Court Opinion

ID: 3062948
Source: CourtListenerOpinion
Date Created: 2015-10-14 20:54:49.286779+00
Date Added: 2024-06-11T12:45:18.517513
License: Public Domain

[DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                     ________________________                   FILED
                                                      U.S. COURT OF APPEALS
                            No. 09-12511                ELEVENTH CIRCUIT
                                                            APRIL 12, 2010
                        Non-Argument Calendar
                                                             JOHN LEY
                      ________________________                 CLERK

                 D.C. Docket No. 08-00099-CV-J-16-TEM

UNITED EDUCATORS INSURANCE,
a reciprocal risk retention group,
a Vermont reciprocal insurer,

                                                     Plaintiff-Appellee
                                                     Cross-Appellant,

                                  versus

EVEREST INDEMNITY INSURANCE COMPANY,
a Delaware corporation,

                                                     Defendant-Appellant
                                                     Cross-Appellee.

                      ________________________

               Appeals from the United States District Court
                    for the Middle District of Florida
                      ________________________
                             (April 12, 2010)

Before EDMONDSON, BIRCH and COX, Circuit Judges.

PER CURIAM:
      This case involves a dispute between two insurers about the liability of each

in a settlement on behalf of their insureds. The underlying action was a wrongful

death case against Edward Waters College and Alrod Security Services, brought by

the estate of a student who was murdered on the College’s campus. Alrod Security

provided security guard services for the College.

      Both the College and Alrod Security carried primary and excess insurance

policies. The College had a primary liability policy with Everest Indemnity Insurance

Company which provided a $1 million liability limit, and an excess policy with

United Educators Insurance which provided a $5 million liability limit. Alrod

Security had a primary liability policy with Everest which provided a $1 million

liability limit, and an excess policy also with Everest which provided a $4 million

liability limit. The College was an “additional insured” under the Alrod Security

primary policy, but Alrod Security was not an “additional insured” under the College

primary policy. As noted by the district court, the College and Alrod Security were

insured equally by the Alrod Security primary policy. The College primary policy

and the Alrod Security primary policy each contained “other insurance” clauses

which “each state that the policy is a primary policy except that each policy is excess

over any other primary insurance available to you [the insured] covering liability for

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damages arising out of the premises or operations for which you have been added as

an additional insured by attachment of an endorsement.” (R.4-42 at 5-6).

      The student’s estate agreed to settle the wrongful death claim against the

College and Alrod Security for $2,750,000. In order to pay the settlement, Everest

provided $1,000,000 under the Alrod Security primary policy, $1,000,000 under the

College primary policy, and $375,000 under the Alrod Security excess policy. United

Educators provided $375,000 under the College excess policy, but reserved the right

to seek reallocation of the amount paid from the College’s excess policy. Thereafter,

United Educators filed an equitable subrogation complaint in order to recover from

Everest the $375,000 that United Educators paid in the settlement. Everest filed a

motion to dismiss United Educators’s complaint.

      The issue presented was the proper way to allocate the settlement among the

four policies and the interpretation of the “other insurance” clauses in the policies.

Following a discovery dispute, the parties stipulated that Everest’s motion to dismiss

and United Educators’s responsive motion should be converted to cross-motions for

summary judgment because the parties believed the factual record is adequate to

decide a summary judgment motion on the proper allocation of the settlement

between the policies. The district court accepted the stipulation and converted the

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motion to a motion of summary judgment. In holding for United Educators on the

issue and awarding it $375,000, the district court concluded,

        that the Alrod Security primary policy was the primary policy and
        should provide the first level of payment up to its limit of $1,000,000 on
        behalf of both the College and Alrod Security. The order next found
        that, on behalf of the College, the College primary policy was primary
        over the Alrod Security excess policy and should pay the remaining
        $875,000.00 owed by the College. Last, the order ruled that, on behalf
        of Alrod Security, the Alrod Security excess policy should pay the
        remaining $875,000.00 owed by Alrod Security.1

(R.5-51 at 3.)

        Everest sought review of the district court’s order pursuant to Fed. R. Civ. P.

59(e). Additionally, United Educators sought attorneys’ fees under Florida Statutes

§ 627.428. The district court denied both Everest’s Rule 59(e) motion and United

Educators motion for attorneys’ fees. Both parties appeal.

        Everest argues that the district court erred by assuming that the College and

Alrod Security were each responsible for half of the amount of the settlement.

Everest raised this argument for the first time in its motion for reconsideration. In

rejecting this argument, the district court wrote in its order denying Everest’s Rule

59(e) motion,

       1
       This language is from the district court’s order denying Everest’s Rule 59(e) motion, in which it
summarizes its earlier summary judgment order.

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      prior to the entry of judgment, Everest addressed neither the extent of
      coverage under the individual policies nor liability for the claims of the
      underlying complaint. Further, although having sufficient opportunity
      to do so before entry of judgment, Everest failed to oppose United
      Educators’ assertion that the parties were equally responsible for the
      settlement amount. Everest waived these arguments by not raising them
      before entry of judgment.

(R.5-51 at 5.)

      A rule 59(e) motion may not be used to “relitigate old matters, raise argument

or present evidence that could have been raised prior to the entry of judgment.”

Michael Linet, Inc. v. Village of Wellington, Fla., 408 F.3d 757, 763 (11th Cir. 2005).

Accordingly, Everest may not challenge the district court’s grant of summary

judgment to United Educators’ based upon an argument it raised for the first time in

its Rule 59(e) motion. Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 955-57, 961

(11th Cir. 2009). For the same reason, Everest’s contention that the College was only

covered under Alrod Security’s primary policy “additional insured” provision for a

limited portion of the underlying liability is also waived. Id.

