Claims And Issues

Federal Declaratory Judgment in Florida Insurance Case, With Default Added.

   In Colony Insurance Co. v. Village at Dadeland Condominium Ass'n, Download Colony Ins. Co. v. Village at Dadeland Condo. Ass'n (S.D. Fla. Case No. 09.22369.cv 04.15.10 Report and Recco Of Magistrate Deny Marcus Motion Dismiss and Stay), also published as 2010 WL 1817038 (S.D. Fla. Report and Recomendation of Magistrate Judge 04.15.10), a Magistrate Judge outlined the many factors Federal Courts in Florida take into account in deciding whether to grant or deny motions to dismiss and stay Insurance Declaratory Relief Actions as in this case:

   In this connection, the Eleventh Circuit has provided general guidance as to the factors that should be considered when deciding whether or not to dismiss a federal declaratory action in favor of a state court action: (1) the state's interest in deciding the matter; (2) whether a judgment in the federal action would completely resolve the controversy; (3) whether the declaratory action would clarify the parties' legal relations; (4) whether the federal action amounts to fencing; (5) whether a ruling in the federal action would increase friction between federal and state courts; (6) whether a superior remedy exists; (7) whether underlying facts are important to an informed resolution of the matter; (8) whether the state court is better situated than the federal court to evaluate those facts; and (9) the nexus, if any, between the underlying issues and state law/policy, and whether federal common or statutory law requires a resolution of the declaratory action.

Recently this Report and Recommendation was adopted by the District Judge.  Download Colony Ins. Co. v. Village at Dadeland Condo. Ass'n (S.D. Fla. Case No. 09.22369.cv 05.04.10 Order Of District Judge Denying Marcus Motion to Dismiss and Stay), also published as 2010 WL 1817034 (S.D. Fla. Order of District Judge 05.04.10).  There is more to the story.

   The Magistrate Judge wrote another Report and Recommendation on April 15, 2010.  This one was filed the next day, April 16, 2010.  This separate Report and Recommendation was to grant the Insurance Company's Motion to Default its Policyholder, the Defendant Village at Dadeland.  Download 04.15.10 Report and Recommendation.Colony Ins. Co. v. Village at Dadeland Condo. Ass'n (S.D. Fla. Case No. 09.22369.cv 04.15.10 Report and Recco Of Magistrate Judge).  This Report and Recommendation too was adopted by the District Judge by another Order on May 4, 2010.  The District Judge granted the Relief Requested in the Plaintiff Insurance Company's Complaint for Declaratory Relief, and:

... and the Court finds Plaintiff does not owe any duty of defense or indemnification to Defendant Village at Dadeland Associates, LLC for the allegations contained in the underlying lawsuit.

  Download Colony Ins. Co. v. Village at Dadeland Condo. Ass'n (S.D. Fla. Case No. 09.22369.cv 05.04.10 Order Of District Judge Granting Default.Holding on Relief Requested).

Please Read The Disclaimer.

Abstention in Insurance Declaratory Judgment Action.

   The Federal Court in the case of Evanston Insurance Co. v. Tonmar, L.P., Download Evanston Insurance Co. v. Tonmar, L.P. (N.D. Tex. Case No. 3.09.cv.0894, Opinion Filed November 5, 2009) also published as 669 F. Supp. 2d 725, 732 (N.D. Tex. 2009),  abstained from considering the Insurance Company's Declaratory Judgment Action.  The Court displayed seven (7) factors to consider in evaluating three (3) "key aspects" of the equation, "fairness, federalism, and efficiency".   "These factors are," said the Federal Court in Tonmar:

(1) whether there is a pending state action in which all of the matters in controversy may be fully litigated;

 (2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant;

(3) whether the plaintiff engaged in forum shopping in bringing the suit; 

(4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist;

(5) whether the federal court is a convenient forum for the parties and the witnesses;

(6) whether retaining the lawsuit would serve the purposes of judicial economy; [and]

(7) whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending.

