Snyder v. Douglas

• Decision Date: 09 December 1994
• Docket Number: No. 94-03058,94-03058
• Parties: 19 Fla. L. Weekly D2579 W. Russell SNYDER, W. Russell Snyder, P.A., and Snyder, Groner & Schieb, a Florida General Partnership, and Florida Insurance Guaranty Association, Petitioners, v. Lawrence H. DOUGLAS, Auro Arindam a/k/a Russell B. Douglas, Jr., Russell B. Douglas, III, and Heather Douglas, Respondents.
• Court: Florida District Court of Appeals

Page 275

647 So.2d 275

19 Fla. L. Weekly D2579

W. Russell SNYDER, W. Russell Snyder, P.A., and Snyder Groner & Schieb, a Florida General Partnership and Florida Insurance Guaranty Association, Petitioners, v. Lawrence H. DOUGLAS, Auro Arindam a/k/a Russell B. Douglas Jr., Russell B. Douglas, III, and Heather Douglas Respondents.

No. 94-03058.

District Court of Appeal of Florida,

Second District.

Dec. 9, 1994.

John P. Joy of Walton, Lantaff, Schroeder & Carson, Miami, for petitioners.

Daniel Joy of Joy & Moran, Sarasota, for respondents.

LAZZARA, Judge.

The petitioners, led by the Florida Insurance Guaranty Association (FIGA), invoke our certiorari jurisdiction to review an order denying an amended motion for entry of stay sought in part under the automatic six-month stay provision of section 631.67, Florida Statutes (1993). In denying the motion, the trial court determined that this portion of the statute contravened the provisions of article I, section 21, of the Florida Constitution, which guarantees a citizen free access to the courts of this state for redress of injury without unreasonable delay or restriction. We conclude that the trial court deviated from the essential requirements of the law in declaring this automatic stay provision unconstitutional and, under the peculiar circumstances of this case, has thereby caused material injury to the petitioners throughout the subsequent proceedings below, effectively leaving no adequate remedy on direct appeal. Accordingly, we grant certiorari, determine that this part of the statute is constitutional, quash the order under review, and remand for further proceedings.

Manatee Insurance Company, formerly Rumger Insurance Company (Manatee), provided legal malpractice insurance coverage to petitioners W. Russell Snyder, W. Russell Snyder, P.A., and Snyder, Groner, and Schieb, a Florida general partnership. In June of 1993, the circuit court in Leon County entered a consent order under the provisions of the Insurers Rehabilitation and Liquidation Act ¹ appointing the Department of Insurance (Department) as the receiver of Manatee for the purpose of financially rehabilitating the company. In May of 1994, the court entered another uncontested order in which it determined that further efforts at rehabilitation were useless. Thus, the court declared Manatee to be insolvent and appointed the Department as the receiver for the purpose of liquidating the company.

The day before the entry of the liquidation order, the respondents filed a legal malpractice claim against petitioner Snyder, his professional association, and his general partnership in the circuit court of Sarasota County. Shortly thereafter, FIGA, acting under the authority of the Florida Insurance Guaranty Association Act (FIGA Act), ² sought a formal order acknowledging an automatic stay of this proceeding for six months. FIGA relied in part on the provision of section 631.67 which provides in pertinent part ³ that:

All proceedings in which the insolvent insurer ... is obligated to defend a party in any court ... in this state shall be stayed for 6 months, or such additional period from the date the insolvency is adjudicated, by a court of competent jurisdiction to permit proper defense by the association of all pending causes of action as to any covered claims. (Emphasis added.) ⁴

At the hearing on the motion, FIGA stipulated that the claims alleged in respondents' complaint fell within the coverage provisions of Manatee's insurance policy. It also argued that the stay was automatic and not a matter of discretion. ⁵ The respondents vigorously opposed the motion, however, contending in part that this provision of the statute violated article I, section 21, of the Florida Constitution. ⁶

In its order denying the stay, the trial court agreed with the respondents' argument that the legislature did not have the authority to delay them from pursuing their claims simply because the defendants they were suing were "insured by an insurer which became insolvent during the time that a claim was made by the insured." It thus concluded that this part of the statute "contravenes Article I, Sec. 21, of the Florida Constitution as impermissibly delaying Plaintiffs [sic] access to the Courts of this State to pursue their claims against these Defendants." We respectfully disagree with this conclusion.

