FI L ED U.S. COURT OF A P P E A LS E LE V E N T H C IR C U IT J UNE 19 , 2006 THOMAS K. KAH

N CL ERK [DO N OT PUBLISH] IN THE UN ITED STATES COURT OF APPEALS FO R T HE EL EV EN TH CIRC UI T

____ ____ ____ ____ ____ ____ N o. 05- 1124 7

____ ____ ____ ____ ____ ____ D. C. Dock etNo. 0 1- 00 30 1- CV-J -HTS ROYAL SURPLUS LINES INSURANCE COMP ANY, Plaintiff Co unt er -D ef

en dant Cross-Appellee Appe llant, ve rs us COACHMAN INDUSTRIES, INC ., GEORGIE BOY MANUFACTURING, D ef en dants Co unt er -C la im an ts Third-P arty

Plaintiffs Cr oss -Appe llants App el le es , GAB ROBINS NORTH AMERI CA, INC., f.k.a . GAB Bus in es s Se rv ic es , Inc ., GEORGIA BOY PROJEC TS, INC., D ef en dants Co unt er -C la im an ts Appe lle es .2 ____ ____ ____ ____ ____ ____ Appeals fr om

the United State s District Court fo r the Mi ddl e D istri ct

of F lor ida

____ ____ ____ ____ ____ ____ _ (J un e 19, 200 6) Be fo re E D MO N D SO N Ch ie f Judg e, A N D E RS O N and F A Y , Ci rc uit Jud ge s. PE R CU RIA M: This appeal involves th e ef fort by an insurance car

rier to collect m onies fr om it s in sur ed

that i t pa id t o se ttl e cl ai m s of thi rd part ie s br ough t a ga ins t the insured. T he gravam en of this suit wa s that the insu red had w ithheldcritical inform ation from

the insurance car

rier and as a result, the settlem ent pay out was m an y ti m es w hat i t c oul d have be enha d th e inf orm at ionbe entr an sm itt ed in a tim el y f as hio n. T he ins ur ed s c ount er -c la im ed , a lle gin g ba d f ai th o n th e part

of the ins ur an ce c ar

ri er , and s ough t r ei m

bur se m en t f

or the e xpe nse s inde fe ndi ng the claim s. T he district court addressed each of the m ultip le claim s and issu es, e ntered num er ous or de rs , and u lti m at el y r ule d inf av or of the ins ur ed s a s to the c la im s by the ins ur an ce c ar

ri er . T he dis tr ic t c ourt r

ule d inf av or of the ins ur an ce c ar

ri er on t h e c o u n t e r c l a i m. We a f

f i rm.

I. Proce dural History3

T his c as e ha s ator

tur ed pr oc ed ur al his tor

y that i nvol ve s e xte nsi ve li tig at ion . O n M ar ch15, 200 1, Appe llant, Ro y al S ur plu s L ine s I nsur an ce Co m pany (“ Ro y al ”) , f

ile d it s f ir st c om pla int in thi s m atte r, se ek ing to re co ve r m oni es it ha d pa id i n se ttl ing ac la im

ins tit ute d by Joy ce H aan and the E state of E ar l H aan. Ro y al ’ s or igi na l c om

pla int a lle ge d c au se s of

a ct ionf or br ea chof

c ontra ct and breach of the c ovenant of go od faith and fair dealing. Appellees, Coac hm en In dustri es ( “ CO A CH MEN ”) , G ab Ro bin s N orth A m er ic a (“ G A B” ), G eo rg ie Bo y Manuf ac tur ing ( “ G BM ”) and G eo rg ie Bo y P ro j ec ts ( “ G BP ), he re af

te r re fe rr ed

to collectively

as “ appellees,” m oved to d ism iss the com plaint. The trial court gr an te d th is m oti on o n June 25, 200 1, and d ism iss ed the c om pla int w ith out pr ejud ic e. O n Ju ly 13, 200 1, Ro y al f

ile d an am en de d c om

pla int a lle gin g br ea chof contract, breac h of fiduciary duty and negligence. O n October 15, 2001 , a ppellees filed a counterclaim

against Roy al alleging four counts ; (I) abuse of process, ( II) br ea chof c ontra ct , ( II I) br ea chof

f idu ci ar y duty /ba d f ai th, and ( IV ) br ea chof co ve nant o f good

f ai th and f ai r de al ing . Ro y al m ove d to dis m iss c ount s I , I I an d IVof the c ount er cl ai m . O n January 1, 200 2, the appe lle es f

ile d am oti on f

or sum m ar y j udgm en t. I n su

ppor t of thi s m oti on, appe lle es a sse rt ed the f oll ow ing : ( 1) Roy al w aived any

and all coverage def

enses by volun tarily

pay ing th e H aan4

se tt le m en t, (2 ) Ro y al was n ot a th ird pa rty ben efi ci ary of th e COACHMEN-GAB co ntr ac t, ( 3) G BP is a pr ed ec es sor in int er es t of

