Bodywell Nutrition, LLC v. Fortress Systems, LLC
2012 U.S. Dist. LEXIS 20929
S.D. Fla.2012Background
- Bodywell filed suit in Florida state court; Fortress Systems removed to SD Fla on diversity grounds.
- Bodywell alleged breach of express warranty, implied warranty of fitness for a particular purpose, and implied warranty of merchantability; Count IV added for negligent shipping/transport.
- James River Insurance provided a $5 million CGL policy to FSI and declined defense/coverage; Bodywell offered a $5 million settlement to FSI; James River did not respond to settlement offers.
- On March 4, 2011, Bodywell and FSI reached a settlement with stipulated final judgment limited to Count IV for $10,450,000, and FSI assigned its rights under the James River policy to Bodywell; settlement conditioned on James River either accepting defense and providing coverage or paying policy limits by March 8, 2011.
- James River filed a Declaratory Judgment Action on March 15, 2011; District Court entered final judgment on Count IV and reserved jurisdiction on March 18, 2011; Bodywell moved for proceedings supplementary and Rule Nisi on April 19, 2011; James River moved to strike those motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether proceedings supplementary or the Declaratory Action should govern coverage. | Bodywell argues supplementary proceedings are appropriate. | James River argues Declaratory Action is first-filed and more appropriate. | Declaratory Action should govern; supplementary motions struck. |
| Whether Florida § 56.29 allows impleading James River in supplementary proceedings. | Bodywell contends statutory rights allow impleader. | James River raises due process concerns and precedent against this approach. | Proceedings supplementary may implead third parties; however, the issue is to be decided in the Declaratory Action. |
| Whether the first-filed rule applies to designate the proper forum. | Bodywell claims its earlier filing makes it first-filed. | Declaratory Action was first-filed on March 15, 2011. | Declaratory Action deemed first-filed; Rule favored declaratory forum. |
| Whether Rule 26 discovery and other Federal Rules rights apply in supplementary proceedings. | Bodywell asserts broad rights applying in supplementary proceedings. | Court should apply due process but notes lack of authority for full Rule 26 in supplementary proceedings. | Full Rule 26 discovery rights apply in Declaratory Action, not in proceedings supplementary. |
| Whether to stay or abate the supplementary proceedings if the Declaratory Action proceeds. | Bodywell proposed stay as an alternative. | A stay serves no practical purpose. | Stay/abate not warranted; proceed in Declaratory Action. |
Key Cases Cited
- Manuel v. Convergys Corp., 430 F.3d 1132 (11th Cir. 2005) (burden to show compelling circumstances to circumvent first-filed rule)
- Higgins v. State Farm, Fire & Cas. Co., 894 So.2d 5 (Fla. 2004) (insurer action to resolve coverage; good faith in declaratory actions)
- Gen. Guaranty Ins. Co. of Florida v. DaCosta, 190 So.2d 211 (Fla. 3d DCA 1966) (insurer may be impleaded as third party in proceedings supplementary; insurance proceeds as property of judgment debtor)
- Ferguson v. Goodley, 213 So.2d 495 (Fla. 4th DCA 1968) (rare second case supporting insurer impleader in supplementary proceedings)