Steil v. Florida Physicians' Ins. Reciprocal

Decision Date13 April 1984
Docket NumberNos. 83-1082,83-1083,s. 83-1082
Citation448 So.2d 589
PartiesColleen STEIL, Appellant, v. FLORIDA PHYSICIANS' INSURANCE RECIPROCAL, and A. Ronald Walker, M.D., Appellees.
CourtFlorida District Court of Appeals

Lee S. Damsker of Maney & Damsker, Tampa, for appellant.

William C. Blake, Jr. and H. Dennis Rogers of Blake & Associates, Tampa, for appellee Florida Physicians' Ins. Reciprocal.

F. Ronald Fraley and Timon V. Sullivan, Trial Counsel, and Charles P. Schropp and Raymond T. Elligett, Jr., Appellate Counsel, of Shackleford, Farrior, Stallings & Evans, P.A., Tampa, for appellee A. Ronald Walker, M.D.

GRIMES, Acting Chief Judge.

In this complicated malpractice action, the injured plaintiff settled her claim against the defendant doctor by acquiring an assignment of his rights against his insurance carrier and then discharging him from liability. She now asserts her right to recover the settlement figure from the insurance carrier which had previously denied coverage to the doctor.

Appellant-plaintiff (Steil) sued Dr. A. Ronald Walker (Walker), a physician specializing in psychiatry, and Florida Physicians' Insurance Reciprocal (carrier). In her third amended complaint she alleged that she became Walker's patient and that he failed to properly diagnose and treat her condition. During the course of treatment, Walker pursued "a course of conduct in which he allowed a counter-transference of his personal feeling to plaintiff, contrary to accepted psychiatric standards." Steil claimed that such negligent course of conduct caused her extensive and permanent psychiatric injury and humiliation.

The complaint went on to recite that Steil filed a malpractice claim against Walker. It was further alleged that Walker's insurance carrier denied that the claim was covered under the policy and wrongfully refused to provide Walker with a defense. Ultimately, Steil and Walker entered into a written stipulation and agreement for settlement of all claims. Walker acknowledged that he was obligated to Steil for $35,000 in damages, and he also gave her a written assignment of all his rights and causes of action against the carrier as they related to Steil's claim except claims for attorney's fees. As part of the settlement, Steil released Walker from further liability and dismissed her claim for malpractice against him. Steil asserted that her claim against Walker was within the coverage of the policy and demanded damages from the carrier of $35,000.

In a second count of the complaint, Steil sought a declaratory interpretation of the settlement agreement with Walker. She also prayed that if the agreement were interpreted contrary to her view, the court should declare the agreement to be without consideration so that she could proceed against Walker. In count III she alleged what she described as a breach of Walker's agreement to pay her $35,000.

The court granted both defendants' motions to dismiss. When it appeared that Steil did not wish to amend her pleadings further, the court dismissed the third amended complaint with prejudice. Steil then filed separate appeals with respect to each defendant. She contends before this court that she has sufficiently stated a cause of action against both.

Walker's policy contains the customary "no action" clause which provides that no action can lie against the carrier until the insured's obligation to pay has been finally determined, either by judgment against him after actual trial or by written agreement entered into by the carrier. The carrier's position is that since neither of these events has occurred Steil cannot maintain her suit.

Steil relies upon the general rule that if an insurer wrongfully refuses to defend, an insured is entitled to make a reasonable settlement without requiring the suit to be carried to judgment even though the policy purports to avoid liability for a settlement made without the insurer's consent. Phoenix Assurance Co. v. Hendry Corp., 267 So.2d 92 (Fla. 2d DCA 1972), cert. discharged, 277 So.2d 532 (Fla.1973); Cunningham v. Austin Ford, Inc., 189 So.2d 661 (Fla. 3d DCA 1966), cert. dismissed, 198 So.2d 829 (Fla.1967). The carrier responds, however, by pointing out that Walker has neither paid nor become obligated to pay any monies in satisfaction of Steil's claim. The carrier argues that since its policy obligations are predicated upon Walker's liability, it cannot be held responsible when Walker has been discharged from liability without making any payment.

There is no Florida case in point, although the Fifth Circuit Court of Appeals in Coblentz v. American Surety Co., 416 F.2d 1059 (5th Cir.1969), endeavored to apply Florida law to a rather similar factual situation. In that case the insured stipulated with the claimant for entry of a $50,000 judgment against him after the insurance carrier withdrew its defense. Despite the fact that it was later determined that coverage existed, the trial court directed a verdict for the insurer because the stipulated judgment provided that it could only be satisfied from the insured's liability policy. The court of appeals reversed and ruled that by virtue of the insurer having elected to leave the insured to his own defenses, it could not later complain about the form of the judgment. Since there was no evidence that the stipulated judgment was tainted by fraud or collusion, the court directed the entry of a judgment against the insurer for $50,000.

In addition to Coblentz, a slim majority of other jurisdictions permit an injured plaintiff to recover from the insurer despite the existence of a covenant between the plaintiff and the insured to seek relief only from the insurer. State Farm Mutual Automobile Insurance Co. v. Paynter, 122 Ariz. 198, 593 P.2d 948 (Ariz.Ct.App.1979); Zander v. Casualty Insurance Co., 259 Cal.App.2d 793, 66 Cal.Rptr. 561 (1968); American Family Mutual Insurance Co. v. Kivela, Ind.App., 408 N.E.2d 805 (1980); Miller v. Shugart, 316 N.W.2d 729 (Minn.1982); Metcalf v. Hartford Accident & Indemnity Co., 176 Neb. 468, 126 N.W.2d 471 (1964); Griggs v. Bertram, 88 N.J. 347, 443 A.2d 163 (1982); contra Bendall v. White, 511 F.Supp. 793 (N.D.Ala.1981); American Casualty Co. v. Griffith, 107 Ga.App. 224, 129 S.E.2d 549 (1963); Huffman v. Peerless Insurance Co., 17 N.C.App. 292, 193 S.E.2d 773, cert. denied, 283 N.C. 257, 195 S.E.2d 689 (1973); Stubblefield v. St. Paul Fire & Marine Insurance Co., 267 Or. 397, 517 P.2d 262 (1...

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