G BM and c an not

be sue d init s own right, and (4) the counts for neglig ence and brea ch of fiduciary duty are barr ed by the e co nom ic los s do ctri ne . O n Apr il 11, 200 2, Ro y al f ile d am oti on t o am en d th e am en de d c om

pla int and a dd a

c ount f or m isr ep re se ntatio n. O n Apr il 12, 200 2, Ro y al f ile d tw o a ddi tio na l m oti ons: ( 1) am oti on f or sum m ar y j udgm en t a sse rt ing that i t di d no t w ai ve any c ove ra ge de fe nse r es pe ct ing the Haan settlem ent, and (2) a m otion for partial summ ary j udgm ent asserting that the und isp ute d f

ac ts e sta bli sh tha t C O A CH MEN and G BM ne gli ge ntl y m is rep res en te d m at eri al fact s re ga rd in g i m po rta nt asp ect s o f th e Haan laws ui t. On Se ptem

ber 17, 2002, the district court issued a series of four order s ad dr es sin g th es e out standi ng m oti ons. F ir st, the c ourt de nie d R oy al ’ s m oti on f or sum m ar y j udgm en t and m oti on f

or part ia l sum

m ar y j udgm en t. S ec ond, appe lle es ’ m otion for sum

m ary j udgm ent was granted as follows: (1) all cla im s asserted ag ai n s tGB P i nth e a m en d ed co m p l ai n twe re s u m

m ar i l y ad ju d i ca t ed i n GB P’s favor , ( 2) sum

m ar y j udgm en t w as gr an te d inf av or of G A B a s to a ll cl ai m s e xc ep t the allegation relating to failure to give no tice as set f orth in Roy als’ negligence count, and (3) sum

m ary j udgm ent was granted in favor of CO ACH MENand GBM as to ne gli ge nc e an d br ea chof f idu ci ar y duty ba se d onthe e co nom ic los s r ule . T he5

co urt r es er

ve d r uli ng o n a

ppe lle es ’ m oti on f

or sum m ar y j udgm en t c onc er

nin g br ea chof c ontra ct . F ina lly , the tr ia l c ourt de nie d R oy al ’ s m oti on t o am en d th e am en de d c om

pla int . Su bse que ntl y , on D ec em

be r 27, 200 2, the appe lle es f ile d athi rd -p ar

ty co m pl ai nt ad di ng Kenn ardW eav er an d h is law fi rm as t hi rd -p art y

de fen da nt s. On June 2, 200 4, the tr ia l c ourt se t a m oti on d ea dli ne f

or A ugus t 6, 200 4 and s et

the m atter f or j ury trial com m encing February

7, 2005. Pursuant to this order, ea ch party filed additional m otion s for sum m ary j udgm ent. Roy al’ s m otion for sum m ary j udgm en t a sse rt ed

a s un dis put ed

f ac ts tha t G BM and C O A CH MEN br ea ch ed the ir ins ur an ce c ontra ct

by c onc ea lin g f

ac ts m at er ia l t o th e H aan c as e. T he appe lle es ’ m oti on f or sum m ar y j udgm en t a sse rt ed

that R oy al w ai ve d it s r igh t t o c ont es t co ve ra ge by

f ai lin g to a sse rt

a“ re se rv at ionof

r igh ts. ” O n N ove m

be r 12, 200 4, the tr ia l c ourt i ssu ed

anothe r or de r ad dr es sin g th es e m oti ons. T he c ourt gr an te d th e ap pe ll ees ’ m ot io n fo r su m m ary jud gm en t o n t he bre ach of c on tra ctcla im . On Novem ber 30, 2004, Roy al m oved for reconsideration of this order. T his was denied. In January

2005 , the c ourt dism issed appellees’ counterclaim . F inal j udgm en t w as e nte re d inthi s m atte r on F eb ru ar y 3, 200 5. T his appe al f

oll ow ed . II . F ac tua l B ac kgr ound6

The I nsurance Policies issued byRoy al Roy al issued two insurance policies on May 5, 1995. T he policies provi ded coverage f

rom May 1, 1995, until May

1, 1996. Both CO ACH MENand GBM we re nam ed insureds un der the policies. T he first policy wa s a com

m ercia l general liabilitypolicy

(prim ary policy ) for the am ount of two m illion dollars, w ith a selfins ur ed r et en tio n ( “ SI R” ) am ount of $50 0, 000 fo r pr oduc ts l ia bil ity c la im s. T he second po licy

wa s an um

brella policy

for the am ount of five m illion dollars. T here w as an in te rm ed ia te pol ic y iss ue d by

S t. P au l S ur

plu s L ine s I nsur an ce Co m pany in the a m ount

of f ive m ill iondol lars . T he S IR pr ovi sio n inthe pr im ar

y pol ic y gave COA CHM ENthe ability

to control the defense of any action within the SIR am ount . T he c ontra ct

f urthe r pr ovi de d th at

Ro y al ha d th e ri ght

to as sum e the defense in any

action that could exceed the SIR am ount . T he am ount of the SI R i n c l u d e dan y c o s t s i n c u rr e db y t h e i n s u r e di n d e f e n d i n g o r i n v e s t i g a t i n g th e c l a i m. A s ar e s u l t , C O A C H M EN c o n t r a c t e dw i t h G A B t o a d mi n i s t e r an dmo n i t o r

c l a i ms fi le d a ga ins t i t. G A B i s athi rd -p ar ty a dm ini str at or , and i t c ontra ct s w ithvari ous co m panie s, w hic h in cl ude both in sur ed s w ithS IR pr ovi sio ns and i nsur er s to handl e cl ai m s.

