W & J Group Enterprises, Inc. v. Houston Specialty Insurance Company
684 F. App'x 867
| 11th Cir. | 2017Background
- HSIC filed a federal declaratory-judgment action seeking a ruling that it owed no duty to defend or indemnify W&J Group Enterprises, Inc. and Wesley Brown (Insureds) and sought rescission of the policy.
- While that action was pending, HSIC and the Insureds settled an underlying state tort action for $653,000; HSIC paid $650,000 and the Insureds paid $3,000.
- After settlement, HSIC voluntarily dismissed its declaratory-judgment action.
- The Insureds moved for attorneys’ fees under Fla. Stat. § 627.428; the district court denied fees in part because the Insureds contributed to the settlement and on other grounds.
- The Eleventh Circuit reviewed Florida law de novo and held that HSIC’s settlement and dismissal constituted a “confession of judgment” that triggers entitlement to fees under section 627.428; the court vacated and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insured is entitled to attorneys’ fees under Fla. Stat. § 627.428 when the insurer settles a third‑party claim and dismisses a related declaratory action | Insureds: Settlement and dismissal constitute a confession of judgment that triggers § 627.428, entitling them to fees | HSIC: Settlement/dismissal did not trigger fees because insurer had a legitimate basis to deny coverage and other district-court rationales | Court: Settlement by insurer and voluntary dismissal constitute a confession of judgment under Wollard and progeny; Insureds entitled to fees |
| Whether the insured’s monetary contribution to the settlement defeats fee entitlement | Insureds: Small contribution does not change that insurer abandoned its position; fees still triggered | HSIC: Contribution makes the settlement not “unilateral,” so Cooper’s rule doesn’t apply and fees are barred | Court: Contribution (here $3,000 of $653,000) does not materially alter confession-of-judgment; Cooper does not limit Wollard; fees still available |
| Whether insurer’s subjective intent or good‑faith basis to deny coverage negates fee recovery | Insureds: Insurer’s subjective intent is irrelevant; incorrect denial is the trigger | HSIC: Legitimate basis to withhold payment negates fee award | Court: Rejected district court’s good-faith basis rationale; Florida law focuses on whether denial was ultimately incorrect, not insurer intent |
| Whether voluntary dismissal/refiling possibilities undermine fee award | Insureds: Voluntary dismissal after settlement is equivalent to confession of judgment; refiling potential doesn’t change fee entitlement | HSIC: Dismissal without judgment or with possible refiling means no confession of judgment | Court: Dismissal after insurer settles underlying claim does not defeat fee recovery; refiling possibilities do not alter right to fees |
Key Cases Cited
- Wollard v. Lloyd’s & Cos. of Lloyd’s, 439 So. 2d 217 (Fla. 1983) (holding insurer’s settlement/confession of judgment can trigger § 627.428 fees)
- Mercury Ins. Co. of Fla. v. Cooper, 919 So. 2d 491 (Fla. Dist. Ct. App. 2005) (applies confession-of-judgment rule to insurer’s settlement of third‑party claim alongside declaratory action)
- Unterlack v. Westport Ins. Co., 901 So. 2d 387 (Fla. Dist. Ct. App. 2005) (extends confession-of-judgment principle to related declaratory-judgment dismissals)
- O’Malley v. Nationwide Mut. Fire Ins. Co., 890 So. 2d 1163 (Fla. Dist. Ct. App. 2004) (insurer’s settlement of third‑party claim furnished insured what insurer denied in declaratory action, triggering fees)
- Johnson v. Omega Ins. Co., 200 So. 3d 1207 (Fla. 2016) (statutory purpose: make insured whole and discourage withholding valid benefits; insurer intent not dispositive)