In Blizzard v. W.H. Roof Co., 573 So.2d 334 (Fla.1991), one of the issues confronted by the court was whether section 631.68, Florida Statutes (1987), which provides for a shortened statute of limitations in bringing claims under the FIGA Act, violated the access to the courts provision of article I, section 21, of the Florida Constitution. In finding no constitutional impediment, the court observed that:

In creating the Florida Insurance Guaranty Association (FIGA), the legislature sought to assure a mechanism whereby injured parties could collect funds otherwise owed by an insurance carrier. It also safeguarded those who had sought to protect themselves by purchasing insurance policies. To effectuate its intentions, the legislature found it necessary to limit the time for filing claims.

573 So.2d 334 (footnote omitted).

Measured against this standard, we conclude that the mandatory six-month stay provision of section 631.67, Florida Statutes (1993), passes constitutional muster. Under the statute, FIGA has the responsibility of defending an insured where the insolvent insurer has a duty to defend, as in this case. Thus, just as the legislature has the right to shorten the time frame for instituting a claim under the FIGA Act, so too, it has the concomitant right to impose, for a reasonable period of time, a self-executing stay of court proceedings in which the insolvent insurer has a duty to defend in order to provide FIGA an adequate and meaningful opportunity to investigate, evaluate, and properly defend the pending claim. Without such a stay, FIGA's ability to fulfill its statutory responsibility could be seriously impaired from the outset, especially when it is immediately confronted with having to defend multiple claims involving an insolvent insurer which may be pending throughout the many circuit courts of this state.

We also conclude that such a stay promotes one of the purposes of the FIGA Act which is to "[p]rovide a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer." Sec. 631.51(1); see also O'Malley v. Florida Ins. Guar. Ass'n, Inc., 257 So.2d 9, 12 (Fla.1971) ("[T]he dominant purpose of [the FIGA Act] is to avoid delay and to settle as soon as possible claims of insolvent insurers which are ripe for payment."). Thus, through a brief respite from the continued prosecution of a claim in a court proceeding, FIGA will be in a better position to properly evaluate the claim and decide whether it should be settled without further delay, thereby avoiding continued financial loss to the claimant and the insured of the insolvent insurer.

We conclude, therefore, that the six-month stay period mandated by section 631.67 represents a reasonable restriction on respondents' access to the courts. See Bystrom v. Diaz, 514 So.2d 1072 (Fla.1987). Accordingly, the trial court erred in declaring this stay provision unconstitutional and in denying FIGA its statutory right to such a stay.

In determining to grant certiorari in this case, we have not overlooked our supreme court's admonition that:

A non-final order for which no appeal is provided by Rule 9.130 is reviewable by petition for certiorari only in limited circumstances. The order must depart from the essential requirements of law and thus cause material injury to the petitioner throughout the remainder of the proceedings below, effectively leaving no adequate remedy on appeal.

Martin-Johnson, Inc. v. Savage, 509 So.2d 1097, 1099 (Fla.1987). We conclude that this case falls within the limited class of cases requiring early intervention by certiorari for the following reasons.

First, the trial court's ruling effectively deprived FIGA of a constitutionally permitted legislative benefit enacted for the purpose of promoting the legislature's goal of protecting the financial well-being of citizens of this state when certain types of insurance companies become insolvent. See Pearlstein v. Malunney, 500 So.2d 585 (Fla. 2d DCA 1986), review denied, 511 So.2d 299 (Fla.1987). Second, contrary to the legislature's clear and unequivocal intent, the effect of this ruling was to place FIGA in the untenable position of not...