N. Am. Capacity Ins. Co. v. C.H., 2D14–3161.

• Decision Date: 07 August 2015
• Docket Number: No. 2D14–3161.,2D14–3161.
• Citation: 173 So.3d 1075
• Parties: NORTH AMERICAN CAPACITY INSURANCE COMPANY, Appellant, v. C.H., individually and as Mother and Natural Guardian of S.C., a minor; John C. Dent, as Personal Representative of the Estate of Dialyn Rae; and Andrew Rae, III, an individual, Appellees.
• Court: Florida District Court of Appeals

173 So.3d 1075

NORTH AMERICAN CAPACITY INSURANCE COMPANY, Appellant

v.C.H., individually and as Mother and Natural Guardian of S.C., a minor; John C. Dent, as Personal Representative of the Estate of Dialyn Rae; and Andrew Rae, III, an individual, Appellees.

No. 2D14–3161.

District Court of Appeal of Florida, Second District.

Aug. 7, 2015.

John R. Catizone and Dustin C. Blumenthal of Litchfield Cavo LLP, Fort Lauderdale, for Appellant.

Tracy Raffles Gunn of Gunn Appellate Practice, P.A., Tampa, for Appellees C.H., individually and as Mother and Natural Guardian of S.C., a minor.

Fred Cunningham and Gregory M. Yaffa of Slawson Cunningham Whalen & Gaspari, Palm Beach Gardens; and Andrew A. Harris of Burlington & Rockenbach, P.A., West Palm Beach, for Appellees John C. Dent, as Personal Representative of the Estate of Dialyn Rae; and Andrew Rae, III, an individual.

Opinion

MORRIS, Judge.

North American Capacity Insurance Co. (NAC) appeals a judgment entered on June 13, 2014, in consolidated lawsuits arising from an incident of child abuse suffered by S.C. at a daycare operated by the Raes, who are insured by NAC. We affirm for the reasons explained below.

In 2010, C.H.—individually and on behalf of her daughter, S.C.—sued Dialyn Rae and Andrew Rae, III, in circuit court, claiming that the Raes' son had sexually abused S.C. while she was in the care of the Raes' daycare. Even though the Raes¹ had earlier filed a claim with their insurer, NAC, and NAC had denied the claim, NAC provided a defense to the Raes under a reservation of rights. In December 2012, a jury returned a verdict for C.H. in the amount of $6,255,340.

NAC then filed a declaratory action in federal court “seeking a declaration that (1) there is no coverage under the [Raes'] policy and NAC therefore has no duty to indemnify the Raes for the judgment[ ] and (2) NAC did not commit bad faith in handling the Raes' underlying claim and defense.” North Am. Capacity Ins. Co. v. C.H., No. 8:12–cv–02860–T–27AEP, 2013 WL 5305708, at *1 (M.D.Fla. Sept. 20, 2013). In state court, the Raes had filed a separate lawsuit against NAC and C.H. “seeking a declaration that the NAC policy provided coverage” and further asserting a claim for bad faith against NAC. Id. NAC removed the Raes' lawsuit to federal court, and it was consolidated with NAC's federal lawsuit. The district court dismissed NAC's bad faith count concluding that there was no actual controversy because it “remained contingent on the state court entering a final judgment and the parties resolving the coverage issue.” Id. at *3. The district court also dismissed the coverage count because the amount in controversy did not meet the threshold for diversity jurisdiction. Id. The consolidated lawsuits were remanded back to state court.

On November 8, 2013, the circuit court entered an order permitting C.H. to file an amended complaint adding NAC as a defendant and alleging counts against NAC for bad faith and for policy limits coverage ($50,000). NAC objected on the basis that a third-party bad faith claim should not be brought into an underlying tort action against the insured. The November 8, 2013, order also consolidated C.H.'s case with the cases filed by NAC and the Raes, which had been removed to federal court but remanded back to state court. NAC answered the coverage count but moved to dismiss the bad faith count on the basis that it was premature. On January 31, 2014, the circuit court denied NAC's motion to dismiss the bad faith count but abated the count until the issue of coverage was resolved. The parties filed motions for summary judgment on the issue of coverage, and on June 13, 2014, the circuit court entered a judgment determining that NAC had a duty to pay C.H. the policy limit of $50,000. In the judgment, the circuit court reserved jurisdiction to rule on any remaining issues between the parties as raised by the pleadings. NAC now appeals the June 13, 2014, judgment determining coverage.

NAC argues that the circuit court erred in allowing C.H. to join NAC as a defendant because even though section 627.4136, Florida Statutes (2013)—the nonjoinder statute—permits an insurer to be added as a defendant, that statute was “not intended to allow a party to inject an insurance bad faith claim into the tort action.” NAC claims that when a court improperly allows a tort plaintiff to add a bad faith defendant more than one year after the underlying tort action was filed, it deprives the bad faith defendant of the right it would otherwise have to remove the case to federal court. See 28 U.S.C.A. § 1446(c) (providing that diversity case may not be removed more than one year after commencement of the action); Safeco Ins. Co. of Illinois v. Beare, 152 So.3d 614, 617 (Fla. 4th DCA 2014) (noting that some federal courts have taken the position that a case may not be removed on the basis of a newly added bad faith claim when that claim was added more than a year after the original complaint was filed).

We do not reach NAC's argument in this appeal. It is generally true that a final ruling on coverage is appealable when a bad faith claim remains pending between the parties, with the rationale being that the coverage issue should be completely resolved before the bad faith claim proceeds. See Michigan Millers Mut. Ins. Co. v. Bourke, 581 So.2d 1368, 1369–70 (Fla. 2d DCA 1991) (quashing order lifting abatement of bad faith claim “[w]hile the appeal of the summary judgment as to the coverage issue was pending”); United Auto. Ins. Co. v. Tienna, 780 So.2d 1010, 1011 n. 4 (Fla. 4th DCA 2001) (noting that “cases involving a contractual claim for insurance coverage and an attendant bad faith claim” are an exception to the general rule that “partial final judgments are premature and erroneous”); see also Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So.2d 1289, 1291 (Fla.1991) (holding that an “action for insurance benefits against the insurer necessarily must be resolved favorably to the insured before the cause of action for bad faith ... can accrue”). But in this appeal, NAC does not challenge the coverage issue determined in the June 2014 judgment it is appealing.² NAC is simply appealing the final judgment on the coverage issue in an attempt to reach back to the rulings on the bad faith claim that were made months earlier in the January 2014 and November 2013 orders.

The June 2014 judgment is a partial final judgment appealable under Florida Rule of Appellate Procedure 9.110(k),³ and rule 9.110(h) provides that “[t]he [appellate] court may review any ruling or matter occurring before filing of the notice.” But “an appeal from a final order calls up for review all necessary interlocutory steps leading to that final order,

whether they were separately appealable or not.” Saul v. Basse, 399 So.2d 130, 133 (Fla. 2d DCA 1981) (emphasis added). The rulings on the bad faith claim were not necessary interlocutory steps leading to the judgment on coverage. Indeed, allowing review in this coverage appeal of the earlier procedural rulings on the bad faith claim would be contrary to the reason behind permitting this coverage appeal to proceed in the first place, namely, that the coverage and bad faith claims are separate and that the coverage issue should therefore be determined before the bad faith claim proceeds. We thus conclude that our scope of review in this coverage appeal does not involve the earlier rulings regarding the bad faith...