Evanston Insurance Co. v. Tonmar, L.P., 669 F. Supp. 2d 725, 732-33 (N.D. Tex. 2009).

Upcoming Speaking Engagements:

DENNIS WALL will be on a panel addressing Professionalism, at Florida A&M Law School in Orlando, with Judge Emerson Thompson (retired), Judge Howard Friedman, and Orlando Attorney Jim Edwards, Esquire twice this coming week:  (1) Wednesday, April 21, 2010 beginning at 5:00 P.M. and (2) also on Friday, April 23, 2010 beginning at Noon.  All times are ET.

 

Please Read The Disclaimer.

Insurance Declaratory Judgment Actions: Part Two of Two: ....

   ....  Download Free For Value.

          Part One of this post left us in the case of Montrose Chem. Corp. v. Superior Court, 25 Cal. App. 4th 902, 908-09, 31 Cal. Rptr. 2d 38, 42, 94 C.D.O.S. 4313, 94 Daily Journal D.A.R. 7922 (2d Dist. 1994).  For your ease of reference, here is a highlighted copy:  Download Montrose Chem. Corp. v. Superior Ct. (Cal. 2d DCA 1994).HIGHLIGHTED FOR WEB LOG.   Specifically, the outline of factual issues announced in that case for Insurance DJA's is so long that it takes two posts to hold it.  The list of factors is provided in full here.

 

          Before continuing, the reader should bear in mind that the Montrose case involved questions of Insurance Coverage for alleged environmental contamination.  That should be kept in mind.  The Court's outline can be adapted easily to other Insurance DJA's outside the area of environmental contamination. The list of factors is in full as follows:

 

          To decide whether it is now appropriate to set the indemnity     [i.e., coverage] issues for trial, the trial court must determine:

 

          (1). Which of the underlying contamination actions are still pending?

 

          (2). Of those that are still pending, what issues remain to be decided and when will that happen?

 

          (3). Which defenses to coverage (whether pleaded as  affirmative defenses or raised by general denials) do each of  the carriers intend to pursue as to each of the underlying actions?

 

          (4). What facts have to be determined to reach the merits of the carriers' defenses?

 

          (5). What other facts, if any, are relevant to the determination of prejudice?

 

          (6). Who has the burden of proof? Since the carriers are pushing for a prompt trial date, is it their burden to prove that  Montrose will not be prejudiced? Or does Montrose's request for an indefinite stay impose upon it the burden of proving prejudice?

 

A word from this decision about attorney bickering.  Although Montrose on the one hand, and the carriers on the other hand, filed many supplemental briefs and other pleadings that they said affected Insurance Coverage, the Courts said that the information they provided was "too scanty to permit meaningful evaluation at this point.  Moreover, whatever one says, the other disputes. "  The Courts need information, not bickering.  "Then and only then can the court determine whether the issues overlap and make the type of detailed findings need for meaningful appellate review."

 

Please Read The Disclaimer.

Insurance Declaratory Judgment Actions: 'Adding Value Here, Free Download Also'.

PART ONE OF TWO PARTS.

    

    At this time I am in the middle of writing the Third Edition of my Book, "Litigation and Prevention of Insurer Bad Faith".  This makes 26 years or writing and researching the issues I address in my Book.  (Note to Thomson-West:  I will meet this year's deadline, just like the others.)  One of those issues involves Insurance Coverage Declaratory Judgment Actions (DJA's). 

 

    An Insurance DJA is a special thing.  It usually calls for special care and handling, based on experience.  The best outline of how to handle an Insurance DJA in my judgment was writtten by a California Appellate Court some 15 years ago.  What they wrote has never been more true than it is today.

