Sheridan v. Greenberg

• Decision Date: 25 November 1980
• Docket Number: No. 80-52,80-52
• Citation: 391 So.2d 234
• Parties: Ann SHERIDAN and Nationwide Underwriters, Inc., Appellants, v. Allen GREENBERG and Woodrow Kaiser, Appellees.
• Court: Florida District Court of Appeals

Page 234

391 So.2d 234

Ann SHERIDAN and Nationwide Underwriters, Inc., Appellants, v. Allen GREENBERG and Woodrow Kaiser, Appellees.

No. 80-52.

District Court of Appeal of Florida, Third District.

Nov. 25, 1980.

Rehearing Denied Jan. 9, 1981.

Wicker, Smith, Blomqvist, Davant, Tutan, O'Hara & McCoy and Richard A. Sherman, Miami, for appellants.

Joel V. Lumer, Adams & Ward, Neil Chonin, Miami, for appellees.

Before HENDRY, NESBITT and DANIEL S. PEARSON, JJ.

DANIEL S. PEARSON, Judge.

Allen Greenberg, desirous of procuring a workmen's compensation insurance policy covering himself and other employees of his small lawn mowing business, contacted Woodrow Kaiser, his regular insurance agent. Kaiser, unable to place the policy with the company he represented, called another insurance agent, Ann Sheridan. Kaiser and Sheridan made arrangements for the policy on the telephone, and Sheridan procured a policy for Greenberg through Nationwide Underwriters, Inc.

Greenberg later suffered a job-related injury and filed a workmen's compensation claim with Nationwide. Nationwide successfully denied coverage, because Greenberg, the employer, was not listed as an insured. ¹ Greenberg sued Kaiser, Sheridan and Nationwide, as Sheridan's principal, for damages arising from their negligent failure to procure coverage for Greenberg. Sheridan and Nationwide cross-claimed against Kaiser, alleging that Kaiser's negligence was the cause of Greenberg's damages. The jury returned a verdict for Greenberg against Sheridan and Nationwide, but found Kaiser not negligent. From the judgment entered thereon and a separate award of attorneys' fees to Greenberg, Sheridan and Nationwide appeal.

The Jury Instruction.

The trial court, over Sheridan and Nationwide's repeated objections, instructed the jury that:

"An insurance agent who undertakes for compensation or other benefit the responsibility of procuring the issuance of an insurance policy, then that agent must exercise a reasonable degree of skill and care to insure that the coverage sought is appropriate, including all steps necessary to afford coverage." (emphasis supplied).

Sheridan claims that the instruction misstates the law and that, since it was undisputed that Kaiser received no compensation, the giving of the instruction was tantamount to directing the jury to return a verdict for Kaiser.

An insurance agent who voluntarily, without consideration or expectation of remuneration or reward, agrees to procure a policy is liable for damages that result from his failure to do so. Reed Mfg. Co. v. Wurts, 187 Ill.App. 378 (1914). Reliance by the putative insured on the insurance agent's undertaking, even if that undertaking is gratuitous, is sufficient to trigger a duty upon the agent to exercise the reasonable skill and care to obtain the appropriate coverage. Colonial Savings Association v. Taylor, 544 S.W.2d 116 (Tex. 1976); Graddon v. Knight, 138 Cal.App.2d 577, 292 P.2d 632 (1956); Lusk-Harbison-Jones v. Universal Credit Co., 164 Miss. 693, 145 So. 623 (1933); Siegel v. Spear & Co., 234 N.Y. 479, 138 N.E. 414 (1923); ² Couch on Insurance 2d, § 25.33 (1960). See also Restatement (Second) of Torts, Section 323 (1965) ("one who undertakes, gratuitously or for consideration, to render service to another which he should recognize as necessary for the protection of the other's person" is subject to liability for harm suffered because of the other's reliance on the undertaking). ³ We hold, therefore, that the instruction was error. We hold further that this error clearly prejudiced Sheridan and Nationwide in their cross-claims against Kaiser. ⁴

Attorneys' Fees.

