Maronda Homes, Inc. v. Progressive Express Insurance
Docket: Case No. 6:14-cv-1287-Orl-31TBS
Court: District Court, M.D. Florida; August 7, 2015; Federal District Court
The court is considering cross-motions for summary judgment from Maronda Homes, Inc. of Florida and Progressive Express Insurance Company without oral argument. Maronda seeks to compel Progressive to pay legal fees incurred by its attorney, Steven Brady, after being sued by Carlos Mesa-Merida for a 2013 accident involving a tractor and trailer. Progressive had a $300,000 insurance policy covering Maronda and undertook Maronda's defense but Maronda opted for independent representation due to concerns about Progressive’s adequacy.
Upon receiving the lawsuit on March 10, 2014, Maronda did not notify Progressive and instead engaged Brady, citing discomfort with Progressive's representation. Brady submitted a response to the lawsuit, and later objected to Progressive’s appointment of attorney Leslie Moore, alleging a conflict of interest. In response, Progressive assigned attorney Jeffrey Bigman to represent Maronda, but Maronda rejected Bigman’s representation, believing it was compromised due to his hesitance to pursue claims against co-defendants. The underlying lawsuit was settled by November 2014 within policy limits.
A party is entitled to summary judgment if it demonstrates that there is no genuine issue regarding any material fact, as outlined in Federal Rule of Civil Procedure 56. Material facts are determined by the relevant substantive law. The burden lies with the moving party to prove the absence of a genuine issue. If the moving party highlights a lack of evidence on a critical issue where the nonmoving party has the burden of proof, the nonmoving party must present specific facts, beyond mere pleadings, to show there is a genuine issue for trial. If the nonmoving party fails to do so, summary judgment is warranted against them. The opposition must provide more than conclusory statements, as such allegations lack probative value.
Under Florida law, an insurer is obligated to provide an adequate defense for claims covered by its policy. If the insurer's defense is deemed inadequate, and it is reasonable for the insured to hire its own counsel, the insured may recover attorney’s fees from the insurer. Carrousel Concessions, Inc. v. Florida Ins. Guar. Ass’n establishes that if an insured can prove inadequate defense by the insurer, they may recover reasonable attorney’s fees incurred. The court has previously determined that the critical issue for recouping independent counsel’s fees is whether a conflict between the insured and insurer impacted the representation. The insurer's right to control the defense is vital for protecting its financial interests and should not be penalized solely based on potential conflicts. A presumption that counsel cannot provide independent representation because of a potential conflict is not acceptable; evidence must indicate that such a conflict actually affected counsel's representation in favor of the insurer's interests. This principle is reinforced by case law, indicating that an insurer's management rights can only be overridden if its interests interfere with independent counsel’s representation. The insured effectively relinquishes control over claims decisions to the insurer.
An insured has the right to hire its own attorney but cannot charge the insurer for those fees unless the insurer fails to provide an adequate defense. In the case Doe v. OneBeacon America Insurance Co., it was noted that Florida courts have not specifically defined "adequate" defense, but it arises from the insurance contract and is contingent upon the insurer's negligence in fulfilling its duty. In the Mesa-Merida lawsuit, Maronda engaged its own attorney, Brady, rejecting Progressive’s defense efforts. Maronda's decision lacked factual basis, as it did not allow Progressive to fulfill its defense obligations. Progressive became aware of Maronda's independent counsel only after Maronda filed its Answer and Affirmative Defense. Progressive attempted to provide its own counsel, attorney Moore, but after Maronda objected due to a conflict of interest, Progressive arranged for attorney Bigman, which Maronda also opposed, citing differences in litigation strategy. Despite Maronda's objections, there was no evidence that Progressive's defense was inadequate. The involvement of Maronda’s independent counsel created coordination issues, not deficiencies in Progressive’s defense. An expert report by Christopher Hill, asserting inadequacy of Progressive’s defense, was deemed unhelpful and did not raise material factual disputes. The court ruled that Progressive did not breach its duty to defend and is not obligated to cover Maronda's attorney fees. Consequently, Progressive’s motion for summary judgment was granted, Maronda’s motion was denied, and the case was resolved in favor of Progressive. The Mesa-Merida lawsuit was settled within Progressive's policy limits, leaving only the issue of the obligation to pay for Maronda's chosen counsel.
A Coblentz agreement allows a plaintiff to obtain a judgment against a defendant while assigning the defendant's claims against their insurer to the plaintiff, enabling direct pursuit of the insurer. Maronda's assertion that Progressive should have provided mutually agreeable counsel due to its reservation of rights is unfounded. Progressive indicated there were no current coverage defenses but reserved the right to amend this if future issues arose, maintaining its duty to defend Maronda at that time. Any later changes in this duty were not based on existing facts, negating the obligation to provide mutually agreeable counsel under Florida Statutes, section 627.426(2).
Maronda claimed that Progressive and attorney Moore should have recognized a potential conflict of interest from the outset, but there is no evidence that they were aware of such a conflict initially. In cases of civil co-representation, conflicts can be waived, and the mere existence of a waivable conflict does not imply inadequate defense or necessitate independent counsel, especially since Progressive later secured independent counsel for Maronda after concerns were raised.
Maronda presented two additional breach theories: that Progressive failed to produce its complete investigative file and that Maronda's insurance disclosures were incomplete. However, Maronda seems to have abandoned the latter claim without supporting evidence, and Progressive provided evidence that the disclosures were made. Additionally, Maronda did not cite any contractual provision entitling it to the complete investigative file nor demonstrate how its defense was hindered by Progressive's failure to provide it. The deposition testimonies cited by Maronda mainly consist of confused questions seeking legal conclusions, which are not permissible. The court must determine whether it was reasonable for Maronda to hire its own attorneys based on Progressive's defense conduct, but expert opinions on this matter are not admissible as they would constitute legal opinions disguised as expert testimony.
