Opinion ID: 1817563
Heading Depth: 1
Heading Rank: 4

Heading: Coverage of Jones' Claims

Text: FIGA also attempts to argue that its duty to defend extends only to covered claims, and that it cannot be liable for a failure of the duty to defend in the instant case because the underlying wrongful death action was not covered under the policy. FIGA now contends that Pratt made a material misrepresentation on his application regarding whether others would be driving the business's vehicles; was not the owner of the vehicle involved in the accident, which was being used to leave the scene of a felony at the time the accident occurred (which was not an issue in the pleadings); failed to cooperate in defense of the claim in violation of the terms of the policy (which was not an issue in the pleadings); and failed to present his claim within the statutory time limits. FIGA seeks to deflect liability by asserting what are essentially coverage defenses to the underlying wrongful death claim. However, all of FIGA's arguments that Jones failed to present covered claims were either decided adversely to FIGA's position in the entry of the judgment in the underlying action or were properly rejected by the trial court. It is well settled that where an indemnitor has notice of a suit against his indemnitee and is afforded an opportunity to appear and defend, a judgment therein rendered against the indemnitee, if without fraud or collusion, is conclusive against the indemnitor as to all material questions therein determined. Grain Dealers Mut. Ins. Co. v. Quarrier, 175 So.2d 83, 86 (Fla. 1st DCA 1965); see also Martino v. Fla. Ins. Guar. Ass'n, 383 So.2d 942, 944 (Fla. 3d DCA 1980) (FIGA is bound by default judgment entered against insolvent insurer due to the mutual or successive relationship created by the Legislature). By virtue of that rule, an insurer and FIGA here may be free to challenge properly pled issues pertaining to fraud in the procurement of the insurance policy or the insured's alleged breach of an essential condition of the policy. However, questions such as identity, negligence, and other factual issues, which were interwoven with and a necessary and integral part of the determination of judgment in the underlying action are precluded from further review and subsequent collateral attack. See Quarrier, 175 So.2d at 86. FIGA's coverage challenge implicates at least one factual issue that was determined by entry of the final judgmentownership, possession, dominion or control of the vehicle at the time of the accident. FIGA contends factually that ownership of the vehicle was in question, and at the time of the accident the vehicle bore temporary license tags and was registered to an individual other than Michael Pratt. It must be remembered that the insured was in the automobile business and such factor was contemplated with the broad coverage for which FIGA became responsible. The entry of the judgment in the underlying case binds FIGA to the factual determination that Pratt had an ownership, possession, or control interest in the motor vehicle involved in the collision with Althea Jones and was legally responsible for Gilliam's negligence in operating that vehicle. See id. Having refused to defend, FIGA cannot now attempt to circumvent and challenge that factual determination. Even if FIGA could properly open this issue for review, any challenge would be meritless. The garage policy defined covered auto most broadly as any auto. See supra, p. 443. The breadth of that language, coupled with the expansive definition of garage operations, renders actual ownership of the vehicle in question totally irrelevant. Moreover, Florida courts have held that the doctrine of implied consent imputes any grant of permission by those entrusted with the vehicle to the original permittor. See, e.g., Ray v. Earl, 277 So.2d 73 (Fla. 2d DCA 1973); Winters v. Phillips, 234 So.2d 716 (Fla. 3d DCA 1970). The trial court properly rejected FIGA's other attempts to challenge the insolvent insurer's responsibility to defend the insured and indemnify Pratt under the policy. The trial court expressly concluded that the FIGA statutory limitations did not bar the claim, and that the policy was not voidable on the basis of any purported misrepresentations on the insurance application because the undisputed facts show that [the insurance company] did not reasonably rely upon such misrepresentations in issuing and maintaining the policy. Both determinations are supported by the record. With regard to FIGA's time limitations defense, the Association erroneously argues that Michael Pratt failed to present a claim to the receiver by the October 1, 1995, deadline. This record demonstrates that the claim was filed in September. FIGA further asserts that Pratt would have been time-barred from commencing any action against the Association, and that the same time bar operates against Jones as Pratt's assignee. However, even assuming that Pratt would be precluded from initiating an action against FIGA, the Association's argument fails. Jones has presented the instant action in her dual capacities as Pratt's assignee and as the personal representative of the estate of Althea Jones and timely initiated the only action available against the insured, the only permissible defendant as a matter of law. FIGA cannot sustain the position that the one-year FIGA statutory limitation for initiating claims against FIGA bars Jones' action. The record shows that Jones' counsel began exchanging letters with FIGA regarding this matter in the fall of 1995, and that Jones timely submitted a proof of claim form with the receiver. Jones timely amended the wrongful death complaint on March 15, 1996, to include the insured, Michael Pratt, d/b/a Spruill Auto Sales, as a named defendant, which was a necessary precursor to initiating any action against Dealers (or FIGA) under Florida's nonjoinder of insurers statute and satisfying the limitation period now asserted by FIGA. See § 627.4136(1), Fla. Stat. (1995); § 631.68, Fla. Stat. (1995). It was not until May 1, 1996, that FIGA sent a letter to Pratt denying coverage; Jones' wrongful death counsel was not advised of the denial until May 16. A judgment was entered against the insured, Pratt, and a final judgment was entered on May 16, 1997. Based