Oppenheim v. Reliance Ins. Co.

• Decision Date: 04 October 1991
• Docket Number: No. 90-571-CIV-ORL-18.,90-571-CIV-ORL-18.
• Citation: 804 F. Supp. 305
• Parties: Robert OPPENHEIM, Plaintiff, v. RELIANCE INSURANCE COMPANY, a foreign corporation, Defendant.
• Court: U.S. District Court — Middle District of Florida

804 F. Supp. 305

Robert OPPENHEIM, Plaintiff, v. RELIANCE INSURANCE COMPANY, a foreign corporation, Defendant.

No. 90-571-CIV-ORL-18.

United States District Court, M.D. Florida, Orlando Division.

October 4, 1991.

Kimberly Sands, c/o Larry Sands, P.A., Daytona Beach, Fla., for plaintiff.

Richard G. Rumrell, Jacksonville, Fla., for defendant.

ORDER

G. KENDALL SHARP, District Judge.

In this case, Robert Oppenheim (Oppenheim), a resident of Florida, is suing Reliance Insurance Company (Reliance), a foreign corporation authorized to do business in Florida, for improper denial of insurance coverage. In the underlying action, Oppenheim sued Dale Martin (Martin) in state court alleging personal injuries due to violation of Occupational Safety and Health Administration (OSHA) regulations. Martin is president of Dal Mar Industries, which is the named insured under a policy issued by Reliance. Martin and Oppenheim stipulated to and the state court entered a judgement in favor of Oppenheim. Martin assigned to Oppenheim any and all claims he might have had against Reliance arising out of its denial of coverage. Based on the assignment, Oppenheim originally filed this action against Reliance in state court. Reliance then requested and this court granted removal to this court, pursuant to 28 U.S.C. § 1446. This court granted the parties' joint motion to bifurcate this action and heard the issue of liability with respect to coverage first, without a jury. This court concludes that Reliance is not liable to Oppenheim for insurance coverage. In accordance with Federal Rule of Civil Procedure 52(a), this court enters this order.

I. FINDINGS OF FACT

In 1985, Dale Martin was the sole officer, director, president and shareholder of Dal Mar (Dal Mar), a roofing repair and installation company. Robert Oppenheim was an employee of Dal Mar. On July 15, 1985, Oppenheim fell from a roof and was injured while working under Martin's supervision at a Dal Mar job site.

Reliance issued both a primary policy and an excess policy that named Dal Mar as the insured and covered the period from July 1, 1985 to July 1, 1986. In January and December 1988, Reliance advised Oppenheim that it had denied coverage and would not defend Martin against Oppenheim's claim. In March 1989, Oppenheim served Martin with a state court law suit that named Martin as the sole defendant. The same month, Reliance told Martin that it had denied coverage, based on the policy's language, and would not defend Martin in the state court case.

On December 22, 1989, Oppenheim and Martin entered into an Agreement for Settlement and Entry of Judgment (Settlement Agreement) in the state court case. On February 2, 1990, the state court entered a stipulated final judgment against Martin for three million dollars plus costs. One month later, Martin assigned to Oppenheim any rights he might have against Reliance. The Assignment of Claims and Causes of Action (Assignment of Claims) stated that it was based on and arose out of the Settlement Agreement.

II. CONCLUSIONS OF LAW

A. Exception to Workers' Compensation Immunity from Suit

Section 440.11 of the Florida Workers' Compensation Law provides that an employer's liability under workers' compensation shall be exclusive and in place of all other liability of such employer. Fla.Stat. § 440.11(1) (1989 & Supp. II 1990). Thus, because Oppenheim, as an employee, may recover under workers' compensation, he may not sue Dal Mar, as his employer, under its insurance plan.

Under Section 440.11, employees, acting in furtherance of their employer's business, can usually claim the same immunity from suit that their employers can claim. Yet, the section excludes from immunity the acts of a fellow employee that are committed with willful and wanton disregard, unprovoked physical aggression, or gross negligence when such acts result in injury. Id. Although Martin was Oppenheim's supervisor, he is considered a fellow employee for the purposes of workers' compensation. See Fla.Stat. § 440.02(13)(b) (1989 & West Supp. II 1990) (defining `employee' as "any person who is an officer of a corporation and who performs services for remuneration for such corporation."). In Streeter v. Sullivan, 509 So.2d 268, 270 (Fla.1987), the Florida Supreme Court held that section 440.11 permits suits against corporate employees, officers, executives and supervisors as `employees' for acts of gross negligence in failing to provide a reasonably safe place in which other employees may work. Id. at 269. In this case, the parties have stipulated as to Martin's status as a fellow employee. In his state court case, Oppenheim alleged that Martin acted with gross negligence in failing to comply with OSHA standards and regulations that govern supervision of roofing work. (Doc. 2, Ex. A.) In the Settlement Agreement, Martin stipulated to gross negligence. Thus, Oppenheim can sue Martin, as a fellow employee, because he is outside of the immunity usually granted to employees by the Florida Workers' Compensation Law.

