Court Opinion

ID: 58416
Source: CourtListenerOpinion
Date Created: 2010-04-26 02:38:47+00
Date Added: 2024-06-11T17:19:45.537647
License: Public Domain

[DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT                  FILED
                         ________________________       U.S. COURT OF APPEALS
                                                          ELEVENTH CIRCUIT
                                                             January 23, 2008
                                No. 07-14521
                                                           THOMAS K. KAHN
                            Non-Argument Calendar                CLERK
                          ________________________

                      D. C. Docket No. 05-00438-CV-W-N

PROGRESSIVE SPECIALTY INSURANCE COMPANY,

                                                 Plaintiff-
                                                 Counter-Defendant-Appellant,

                                      versus

MCKNIGHT AGENCY, INC.,
JOE MCKNIGHT,

                                                 Defendants-
                                                 Counter-Claimants-
                                                 Cross-Defendants-Appellees,

RICKY LANE,
RIVERSIDE TURF FARM

                                                 Defendants-
                                                 Counter-Claimants-
                                                 Cross-Claimants,

JANE HOLMES, individually and as the
personal representative of the Estate of Daisy
Beasley, deceased, et al.,

                                                 Defendants.
                           ________________________

                   Appeal from the United States District Court
                       for the Middle District of Alabama
                         _________________________

                                (January 23, 2008)

Before ANDERSON, DUBINA and HULL, Circuit Judges.

PER CURIAM:

      Appellant Progressive Specialty Insurance Company (“Progressive”)

appeals the district court’s final judgment entered on September 18, 2007. After

reviewing the record, and reading the parties briefs, we affirm the district court’s

final judgment.

                                          I.

      On July 6, 2004, Ricky Lane (“Lane”) was driving a truck for Riverside

Turf when he had an automobile accident that killed Daisy Beasley (“Beasley”).

At the time of the accident, Lane had automobile liability coverage through

Progressive, and McKnight was Lane’s insurance agent.

      Both prior and subsequent to the accident, Progressive insured Lane with

$1,000,000 policy limits. Due to McKnight’s clerical error on the Progressive

computerized application for the 2004 policy, Progressive bound only $300,000 in

coverage. Both Lane and McKnight mistakenly believed the 2004 Progressive

coverage had been renewed with $1,000,000 limits. The insurance adjuster

                                          2
discovered the mistake when Beasley’s estate sued Lane, and Lane reported the

claim.

         Subsequently, to minimize its exposure for a $1,000,000 policy limits claim

against Lane, Progressive filed a declaratory judgment action asking the court to

limit Progressive’s coverage to $300,000. Lane and McKnight filed counterclaims

seeking reformation of the Progressive Policy to reflect the parties’ true intent of

$1,000,000 policy limits. Thereafter, Progressive settled the suit against Lane for

the limits of the coverage intended by Lane and McKnight: $1,000,000.

         Progressive and McKnight filed cross-motions for summary judgment, and

stipulated that there were no disputed issues of fact in relation to the claims before

the court. The district court held that the Progressive Policy should be reformed to

reflect $1,000,000 policy limits. The court also found that Progressive could

recover from McKnight the difference in premiums between a $1,000,000 limit

policy and a $300,000 limit policy, plus attorney’s fees and litigation costs. Later,

the district court changed its prior ruling on reformation because it found

McKnight had no standing to reform the policy. The district court then held that

Progressive was entitled to $2,821.76 in unpaid premiums, and $19,991.00 in

attorney’s fees and litigation costs, but it was not entitled to recover the $700,000

excess limits it paid.

                                           3
                                               II.

       This court reviews the district court’s grant or denial of summary judgment

de novo, applying the same legal standards that control the district court’s

decision. Shannon v. Jack Eckerd Corp., 113 F.3d 208, 210 (11th Cir. 1997).

                                              III.

       There is no question that McKnight made a clerical error in selecting the

intended coverage limits from a drop-down menu on Progressive’s application

software. Factually, it is undisputed that (1) Lane qualified for $1,000,000 policy

limits, (2) Lane and McKnight intended there to be $1,000,000 policy limits, and

(3) Progressive would have issued $1,000,000 policy limits but for the clerical

mistake. We agree with the district court that McKnight’s error may have resulted

in an underpaid premium to Progressive. Those damages flow naturally from the

breach. See Pate v. Rollison Logging Equip., Inc., 628 So. 2d 337, 345 (Ala.

1993). However, there is no proximate cause between McKnight’s clerical error

and Progressive’s obligation to pay an additional $700,000. Rather, we conclude

that Progressive is in the “same position it would have been” had the error not

occurred, with the exception of the additional premium due. See Wood v. Old

Security Life Insurance Co., 643 F.2d 1209 (5th Cir. 1981).1

       1
         In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc), this court
adopted as binding precedent all decisions of the Fifth Circuit prior to October 1, 1981.

                                                4
      For the above-stated reasons we affirm the district court’s September 18,

2007, final judgment.

      AFFIRMED.

                                        5