McNulty v. Nationwide Mut. Ins. Co.

• Decision Date: 01 April 1969
• Docket Number: No. 68--802,68--802
• Citation: 221 So.2d 208
• Parties: Kendrick D. McNULTY, Appellant, v. NATIONWIDE MUTUAL INSURANCE COMPANY, an Ohio corporation, Appellee.
• Court: Florida District Court of Appeals

Page 208

221 So.2d 208

Kendrick D. McNULTY, Appellant, v. NATIONWIDE MUTUAL INSURANCE COMPANY, an Ohio corporation, Appellee.

No. 68--802.

District Court of Appeal of Florida, Third District.

April 1, 1969.

Rehearing Denied April 30, 1969.

Frates, Fay, Floyd & Pearson and Larry S. Stewart, Miami, for appellant.

Weinstein, Weissenborn & Burr, Miami, for appellee.

Before CHARLES CARROLL, C.J., and BARKDULL and HENDRY, JJ.

CHARLES CARROLL, Chief Judge.

The appellant Kendrick D. McNulty was injured when struck by the vehicle of Timothy Peter Garvey. He sued Garvey and obtained judgment for $18,000. Garvey was insured under an automobile liability indemnity policy issued by the appellee Nationwide Mutual Insurance Company. The liability indemnity coverage limitation for injury to one person was $10,000. Prior to, and again during pendency of the suit McNulty made offers to settle for an amount within the policy limit, which were refused by the insurer without counter offer.

After entry of the judgment against him, Garvey assigned to Mc.nulty his claim against Nationwide for the excess of the judgment over the insurance coverage limit. McNulty, on the basis of that assignment, then brought this action against Nationwide, alleging negligent and bad faith refusal to settle within the policy limit. Nationwide moved to dismiss, asserting as one ground that such suit could not be maintained by an assignee. The motion was granted, and the cause dismissed. Thereupon the plaintiff-assignee filed this appeal. The order of dismissal did not state the ground or grounds on which it was predicated. We agree with appellant's contention that the complaint was not properly subject to dismissal on the grounds of the motion stated in addition to the one referred to above.

Concerning the propriety of the cause of action asserted, the brief of the appellee contains the following concession: 'That such liability for the said 'excess' in the judgment is owing from the insurer to its insured is clearly the law if the facts of the case warrant same. See American Fire and Casualty Co. v. Davis (Fla.App.1962), 146 So.2d 615; and American Fidelity & Casualty Co. v. Greyhound Corp., (5 Cir.1958) 258 F.2d 709.' See also Auto Mut. Indemnity Co. v. Shaw, 134 Fla. 815, 184 So. 852.

The judgment creditor does not have a direct right of action against the insurer for such excess (Sturgis v. Canal Insurance Co. of Greenville, South Carolina, Fla.1960, 122 So.2d 313), in absence of a provision in the insurance policy granting the right (as there was in Auto Mut Indemnity Co. v. Shaw, supra, as explained in the Sturgis case). That rule is not controlling in this case, because here the judgment creditor plaintiff bases his suit upon an assignment of the cause of action to him by the judgment debtor.

Against the contention of the appellant that the trial court committed error in dismissing his complaint, the appellee advances three arguments. First, that the judgment creditor is not entitled to maintain a direct action for the excess against the insurer. That argument is not applicable here, for the reason pointed out above that the judgment creditor is proceeding as assignee of the cause of action. Secondly, that the cause of action was not assignable. We hold that argument also is without merit, for the reasons more fully set out below. Third, that the assignment was champertous. We hold that it was not. The written assignment discloses that in return for the assignment of the cause of action to him, McNulty agreed that at the expiration of six months (if suit were not brought thereon by him) or 'upon the conclusion' of legal proceedings if brought thereon by him against Nationwide, he would 'satisfy all amounts of the aforesaid judgments in excess of the coverage afforded.'

The principal question presented and argued on this appeal was whether a claim of the insured judgment debtor against the insurer for excess of judgment over the policy limit for alleged bad faith in refusal to settle within the policy limit, may be maintained against the insurer by the judgment creditor on the basis of an assignment...