H aan A cc ide nt7

O n M a r c h 4 , 1 9 9 6 , atr a g i c a c c i d e n t o c c urr e di n v o l v i n g amo t o r h o me m anuf ac tur ed by G BM , ar ec en tly

a cquir ed CO A CH MEN sub sid iary . T he m oto r hom e in que sti on w as bui lt on a c ha ssi s purc ha se d f

ro m the Ch ry sle r Co rp or at ion (“ Ch ry sle r” ). Joy ce and E ar l H aan w er e tr av el ing in the ir 197 8 S w ing er

m oto r hom e on I nte rs ta te 95 i n Ja ck sonv ill e, F lor ida , whe n astr ap hol din g th e ga s tank failed. The gas tank fell to the pavem ent, w as punctured, and the fuel contained therein ignited, causing an explo sion anda fir e. The explosi on and su bsequent fire ca use d th e de ath of

E ar l H aan and s ev er el y

inj ur ed Joy ce H aan w he n sh e ha d to j um p from the burning m otor hom e. Sh ortly a ft er the a cc ide nt, G BM r et ai ne d K en nard R. W eave r, alaw y er , to handl e the H aan c la im . O n M ar ch13, 199 6, Mr . W eave r w ro te ale tte r not if y ing GA B of the potential loss due to the Haan a ccident. O n April 30, 1996, Mr. W eaver spok e w ith Richard Bowe rs, in-hous e counsel for CO ACH MEN . Mr . W eave r expr es se d hi s op ini on tha t he be lie ve d th e H aan a cc ide nt w as li ke Ro bic haux, aL oui sianac as e w hic h de al t w ithsim ilar fa ct s.

T he Ro bic haux a cc ide nt In198 5 and 1 986 Ch ry sle r an d G BM w er e inv olv ed in a sim ilar pr oduc ts lia bil ity c as e, Ro bic haux, in w hic h stra ps tha t he ld the ga s tank o n ac ha ssi s8

m anufactured by

Chry sler fa iled, ca

using at least one death. Mr. W eaver represe nted GBM during that tim e period. I n additio n, on May 23, 1986, Richard Na j , S enior Staff

Counsel for Chry sler, wr ote Virl T hom pson , P resident of GB M, a le tte r in whic h he w ar

ne d G BM that m ovi ng the ga s tanks cr eate d apot en tia lly dangerous cond ition . Acopy wa s sent to Mr. W eaver in 198 6. In the instant case, Mr . W eave r dir ec te d th at a ll of G BM ’ s f ile s w hic h de al t w ithRo bic haux and the N aj le tte r, to be de liv er ed to him . Appare ntl y , he did not dis cl ose the r el ev an ce of Ro bi ch au x o r th e ex is te nc e o f th e Naj let te r to an y bo dy at COACHMEN.

H aan L iti ga tio n On July 9, 1997, Joy ce H aan, indiv iduallyand on behalf of her husband's estate, sued COA CHM ENand Chry sler. Eventually , G BM and G BP w ere added as defendants. T he First A m ended Com plaint alleged that th e plaintiffs incurred da m ag es as a res ul t o f a d efec t i n t he m ot orho m e an d a ve rredCOACHMEN, GBM , G BP, and Chry sler acte d neglig ently . O nce the H aan law sui t w as f

ile d, CO A CH MEN too k ov er

the de fe nse and h ir ed

Rum be rg er , K irk and C al dw el l, P. A . ( ”RK C” ) to r ep re se nt i ts i nte re sts in the H aan li tig at ion . Ro y al w as not if ie d of the c la im by ale tte r da te d O ct obe r 10, 199 7. A ft er it w as not if

ie d of the sui t, Ro y al c hose not

to take an a ct ive r ole in the de fe nse , but ins te ad de ci de d to9

m oni tor the li tig at ionc los el y

and a llo wthe ins ur ed s to pr ovi de the de fe nse in ac co rd an ce w iththe S IR . Ro y al r eque ste d th at it be ke pt i nf

orm ed of any inform ation that develo ped throug h the investi gation anddiscovery in the case. Ro y al not if