 

          In the case of Montrose Chem. Corp. v. Superior Court, 25 Cal. App. 4th 902, 908-09, 31 Cal. Rptr. 2d 38, 42 (2d Dist. 1994), the California Court of Appeal for the Second District announced a comprehensive list of factual issues unique to Insurance Coverage DJA's.  The Court outlined a procedure which enables Trial Judges to resolve those factual issues.  That procedure includes the assistance of the parties and their counsel.  (This would probably help even the Trial Judge who told me, before I began arguing a Motion for Summary Judgment in an Insurance DJA:  "Mr. Wall, before you begin, I have to tell you that for me Insurance is about as interesting as dirt.  Please proceed."  And now, the rest of the story as the late Paul Harvey might say, God rest his soul.  By the time the Hearing was over, that Judge granted my client's Motion for Summary Judgment.)

 

          The Montrose DJA case involved questions of Insurance Coverage for alleged environmental contamination. The complete list of factors outlined for that DJA by the California Appellate Court is very long and so will be posted here separately.  In the meantime, the attached copy of the Montrose decision is highlighted for your ease of reference: Download Montrose Chem. Corp. v. Superior Ct. (Cal. 2d DCA 1994).HIGHLIGHTED FOR WEB LOG.

Please Read The Disclaimer.

Staying All Discovery (Costs) in Insurance Coverage Cases.

The Chief Judge of the U.S. District Court for the Middle District of Pennsylvania has recently ruled in favor of staying all discovery in an Insurance Coverage and alleged Bad Faith case where a potentially dispositive motion would decide the Insurance Coverage issue without the need for discovery. 

            In Babalola v. Donegal Mutual Insurance Co. (M.D. Pa. December 18, 2008), download Babalola v. Donegal Mutual Insurance Co. (M.D. Pa. Dec. 18, 2008),  the Chief Judge had already granted the Insurance Company’s motion to dismiss the original complaint.  She gave leave to amend.  The Plaintiff filed an amended complaint.  The Defendant filed a second motion to dismiss, and this time, also filed a motion to stay all discovery because the second motion to dismiss would decide the Insurance Coverage issue and so it would decide the entire case.

         The Chief Judge agreed and granted the motion to stay all discovery – and stayed the costs of discovery too of course although the costs of discovery in that case are not addressed ‘out loud’ in the opinion.  First, she ruled that the decision was within her discretion.  The exercise of discretion calls for a balancing test, balancing the competing interests of each party to determine the benefits and harm from staying discovery.  The Federal Judge also preliminarily reviewed the motion to dismiss in that case.  She agreed that deciding the second motion to dismiss in that case would decide the entire case and that no discovery on the dispositive motion was necessary.  “The balance favors granting the stay where the pending motion to dismiss disposes of the entire case and where no discovery is needed to rule on such a motion.”

         There are likely to be many Insurance cases in other Federal Courts, and in State Courts too perhaps, in which a stay will be requested.  In a case like this new decision attached for your ease of reference, requesting a stay of all discovery at an appropriate juncture will arguably be in each party’s interest, on the whole, because a Judge is convinced by Insurance Counsel that a pending dispositive motion will decide the Insurance Coverage issue without the need for discovery.

         On the authority of this new Insurance Coverage case, parties and their counsel in any similar case should seriously consider requesting a stay of all discovery and thus a stay of all the costs that go along with that  discovery.

Please Read The Disclaimer. 

   

Increasing Risk, Increasing Insurance Role.

    Current market conditions strongly reflect significant risk.  In this situation, Insurance Coverage Issues and Claims are inevitable.  They are coming.  They are coming under all sorts of Insurance Policies.  These Insurance Coverage Issues and Claims will in turn trigger many accusations that Insurance Companies and others acting in Fiduciary settings did not act in Good Faith and Deal Fairly.  In a climate like this one, these Issues and Claims are inevitable.  See generally Peter G. Gosselin, "In This Economy, Failure is an Option" (Los Angeles Times Online Sunday, July 20, 2008).

Please Read The Disclaimer.

Florida Laws and Hurricane Deductibles: Damages or Declarations.

