26 Fla. L. Weekly Supp. 196a

Online Reference: FLWSUPP 2603PARRTorts — Collateral estoppel — Res judicata — Action against insurance agent and agent handling personal and business affairs of driver whose negligent conduct caused accident in which plaintiffs were severely and permanently injured, alleging that agents failed to secure excess liability policy that would have covered accident — For purpose of addressing collateral estoppel and res judicata claims on motion to dismiss, court may take judicial notice of contents of court files in prior proceedings that are referenced in complaint — Declaratory judgment case between insurer and driver, in which excess liability coverage was determined to be in effect, does not have collateral estoppel or res judicata effect on present case between injured persons and agents where agents were acting on behalf of driver when they failed to secure coverage and, therefore, were not in privity with or virtually represented by insurer in that prior case — No merit to argument that agents were party to declaratory judgment case by virtue of third-party complaint brought by driver against agents where third-party complaint was abated and never resolved on merits — Plaintiffs are required to file amended complaint separating each of their putative individual claims against agents from their putative assigned claim resulting from settlement with driver

TAMMY PARROTT, et al., Plaintiffs, v. WILLIS OF FLORIDA, INC., et al., Defendants. Circuit Court, 12th Judicial Circuit in and for Sarasota County. Case No. 2017-CA-2312-NC. Division E. May 23, 2018. Hunter W. Carroll, Judge. Counsel: Derek A. Reams, Leonard A. McCue, P.A., Bradenton, for Plaintiffs. Laura Besvinick, Stroock & Stroock & Lavan, LLP, Miami, for Defendant, Willis of Florida, Inc.Robert G. Lyons, Icard, Merrill, Cullis, Timm Furen & Ginsburg, P.A., Sarasota, for Defendant, Comerica Bank.

ORDER (1) TAKING JUDICIAL NOTICE; (2) CONCLUDINGTHE DOCTRINES OF RES JUDICATA AND COLLATERALESTOPPEL DO NOT APPLY IN THIS CASE; AND(3) GRANTING DEFENDANTS’ MOTIONS TO DISMISSWITHOUT PREJUDICE AND PERMITTINGPLAINTIFFS LEAVE TO AMEND

BEFORE THE COURT are Defendant Willis of Florida, Inc.’s Motion to Dismiss Complaint and Defendant Comerica Bank’s Motion to Dismiss Complaint. Because Plaintiffs impermissibly mixed separate putative causes of action against each Defendant, the Court dismisses the complaint with leave to amend.

Despite that innocuous ruling, the significant issue addressed by the Court in this Order involves the potential application of the related doctrines of res judicata and collateral estoppel, also referred to as claim preclusion and issue preclusion.

The Court concludes that — over Plaintiffs’ objection — it can take judicial notice of a prior related lawsuit to address claim preclusion matters raised by a motion to dismiss. Having taken judicial notice, the Court concludes that neither the doctrine of res judicata nor collateral estoppel apply to this case because of Florida’s more stringent claim preclusion rules require identical parties for its application. Had the federal issue preclusion rules applied, though, the Court would have dismissed Plaintiffs’ complaint.

This is an unsettling result for the Court because the decision of which claim preclusion rules to apply is dependent on happenstance and not on a principled analysis or difference in the prior proceeding other than being adjudicated in federal court instead of state court. If the Court were in a position to readdress Florida’s adherence to its more stringent claim preclusion rules, it would.

A. Factual Allegations from the Complaint.¹

The Plaintiffs are Tammy Parrott (“Ms. Parrott”) and Valerie Crow (“Ms. Crow”). The Defendants are Willis of Florida, Inc. (“Willis”) and Comerica Bank (“Comerica”). Plaintiffs filed a two-count complaint, with Count 1 brought by Plaintiffs against Willis and Count 2 brought by Plaintiffs against Comerica.

1. Background.

Ms. Parrott and Ms. Crow contend in Count 1 that Willis was the insurance agent (not broker) for Marshall and Anne Miller (“the Millers”). They contend that as the Millers’ insurance agent, Willis was supposed to obtain, but failed to obtain, an excess liability policy to provide coverage for the Millers’ negligent acts. Ms. Parrott and Ms. Crow allege that because of that failure, there was no excess liability policy in effect to provide coverage for an October 2009 car crash caused by Mr. Marshall.

Ms. Parrott and Ms. Crow contend in Count 2 that Comerica handled the Millers’ personal and business affairs and, given that relationship, Comerica Bank had the duty to obtain an excess liability policy to protect the Millers. Like they alleged against Willis, Ms. Parrott and Ms. Crow allege that Comerica failed to secure that excess liability policy, leaving Mr. Miller with no excess liability policy to pay for his negligent conduct in causing a car crash in October 2009.

Both counts rest on — and are entirely dependent on — the allegation that Willis and Comerica failed to secure an excess liability policy. Through prior litigation with First Floridian Auto and Home Insurance Company (“First Floridian”), though, there has already been a declaration that the disputed excess liability policy was in full force and effect that could provide coverage for the October 2009 crash.

On October 3, 2009, Mr. Miller drove a vehicle while accompanied by his wife, Mrs. Miller. Mr. Miller negligently drove that car, striking a motorcycle ridden by Ms. Parrott and Ms. Crow, causing them severe, permanent injuries. Ms. Parrot’s medical bills exceed $2.19 million, and Ms. Crow’s medical bills exceed $670,000. The crash occurred near University Parkway and Shade Avenue in Manatee County.

Since at least 1993, the Millers continuously maintained an excess liability insurance policy with policy limits in the amount of $1 million. First Floridian, a subsidiary of Travelers Insurance Company, wrote the most recent excess liability policy that had been in force.

