U.S. Fire Ins. Co. v. Mikes

Decision Date16 October 2007
Docket NumberNo. 8:04-cv-2783-T-23TBM.,8:04-cv-2783-T-23TBM.
Citation576 F.Supp.2d 1303
PartiesUNITED STATES FIRE INSURANCE CO., Plaintiff, v. James R. MIKES and Suncoast Country Clubs, Inc., Defendants.
CourtU.S. District Court — Middle District of Florida

Gary Khutorsky, Stephens, Lynn, Klein, La Cava, Hoffman & Puya, PA, Miami, FL, for Plaintiff.

Betsy Lu McCoy, Law Office Of Betsy L. McCoy, PA, Tampa, FL, for Defendants/Intervenor Defendants/Counter Claimants/Counter Defendants.

James R. Mikes, James R. Mikes, P.A., Tampa, FL, Intervenor Defendant.

ORDER ADOPTING REPORT AND RECOMMENDATION AND ORDER TO SHOW CAUSE

STEVEN D. MERRYDAY, United States District Judge.

Pursuant to 28 U.S.C. § 636 and Local Rule 6.01(b), a September 20, 2006, order (Doc. 262) referred the parties' cross-motions for summary judgment (Docs. 252, 258, 259, 260, and 261) to the United States Magistrate Judge for a report and recommendation. Following the Magistrate Judge's August 23, 2007, report and recommendation (Doc. 346), both parties object (Docs. 348, 350) and both parties (Docs. 353, 354, 356-2) respond. Also before the court are (1) a motion by James R. Mikes and Suncoast Country Clubs, Inc., ("Mikes/SCC") (Doc. 355) to strike the response of U.S. Fire Insurance Company ("U.S. Fire") and U.S. Fire's response (Doc. 358) to the motion; (2) U.S. Fire's motion (Doc. 356) for leave to re-file its response one day out of time to comply with Local Rule 3.01(b) and Mikes/SCC's response (Doc. 357) to the motion; and (3) Mikes/SCC's request (Docs. 349, 351) for judicial notice of (a) the appellant's initial brief apparently1 filed on June 22, 2006 (Doc. 349-2) in Toomey v. Wachovia Ins. Servs., Inc., (11th Cir.2006), which is pending on certified questions before the Florida Supreme Court (Case No. SC06-1110), and particularly pages 5-6 of the brief, and (b) U.S. Fire's Petition for Writ of Certiorari to the Florida District Court of Appeal (Doc. 349-3) in the underlying state court action styled Suncoast Country Clubs, Inc., and James R. Mikes v. Freedom Village of Sun Center, Ltd., Freedom Group, Inc., and Frank Herold, Case No. 95-5802 (the "Suncoast action"), and particularly page 12 of the petition.2

As an initial matter, U.S. Fire's motion (Doc. 356) for leave to re-file its response to Mikes/SCC's objections "one day out of time"3 to comply with the page limits in Local Rule 3.01(b) is GRANTED and the Clerk is directed to file U.S. Fire's attached response (Doc. 356-2) as a separate document. U.S. Fire concedes (Doc. 356 ¶ 3) that U.S. Fire's initial response failed to comply with Local Rule 3.01(b) and Mikes/SCC's motion (Doc. 355) to strike U.S. Fire's initial response (Doc. 354) is GRANTED. The Clerk is directed to electronically delete Doc. 354 from the record. U.S. Fire has not opposed Mikes/SCC's request (Docs. 349, 351) for judicial notice of the exhibits attached to Doc. 349 and the request is GRANTED.

A de novo determination of those portions of the report and recommendation to which the parties object reveals that the objections either are unfounded or otherwise require no different resolution of the motion. Accordingly, the parties' objections (Docs. 348, 350) are OVERRULED and the Magistrate Judge's report and recommendation (Doc. 346) is ADOPTED. The plaintiffs motion for final summary judgment (Doc. 252) is GRANTED, and the defendants' motion for partial summary judgment (Docs. 258) is DENIED. The defendants' "Motion for Partial Summary Judgment that U.S. Fire Received Timely Notice of the Claim, and U.S. Fire's Late Notice Defense Does Not Void Coverage," "Motion for Partial Summary Judgment that by Settlement with the Insureds, the Mikes Claim Constitutes One Occurrence under the U.S. Fire and PHICO Policies, and U.S. Fire Is Liable for All Sums Over the PHICO Policy per Occurrence Limit," and "Motion for Partial Summary Judgment that There Is Coverage under the U.S. Fire Policy over the Amounts Provided in the Settlement Documents Between Mikes/SCC and the Insureds" (Docs. 259, 260, and 261) are DENIED AS MOOT.

