In Florida, a crucial element "of enforceability of a Coblentz agreement, whether the settlement is reasonable and in good faith, is a fact-intensive inquiry." St. Paul Fire & Marine Ins. Co. v. Cypress Fairway Condo. Ass'n, 114 F. Supp. 3d 1231, 1238 (M.D. Fla. 2015) (Presnell, J.).
For those who do not use the term, "a Coblentz agreement" is a negotiated final consent judgment. Under this type of agreement, a consent judgment is entered against an insured which was not defended by the insurer. The name comes from a case which arose in South Florida, Coblentz v. American Surety Co., 416 F.2d 1059 (5th Cir. 1969).
The third party seeking to execute on the consent judgment and to enforce the settlement agreement in the context of a Coblentz agreement must prove three things. First, the plaintiff must prove both a wrongful refusal to defend and that the policy in question indemnified the policyholder or other insured in the underlying case. Finally, the Coblentz plaintiff must prove that the Coblentz agreement was reasonable and made in good faith, the Court in this case held. This case involved a consent judgment for $2.5 Million. St. Paul Fire & Marine Ins. Co. v. Cypress Fairway Condo. Ass'n, 114 F. Supp. 3d 1231, 1236 (M.D. Fla. 2015) (Presnell, J.).
Parenthetically, the Court did not recite the policy limits involved, noting only that "St. Paul issued several policies to [a construction] project's general contractor". St. Paul Fire & Marine Ins. Co. v. Cypress Fairway Condo. Ass'n, 114 F. Supp. 3d 1231, 1233 (M.D. Fla. 2015) (Presnell, J.).
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with Supplements). See in particular § 7:2 in Volume 1 which addresses the issues which were addressed in the St. Paul v. Cypress Fairway case, including the nature and proof of Coblentz agreements, "Actions by Third Parties--Assignment." All rights reserved.