ie d RK C tha t i t w an te d c opi es of a ll co rr es pond en ce se nt t o CO A CH MEN . I n r es pons e to this r eque st, CO A CH MEN ins tr uc te d RK C t o c opy an d se nd a ll doc um en ts i nvol ve d inthe H aan c as e to R oy al . Inale tte r da te d Augus t 5, 199 8, RK C n oti fi ed Ro y al of Ch ry sle r' s c la im that G BM ha d m ove d th e ga s tank f ro m it s or igi na l po sit iona s m anuf ac tur ed and that this is what c aused the strap to fail on the Haan m otor hom e. At that tim e, h o we v er , R KC d i dn o th av e a n y ad d i t i o n al i n fo rmat i o n b eyo n dCh rys l er ’s a l l e g a t i o n s . T h e i n i t i a l l e t t e r p l a c i n g th e c a rr i e r s o n n o t i c e s t a t e dth a tth e c l a i ms could have serious dam age potential. CO ACH MEN ’ s initial offer to the plaintiffs w as f or $50 0, 000, and RK C o pin ed that the c la im s w oul d li ke ly not r equir e a larg e p a yo u tf r o m th e p r i mary p o l i c y. A m ed ia tio n c onf

er en ce w as he ld o n O ct obe r 1, 199 8. I n a dvanc e of the m ed ia tio n, RK C r ec ei ve d in fo rm at ionf ro m Mr . Bo w er s th at

G BM m ay

have m oved the fuel tank from its origin al positio n as m anufactured by Chry sler. Im m ediately following the October 1998 m ediation, the lawsuit could have been se ttl ed f or appr oxi m at el y

tw o m ill iondol lars . Indeed, the plaintiffs m ade a f orm alUn de r t he pr oc e dure s b e ingfo llo we d, RK C w ou ld h ave se nt c op ie s o f t he se le tte rs to 1 Roya l. 10 of fe r of j udgm en t f

or tw o m ill iondol lars sho rt ly a ft er the uns uc ce ssf

ul m ed ia tio n. O n N ove m

be r 11, 199 8, Mi ka l W atts w as r et ai ne d a s c o- co unse l f or the pl ai nt iff s. On ce M r. W at ts en te redth e cas e, th e o pp or tu ni ty to s et tl e fo r two m illion dollars closed. O n Dec em ber 17, 1998, Mr. W atts sent a letter to RK C, w hic h e ff ec tiv el y r ev oke d th e pr ev iou s of

fe r to s ettle the c as e. T he pla int if fs now de m an de d tw el ve m ill iondol lars . O n D ec em

be r 11, 199 8, RK C i nf

orm ed CO A CH MEN that G BM ha d, in fact, m oved the gas tankon the chassis o f the H aans' m otor hom e. Inale tte r fr om RK C t o C O A CH MEN , da te d D ec em be r 22, 199 8, it

w as dis cl ose d, se em ing ly f or the f ir st t im e, that C hr

y sle r m ay have w ar ne d G BM not

to m ove the f

ue l t an k. 1 Prior to this tim e, RK C expressed the opinio n that Chry sler's def ense that GB M ha d m ove d th e ga s tank, r es ult ing in the str ap f ai lur e, w oul d be dif

fi cu lt to m ai nta in. Obv io us ly, th atop in io n c ha ng ed . In J an ua ry 19 99 , COACHMEN dir ec te d RK C t o a cc ep t the O ct obe r 1998 of fe r of se ttl em en t f

or tw o m ill ion dol lars . T his w as im

poss ibl e, how ev er , sin ce the of fe r ha d be enw ith dr awn in D ec em be r 1998 . Subsequentl y , on Fe bruary 18, 1999, RK C provided a copy of the 1986 NajOn May 23, 1986, Richard Na

j, senior staff

counsel for

Chry sler, sent a

letter to Virl 2 Thompson of GB M. Chry sler had c onducted a n independe nt investigation on the rec ent motor home problems, and de termined that movingthe g as tank on Swing er motor homes c reated a po te nti a lly

da ng e ro us c on dit ion . T he Na j le tte r r e a ds in p e rt ine nt p art : As a re sult of the Robichaux l awsuit Chry sler has c onducted a n independe nt inv e sti g atio n o f t

he inv olv e d a c c ide nt v e hic le and oth e r s imi lar m oto r h ome s. Specifica lly , we ha

ve examined four othe r Swing er motor homes . . . . Tw o wer e manufa cture d in 1977, one in 1978, and one in 1979. The 1978 vehicle is identica l to the Robichaux m otor home. . . . In eac h instance w e found that Georg ie-B oy (GB M) had substantially

modified the re ar f

uel sy stem. The fue l tanks were moved forw ard a

nd the cr oss-supports wer e found to be modified from the orig inal position. W e believe that the re -desig n of the fue l tank attachme nt sy stem cre ates a potentially

dang erous c ondition which could compromise the integrity of the fu e l sy ste m. . . . We b e lie ve that th e re is s uf fi c ie nt e vid e nc e to d e te rm ine that a situation ex ists which cre ates a potential problem transc endingthe Robichaux litigation and that Ge org ie-B oy (GB M) should notify

the owner s of its vehicles of this potential problem. . . . Th e se ttl e me nt a lso inc lud e d f un ds fr om S t. P a