      The original issue argued before the district court was the interpretation of the

“other insurance” clauses of the policies. Although Everest does discuss all the

“other insurance” provisions in his brief, Everest focuses on the provisions in the

excess policies. But more relevant to this case are the “other insurance” clauses in

both primary policies. As discussed above, although Alrod Security’s primary policy

                                          5
covers both Alrod Security and the College, the College’s primary policy covers only

the College. Because of the College’s primary policy “other insurance” provision and

the fact that Alrod Security’s primary policy covered the College as an additional

insured, the College’s primary policy was excess to Alrod Security’s primary policy

coverage of the College. In other words, it only activated once the Alrod Security

primary policy exhausted its coverage. Thus, the first layer of payment was Alrod

Security’s primary policy. The policy contained a limit of $1 million, paying

$500,000 to Alrod Security and $500,000 to the College. After this payment, the

College and Alrod Security owed $875,000 each on the settlement. The next layer

was the College primary policy, with a limit of $1,000,000. However, because it only

covered the College, and not Alrod Security, the College primary policy paid the

College’s remaining $875,000 liability, and nothing more. The next policy available

to Alrod Security was its excess policy, which paid its remaining $875,000 liability.

      Alrod Security contends that the excess policies are only required to pay a

settlement upon exhaustion of the primary insurance. We recognize that true excess

policies only activate after the exhaustion of primary policies. See, e.g., Chicago Ins.

Co. v. Dominguez, 420 So. 2d 882, 884 (Fla. 2d DCA 1982). But Alrod Security’s

argument ignores the analysis above, which is founded upon the following facts: 1)

the College is an additional insured under Alrod Security’s primary policy; 2) the

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College’s primary policy does not contribute to Alrod Security; and 3) the “other

insurance” provisions of the primary policies, from which the College’s primary

policy becomes excess over Alrod Security’s primary policy.

      The district court’s decision is in accord with Florida law. Alrod Security’s

excess policy was activated only after the primary policy available to it was

exhausted. Accordingly, we find no error in the district court’s finding that “the

settlement never triggered the College[’s] excess policy,”(R.4-42 at 7) , and no error

in the resulting grant of summary judgment to United Educators and denial of

summary judgment to Everest.

      On cross-appeal, United Educators argues that the district court erred in

concluding that Florida Statutes § 627.428,2 does not allow attorneys’ fees for

insurers who attempt to recover from other insurers. The district court cited a Middle

District of Florida case, which

      2
          FLA . STAT . § 627.428(1), states:

                 Upon the rendition of a judgment or decree by any of the courts of this state against
                 an insurer and in favor of any named or omnibus insured or the named beneficiary
                 under a policy or contract executed by the insurer, the trial court or, in the event of
                 an appeal in which the insured or beneficiary prevails, the appellate court shall
                 adjudge or decree against the insurer and in favor of the insured or beneficiary a
                 reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney
                 prosecuting the suit in which the recovery is had.

                                                       7
      reviewed Florida law on this point and [ ] adopted the view that Section
      627.428 does not provide for “the recovery of attorney’s fees expended
      in pursuing the action by the excess carrier against the primary insurer.”
      Essex Builders Group, Inc. v. Amerisure Ins. Co., 429 F. Supp. 2d 1274,
      1290 (M.D. Fla. 2005) (adopting the reasoning of Associated Elec. and
      Gas Ins. Services, Ltd. v. Ranger Ins. Co., 560 So. 2d 242, 243 (Fla. 3d
      DCA 1990), and quoting Chief Judge Schwartz’s concurring opinion in
      State Farm Fire & Cas. Co. v. Pritcher, 456 So. 2d 1060 (Fla. 3d DCA
      1989)). “Insurers are not among those entitled to recover fees.” Id.
      Accordingly, United Educators is not entitled to attorney’s fees pursuant
      to Section 627.428, Florida Statutes.

(R.5-51 at 7.) United Educators contends that Essex Builders, upon which the district

court relied, was rejected by the Florida Supreme Court in Continental Casualty Co.

v. Ryan Inc. Eastern, 974 So. 2d 368 (Fla. 2008). Everest counters that Continental

Casualty held that § 627.428 authorized only the three classes of persons explicitly

identified in the statute to recover: named insureds (and their estates), omnibus

insureds (and their estates), and named beneficiaries. Everest also argues that in

Continental Casualty, “[t]he court [ ] rejected the surety’s contention that its

subrogation rights were the functional equivalent of an assignment, and held that the

surety had no right to an award of fees under the statute because it did not have a

written assignment from the insured.” (Appellant’s Response and Reply Brief at 18.)

      We find that the district court erred by holding that insurers are not entitled to

attorneys’ fees under the statute as a matter of law. The Florida Supreme Court

recently held,

                                           8
      [w]e reject the argument that Hartford is precluded from recovering
      attorney’s fees because it can be classified as an insurer. This Court has
      previously awarded attorney’s fees under section 627.428 to entities
      engaged in the business of insurance. For example, in Fidelity &
      Deposit Co. v. First State Insurance Co., 677 So. 2d 266 (Fla. 1996), a
      fire insurer disputed coverage for a fire-damaged property arguing that
      it had previously cancelled the policy. Id. at 267. The insured settled
      with its “errors and omissions” insurer and assigned its right to sue the
      fire insurer for coverage. Id. We held that the “errors and omissions”
      insurer, which had obtained an assignment from the insured, would be
      entitled to an award of attorney’s fees if it was successful in the suit
      against the fire insurer. Id. at 269.

Continental Casualty, 974 So. 2d at 374-75 n.5. Accordingly, we vacate the district

court’s order denying United Educator’s request for attorneys’ fees, and remand to

that court for reconsideration of the issue.

      AFFIRMED IN PART; VACATED AND REMANDED IN PART.

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