2 Fla. L. Weekly Supp. 10b
Insurance — Attorney’s fees — Insurer cannot avoid payment of attorney’s fees to insured by entering into settlement agreement and voluntarily dismissing suit brought by it against its insured for breach of insurance contract — Insureds entitled to award of costs
EDUARDO MARINO and PETRONIA MARINO, et al., Appellants, v. TRAVELERS INDEMNITY COMPANY, Appellee. 11th Judicial Circuit, Appellate Division. Case No. 92-303AP. Opinion filed November 5, 1993. An Appeal from County Court for Dade County. Philip Cook, Judge. Carlos Lidsky and Pamela Beckham for Appellant. Max A. Goldfarb for Appellee.
(Before GOLDMAN, CARDONNE and SHAPIRO, B., JJ.)
(GOLDMAN, J) This is an appeal from an Order Denying Appellants’ Motion for Costs and Attorneys’ Fees. We Reverse.
On July 26, 1989, the appellant, EDUARDO MARINO, was injured when his car was struck by an uninsured motorist, Julian Cerezo. At this time, the appellant had uninsured motorist coverage with the appellee, TRAVELERS INDEMNITY COMPANY. On June 4, 1990, the Marinos filed suit against Travelers for failure to pay proceeds due them in a timely fashion. This suit was settled for $4,000.00 on October 17, 1990. As part of this settlement, the Marinos executed “Trust Agreement” in which they agreed to “hold any monies received as a result of settlement … in trust for” Travelers.
In addition, the insurance policy at issue provides:
“In the event of any payment under this policy, the company shall be subrogated to all the insured’s rights of recovery; therefore, against any person or organization and the insured shall execute and deliver instruments and papers to do whatever else is necessary to secure such rights. The insured shall do nothing at after loss to prejudice such rights.”
On October 7, 1990, the Marinos had signed a document which stated that they had received $1,000.00 from the uninsured motorist, Cerezo. Travelers took the position that this document operated as a release which barred it’s subrogated claim, and instituted suit against the Marinos which in effect was a suit for breach of the insurance contract. The suit was later amended to join the uninsured motorist as a party defendant.
It was Marino’s position that no money had ever been received from the uninsured motorist and that they had been tricked and intimidated into signing the document by the uninsured motorist.
On April 1, 1992, the suit was settled and Travelers voluntarily dismissed its lawsuit against the Marinos without prejudice. The Marinos then moved for costs and attorneys’ fees. The trial court denied these motions.
The trial judge clearly erred in its denial of costs to the Marinos. See Fla. Sm. Cl. R. 7.110(d); Fla.R.Civ.P. 1.420(d); Century Construction Corp. v. Koss, 559 So. 2d 611 (Fla. 1st DCA 1990), Rev. denied at 574 So. 2d 141 (Fla. 1990); See Also Bayview, Inc. v. Friedman, 545 So. 2d 417 (Fla 3d DCA 1989).
The Court further erred in denying the Marinos’ request for attorneys’ fees pursuant to §627.428, Florida Statute. Regardless of the terminology used in the complaint, the only legal basis upon which this suit could be instituted was a breach of the insurance contract. The purpose of §627.428, Florida Statute, is to discourage the contesting of insurance policies and for the award of attorneys’ fees to successful insureds who are forced to defend or sue to enforce their contracts. Insurance Company of North America v. Lexow, 602 So. 2d 528 (Fla. 1992); Feller v. Equitable Life Assurance Society of the United States 57 So. 2d 581 (Fla. 1952); Florida Rock and Tank Lines, Inc., v. Continental Insurance Company, 399 So. 2d. 122 (Fla. 1st DCA 1981); Vermont Mutual Insurance Company v. Bolding, 381 So. 2d 320 (Fla. 5th DCA 1980).
It is also well-established that an insurer may not settle a lawsuit and thereby avoid paying attorney’s fees. In the case of Avila v. Latin American Property and Casualty Insurance Company, 548 So. 2d 894 (Fla. 3d DCA 1989), the Court stated as follows:
“The issue of award of attorney’s fees under §627.428, Florida Statutes, has been litigated and is now well settled in the State of Florida. Where an insurer has agreed to settle a disputed case, it has, in affect declined to defend its position in the pending suit. The insurer’s payment of the claim has been deemed the functional equivalent of a confession of judgment or a verdict in favor of the insured. Such settlement furnishes the basis for an award of attorney’s fees to the insured. Wollard v. Lloyds and Companies of Lloyds, 439 So. 2d 217 (Fla. 1983); Fortune Insurance Company v. Brito, 522 So. 2d 1028 (Fla. 3d DCA 1988).”
Accordingly, the order appealed from is reversed and this cause is remanded to the trial court to hold the necessary hearings to assess costs and attorneys’ fees.
The Appellant’s Motion for Appellate Attorneys’ Fees is hereby granted and the trial court is further directed to assess appellate attorneys’ fees in the cause.
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