ul. 3 11 le tte r to Mr . Ri ch ar d S tr om , c or por at e re pr es en ta tiv e fo r Ro y al . Ro y al w as tol d 2 that the le tte r w as r ec en tly dis co ve re d inthe f

ile s of Mr . W eave r, G BM ’ s pr ev iou s co unse l. T he re af

te r, Ro y al be cam e ac tiv el y inv olv ed in atte m pti ng a se ttl em en t. O n M ar ch1, 199 9, Ro y al m ad e anof fe r to M r. W atts t o se ttl e the H aan c la im s f or an am ou nt th atwou ldreq ui re p aym en t o ut of b ot h t he pri m ary an d e xc es s p ol ic ie s. U lti m at el y , Ro y al se ttl ed the H aan c as e on Apr il 16, 199 9, f or an am ount that gr eatly

e xc ee de d th e of

fe r te nde re d a ft er

the O ct obe r 1998 m ed ia tio n. P ri or to co m ple tin g th e se ttl em en t, Ro y al did not de ny c ove ra ge , a sse rt

ade fe nse to coverage, or rese rve its rights. T he am ount of the settlem ent caused Roy al to pay t h e e n t i r e p r i mary p o l i c y an dap o rt i o n o f i t s e x c e s s p o l i c y. 312

Co nse nt t o M ag istrate Jud ge Purs uant t o th e pr ovi sio ns o f T itl e 28 U . S. C. 636 (c )( 1) and F ed . R. Ci v. P. 73, the part ie s c onse nte d to the U nit ed S ta te s M ag istrate Jud ge c ondu ct ing a ll pr oc ee din gs i n th is c as e to f ina l j udgm en t.

III . I ssues T he appe llant, Ro y al , r ai se s th e fo llo w ing iss ue s onappe al : 1. D id the trial court err

by granting su m

m ary j udgm ent against Roy al reg ard in g t he is su e o f br each of c on tra ct . 2. D id the tr ia l c ourt e rr

in co nc lud ing that R oy al ’ s burd enof pr oof to establish b reac h of the cooperation clause was to dem onstrate that appellees de lib er at el y

c onc ea le d in fo rm at ionabout the H aan a cc ide nt a

nd the pr ior Robichaux case. 3. D id the tr ia l c ourt e rr

in co nc lud ing that the E co nom ic L oss Ru le pr ecl ud edRo y al fro m

pu rs ui ng to rt c la im s ag ai ns t t he ap pe ll ees . Ina ddi tio n, the appe lle e, CO A CH MEN , c ro ss a ppe al s th e dis m iss al of

it s c o u n t e r c l a i m. IV . S tandard of Review13

W e re vie wr

uli ngs on m oti ons fo r sum m ar y j udgm en t de novo by

appl y ing the sam e le ga l st an dard s us ed by the dis tr ic t c ourt. S ee G ranit e St at e O utd oor A dve r. , I nc . v. Ci ty

of S t. P et er sbur g, 348 F . 3d 1 278, 128 1 ( 11th Ci r. 200 3) . T he sa m e hol ds tru e fo r ru lin gs o n qu es tio ns o f law . S ee D ah l- E im er s v. Mu t. of Om aha L ife Ins. Co., 986 F.2d 1379 , 1381 (11th Cir. 1993).

Sum m ary Judgm ent Standard A c ourt sh oul d gr an t sum m ar y j udgm en t “ if

the ple ad ing s, de posi tio ns, an sw er s to int er

ro ga tor ie s, and a dm iss ion s onf ile , tog ethe r w iththe a ff

idavit s, if an y , sho wthat the re is no g enuin e iss ue a s to any m at er ia l f

ac t and tha t the m ovi ng party is en tit le d to j udgm en t a s am atte r of law . S ee Ce lot ex Co rp . v. Catr ett, 477 U . S. 317 , 322 ( 1986 ). T he party m ovi ng f or sum m ar y j udgm en t “ al w ay s be ar s th e ini tia l r es pons ibi lit

y of inf orm ing the . . . c ourt of

the ba sis f

or it s m oti on, and ide nti fy ing tho se portio ns o f the ple ad ing s . . . w hic h it be lie ve s de m onstrate the ab se nc e of

age nui ne iss ue of

m at er ia l f

ac t. ” Catr ett, 477 U . S. a t 32 3. I f the m ovi ng p ar

ty suc ce ed s inde m onstratin g th e ab se nc e of am at er ia l i ssu e of

f ac t, the burden shi fts to the non -m ovin g party to establish that a genuine issu e of fa ct m at er ia l t o th e non- m ovant’ s c as e ex ist s. S ee F itzpa tr ic k v. Ci ty of A tlanta , 2 F . 3d 1112 , 111 5- 17 ( 11th C ir . 199 3) . A ft er the non -m ovi ng p ar

ty ha s r es pond ed

to the14

m otion for sum

m ary j udgm ent, the court m

ust grant summ ary

j udgm ent if there re m ai ns n o ge nui ne iss ue of m at er ia l f

ac t and the m ovi ng p ar

ty is en tit le d to jud gm en t as a m at te r of

law.

