Court: District Court, M.D. Florida; June 3, 2019; Federal District Court
Cross-motions for summary judgment have been filed regarding whether ACE American Insurance Company's policy covers a car accident caused by Jacobs Technology Inc. employee, Benjamin Wintersteen. USAA and Lawrence filed motions opposing ACE's motion, indicating contention over the issue of coverage.
Summary judgment is warranted when there are no genuine disputes over material facts, with the burden on the moving party to demonstrate this through available evidence. If the moving party meets this burden, the opposing party must then provide specific evidence to establish a genuine issue for trial.
The underlying case revolves around Wintersteen's job offer from Jacobs, which was associated with a government contract requiring his relocation to Germany. He received a $20,000 relocation allowance to assist with moving expenses, which could be spent according to government guidelines. Jacobs recommended that Wintersteen ship his car to Germany and rent a car in Tampa due to cost efficiency. Jacobs had a Corporate Customer Agreement with Hertz, providing $100,000 in bodily injury coverage for employees renting cars for business purposes, while rejecting supplementary insurance coverage offered in Hertz's agreements.
Wintersteen was driving a Hertz rental car in Tampa while his personal car was being shipped to Germany. Although he did not require a vehicle for his job, he needed transportation to commute to work. On August 12, 2014, while driving the rental car to buy groceries for his sick daughter, he was involved in a car accident with William Lawrence, resulting in Lawrence's car flipping over. In May 2015, Lawrence sued Wintersteen, who sought coverage under ACE American Insurance Company's commercial automobile insurance policy, which was denied. Wintersteen had personal insurance through USAA and additional coverage from Hertz due to a contract with Jacobs.
In May 2017, a settlement was reached wherein Lawrence, Wintersteen, and USAA agreed to a $750,000 consent judgment for Lawrence's damages, with USAA and Hertz collectively paying $350,000. Wintersteen assigned his rights against ACE to Lawrence. Following this, Lawrence filed a declaratory judgment lawsuit against ACE, which was later removed to federal court. In his second amended complaint, Lawrence raised claims for declaratory judgment and coverage based on promissory estoppel. USAA intervened with claims for equitable contribution, unjust enrichment, and declaratory judgment.
Both Lawrence and USAA acknowledged their promissory estoppel claims were unsuccessful, leading the court to grant ACE's motion for summary judgment on these claims. The central issue remains whether the ACE policy provides coverage for the accident, with USAA and Lawrence asserting coverage under specific provisions of the policy. The court will evaluate each provision accordingly.
The ACE insurance policy, issued in California, is governed by California law, which emphasizes that the interpretation of insurance contracts should reflect the mutual intentions of the parties involved. Clear and explicit contractual language takes precedence, while ambiguous terms are interpreted to protect the reasonable expectations of the insured. If ambiguity remains unresolved, it is construed against the insurer, with a preference for broad coverage in favor of the insured. Determining ambiguity requires examining the policy in its entirety and context.
The ACE policy specifically defines "Hired Autos" as vehicles leased, hired, rented, or borrowed by Jacobs, with coverage extending to anyone using a covered auto with Jacobs' permission. The critical issue is whether Jacobs rented the car driven by Wintersteen at the time of the accident. While it is undisputed that Wintersteen drove a rental car, the policy does not clarify how to ascertain who actually hired the vehicle. ACE argues that hiring implies dominion and control over the car, supported by a citation to California Civil Code 1925. ACE asserts that Wintersteen had such control, pointing out that his name was on the Hertz rental agreement and he used his credit card to make the payment. Additionally, Wintersteen independently rented the car without direction or restrictions from Jacobs, as corroborated by deposition evidence.
