North American Capacity Insurance Company v. C.H.
173 So. 3d 1075
| Fla. Dist. Ct. App. | 2015Background
- In 2010 C.H. (on behalf of her daughter S.C.) sued daycare operators Dialyn Rae and Andrew Rae, III, alleging sexual abuse of S.C.; jury returned a $6,255,340 verdict in 2012.
- The Raes had an insurance policy with North American Capacity Insurance Co. (NAC); NAC denied coverage but provided a defense under a reservation of rights.
- NAC filed a federal declaratory action seeking a declaration of no coverage and no bad faith; related state actions were removed, consolidated, dismissed in part, and ultimately remanded to state court.
- In state court C.H. successfully sought to add NAC as a defendant (alleging bad faith and seeking policy limits), and the court abated the bad faith count pending resolution of coverage.
- On June 13, 2014 the circuit court entered a judgment ruling NAC had a duty to pay the $50,000 policy limit; NAC appealed only that coverage judgment attempting to challenge earlier procedural rulings on the bad faith claim.
- The Second District affirmed, holding the appeal of the coverage judgment was proper but that earlier rulings on the bad faith claim were not reviewable in this coverage appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NAC could be joined as a defendant and a bad faith claim injected into the underlying tort action | C.H.: nonjoinder statute permits adding insurer; may pursue bad faith alongside coverage | NAC: nonjoinder was not meant to inject bad faith into tort action; late joinder deprives insurer of timely removal rights | Court: permitted coverage appeal; did not reach or reverse earlier orders allowing bad faith joinder because those orders were not necessary interlocutory steps to the final coverage judgment |
| Whether the coverage judgment is appealable while a bad faith claim remains pending | C.H.: coverage decision should be resolved first and is appealable | NAC: seeks to use coverage appeal to review prior bad faith rulings and removal-related harms | Court: judgment on coverage is a partial final judgment appealable under rule 9.110(k); scope of review limited to matters necessary to that judgment |
| Whether appellate review may include interlocutory rulings on bad faith made before the coverage judgment | C.H.: not necessary; coverage and bad faith separate | NAC: earlier orders on bad faith should be reviewable now | Court: interlocutory rulings on bad faith were not necessary steps to the coverage judgment and are not reviewable in this appeal |
| Whether NAC's remedy is certiorari for earlier orders denying dismissal/abating bad faith | NAC: sought certiorari review of orders permitting bad faith claim in underlying action | C.H.: certiorari was untimely; appellate remedy after final bad faith judgment remains available | Court: NAC's certiorari petition was untimely; could raise issues on appeal from final bad faith judgment later |
Key Cases Cited
- Michigan Millers Mut. Ins. Co. v. Bourke, 581 So. 2d 1368 (Fla. 2d DCA) (coverage should be resolved before bad faith claim proceeds)
- Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So. 2d 1289 (Fla.) (insured must first prevail on coverage claim before bad faith accrues)
- United Auto. Ins. Co. v. Tienna, 780 So. 2d 1010 (Fla. 4th DCA) (coverage-plus-bad-faith cases are an exception to general rule against partial final judgments)
- Saul v. Basse, 399 So. 2d 130 (Fla. 2d DCA) (appeal from a final order brings up necessary interlocutory steps leading to it)
- GEICO Gen. Ins. Co. v. Harvey, 109 So. 3d 236 (Fla. 4th DCA) (held insurer should not be forced to litigate bad faith in underlying tort action; addressed remedial posture for premature bad faith joinder)
- Safeco Ins. Co. of Ill. v. Beare, 152 So. 3d 614 (Fla. 4th DCA) (distinguished Harvey; abatement rather than dismissal can be an acceptable handling of premature bad faith claims)
- Universal Underwriters Ins. Co. v. Stathopoulos, 113 So. 3d 957 (Fla. 2d DCA) (rule 9.110(m) judgments on coverage do not create independent appellate jurisdiction)
- Centennial Ins. Co. v. Life Bank, 953 So. 2d 1 (Fla. 2d DCA) (same point on appellate jurisdiction for coverage judgments)
- Safeco Ins. Co. of Ill. v. Rader, 132 So. 3d 941 (Fla. 1st DCA) (state-court litigating harm from premature bad faith claim may be reviewed on direct appeal from final bad faith judgment)