGA had the rights, duties, and obligations of Dealers as if the company had not become insolvent. The complaint outlined that under Pratt's insurance policy, Dealers Insurance had assumed the duty to defend Pratt to the exclusion of others against complaints alleging facts within the scope of the coverage of the insuring agreement, whether true or not, the duty to indemnify Pratt for the same, and the duty to make any and all payments required under the policy with regard to judgments entered against Pratt. The complaint asserted that the underlying wrongful death action alleged facts which fell within the scope of liability coverage of the insurance agreement, and that FIGA breached its statutory duties stemming from the contractual obligations in failing to defend and indemnify Pratt. Counts II and III alleged breach of contract and fiduciary duty claims arising from the same factual basis. Jones sought a judgment against FIGA for all damages incurred as well as costs, interests, attorneys fees, and any other relief the court deemed just.

In its answer, FIGA admitted that the Association had the same duties as the insurer. FIGA further conceded that under the FIGA Act, it was deemed the insurer to the extent of the insurer's obligations on covered claims, and to such extent, had the identical rights, duties and obligations of the insurer as if the insurer had not become insolvent. FIGA also asserted six affirmative defenses — only two of which pertained to coverage of the underlying claim. The balance of the defenses challenged the negligence determination-an issue that was decided adverse to FIGA with entry of the default judgment in the underlying action.2 With regard to coverage, FIGA first asserted that Pratt fraudulently attempted to procure the insurance, and that Pratt's claim for coverage was correctly denied based on fraudulent misrepresentation. Second, FIGA argued that Jones had failed to timely file her claim, and that the claim was therefore barred. FIGA also asserted that damages against the Association were only available as permitted by section 768.81 of the Florida Statutes (1995) (the comparative negligence provision), as limited by section 631.57.

Pursuant to an agreed order, FIGA withdrew all of the negligence defenses, was granted leave to amend the misrepresentation defense and limited liability argument, and was permitted to proceed on the timeliness defense. The issues were narrowed and limited when FIGA amended its affirmative defenses to assert that FIGA's liability is limited by section 631.57 of the Florida Statutes to the limits of the underlying insurance policy, the claim was not covered due to a material misrepresentation on Pratt's insurance application, and the claim was timebarred. FIGA did not assert any defenses based on Pratt's purported lack of cooperation in the investigation or defense of the claim, failure to notify Dealers or FIGA regarding the accident, or...

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