McKenzie Tank Lines, Inc. v. Empire Gas Corp.

• Decision Date: 27 January 1989
• Docket Number: No. BS-87,BS-87
• Citation: 538 So.2d 482,14 Fla. L. Weekly 282
• Parties: 14 Fla. L. Weekly 282 McKENZIE TANK LINES, INC., a Florida corporation, Appellant v. EMPIRE GAS CORPORATION, a Missouri corporation, and Empiregas, Inc., of Jay, a Florida corporation, Appellees.
• Court: Florida District Court of Appeals

Page 482

538 So.2d 482

14 Fla. L. Weekly 282

McKENZIE TANK LINES, INC., a Florida corporation, Appellant v. EMPIRE GAS CORPORATION, a Missouri corporation, and Empiregas, Inc., of Jay, a Florida corporation, Appellees.

No. BS-87.

District Court of Appeal of Florida First District.

Jan. 27, 1989.

Robert D. Bell of Bell, Hahn & Schuster, Pensacola, for appellant.

Larry Hill of Moore, Hill & Westmoreland, P.A., Pensacola, for appellees.

SMITH, Chief Judge.

Appellant, McKenzie Tank Lines, Inc. (McKenzie), appeals a judgment entered against McKenzie and Florida Insurance Guaranty Association (FIGA). We affirm.

McKenzie and Empire Gas Corporation (Empire) were named as codefendants in a negligence suit stemming from an explosion at a facility owned by Empire. The explosion occurred as a result of negligence of one of McKenzie's employees while he was in the process of unloading a tank of LP gas from McKenzie's tank truck into a storage tank owned by Empire, located at Empire's plant in Jay, Florida.

McKenzie and Empire filed cross-claims against each other, both alleging that the negligence of the other caused the explosion. Empire also sought a judgment against McKenzie for damages to its business and property caused by the explosion. Before trial, Empire settled with the multiple plaintiffs for $464,205.00 in exchange for a release of liability for Empire and McKenzie. After the settlements, the several plaintiffs dismissed their complaints. Thereafter, McKenzie and Empire went to trial before a jury on the issue of liability between them, and McKenzie was found to be one hundred percent liable. A judgment was entered against McKenzie in favor of Empire for $109,000.00, representing the amount of property and business damages suffered by Empire in the explosion. On appeal of that judgment, this court affirmed, McKenzie Tank Lines, Inc. v. Empire Gas Corp., 487 So.2d 1174 (Fla. 1st DCA 1986). Subsequently, Empire filed a motion for contribution seeking recovery from McKenzie of the amounts paid in settlement to the plaintiffs in the underlying action. It is from final judgment rendered in the contribution action that this appeal is taken.

During the pendency of the contribution action, McKenzie's insurance carrier became insolvent, and FIGA became the successor insurer. After a hearing and argument before the court resulting in the trial court's announcement of a ruling in favor of Empire for the full amount of its damages, FIGA filed a motion for reduction of its liability for any judgment rendered on the contribution claim, basing its motion on the provisions of section 631.54(3), Florida Statutes (1985), which states in part that a "covered claim" does not include any amount owed an insurer, a reinsurer, or an underwriting association as subrogation recoveries or otherwise. FIGA's motion also relied upon that provision of the statute stating that member insurers shall have no right of subrogation against the insured of an insolvent member. These provisions are pertinent, FIGA maintained below and here, because part of the sums paid by Empire in the settlements which were the subject of the contribution award were paid directly to insurer members of FIGA.

In the final judgment here appealed, the trial court found, among other things, that the contribution statute, section 768.31, Florida Statutes (1985) (the Uniform Contribution Among Tortfeasors Act) was applicable; that FIGA was not entitled to a reduction of the contribution judgment; and that Empire was entitled to judgment against McKenzie and FIGA for the full amount paid by Empire in settlement of the claims of the several plaintiffs against Empire and McKenzie.

On appeal, McKenzie contends that the trial court erred in denying FIGA's motion for reduction of Empire's recovery against FIGA by the amount representing subrogation claims paid by Empire to insurance companies who were FIGA members. McKenzie also contends that the trial court erred in fixing the amount of the judgment awarded to Empire, in that the amount paid by Empire in its settlements with the several plaintiffs exceeded amounts that were reasonable. Only the first point requires extended discussion.