The Clerk is directed to enter judgment for the plaintiff and against the defendants declaring that U.S. Fire is not liable under three umbrella insurance policies U.S. Fire issued to Freedom Group, Inc.,—(1) policy no. 553 027192 2 (Docs. 130-2, 130-3, 130-4) covering the period June 30, 1995 to June 30, 1996, (2) policy no. 553 039777 8 (Docs. 130-5, 130-6, 130-7) covering the period June 30, 1996, to June 30, 1997, and (3) policy no. 553 051715 4 (Docs. 130-8, 130-9, 130-10) covering the period June 30, 1997, to June 30, 1998—for any portion of the settlement agreement that Freedom Village of Sun City Center, Ltd., Freedom Group, Inc., American Retirement Corporation (as successor in interest to Freedom Group, Inc.), and Frank Herold entered into with Mikes/SCC in the Suncoast action (the "Suncoast settlement") on or about November 30, 2005. Finally, on or before October 31, 2007, the defendants shall file and serve a written response of no more than five pages showing cause why the defendants' counterclaim (Doc. 215) should not be dismissed because barred by res judicata or mootness or because otherwise subject to dismissal in light of this order. Within ten days after service of the defendants' paper, the plaintiffs may respond in no more than five pages. Because the filings in this case have been excessive, the parties shall file nothing further without first obtaining leave of court by a motion not exceeding two pages.

ORDERED.

REPORT AND RECOMMENDATION

THOMAS B. McCOUN, III, United States Magistrate Judge.

THIS MATTER is before the court on referral by the Honorable Steven D. Merryday for a Report and Recommendation on the parties' cross motions for summary judgment:

(1) U.S. Fire's Motion for Summary Final Judgment (Doc. 252) and Defendants' response (Doc. 278);

(2) Motion for Partial Summary Judgment on the Insureds' Entitlement to Settle; That the Settlement Documents are Binding Upon U.S. Fire and Settlement is not a Breach of Cooperation (Doc. 258) and Plaintiffs response (Doc. 273); and

(3) Motion for Partial Summary Judgment that U.S. Fire Received Timely Notice of the Claim, and U.S. Fire's Late Notice Defense does not Void Coverage (Doc. 259), Plaintiffs response (Doc. 276), and Defendants' reply (Doc. 322).

The parties have filed affidavits, excerpts of depositions, and other documentary evidence in support of their positions. See (Docs. 133-35, 139, 239, 246-51, 253-55, 279-80, 329). Oral arguments on these and other matters were heard on May 17, 2007.1

I.

In this action for declaratory relief, United States Fire Insurance Company ("U.S. Fire" or "Plaintiff") seeks a declaration that it is not liable for any portion of a settlement that was negotiated in the underlying state court action styled Suncoast Country Clubs, Inc. and James R. Mikes v. Freedom Village of Sun City Center, Ltd., Freedom Group, Inc. and Frank Herold, Case No. 98-5802 (the "Suncoast action")2 Pursuant to the terms of the settlement in that action, James R. Mikes and Suncoast Country Clubs, Inc., ("Mikes/SCC" or "Defendants") ultimately seek to recover from U.S. Fire the principal sum of $1,700,100 plus prejudgment interest in the amount of $1,492,093, calculated from March 13, 1996, for loss/damage suffered by Mikes/SCC at the hands of Freedom Village of Sun City Center, Ltd., Freedom Group, Inc., and Frank Herold (collectively "Freedom Defendants" or "the Insureds") under umbrella policies issued by U.S. Fire.

The historical and chronological facts underlying this case are largely undisputed and are as follows. Mikes/SCC initiated the Suncoast action against the Freedom Defendants in August 1998. The Suncoast action was amended numerous times, with the last operative complaint being the Eighth Amended Complaint.3 In the Suncoast Complaint, Mikes/SCC claimed that between August 25, 1995, and June 1997, the Freedom Defendants made numerous statements about Mikes and SCC that were defamatory and invaded Mikes' privacy. Suncoast Compl. (Doc. 139-6 at ¶¶ 105, 109).

Mikes claimed that these statements caused injury to his reputation and his business. In particular, Mikes claimed that as a result of certain statements made to his lender, GATX, the lender filed a foreclosure action against him. Suncoast Compl. (Doc. 139-9 at ¶ 232); Dep. Mikes (Doc. 231-15 at 3).4 The foreclosure action ultimately resulted in Mikes losing valuable development property and suffering other economic losses. Suncoast Compl. (Doc. 139-12 at ¶¶ 362, 390). Mikes claimed that but for the defamatory and offensive statements, GATX never would have filed its foreclosure action against him, he would not have lost the development land, and he would have been able to realize millions of dollars in profits from developing that land. Dep. Mikes (Doc. 231-15 at 3). Mikes also claimed that once the foreclosure action was initiated in May 1996, he was required to incur legal fees and costs to defend such action and to devote substantially all his own time and effort to fighting that action. Suncoast Compl. (Doc. 139-9 at ¶ 252); Dep. Mikes (Doc. 231-15 at 2, 8). By this complaint, Mikes/SCC sought compensatory, consequential and punitive damages. (Doc. 139-12 at 86-87). In the claim for invading his privacy, Mikes sought identical general and special damages, as well as punitive damages, as had been alleged in Count I. Id. at 90; (Doc 139-13 at 1-2).

At all times pertinent to the Suncoast action, the Freedom Defendants were insured under a primary liability policy # HCL 4783, issued by PHICO Insurance Company ("PHICO"). (Docs. 133, 134).5 The original policy covered the period of 6/30/95 to 6/30/96. It was renewed for the period of 6/30/96 to 6/30/97 and then again for the period of 6/30/97 to 6/30/98. During each policy year, the PHICO policy provided coverage for personal...

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