on these facts, legal action was initiated against the insured before the October 1, 1996, deadline for filing claims. The statutes cannot be held to apply to a cause of action which had not yet accrued, and such argument is contrary to the terms of the statute, which requires the action to be filed against the insured or the association. See § 631.68, Fla. Stat. (1995). As determined by the trial court, there is no evidence that any misrepresentation allegedly made by Pratt on the insurance application regarding authorization to operate the cars at Spruill affected Dealers' decision to issue and maintain the garage policy. Sam Allen, the senior claims examiner for FIGA who was responsible for responding to Jones' interrogatories in the underlying wrongful death action, testified at deposition that the only alleged misrepresentations made on that portion of the application were those regarding the driving records of Pratt and McClendon. Allen did not state, suggest or even hint that Pratt's naming of the individuals who had occasion to drive the cars was a misrepresentation or problem. Allen confirmed that Dealers in fact obtained correct information about the driving records of Pratt and McClendon from the Department of Motor Vehicles before issuance of the policy, but issued the insurance contract and never attempted to rescind the policy based on that representation. Thus, the evidence in the record with regard to arguments of misrepresentationwhether it pertains to the owners' driving record or who was permitted to drive the business's carsdid not impact the insurance contract, the issuance of the contract, or Pratt's coverage under the policy of insurance. The argument is a paper issue without factual support. FIGA also contends that Jones' action was not a covered claim because Gilliam was using the vehicle to leave the scene of a felony and was in the process of failing to respond to a marked police vehicle when the accident occurred. FIGA raises this argument presumably to invoke a policy exclusion applicable to intentional acts. See Wiggins v. Portmay Corp., 430 So.2d 541, 542 (Fla. 1st DCA 1983) (Affirmative defenses do not simply deny the facts of the opposing party's claim. They raise some new matter which defeats an otherwise apparently valid claim.). Florida courts have held that a defense based on a policy exclusion ordinarily should be raised as an affirmative defense. See St. Paul Mercury Ins. Co. v. Coucher, 837 So.2d 483, 487 (Fla. 5th DCA 2002). However, in the instant action, FIGA never pled or alleged any fact of impermissible use of the vehicle at the time of the accident as an affirmative defense to coverage. FIGA, therefore, has waived any claim to assert a defense similar to this affirmative defense. See, e.g., Jojo's Clubhouse, Inc. v. DBR Asset Mgmt., Inc., 860 So.2d 503, 504 (Fla. 4th DCA 2003) (affirmative defenses are waived if not pled); St. Paul Mercury Ins., 837 So.2d at 487 (same); Langford v. McCormick, 552 So.2d 964, 967 (Fla. 1st DCA 1989) (same); see also Goldberger v. Regency Highland Condo. Ass'n, Inc., 452 So.2d 583, 585 (Fla. 4th DCA 1984) (Failure to plead an affirmative defense waives that defense, and an appellate court will not consider it in reviewing a summary judgment for a plaintiff.). This afterthought, as with the misrepresentation argument, has no basis in this record for argument. FIGA also attempts to insert a new issue as it contends that the wrongful death action was not a covered claim because Pratt violated the terms of the policy by failing to report the accident, notify FIGA that an action had been filed against him, and cooperate in investigation and defense of the claim. As with the previous defense, Pratt's purported failures to provide the requisite notification and cooperation were never pled as affirmative defenses and are, therefore, waived. See, e.g., Jojo's Clubhouse, 860 So.2d at 504; St. Paul Mercury Ins., 837 So.2d at 487 (same); Langford, 552 So.2d at 967. However, it must be noted that FIGA could not sustain these defenses even if they were properly pled. To constitute a defense to insurance coverage, lack of cooperation must be prejudicial. See Tri-State Ins. Co. of Minnesota v. Fitzgerald, 593 So.2d 1118 (Fla. 3d DCA 1992). FIGA cannot viably argue that it was prejudiced by Pratt's failure to notify the Association of the accident and Jones' pending legal action. FIGA was notified of the claim several weeks after Jones amended the wrongful death complaint to include Pratt as a named party, as a courtesy copy of the pleading was served on FIGA by Jones' counsel. In deposition testimony, FIGA claims adjuster James Leezer confirmed that the Association had in fact received the copy of the complaint prior to denying Pratt's claim, had notice of the action, and had an opportunity to investigate and defend it. With regard to the other aspects of FIGA's defensenamely that Pratt failed to cooperate in FIGA's investigation of the accident and wrongful death actionthe record again reveals that FIGA did not and could not affirmatively establish that Pratt himself was aware of the accident or the ongoing investigation such that his failures could be deemed a breach of the duty to cooperate. Ultimately, even if Pratt did violate the contractual duty to cooperate, FIGA has failed to establish any prejudice whatsoever. FIGA had all information and simply made the unilateral decision that it would not defend the insured. These afterthought arguments have no foundation. Based on the foregoing, we conclude that the district court erred in determining that FIGA had absolute immunity from legal action resulting from the Association's breach of the statutory and contractual duties owed to Pratt. It is clear from the record that FIGA had an obligation to defend Pratt in the underlying wrongful death action. The trial court properly and correctly rejected FIGA's attempt to avoid its obligation by asserting hollow afterthoughts of non-coverage, which themselves were either procedurally barred, without a factual basis, or meritless. Having determined that FIGA violated its statutory and contractual obligations to defend and indemnify Pratt, the only question that remains pertains to the appropriate amount of any judgment that should be entered under these circumstances.