B. Double Recovery and Workers' Compensation.

Although Oppenheim can bring suit against Martin, the suit by Martin raises certain fundamental questions of public policy. This case constitutes an attempt on the part of Oppenheim to seek double recovery for his injuries. Reliance, after issuing a policy to Dal Mar as the named insured corporation, denied a claim on the policy made by an employee, Oppenheim, because he already had received workers' compensation benefits from Dal Mar for the same injury. Oppenheim could not obtain additional benefits directly from his employer because the Florida Workers' Compensation Law gives his employer immunity from further liability. Therefore, Oppenheim endeavors to do indirectly what he cannot do directly. Oppenheim seeks to recover from his employer's insurance carrier by suing Martin, Dal Mar's president, as a fellow employee which places Martin outside the Florida Workers' Compensation Law.

Oppenheim was entitled to Workers' Compensation benefits and received them. In Bevans v. Liberty Mut. Ins. Co., 356 F.2d 577 (4th Cir.1966), a case similar to the case at bar, the court aptly points out the policy implications of allowing recovery from both workers' compensation and the employer/fellow employee's insurance company. An employer is exposed to two types of injury suits. The first type of suit is internal from his employees and covered by workers' compensation or other employer liability insurance. The second type is external, involving third party injuries and protected by general liability insurance. Id. at 579. The insurer is likewise exposed to both types of liability in insuring an employer and must compute its premiums accordingly. Id. If Oppenheim is permitted to recover under both workers' compensation and under Dal Mar's insurance plan, Reliance would have to charge sufficient premiums to insure Dal Mar from both third party liability and employee liability. Id. In making its decision, this court has taken into account the likelihood that insurance premiums across the country might increase if double recovery is allowed in the case at bar.

C. The Primary Policy

1. Choice of Law.

Because this is a diversity action, the court applies the law of the forum state. See Trans Caribbean Lines, Inc. v. Tracor Marine, Inc., 748 F.2d 568, 570 (11th Cir.1984). In this case, the substantive law of Florida governs the construction of insurance contracts. Id. Under Florida law, the court should construe the insurance policy in its entirety and give it the construction which reflects the intent of the parties. Gulf Tampa Drydock Co. v. Great Atlantic Ins. Co., 757 F.2d 1172, 1174 (11th Cir.1985).

2. Workers' Compensation Clause.

Given that Oppenheim can sue Martin as a fellow employee under the insurance policy, the court must determine whether the policy covers Oppenheim's claim. Dal Mar's insurance policy with Reliance exempts from coverage "any obligation for which the Insured or any company as its insurer may be held liable under any ... workers' compensation ... benefits law." Because Oppenheim recovered from Dal Mar under workers' compensation, Oppenheim could not recover from Dal Mar under it's policy with Reliance, based on the exclusive recovery provision under section 440.11 and the express terms of the policy.

The workers' compensation clause excludes a claim if any insured, whether Dal Mar or Martin, is liable under workers' compensation. Thus, Martin's liability as an "insured" in any capacity, whether as a fellow employee, employer, corporate officer, director or stockholder, falls squarely within the policy's workers' compensation exclusion.

Oppenheim contends that Shelby v. Mut. Ins. Co. v. Schuitema, 183 So.2d 571 (Fla. Dist.Ct.App.1966), approved and adopted, 193 So.2d 435 (Fla.1967), should apply to the Reliance policy. Under Schuitema, the name "Dale Martin" would be substituted for the words "the Insured" in the workers' compensation clause. Oppenheim argues that Martin, individually, could not be held liable under workers' compensation; and, therefore, the clause, with the substitution of names, is a nullity. The court declines to apply the Schuitema holding to the instant case because Schuitema is distinguishable in that it did not involve a suit by a fellow employee. In Schuitema, the plaintiff was not a fellow employee, but a customer who injured an employee in an accident. Thus, Schuitema is silent with regard to the operation of the Florida Workers' Compensation Law. Id. at 572. Because the workers' compensation clause is applicable, Reliance is not liable for coverage under the policy.

3. Fellow-Employee Exception.

Oppenheim urges the court to consider Martin a fellow employee for the purposes of placing him outside the Florida Workers' Compensation Law, but then asks the court not to consider him a fellow employee, but rather an executive office, for the purposes of determining...