Morales v. Zenith Ins. Co.

• Decision Date: 04 December 2014
• Docket Number: No. SC13–696.,SC13–696.
• Citation: 152 So.3d 557
• Parties: Leticia MORALES, et al., Appellants, v. ZENITH INSURANCE COMPANY, Appellee.
• Court: Florida Supreme Court

152 So.3d 557

Leticia MORALES, et al., Appellants

v.ZENITH INSURANCE COMPANY, Appellee.

No. SC13–696.

Supreme Court of Florida.

Dec. 4, 2014.

Lee Delton Gunn, IV, of Gunn Law Group, P.A., Tampa, FL, and Tracy Raffles Gunn of Gunn Appellate Practice, P.A., Tampa, FL, for Appellants.

Ira William Spivey, II and Courtney M. Keller of Greenberg Traurig, P.A., Orlando, FL, and Elliot H. Scherker, Julissa Rodriguez, and Jay Andrew Yagoda of Greenberg Traurig, P.A., Miami, FL, for Appellee.

William Harris Rogner of Hurley, Rogner, Miller, Cox, Waranch & Westcott, P.A., Winter Park, FL, on behalf of The Florida Association of Insurance Agents; Katherine Eastmoore Giddings and Nancy Mason Wallace, Akerman LLP, Tallahassee, FL, and William Wells Large, Tallahassee, FL, on behalf of the Florida Justice Reform Institute, et al.; Rayford Huxford Taylor of Casey Gilson P.C., Atlanta, GA, on behalf of Associated Industries of Florida, Inc., et al., for Amici Curiae.

Opinion

POLSTON, J.

In a breach of contract action brought by the estate of a deceased employee against his employer's workers' compensation and employer liability insurance carrier, the United States Court of Appeals for the Eleventh Circuit certified the following questions of Florida law:¹

(1) DOES THE ESTATE HAVE STANDING TO BRING ITS BREACH OF CONTRACT CLAIM AGAINST ZENITH UNDER THE EMPLOYER LIABILITY POLICY?

(2) IF SO, DOES THE PROVISION IN THE EMPLOYER LIABILITY POLICY WHICH EXCLUDES FROM COVERAGE “ANY OBLIGATION IMPOSED BY WORKERS' COMPENSATION ... LAW” OPERATE TO EXCLUDE COVERAGE OF THE ESTATE'S CLAIM AGAINST ZENITH FOR THE TORT JUDGMENT?

(3) IF THE ESTATE'S CLAIM IS NOT BARRED BY THE WORKERS' COMPENSATION EXCLUSION, DOES THE RELEASE IN THE WORKERS' COMPENSATION SETTLEMENT AGREEMENT OTHERWISE PROHIBIT THE ESTATE'S COLLECTION OF THE TORT JUDGMENT?

Morales v. Zenith Ins. Co., 714 F.3d 1220, 1234 (11th Cir.2013).

For the reasons that follow, we hold that, under Florida law, the estate has standing, but that the workers' compensation exclusion and the release prevent it from collecting the tort judgment from Zenith. Accordingly, we answer all three certified questions in the affirmative.

BACKGROUND

Santana Morales, Jr., was crushed to death by a palm tree while working for Lawns Nursery and Irrigation Designs, Inc. (Lawns). Thereafter, his surviving spouse, Leticia Morales, entered into a workers' compensation settlement agreement with Lawns and Lawns' workers' compensation and employer liability insurance carrier, Zenith Insurance Company (Zenith). The settlement agreement contained a release, through which Ms. Morales elected the consideration described in the agreement as the sole remedy with respect to the insurance coverage that Zenith provided to Lawns.

In a separate wrongful death lawsuit, which was ongoing when the parties entered the settlement agreement, Morales' estate alleged that Lawns' negligence caused his death and obtained a default judgment against Lawns for $9.525 million. After Zenith refused to pay the tort judgment, the estate sued Zenith in state court under Lawns' employer liability policy, alleging that Zenith had breached the policy. Zenith removed the case to federal court, and the federal district court held that the policy's workers' compensation exclusion barred the estate's suit and therefore entered summary judgment in Zenith's favor. Morales v. Zenith Ins. Co., 2012 WL 124086, at *8 (M.D.Fla. Jan. 17, 2012).

On appeal, the Eleventh Circuit concluded that it is unclear under Florida law “whether a workers' compensation exclusion in an employer liability policy—which is intended to protect employers from tort liability to their employees—bars coverage of an employee's tort judgment obtained in a separate negligence suit against the employer.” Morales, 714 F.3d at 1228. The Eleventh Circuit further concluded that Florida law is unsettled as to whether the estate has standing to sue Zenith under Lawns' employer liability policy and whether, if the workers' compensation exclusion does not bar the estate's claim, the release in the workers' compensation settlement agreement prevents the estate from collecting the tort judgment from Zenith. Id. at 1234. Accordingly, the Eleventh Circuit certified the three questions of law set forth above to this Court. Id.