Much of the argument in the briefs of both parties concerns the trial court's ruling that Empire is entitled to contribution under the statute, section 768.31, as opposed to the remedy of subrogation. McKenzie focuses particularly upon the trial court's ruling that the element of "common liability", which must be present to permit Empire to recover by way of contribution against McKenzie, is satisfied by the allegations of the complaints in the underlying litigation in which both Empire and McKenzie were charged as joint tortfeasors. Empire agrees with this interpretation of the contribution action, but cites no authority supporting this position, while McKenzie vigorously opposes the trial court's ruling, pointing to the Fifth District's recent decision in West American Ins. Co. v. Yellow Cab Co. of Orlando, Inc., 495 So.2d 204 (Fla. 5th DCA), re. denied, 504 So.2d 769 (Fla.1987).

In West American, an automobile owner's insurer (West American Insurance Company) settled the claim of a passenger injured in a collision between the automobile and a taxicab, and then brought an action for contribution against the taxicab company for contribution to recover sums paid in the settlement. However, at trial, the taxicab company was found to be one hundred percent at fault in causing the accident, and the insured automobile was exonerated of all liability. The trial court entered judgment for the taxicab company, notwithstanding the jury's verdict, ruling that because the jury found the taxicab one hundred percent responsible for the accident, the parties were not "joint tortfeasors" as contemplated by the contribution statute. On appeal, the District Court of Appeal affirmed, agreeing that the element of "common liability" was not present, and that an accident for contribution was not proper. The appellate court held, however, that a cause of action for legal subrogation was fully supported by the evidence at the trial, and that West American was entitled to full recovery on that theory. The court cited to Rule 1.190(b), Florida Rules of Civil Procedure (amendment of pleadings to conform to the evidence), as removing any barrier to recovery based on any deficiency in the pleadings.

We are in agreement with the Fifth District's interpretation of the "common liability" element required for contribution under the statute, since it clearly follows the prevailing view as reflected by those decisions from other jurisdictions relied upon by the court in West American, as well as by later decisions. See, e.g., Stephenson v. McClure, 606 S.W.2d 208 (Mo.App.1980); Robertson v. McCarte, 13 Mass.App. 441, 433 N.E.2d 1262 (1982); Wesley v. United Services Auto Ass'n., 694 P.2d 855 (Colo.App.1984). We find, however, that the trial judge's rejection of the holding of West American has no effect upon the correctness of his ultimate decision. We observe, as did the trial judge in the final judgment on appeal, that the ultimate decision in this case does not hinge on whether or not Empire's action against McKenzie is now couched in terms of contribution or subrogation. We base our decision, accordingly, upon the nature of the relief to which Empire is justly and equitably entitled under the admitted facts, as affected by the Florida Insurance Guaranty Association statutes and the purpose behind those statutes.

It is clear that where the remedy of contribution fails because the party against whom contribution is sought is found one hundred percent liable for the tortious injuries, payments made in settlement with injured parties by a non-liable codefendant in return for release of a responsible codefendant, are recoverable under the theory of indemnity or subrogation. An explanation of the remedies available to a settling defendant was concisely stated in Lemmer v. IDS Properties, Inc., 304 N.W.2d 864 (Minn.1980), quoting from the earlier case of Samuelson v. Chicago, R.I. & Pac. RR. Co., 287 Minn. 264, 178 N.W.2d 620 (1970), as follows:

A right to contribution or indemnity between tortfeasors normally arises in favor of a defendant who, not acting as a volunteer enters into a reasonable settlement with the plaintiff, the result of which is to release the other defendants. A case for recovery of indemnity will be established where it is subsequently shown that the tortfeasor joined in the action by the compromising defendant is solely liable for the injury, while a case for recovery of contribution will be established where it is shown that such liability is shared by the parties defendant.

It is sufficient, for resolution of the case before us, to note our agreement with the West American decision, which found the remedy of subrogation applicable under quite similar facts. Moreover, appellant here concedes that Empire...