Lawrence and USAA are in disagreement regarding the rental of a vehicle, with evidence showing that the Hertz rental receipt included Jacobs' name, corporate discount code, and that Jacobs reimbursed Wintersteen for the rental cost. Wintersteen indicated that Jacobs, through Petr, imposed restrictions on the vehicle's use, preventing long-distance driving. California courts often face challenges in determining which party controlled a vehicle under the dominion and control test in rental agreements. Notably, cases such as Keller v. Argonaut Ins. Co. and City of Los Angeles v. Allianz Ins. Co. have explored nuances in the interpretation of "borrow" versus "hire," applying the dominion and control test. This Court, however, finds that solely focusing on control is insufficient in scenarios where vehicle hiring is influenced by another party. Instead, it proposes a broader analysis, akin to certain non-California cases, that considers the entire rental transaction. An illustrative case is Continental Insurance Company v. McKain, where the court examined who hired a rental car provided as a loaner by a repair shop under an arrangement with a rental agency. In McKain, the repair shop coordinated the rental, allowing the customer to use the vehicle without direct charges, which is key to determining the hiring responsibility. The Court intends to apply this broader test to ascertain whether Jacobs hired the rental car involved in the dispute.
The court examined whether Duncan qualified as an insured under Reedman's insurance policy, which covered individuals using a vehicle rented by Reedman with permission. The determination hinged on Reedman's involvement in the rental of the loaner car. The court found that both Reedman and Duncan played significant roles in the rental process. Reedman had a formal agreement with McCafferty for renting cars, negotiated favorable rental rates, and controlled customer authorizations, while Duncan managed optional insurance and the vehicle's operation. Neither party had exclusive control over the vehicle; both had agreements with McCafferty, with Reedman's being unwritten. Duncan's signing of the rental agreement did not solely define him as the renter for insurance purposes. The court concluded that both Reedman and Duncan co-hired the vehicle, allowing Duncan to be classified as an insured under Reedman's policy due to his use of the vehicle with Reedman's permission.
Additionally, the excerpt referenced Hargrove v. Missouri Pacific Railroad Company, where the court assessed co-renter status regarding a rental car. In Hargrove, Martin arranged a rental for Haley with Enterprise, establishing a verbal agreement that allowed for reduced rental rates. Martin's involvement included a purchase order for the rental, and an Enterprise employee facilitated the rental process. The appellate court considered whether the trial court correctly identified Martin and Haley as co-renters after an accident with the rental car.
Martin's role as a co-renter of a rental car significantly impacted the insurance coverage under his policy with St. Paul. The appellate court found sufficient evidence to classify Martin as a co-lessee alongside Mr. Haley, countering St. Paul's argument that Haley was the sole lessee due to his control over the vehicle. Testimonies revealed that Martin engaged with Enterprise, contributed financially to the rental, and altered the leasing terms, thus demonstrating essential participation in the rental transaction.
The court dismissed St. Paul’s reliance on cases emphasizing control, noting that both Martin and Haley were integral to the rental agreement. Despite Haley being the authorized driver, Martin's comprehensive involvement—including making decisions regarding the rental duration, vehicle type, and pricing—established his dominion over the vehicle. Consequently, the court concluded that the rental car qualified as a "hired auto" under St. Paul's policy.
Additionally, the appellate court emphasized that when assessing dominion and control in rental situations, courts should consider both actual vehicle control and participation in the rental process. The analysis referenced the collaboration between Jacobs and Wintersteen regarding another rental scenario, indicating potential co-renter status based on significant financial involvement and decision-making authority in the rental transaction, despite disputes over use restrictions and insurance coverage.
Wintersteen references a document titled "Global Rental Car Insurance Frequently Asked Questions," which he claims Petr provided to him, indicating that he did not need additional car insurance for the rental vehicle. Following the accident, Jacobs required Wintersteen to complete a vehicle incident report, undergo a drug test, and take a driving course. The Court identifies a genuine issue of material fact regarding whether the ACE insurance policy covers the accident under the Hired Autos provision, as the policy does not specify how to determine who hired the car. The Court concludes that the determination hinges on who exercised control over the vehicle and was involved in the rental transaction, including payment. If Jacobs is found to have had significant involvement in the rental, it could imply that he permitted Wintersteen to use the vehicle.