I. Standing

The Eleventh Circuit first asks whether the estate has standing under Lawns' employer liability policy to sue Zenith for breach of contract. We hold that it does and therefore answer the first certified question in the affirmative.

Under Florida law, a judgment creditor has standing to bring suit against a liability insurer that may have coverage for the judgment. See Johnson v. Dawson, 257 So.2d 282, 284 (Fla. 3d DCA 1972) (“[A] judgment creditor has standing to raise the issues of estoppel and waiver as to insurance coverage against the insurer of the judgment debtor. However, one possessing standing does not necessarily prevail upon the proper application of the legal principles he may assert.”); Williams v. Union Nat'l Ins. Co., 528 So.2d 454, 455 n. 1 (Fla. 1st DCA 1988) (recognizing the right of a judgment creditor to proceed directly against a tortfeasor's insurance company); see also VanBibber v. Hartford Accident & Indem. Ins. Co., 439 So.2d 880, 882–83 (Fla.1983) (recognizing the ability of an injured person to bring claims as a third-party beneficiary against the tortfeasor's insurance company after obtaining a judgment against the tortfeasor). In fact, Florida's nonjoinder statute specifically allows a “cause of action against a liability insurer by a person not an insured under the terms of the liability insurance contract [but who] obtain[s] 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), Fla. Stat. (2009).

Accordingly, by virtue of having obtained a judgment against Lawns, Morales' estate has standing to bring a direct action against Zenith to recover that judgment.

Therefore, we answer the first certified question in the affirmative.

II. Workers' Compensation Exclusion

The Eleventh Circuit next asks whether the workers' compensation exclusion in the employer liability policy excludes coverage of the estate's tort judgment against Lawns. We hold that it does and therefore answer the second certified question in the affirmative.

As the Eleventh Circuit explained, “[u]ltimately, an insurer's liability depends on whether the insured's claim is within the coverage of the policy.” Morales, 714 F.3d at 1227. In determining whether a claim is covered by an insurance policy, this Court enforces “a clear and unambiguous” provision pursuant to its plain language regardless of “whether it is a basic policy provision or an exclusionary provision.” Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So.2d 528, 532 (Fla.2005) (quoting Hagen v. Aetna Cas. & Sur. Co., 675 So.2d 963, 965 (Fla. 5th DCA 1996) ). Further, this Court reads the “policy as a whole, endeavoring to give every provision its full meaning and operative effect.” U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871, 877 (Fla.2007) (quoting Auto–Owners Ins. Co. v. Anderson, 756 So.2d 29, 34 (Fla.2000) ). Only if a provision is ambiguous after considering the policy as a whole will this Court construe the ambiguous provision against the insurer in favor of coverage. Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So.2d 161, 165 (Fla.2003).

The policy at issue is a “Workers Compensation and Employers Liability Insurance Policy” issued by Zenith to Morales' employer, Lawns. Part One of the policy provides Workers Compensation Insurance, under which Zenith agreed to pay “the benefits required of [Lawns] by the workers compensation law.” Part Two provides Employers Liability Insurance, under which Zenith agreed to pay “all sums [Lawns] legally must pay as damages because of bodily injury to [its] employees, provided the bodily injury is covered by this Employers Liability Insurance.” Through a workers' compensation exclusion, the employer liability policy excludes coverage for “any obligation imposed by a workers compensation ... law.”

Reading these provisions together, it is clear that the workers' compensation exclusion bars coverage of claims arising from bodily injuries for which Lawns is required to pay benefits under workers' compensation law—i.e., claims that are covered by the workers' compensation insurance portion of the policy. In other words, as we have previously explained, employer liability insurance is a “gap-filler [that] provid[es] protection to the employer in those situations where the employee has a right to bring a tort action despite the provisions of the workers' compensation statute.” Travelers Indem. Co. v. PCR Inc., 889 So.2d 779, 784 n. 7 (Fla.2004) (quoting Producers Dairy Delivery Co. v. Sentry Ins. Co., 41 Cal.3d 903, 226 Cal.Rptr. 558, 718 P.2d 920, 927 (1986) ); see also Appleman on Insurance Law and Practice § 4571 (Berdal ed. 1979) (describing the coverages provided by workers' compensation and employer liability insurance as “mutually exclusive”); 9A Couch on Ins. § 132:57 (3d ed. 2013) (explaining that employer liability insurance “ ‘fill[s] the gaps' in workers' compensation coverage”).

In this case, the estate did not have the right to bring a tort action against Lawns. Rather, because the estate alleged that Lawns' negligence caused Morales' death, its exclusive remedy was under Florida's Workers' Compensation Law, chapter 440, Florida Statutes. See generally § 440.11(1), Fla. Stat. (2014) (addressing the exclusiveness of workers' compensation liability); see also Eller v. Shova, 630 So.2d 537, 539 (Fla.1993) ( “[W]orkers' compensation is the exclusive remedy available to an injured employee as to any negligence on the part of that employee's employer ... so long as the employer has not engaged in any intentional act designed to result in or that is substantially certain...