V. Bre ach of Contrac t T he tr ia l c ourt gr an te d sum m ar y j udgm en t i n f

av or of the appe lle es on the br ea chof c ontra ct c la im , f ind ing that R oy al w ai ve d it s r igh ts whe n it vol unt ar ily paid the settlem ent funds withou t reser ving its right to d eny

coverage. Roy al ar gue s th at

the tr ia l c ourt e rr ed

in gr an tin g sum

m ar y j udgm en t be ca

use : ( 1) it w ei ghe d in co nsi ste nt t es tim ony of Mr . Ri ch ar d S tr om , and ( 2) a t the ti m e of the s et t l emen t , R o yal d i d

n o tkn o w e n o u g h t o i s s u e a re s er v at i o n o f r i g h t s l et t er . We fi nd the se arg um en ts t o be w ith out m er it. W aiver is defined as “ the intentio nal or volun tary relinquish m ent of a known right, or conduct which im plies the relinqui shm ent of a known right.” S ee St at e Farm

Mu t. A uto . I ns. Co . v. Y en ke , 804 S o. 2d 4 29, 432 ( Fl a. D ist . Ct . App. 2001 ). Ar es er

va tio n of r igh ts i s w ar

rante d w he re an in sur er

“ kne wor sho uld have known” the potenti al for a defense to coverage. See Fla. Stat. § 627.426 (2) (2005).A l i ab i l i ty i n s ure r s h al l n o tb e p erm i t t edt o d en y co v er age b as edo na p art i cu l ar co v er age 4 de fe ns e un le ss: (a) Wit hin 30 day s after

the liability

insurer kne w or should have known of the c overa g e def ense, written notice of

rese rvation of r ights to asse rt a c overa g e def ense is g iven to the named insure d b y r e g i s t e r e d

o r c e rt i f i e d m a i l s e n tt o th e l a s tkn o w na d dr e s s o f th e i n s ur e d

o r b y h an d d e l i v e r y. Fla. Stat. 627.426(2) (a) (2005). 15 The a ppellees contend th at Roy al should have reser ved its right s because it knew or shoul d have known the pot ential for a def ense to coverage. Appellees argue that Ro y al w as aw ar e of

both th e Ro bic haux c as e an d th e N aj le tte r be fo re it de ci de d to settle the Ha an claim s and that it was also aw are of how the inform ation was dis cl ose d and tha t i t ha d be enin the pos se ssi on o f the ins ur ed s f ro m the out se t. Thus, R oy al should have reser ved its right s as required by the Florida statute. 4 Fai li ng to do so , itha s wai ve d a ny clai m forrei m bu rs em en t. The thrust of the claim

being m ade by

Roy al is that the insu red appellees fa ile d to pr ovi de Ro y al w iththe de ta ils of the Ro bic haux l iti ga tio n and w itha co py of the N aj le tte r in a

ti m el y f as hio n, r es ult ing in a subs tanti al ly hig he r pay out in s ettle m en t. T he que sti on b ef or e us i s w he the r the r ec or d su ppor ts the r uli ng o f the trial court that Roy al knew a ll of the relevant inform ation abou t these m atters pr ior to the se ttl em en t, thu s r equir ing it to iss ue ar es er

va tio n of r igh ts. A ft er e xa m ini ng the r ec or d, w e co nc lud e the f oll ow ing : ( 1) the f

ai lur e to disclos e in a tim ely

m anner inform ation abou t the Robichaux case and the Naj16

le tte r pr oba

bly r es ult ed in a subs tanti al inc re as e in the sum s r equir ed to se ttl e the H aan c la im s, ( 2) Ro y al w as aw ar e that this m at er ia l ha d be enin the pos se ssi on o f its insu reds and had not been prod uced in a tim ely m anner w hen it conclud ed se ttl em en t of

the H aan c la im s, and ( 3) kno w ing thi s, Ro y al w as obl igate d to r e s e rv e i t s r i g h t s an df

a i l u r e t o d o s o a mo u n t s t o aw a i v e r o f th i s c l a i m. O n Ju ly 7, 200 4, Ri ch ar d S tr om ’ s de posi tio n w as vid eo ta pe d. D ur ing thi s de posi tio n, he c onf

irm ed that R oy al kne wthe de ta ils of the Ro bic haux c as e an d had a copy

of the N aj letter w ell before se ttlem ent of the Ha an claim s. H e knew that this m at er ia l ha d be enin the pos se ssi on o f the ins ur ed s and n ot p ro duc ed pr ior to the m ed ia tio n. H e al so c onf irm ed that ha d R oy al kno w n of the c ont en ts o f thi s ma t e r i a l , th e H a a n c l a i ms c o u l dh a v e b e e n s e t t l e df o r amu c h r e du c e ds u m. Q uot ing f ro m the de posi tio n: Q : Bu t a s y ou t es tif

