Leticia Morales v. Zenith Insurance Company
714 F.3d 1220
11th Cir.2013Background
- Morales Estate sues Zenith for breach of contract under Zenith's employer liability policy after a tort judgment against Lawns in Florida, in a diversity action.
- Policy has Part I workers’ compensation coverage ( Zenith pays statutory benefits; no explicit policy limits) and Part II employer liability coverage with specific dollar limits and a workers’ compensation exclusion.
- Morales’s death occurred in the course of employment; Zenith paid workers’ compensation benefits and funeral expenses to the Estate under Part I and a lump-sum settlement ended workers’ compensation obligations.
- Estate obtained a $9.525 million tort judgment against Lawns in state court; Zenith defended Lawns under Part II under a reservation of rights.
- A workers’ compensation settlement (Election and Waiver) was approved; the Estate waived further workers’ compensation benefits, potentially affecting remedies.
- District court granted Zenith summary judgment, relying on the workers’ compensation exclusion to bar coverage for the tort judgment; Estate appealed and the issue framed Florida law questions for certification.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue under Part II | Estate is a third-party beneficiary with standing to enforce the policy against Zenith. | Only insureds may sue; non-parties lack standing under Florida law. | Certified to Florida Supreme Court; standing unresolved |
| Workers’ compensation exclusion applicability | Exclusion does not cover a tort judgment not arising as an obligation under the workers’ compensation act. | Exclusion bars coverage where the obligation is imposed by workers’ compensation law. | Certified to Florida Supreme Court; exclusion applicability unresolved |
| Effect of workers’ compensation settlement on tort judgment collection | Settlement does not extinguish rights to collect a tort judgment. | Election/settlement may constitute an election of remedies and bar collection of the tort judgment. | Certified to Florida Supreme Court; settlement impact unresolved |
| Effect of withdrawal from defense on coverage defenses | Zenith’s withdrawal should not foreclose raising defenses to coverage; preclusion should not apply. | Withdrawal preserves or waives defenses; defenses may be raised to contest coverage. | Certified to Florida Supreme Court; withdrawal impact unresolved |
Key Cases Cited
- Florida Ins. Guar. Ass'n, Inc. v. Revoredo, 698 So.2d 890 (Fla. 3d DCA 1997) (workers’ compensation exclusion bars coverage under liability policy)
- Wright v. Hartford Underwriters Ins. Co., 823 So.2d 241 (Fla. 4th DCA 2002) (permits remand regarding coverage issues after settlement; distinction from exclusion)
- Indian Harbor Ins. Co. v. Williams, 998 So.2d 677 (Fla. 4th DCA 2009) (uses workers’ compensation exclusion to bar coverage under a CGL policy)
- Sinni v. Scottsdale Ins. Co., 676 F. Supp. 2d 1319 (M.D. Fla. 2009) (federal court adopts Indian Harbor/Revoredo approach to exclusion in CGL)
- Ortiz v. XL Ins. Am., Inc., 673 F. Supp. 2d 1331 (S.D. Fla. 2009) (policy exclusion bars coverage when claimant already received workers’ comp benefits)
- Hazel v. Allstate Ins. Co. / Hazen v. Allstate Ins. Co., 952 So.2d 531 (Fla. 2d DCA 2007) (third party beneficiary framework for liability insurance)
- Shingleton v. Bussey, 223 So.2d 713 (Fla. 1969) (insurance intended to benefit injured third parties under liability policies)
- Beta Eta House Corp., Inc. of Tallahassee v. Gregory, 237 So.2d 163 (Fla. 1970) (extension of third-party beneficiary status to liability insurance)
- Turner v. PCR, Inc., 754 So.2d 683 (Fla. 2000) (workers’ compensation as no-fault exclusive remedy framework)
- Eller v. Shova, 630 So.2d 537 (Fla. 1993) (exclusive remedy and immunity principles under workers’ compensation statute)