Additionally, Lawrence argues that if Jacobs is not deemed to have hired the rental car, it may still be covered as a Non-owned Auto, with Wintersteen as an insured under the Employees as Insureds provision of the ACE policy. The policy defines Non-owned Autos as vehicles not owned, leased, hired, or borrowed by Jacobs but used in connection with Jacobs' business. ACE argues that Wintersteen was not using the rental car for Jacobs' business or personal affairs at the time of the accident. Lawrence counterclaims that Wintersteen's rental car was necessary for his relocation related to work for Jacobs. However, ACE asserts that Wintersteen's tasks in Tampa did not necessitate vehicle use, and at the time of the accident, he was merely driving to a store for personal errands, which does not qualify as being in Jacobs' business or personal affairs. The Court denies all motions for summary judgment related to the applicability of the Hired Autos and Non-owned Autos provisions of the ACE policy.
To qualify as a covered Non-owned Auto under the relevant insurance policy, Wintersteen needed to be using the rental car for company-related work at the time of the accident. The court referenced multiple cases to support this requirement, including United Financial Cas. Co. v. Smith and Alaska National Ins. Co. v. Bryan. In the Smith case, Brenton Smith, who worked for his father’s construction company, was involved in an accident while driving home from a social outing after work. Although he had work tools in his car and used it to travel to job sites, the court determined that his use of the vehicle at the time of the accident was purely personal, as he was driving friends home from a party. The insurance policy's non-owned auto provision covered vehicles used for the employer's business or personal affairs, but the court concluded that Brenton was not engaged in such activities when the accident occurred. There was no evidence that he was acting on his employer's instructions or that carrying tools was for his employer’s benefit at that time. Thus, coverage under the policy was denied as the vehicle was not being used in the course of work-related duties during the incident.
To qualify as a covered Non-owned Auto during the accident, Wintersteen must have been using the rental car for company-related work, as established by the precedent set in Smith and supported by Hobbs Rental. In Hobbs Rental, the insurance policy's non-owned autos provision covered vehicles not owned by HRC but used in connection with its business, emphasizing that coverage was limited to circumstances involving HRC employees or their household members while engaged in company-related activities. The court clarified that merely having a connection to HRC's business was insufficient; the use of the vehicle must be directly tied to performing company work.
In this case, the relevant Non-Owned Autos provision closely mirrors that of Hobbs Rental. Therefore, evidence is required to show that Wintersteen was using the rental car for business purposes at the time of the accident, which Lawrence has failed to provide. Consequently, the Court concludes that ACE is entitled to summary judgment regarding its policy's lack of coverage under the Non-owned Autos and Employees as Insureds provisions.
USAA's claims for equitable contribution and unjust enrichment, which argue that ACE should have contributed to a $250,000 settlement, hinge on the existence of coverage under the ACE policy. Since the Court has identified genuine issues of material fact regarding this coverage, USAA's request for summary judgment on these claims is deemed premature and denied.
If coverage is determined to exist under the ACE policy, both Lawrence and USAA are seeking damages based on a $750,000 consent judgment from the underlying lawsuit, with Lawrence claiming $400,000 and USAA seeking reimbursement for alleged overpayment. Both parties are moving for summary judgment on the reasonableness of the $750,000 settlement, noting that if an insurer fails to defend its insured, it is typically bound by the settlement amount unless proven otherwise.
In cases involving a Coblentz agreement, the assessment of settlement validity focuses on potential fraud or collusion, particularly evaluating if the settlement amount is unreasonable or if it was negotiated in bad faith. ACE concedes the absence of bad faith but contests the reasonableness of the settlement amount. Florida law defines the reasonableness of a settlement based on what a prudent defendant would settle for considering the plaintiff's claim, weighing both objective factors (plaintiff’s injuries) and subjective factors (certainty of liability, trial risks, and potential jury verdicts). Expert testimony often informs this determination, addressing defendant liability, comparisons to similar case awards, and settlement costs.
A Coblentz agreement's settlement figure may not reflect the true value of the plaintiff's claim if the insured agrees to a high settlement to avoid liability since they face no actual financial obligation. Consequently, such settlements are viewed with skepticism compared to those reached through adversarial negotiations. The burden to demonstrate the settlement's reasonableness and absence of bad faith initially lies with the party enforcing the Coblentz agreement, although the insurer ultimately bears the burden of proof.
