American K-9 Detection Services, Inc. v. Rutherfoord International, Inc.
6:14-cv-01988
M.D. Fla.May 11, 2016Background
- AMK9 (plaintiff) sought DBA-equivalent insurance for a Canadian-funded contract performed in Afghanistan; defendants Rutherford and agent Sara Payne (defendants) had been AMK9’s DBA broker for certain periods.
- In Nov. 2009 Payne allegedly advised AMK9 that DBA insurance was unavailable for contracts not funded by the U.S. government, so AMK9 obtained a Lloyd’s personal-accident (PA) policy instead (Feb. 2010–Feb. 2011).
- Three AMK9 employees were injured in Afghanistan in May and August 2010. AMK9 used the PA policy for some benefits and later paid a $300,000 disability payment to one employee; AMK9 had no DBA policy in place at the time of the injuries.
- AMK9 sued Rutherford and Payne for negligent failure to procure insurance, breach of fiduciary duty, breach of contract, and negligent misrepresentation; defendants moved to exclude AMK9’s expert (Daubert) and for summary judgment based on the 4-year statute of limitations. AMK9 cross-moved for summary judgment on all counts.
- Court denied summary judgment to both parties: (1) Daubert motion granted in part (bar legislative/regulatory testimony) but otherwise denied; (2) defendants’ statute-of-limitations SJ denied (claims did not accrue until resolution of underlying litigation); (3) AMK9’s summary judgment denied on all counts because material factual disputes remain.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of expert (Hager) | Hager is qualified to opine on broker standard of care based on insurance/industry experience | Hager lacks broker "hands-on" experience; prior courts excluded him; opinions unreliable or invade legal issues | Admissible except barred from testifying about legislative/regulatory experience; Daubert challenges go to weight, not admissibility |
| Accrual / statute of limitations | Accrual occurred at settlement of underlying Cicero lawsuit (Sept. 13, 2013); SOL therefore timely | Accrual occurred when AMK9 first incurred damages/advanced payments (May–Aug 2010), so claims time-barred | Accrual follows Medical Data/Blumberg line—claims accrued at resolution of underlying litigation; SOL motion denied |
| Negligent failure to procure / negligent misrepresentation | Payne’s email representations that DBA unavailable caused AMK9 to accept PA policy and led to damages; no genuine dispute | Defendants say AMK9 never provided contract details as requested and thus broker couldn’t/wasn’t instructed to procure DBA; factual disputes | Summary judgment denied—material factual disputes (e.g., whether Payne reasonably relied on missing contract, special relationship, causation) for jury |
| Breach of contract / fiduciary duty | Oral contract to procure DBA and special broker relationship created heightened fiduciary duty | No mutual assent or commitment to procure; relationship limited to prior (Compass) policy | Breach-of-contract SJ denied (no clear evidence of offer/acceptance); fiduciary-duty SJ denied because existence of a special relationship is factual for jury |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) (district court gatekeeping standards for expert testimony)
- Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061 (Fla. 2001) (malpractice/negligence claim against broker accrues at conclusion of related coverage litigation)
- Kelly v. Lodwick, 82 So. 3d 855 (Fla. 4th DCA 2011) (accrual may occur when uninsured party takes immediate defensive action; distinguished when coverage was nonexistent)
- Medical Data Sys., Inc. v. Coastal Ins. Group, Inc., 139 So. 3d 394 (Fla. 4th DCA 2014) (applies Blumberg to hold malpractice claim accrues at settlement of underlying litigation when inadequate coverage existed)