     Florida has a lengthy statute which addresses Hurricane Deductibles. The Florida Statute, Sub-Section 627.701(4)(a), applies to policies issued or renewed on or after May 1, 2005. This effective date reflects the Florida visitation in 2004 of Hurricanes Charley, Frances, Ivan and Jeanne, and the 2005 visitation of Hurricane Wilma. This lengthy Florida Statute has now given rise to 5 lengthy Federal Court opinions. Any discussion of the statute and these cases is difficult, and a short discussion runs the risk of leaving out something important. This discussion will be kept as short as possible in this post in order to point out how the Florida Legislature and at least 5 Federal Court rulings in Florida have so far treated the recent use of Hurricane Deductibles.

     The Florida Hurricane Deductibles Statute requires certain language in specified pitch or points:

Any policy that contains a separate hurricane deductible must on its face include in boldfaced type no smaller than 18 points the following statement: THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU." A policy containing a coinsurance provision applicable to hurricane losses must on its face include in boldfaced type no smaller than 18 points the following statement: "THIS POLICY CONTAINS A CO-PAY PROVISION THAT MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU."

     Personal lines residential property insurance policies containing a separate Hurricane Deductible and that are subject to the Florida Statutes, must also comply with the following requirements of Sub-Section (4)(b) of Section 627.701:

Beginning October 1, 2005, for any personal lines residential property insurance policy containing a separate hurricane deductible, the insurer shall compute and prominently display the actual dollar value of the hurricane deductible on the declarations page of the policy at issuance and, for renewal, on the renewal declarations page of the policy or on the premium renewal notice.

These statutory provisions have caused a Hurricane of Judicial interpretation in 5 reported rulings by 3 Federal Judges. All 5 available rulings have been made in Federal Cases in the Southern District of Florida.

The Jury Pool for Katrina Coverage Lawsuits

    In any lawsuit, the Venire must be considered by the parties.  The Venire is the list of potential jurors, the potential jury pool, the group from which a Jury will be selected at Trial.  In Mississippi, most individuals did not have Flood Insurance as was true across all of the Gulf Coast before Katrina.  However, many people in Mississippi as well as other States did not have Homeowner's Insurance or Property Insurance either.  They are left to counter the devastation left by Katrina either with the help of volunteers, or by waiting for Government assistance God help them.   See this news article published today for a fuller description of their situation:  Peter Whoriskey, "As Aid Lags, Volunteers Shoulder Rebuilding on Gulf Coast/Local Gratitude Mixes With Frustration Over Government's Failures" (Washington Post,  Sunday, January 28, 2007, p. A03).

    The Venire must be carefully considered in any case, and in no lawsuits should the Venire -- the Jury Pool -- be given more careful consideration than that available to decide fact issues in the Katrina Damages lawsuits.

    A recent case that went to verdict in Mississippi, in which the Trial Judge directed a verdict on Coverage for the apparent Policy Limits and in which a Jury assessed Punitive Damages of $2,500,000.00 was previously posted here on January 12, 2007.  A more detailed discussion of it is also posted today, and on January 15, 2007, on Insurance Claims and Bad Faith Law Blog.

 Please see Disclaimer.

Liability Insurance Policies and Defense Under a Reservation of Rights.

    It is neither a breach of the Liability Insurance Contract nor Third Party Bad Faith, for the Liability Insurance Company to defend under a Reservation of Rights and also file a Declaratory Judgment Action, it was recently held in Download State_Auto_Property_Casualty_Insurance_Co. v. Stillwell Masonry Co. (M.D. Ala. Case No. 3.06.CV.435, Opinion Filed December 22, 2006).pdf.    Although that case involved "a Series I Contractor's Policy" and Alabama Insurance Law, it is consistent with the vast majority of decisions in jurisdictions across the United States under similar circumstances involving all types of Liability Insurance Policies which provide a duty to defend.
 

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.