In this case, the $750,000 settlement's reasonableness is supported by extensive litigation over two years, substantial discovery, subpoenaed medical and employment records, depositions of key parties and witnesses, a compulsory medical examination, and mediation. Evidence indicates clear liability on Wintersteen's part, significant vehicle damage resulting in serious injuries to Lawrence, confirmed by immediate hospital diagnoses.
Medical records and testimony revealed that Lawrence sustained multiple serious injuries from an accident, including a lumbar spinal fracture at L1, a left traumatic disc herniation at L4-5, compression of the L4 and L5 nerve roots, lumbar radiculopathy, traumatic sacroiliitis, cerebral contusions, blood in the brain's interhemispheric fissure, and a permanent traumatic brain injury. Future medical care will require a lumbar microdiscectomy, bilateral SI joint injections, joint infusion, neuropsychological evaluation, therapies for traumatic brain injury symptoms, and prescription medication for cognitive issues. Dr. Powell confirmed that Lawrence has permanent injuries affecting both his brain and lumbar spine.
Lawrence, a retired Navy SEAL and decorated military veteran, was working as an Action Officer for the Department of the Air Force at the time of the accident. The resulting injuries have severely limited his ability to work, compete in triathlons, and maintain his previous lifestyle. Medical expenses incurred amount to approximately $60,000, with future medical expenses projected at $557,000. Additionally, he has lost $24,000 in wages and has a projected loss of earning capacity of $1,030,000. Pain and suffering have been valued by Lawrence’s attorney between $75,000 and $200,000 for past pain and between $250,000 and $500,000 for future pain.
Before trial, the case was settled for $750,000. In partial satisfaction, Hertz paid $100,000 and USAA paid $250,000, totaling $350,000, with an agreement not to pursue Wintersteen for the remaining $400,000. Wintersteen assigned his rights against ACE to Lawrence in return for the settlement. The Court determined that Lawrence and USAA adequately demonstrated the reasonableness of the settlement and the absence of bad faith.
ACE contests the reasonableness of a $750,000 settlement amount related to Lawrence's car accident, arguing that Lawrence's medical treatment was minimal. However, Lawrence testified that he wore a back brace continuously for three and a half months, underwent physical therapy, and received an epidural, despite not having surgery or treatment for head trauma. The Court finds that ACE has not presented a genuine issue of material fact regarding the settlement's reasonableness, given Lawrence's pain, medical expenses, and loss of earning capacity. The Court cites a precedent that a mistaken assessment of damages does not render a settlement unreasonable.
As a result, the Court grants summary judgment in favor of USAA and Lawrence regarding the reasonableness of the settlement. Specific rulings include:
1) USAA's and Lawrence's motions for summary judgment are granted concerning the reasonableness of the settlement;
2) ACE's motion is granted regarding the lack of coverage under certain policy provisions, the denial of attorneys' fees under Florida Statute 627.428, and the failure of promissory estoppel claims;
3) All parties must file pretrial motions and a joint pretrial statement by specified deadlines.
ACE also argues against the applicability of Florida Statute 627.428 for attorneys' fees due to the ACE policy being issued in California, a point conceded by USAA and Lawrence. However, they continue to seek fees under the offer of judgment statute.
Disputes exist regarding whether Jacobs directed Wintersteen to rent a car, which affects Lawrence and USAA's reliance on prior case law. In Abrams v. Trunzo and Royal Indemnity Co. v. Metropolitan Casualty Insurance, courts found employees acted as agents of their employers in car rentals due to direct instructions and employer control over the rental process. A Coblentz agreement involves a consent judgment against an insured, allowing the plaintiff to claim the insured's rights against their insurer in exchange for releasing them from personal liability. Evidence indicates that Lawrence, due to his Navy SEAL background, is in demand for employment but has had to decline offers post-accident due to physical limitations. Although ACE contends that Lawrence returned to work without restrictions after therapy, they lack evidence to substantiate this claim. Testimony reveals that a stand-up desk was provided for Lawrence due to pain from sitting, and initially, he experienced severe pain and was advised against any activity to avoid exacerbating his spinal injuries.