ie d e ar lie r, y ou c an ’ t – y ou d on’ t have any inform ation or evidence to establish that anything wa s int en tio na lly

c onc ea le d f

ro m Ro y al a t any

poi nt i n ti m e by

any defendant; is that true? A : W el l, y ou know , the re ’ s – the re ’ s in fo rm at ionthat c am e out that su gge sts , and i f the re ’ s su gge sti on, the n th er e’ s – the re ’ s a re as on t o r es er

ve , it ’ s no t de ny ing c ove ra ge , it ’ s r es er vin g y our rights to deny

coverage. Q : Wha t i s th at

inf orm at ionthat su gge sts that? A : W el l, I m ean, the r ev el at ionof the N aj le tte r an d th eIntere stingly , St. P aul Surplus Insuranc e Company did reser ve its rig hts to deny 5 cover ag e. 17

inform ation that cam e belatedly on the Robichaux m atter. Q: But y ou kn ewall of that inform ation before the case had se ttl ed , c or

re ct ? A : T ha t’ s co rr ec t. Ri ch ar d S tr om , D ep osi tio n 92 a t 3- 19. In addition to this testi m ony , a ll of this is also confirm ed in a detailed interoffice m em orandum

authored by

Strom and sent to Bob Moo ney on February 24, 1999. See Exhibit 52. The m em o contains a detailed dis cussion of the problem created by

GB M in m ovin g the gas tanks from the location selected by

Chry sler an d th e w ar

nin g gi ve n by

Ch ry sle r in the N aj le tte r. T he m em or an dum dis cu sse s in detail how the revelation of this inform ation has increased the value of the Ha an claim s. I d. T here is sim

ply no questi on that Roy al knew at that tim e that the failure of the ins ur ed s to pr oduc e thi s in fo rm at ionpr ior to the m ed ia tio n ha d in cr ea se d it s ex po su re d ram at ic al ly. U nde r the se c ir cum stanc es , the re is no g enuin e iss ue of f ac t pe rt ai nin g to wh et h erRo yal co u l dh av e a n ds h o u l dh av e i s s u ed a r es er v at i o n o f r i g h t s . Ro yal ’s 5 as se rt ion s th at

it did not have e noug h in fo rm at ionto re se rv e its r igh ts i s to ta lly re fu te d by

the sw or n te sti m ony

of it s c or por at e re pr es en ta tiv e. I n a ddi tio n, the18

re co rd und en ia bly de m onstrate s th at

Ro y al “ kne wor

sho uld have kno w n” about the pos sib le c ove ra ge de fe nse s, to the e xte nt n ec es sary f or a sse rt ing ar es er

va tio n of r igh ts. I n li ght

of the f or eg oin g, w e fi nd tha t R oy al w ai ve d it s r igh ts whe n it vol unt ar ily

pa id the se ttl em en t f

unds w ith out

f ir st r es er vin g it s r igh t t o de ny coverage in acc ordance w ith the Florida statute. V I. Burd enof

P ro of The tr ial court determ ined that Roy al’ s burden of proof to establis h breach of the cooperation clause wa s to dem onstrate that appellees deliberately concealed inform ation from

it and that this fac t wa s not learned until after the Ha an se ttl em en t. Roy al alleges that the appellees brea ched the cooperation clause when they failed to notify

Roy al of m aterial inform ation in a tim ely m anner as discussed above. F urtherm ore, Roy al contends th at the trial court er red w hen it determ ined that Roy al’ s burden to establ ish su ch a brea ch wa s to dem onstrate that appellees deliberately

or intention ally

concealed inform ation. W e conclude that the trial court wa s correc t in articulating the elem ents of the claim being m ade. In granting su m

m ary j udgm ent, the court m erely defined the burden ne ce ssary in or de r fo r Ro y al to es ta bli sh tha t the appe lle es br ea ch ed the ir duty to co ope rate . F ai lin g to c oope rate e nc om pa sse s th e ac tio n of

int en tio na lly

or w ill fu lly19

co nc ea lin g in fo rm at ionf

ro m the ins ur er . Me re ne gli ge nc e is n ot s uf fi ci en t. W ill fu l int en t i s inhe re ntl y

part of the te rm c onc ea lm en t. S ee N ewY ork C ity H ous. A uth . v. H ous. A uth . Ri sk R et en tio n G ro up, I nc . , 203 F . 3d 1 45, 151 ( 2nd Ci r. 200 0) (h old ing that i n or de r to d isc la im c ove ra ge on the gr ound

of an in sur ed ’ s la ck

of co ope ratio n, the c ar

ri er m ust de m onstrate that the atti tud e of the ins ur ed , a ft er

his co ope ratio n w as sou ght , w as one of w ill fu l and avow ed

obs tr uc tio n) . I n a ddi tio n, Black’ s Law D ictionary

defines concealm ent as: “ The insured’ s intentio nal withholdi ng from

the insurer m aterial f

acts that increase the insurer’ s risk and that in goo d faith ough t to be disclos ed.” Black’ s Law D ictionary 282 (7th ed. 1999 ). T he tr ia l c ourt de te rm ine d th at w he n a ddr es sin g abr ea chof duty to co ope rate cl ai m , an in sur ed

c an not br ea chthe c oope ratio n c lause by ne gli ge ntl y

f ai lin g to produce inform ation. Roy al had to prove intent ional concealm ent. W e agre e.

