151 F. Supp. 3d 1282
M.D. Fla.2015Background
- Culbreath Isles HOA sued homeowners (Kirkwood and the Lewises) under Fla. Stat. §720.305; defendants prevailed and motions for attorney’s fees were granted; Culbreath assigned its rights under its D&O-style policy issued by Travelers.
- Kirkwood was represented by Buell of Buell & Elligett (B & E); B & E billed at $300/hr (with a contingency multiplier clause); Buell signed a stipulation settling Kirkwood’s fee claim for $295,000 payable to B & E and secured a consent final judgment without a hearing.
- At the time Buell executed the stipulation, evidence showed Kirkwood was hospitalized, suffered a stroke, and was likely incapacitated; no guardian had been appointed and Buell did not obtain Kirkwood’s contemporaneous clear, informed consent to the specific settlement terms.
- Culbreath agreed not to execute on the $295,000 judgment and assigned any claims against Travelers to Kirkwood/B & E; Travelers was aware of negotiations but had denied coverage at the time.
- Plaintiffs (Sidman as Kirkwood’s representative, and Florida Policyholders, LLC—an assignee of B & E) sued Travelers to enforce the consent judgment under Coblentz principles; Eleventh Circuit had already held coverage exists for prevailing-party attorney’s fees, remanding remaining issues (good faith and reasonableness).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the consent judgment is enforceable against insurer under Coblentz (good faith & reasonableness) | Settlement was entered; Travelers had notice/opportunity and is therefore vouchedin; judgment should be enforced | Settlement was procured in bad faith and is objectively unreasonable; Travelers may contest enforcement despite notice | Judgment not enforceable; settlement was not reasonable or in good faith |
| Whether Kirkwood validly consented to settlement | Buell had authority; settlement reflected client’s desire to end suit and be paid | Kirkwood was incapacitated; Buell lacked clear, unequivocal authorization and made misrepresentations | Buell lacked clear consent; Kirkwood was incapacitated when settlement executed |
| Whether plaintiffs met prima facie Coblentz burden (reasonableness of fee award) | $295,000 reflects legitimate fees and acceptable multiplier; affidavits of counsel support reasonableness | Fees ($842/hr) far exceed market; expert testimony capped reasonable rate at ~$400/hr; no evidentiary hearing or findings in state court | Plaintiffs failed to prove reasonableness; award was excessive and not objectively reasonable |
| Whether Travelers’ prior inaction estops it from contesting settlement | Travelers had notice and opportunity to object, so it should be precluded from challenging settlement | Allowing estoppel would render Coblentz’s good-faith requirement meaningless; state court never litigated reasonableness | Vouching-in/estoppel rejected; Travelers may contest because required Coblentz elements were not litigated below |
Key Cases Cited
- Coblentz v. Am. Sur. Co. of N.Y., 416 F.2d 1059 (5th Cir. 1969) (insurer who declines to defend may be bound by consent judgment absent fraud or collusion)
- First Baptist Church of Cape Coral, Fla., Inc. v. Compass Constr., Inc., 115 So.3d 978 (Fla. 2013) (trial court must apply Quanstrom/Rowe factors and evaluate reasonableness of fee awards and multipliers)
- Sinni v. Scottsdale Ins. Co., 676 F. Supp. 2d 1319 (M.D. Fla. 2009) (under Florida law, to enforce a Coblentz agreement plaintiff must show coverage, wrongful refusal to defend, and settlement made in good faith and objectively reasonable)
- Stephens v. Mid-Continental Cas. Co., 749 F.3d 1318 (11th Cir. 2014) (Coblentz consent-judgment enforcement requires proof of reasonableness and good faith)
- Lozman v. City of Riviera Beach, Fla., 713 F.3d 1066 (11th Cir. 2013) (consent judgments are not the same as actual adjudications for collateral estoppel purposes)
- Noman v. Housing Auth. of City of Montgomery, 836 F.2d 1292 (11th Cir. 1988) (trial court may use its own expertise to assess reasonable attorneys’ fees)