The Estate of Reinaldo de Morales sued Donel Enterprises for negligently causing Mr. de Morales’s death. Donel defended by claiming it was de Morales’s employer and thus entitled to workers compensation immunity. Donel’s insurer agreed to defend Donel under a reservation of rights.
The insurer also filed a declaratory judgment action against Donel and the estate, seeking a declaration that the claim was excluded from coverage and the insurer had no duty to defend or indemnify the claim under Donel’s commercial general liability policy. Donel asked the trial court to stay the declaratory judgment action pending the resolution of the wrongful death action.
The trial court agreed to stay that portion of the dec action directed towards the insurer’s duty to indemnify, stating: “The same question of fact is going to be determined by a jury in the underlying case.” The trial court refused to abate or stay that portion of the dec action directed towards the insurer’s duty to defend.
The trial court seems to have recognized the distinction between the “duty to defend,” which is simply determined by comparing the allegations in the underlying complaint with the terms of the insurance policy; and the “duty to indemnify,” which is based upon the actual facts of the loss as determined by the fact finder.
Realizing that the jury in the wrongful death action would determine the precise factual issue which controlled the indemnification issue, the trial court stayed the indemnification issue pending resolution of the wrongful death action.
The 4th DCA granted certiorari review, found that this order departed from the essential requirements of the law, and ordered that the entire declaratory judgment action proceed unstayed. The 4th DCA cited to the Supreme Court’s ruling in Higgins v. State Farm Fire & Casualty Co., 894 So. 2d 5 (Fla. 2004), which identified three factors for trial courts to consider when determining whether a coverage action should be tried before the tort action. Those factors are:
1. Whether the two actions are mutually exclusive;
2. Whether proceeding to a decision on the indemnity issue will promote settlement and avoid the problem of collusive actions between the claimant and the insured in order to create coverage where there is none; and
3. Whether the insured has resources independent of insurance, so that it would be immaterial to claimant whether the insured’s conduct was covered or not covered by indemnity insurance.
The 4th DCA determined that the first 2 factors militated in favor of allowing the declaratory judgment action to proceed. The court found that there was no record evidence concerning the third factor. The 4th DCA found support for its decision in Progressive Express Insurance Co. v. Reed, 971 So. 2d 176 (Fla. 5th DCA 2007), and Indemnity Insurance Co. v. Ridenour, 629 So. 2d 1053 (Fla. 2nd DCA 1993).
Given this decision, along with Higgins, Reed, and Ridenour, it seems it will be difficult for either party to stay either of the underlying actions without agreement of the parties.
This case can be found at Century Surety Insurance Company v. de Morales, 34 FLW D93 (Fla. 4th DCA January 5, 2009).