V II . E co nom ic L oss Ru le La stly , R oy al argues that the trial court w as err oneous when it concluded that the econom ic loss rule precluded it from pursuin g tort actions for negligence, br ea chof f idu ci ar y duty , f ra ud, de ce it an d m isr ep re se ntatio n. R oy al se ek s re co ve ry of an e co nom ic los s m ea sur ed by the dif fe re nc e be tw ee n th e $2 m ill ion settlem ent offer , which would have been accepted had CO ACH MENand GBM20

share d in fo rm at ionin a tim el y m an ne r, and the $9, 875, 000 ult im at el y pa id t o se ttl e the H aan c la im s. Purs uant t o F lor ida

law , the e co nom ic los s r ule pr ovi de s th at

“part ie s to a contract can only

seek tort dam ages if conduct occurs that establishes a tort dis tin gui sha

ble f ro m or ind ep en de nt o f [the ] br ea chof c ontra ct . ” Se e Jone s v. Childers, 18 F. 3d 89 9, 904 (11th Cir. 1994) (citations and qu otation s om itted) see also HT P, Ltd. v. L ineas Ae reas C ostarricenses, S. A. , 685 So.2d 1238, 1239 (Fla. 1996 ) (h old ing that i n or de r fo r anind ep en de nt t ort t o be suf fi ci en t t o surv ive the econom ic loss rule, it “ requires proof of fa cts separate and disti nct from the breac h of contract). This rule is based upon th e doctrine that “ contractual principles are m or e ap pr opr ia te than to rt pr inc ipl es f

or r es olv ing e co nom ic los s c la im s. ” Fl or ida Powe r & L ight Co. v. W estingh ouse Elec. Corp., 510 So.2d 899 , 901 (Fla. 1987 ). Ro y al cit es Ind em . Ins . Co. o f Nor th Am eri ca v . Am eri can Avi at io n, In c., 891 So.2d 53 2 (Fla. 2004 ) for the propos ition that tort recovery is perm itted where t h e t o rti s c o mmi t t e di n d e p e n d e n t l y o f th e b r e a c h o f

c o n t r a c t . H o w e v e r , i n I n d e m. Ins. Co. , the F lorida Suprem e Court m ade it clear that the econom ic loss rule does apply “ wher e the parties ar e in contractual privity and one seeks to recover da m ag es in tort f

or m atte rs ari sin g f

ro m the c ontra ct . ” Id . a t 53 6. T he tr ia l c ourt c or

re ct ly he ld tha t R oy al ’ s to rt

c la im s w er e ba se d ontheMa lic iou s p ro se c uti on a c tio ns re qu ir e a

pr e c e din gjud g me nt. 6 21 a l l e g a t i o n th a tap p e l l e e s c o n c e a l e dd a ma g i n g i n f o rma t i o n f

r o m i t , th e s a me inform ation that prov ided the basis for the breach of contrac t claim . T hese parties w er e in a c ontra ct ua l r el at ion shi p. T he ir

obl igatio ns t o e ac h othe r ar ose f ro m the insurance contracts. Thus, any tort claim s are bar

red by the econom ic loss rule.

V II I. Ba d F ai th C ount er cl ai m T he tr ia l c ourt di sm iss ed

CO A CH MEN ’ s ba d- fa ithc ount er cl ai m a ga ins t Ro yal fo r f

ai l i n g t o s t at e a ca u s e o f a ct i o nfo r w h i ch re l i ef ca nb e g ra n t ed . We ag re e. T he e nti re thr

ust of the c ount er cl ai m

is that R oy al sho uld

not have br ough t this su it. T he allegations are not fram ed as ones for m alicious prosecuti on. Rather, 6 itap pe ars th atCOACHMEN se ek s d am ag es forde fen di ng th is su it . COACHMEN ha s no t c ite d, and w e ha ve not unc ove re d, any

auth or ity f or suc h ac la im . T he dism issal was proper.

IX . Co nc lus ion A ft er r ev ie w ing the r ec or d w e co nc lud e the f oll ow ing : ( 1) Ro y al w ai ve d it s ri ght s to br ing the se c la im s w he n it vol unt ar ily

pa id the se ttl em en t w ith out f ir st22

reser ving its rights in accor dance w ith the Florida statute, (2) the tr ial court wa s correc t in its determ ination as to Roy al’ s burden of proof, and (3) R oy al’ s tort c l a i ms w e r e b a rr e db y t h e e c o n o mi c l o s s r u l e . Wi t h r e g a r dt o th e c o u n t e r c l a i m, the re is sim

ply no l eg al ba sis . AF FIRMED .