The issue we now address is whether Greenberg, having recovered judgment against Sheridan and Nationwide for negligent failure to procure workmen's compensation coverage, may recover attorneys' fees in this action.

The fundamental rule in Florida is that attorneys' fees are in derogation of the common law and will only be granted pursuant to a contractual agreement or statutory authority. Any statute allowing an award of fees will be strictly construed. Roberts v. Carter, 350 So.2d 78 (Fla. 1977); Sunbeam Enterprises, Inc. v. Upthegrove, 316 So.2d 34 (Fla. 1975).

In Roberts v. Carter, supra, the Florida Supreme Court held that under Section 627.428(1), Florida Statutes (1975), a part of Florida's Insurance Code, only persons named in the statute as authorized to recover attorneys' fees could, in fact, do so. Section 627.428(1) provides:

"Upon ... judgment ... against an insurer and in favor of an insured or the named beneficiary under a policy ... the ... court ... shall (award) ... attorneys' fees." (emphasis supplied).

The court held that only "the contracting insured, the insured's estate, specifically named beneficiaries and third parties who have coverage through assignment" may recover attorneys' fees. See also Smith v. Conlon, 355 So.2d 859 (Fla. 3d DCA 1978). The statute's purpose, according to the court in Roberts, "is to discourage contesting valid claims by insureds against insurance companies."

Greenberg correctly says that his action against Sheridan does not arise under the Insurance Code and that the trial court's fee award was not made under Section 627.428(1). He argues that therefore Roberts is not controlling. His argument proves too much. If the award of attorneys' fees to him is not pursuant to any statutory authority (it being undisputed that there was no contractual arrangement for fees), there is no authority at all for a fee award. ⁵

Greenberg points to Duncanson v. Service First, Inc., 157 So.2d 696 (Fla. 3d DCA 1963), as stating a contrary rule. A close examination of Duncanson tells us otherwise. In Duncanson, a person named Wilson went to Service First, Inc., her insurance agent, to renew her automobile liability policy. Service First undertook to renew the policy, but failed to do so. Wilson was later involved in an automobile collision and was sued by Duncanson. Wilson made a demand upon Service First to defend her against Duncanson's suit, and Service First refused.

We said in Duncanson that Service First was liable to Wilson to the extent of the prior policy, not only for the amounts assessed against Wilson in Duncanson's action against her, but also was "required to pay a reasonable attorney's fee for the defense of the suit instituted by Duncanson against Wilson ...." 157 So.2d at 699. Duncanson merely holds that where one of the provisions of an insurance contract is to provide a defense to the insured, a breach of that contract causing the insured to expend attorneys' fees in providing for his own defense is an element of damages in a later suit against the insurer. ⁶

Duncanson does not, therefore, represent a departure from the fundamental rule that attorneys' fees will be awarded only pursuant to contract or statute. That rule concerns itself with attorneys' fees for prosecuting or defending the action itself, not attorneys' fees as an element of damages to be recovered within the action. Where, as here, the fees sought to be recovered by Greenberg were those incurred during the lawsuit against Sheridan and Kaiser, they are not recoverable. Compare Tidwell v. Witherspoon, 21 Fla. 359 (1885) (holding that in an action for malicious prosecution the plaintiff is entitled to recover damages not only for his unlawful arrest and imprisonment, but also for expenses of his defense); Bondy v. Royal Indemnity Co., 134 Fla. 776, 184 So. 241 (1938) (holding that "in order to recover damages, including attorneys' fees, for the damages consequent upon the improper suing out of the writ of attachment the proceedings must be begun ... as a proceeding to dissolve the attachment and not as a trial of the case on the merits."); City of Miami Beach v. Bretagna, 190 So.2d 364 (Fla. 3d DCA 1966) (holding in a false imprisonment action that the plaintiff is not entitled to recover...