UNIVERSITY OF MIAMI'S ADDITIONAL INSURED DEFENSE EXPENSES: NEW FLORIDA LAW?

          A new Florida Appellate Court decision addresses an issue of first impression:  Can an Additional Insured obtain indemnity for its own defense expenses when it hired its own defense counsel because of a perceived ethical conflict on the part of the one defense counsel retained by the Insurance Company to defend two Insureds?  In this case, the two Defendants-Insureds are the University of Miami, the Additional Insured, and the Named Insured, MagiCamp, under a Liability Policy issued to MagiCamp:  University of Miami v. Great American Insurance Co., 2013 WL 616156 (Fla. 3d DCA February 20, 2013)  [STATED SUBJECT TO REVISION OR WITHDRAWAL BEFORE RELEASED FOR PERMANENT PUBLICATION].

          This vote in this case was 2-to-1 among the three Judges on the Appellate Panel.  They all knew that this is a case of first impression.  To quote the majority:

   The precise question presented by this appeal and these facts has not been answered directly in Florida. Simply stated, the question presented is whether in this factual scenario, where both the insured and the additional insured have been sued, and the allegations claim that each is directly negligent for the injuries sustained, a conflict between the [Named] insured and the additional named insured exists that would require the insurer to provide separate and independent counsel for each. We answer the question affirmatively.

University of Miami v. Great American Insurance Co., 2013 WL 616156 *2 (Fla. 3d DCA February 20, 2013). 

          The perceived conflict was not perceived because one Defendant was an Additional Insured or Additional Named Insured, and the other was the Named Insured.  Instead, an ethical conflict was perceived by the University of Miami and the 2-Judge Majority because of the possibility  of adverse legal positions based on the facts of the underlying case in which the University (Additional Insured) and the Named Insured had both been sued for negligence:

The conflict in this case is created by the adverse legal positions one attorney must take in representing two different defendants.

 University of Miami v. Great American Insurance Co., 2013 WL 616156 *3 n.5 (Fla. 3d DCA February 20, 2013).

          The Majority did not find a conflict originating in an Insurance Coverage dispute but instead found a conflict originating from potentially adverse possible legal positions in the underlying case:

Although no question of coverage or excess policy limits, upon which to base a conflict of interest, exists in this case, since coverage has been agreed to by the parties, the pleadings and record evidence on summary judgment create a conflict, not on coverage, but on legal defenses based upon the record facts....

* * *

These allegations create diverse legal positions that are inherently adverse. These conflicting legal positions presented in defense to individual active negligence claims against MagiCamp and UM exist separate and apart from issues of coverage or excess policy limits.

 University of Miami v. Great American Insurance Co., 2013 WL 616156 *3 (Fla. 3d DCA February 20, 2013).  [Emphasis added.]

          This perceived conflict resulted in a holding new to Florida but based on the Majority Opinion's review of a Federal District Court case from Pennsylvania and two State Court decisions from Illinois and New Jersey.  University of Miami v. Great American Insurance Co., 2013 WL 616156 *2 (Fla. 3d DCA February 20, 2013).  Following what it said were the holdings in these non-Florida cases, the Majority held that the University of Miami is entitled to indemnity from MagiCamp's Liability Carrier for the University's separate defense expenses in this case:

On these facts, we believe this legal dilemma clearly created a conflict of interest between the legal defenses of the common insureds sufficient to qualify for indemnification for attorney's fees and costs for independent counsel.

 University of Miami v. Great American Insurance Co., 2013 WL 616156 *3 (Fla. 3d DCA February 20, 2013).

To be continued .....

Comments

[Mike Collins]

Looking forward to hearing why there was a dissent.