Prior to the crash, the Millers used Willis “as their insurance agent to obtain insurance coverage including, but not limited to, excess or umbrella personal liability insurance for the Millers.” Cmplt. ¶8 (emphasis added). In the May-June 2009 time period, Willis received from First Floridian notification that the excess policy was being non-renewed and would expire July 25, 2009. Despite that notification, Willis failed to obtain a new excess liability policy.

Within days of the crash, Ms. Parrott and Ms. Crow sent representation letters to First Floridian as well as the Millers’ underlying bodily injury insurer, National General Insurance Company (“National General”). On October 16, 2009 — less than two weeks from the crash — National General tendered its $500,000 policy limits, $250,000 to Ms. Parrott and $250,000 to Ms. Crow.

Ms. Parrott and Ms. Crow demanded the full $1 million excess liability limit from First Floridian. In response, First Floridian denied coverage, explaining that the policy had been non-renewed effective July 25, 2009.

2. The 2009 Manatee Negligence Case.

In November 2009, Ms. Parrott and Ms. Crow sued Mr. Miller in Manatee County circuit court for negligence in the case styled Tammy A. Parrott and Valerie A. Crow v. Marshall B. Miller, 2009-CA-11982. National General provided a defense to the Millers; First Floridian did not provide a separate defense.²

In May 2010, Ms. Parrott and Ms. Crow settled the 2009 Manatee negligence suit by entering into a Settlement Agreement and Stipulation for Judgment, which was an attempted Coblentz Agreement.³ As part of that settlement agreement, Mr. Miller agreed to the entry of a $7.5 million judgment against him, which judgment would never be recorded in the Official Records or become a lien on Mr. Miller’s property. Of the $7.5 million, $5 million was allocated to Ms. Parrott and $2.5 million was allocated to Ms. Crow. Mr. Miller agreed to assign his rights and claims to Ms. Parrott and Ms. Crow. In exchange, Ms. Parrott and Ms. Crow agreed never to execute the judgment against Mr. Miller.

3. The 2009 Sarasota Declaratory Judgment Case.

The Millers repeatedly requested that First Floridian honor the excess policy and tender the $1 million policy limits. Instead of acknowledging coverage or tendering the policy limits, First Floridian in December 2009 sued the Millers in Sarasota County circuit court for declaratory judgment in the case styled First Floridian Auto and Home Insurance v. Marshall Miller and Anne Miller, 2009-CA-21589-NC (“2009 Sarasota Declaratory Judgment Case”).

Of particular note, while Ms. Parrott and Ms. Crow acknowledged the existence of the 2009 Sarasota Declaratory Judgment Case in their Complaint, they did not provide a wealth of allegations concerning that prior lawsuit. In footnote 6, they allege that at some point Mr. Miller died, and the case style was amended. Additionally, they contend in that footnote that “claims against Willis of Florida, Inc. and Comerica Bank were added during the pendency of this Declaratory Judgment Action however, these claims were abated by the Circuit Court.”

From the allegations in the Complaint, we also know there was an appeal in the 2009 Sarasota Declaratory Judgment case and that the mandate in the appellate case issued July 3, 2013.

The balance of the discussion of the 2009 Sarasota Declaratory Judgment Case in this fact section is taken from documents filed in that case for which the Court takes judicial notice.

Soon after First Floridian filed the 2009 Sarasota Declaratory Judgment Case, Mr. and Mrs. Miller countersued First Floridian for a declaration that the excess policy was in effect at the time of the car crash. First Floridian then filed a summary judgment motion; however, before that hearing, Attorney Reams on behalf of Mr. and Mrs. Miller appeared and moved for a continuance of the summary judgment hearing. That motion specifically identified the assignment obtained by virtue of the Coblentz Agreement.⁴

In the spring of 2011, Attorney Reams on behalf of Mr. and Mrs. Miller amended the counterclaim against First Floridian, however, they still sought a declaratory judgment against First Floridian that there was coverage for the car crash.⁵ A year-and-a-half into the litigation, and within the context of the 2009 Sarasota Declaratory Judgment Case, the Millers initiated a third-party complaint against Willis and Comerica, seeking in that third-party complaint the same relief with basically the same allegations that are alleged in the current complaint.

Willis and Comerica successfully convinced the court to abate the third-party complaint against them until a time after the declaratory judgment action was resolved. The court file in that case reflects that after the abatement, no party sought to pursue the third-party complaint and there was not a ruling on the merits of the third-party complaint. In fact, neither Willis nor Comerica ever answered the third-party complaint.

Within the declaratory judgment portion of the case between First Floridian and the Millers, the court entered an order on summary judgment in favor of Mr. Miller, finding that First Floridian did not have sufficient proof of mailing the July 2009 non-renewal of the excess liability policy. Thus, the First Floridian policy “was in full force and effect and shall provide coverage for the October 3, 2009

motor vehicle collision between Tammy A. Parrott, Valeria A. Crow, and Marshall Miller as the policy was not cancelled in accordance with the terms of the insurance policy or in accordance with Florida law.” The Court thereafter entered a final judgment in the Millers’ favor and against First Floridian in accordance with the Court’s prior order on summary judgment. Mrs. Miller would later be dropped as a party.

First Floridian appealed the final summary judgment. The Second District by per curiam affirmance without opinion affirmed the trial court’s judgment. Mandate issued on July 2, 2013. Attorney Reams was identified as the attorney for Mr. Marshall on the Second District’s per curiam affirmance without opinion.

The third-party claims by Mr. Miller against Willis and Comerica never were adjudicated. The clerk notes this case as being closed. The court file does not reflect a reason why the third-party claims were not adjudicated.

4. The 2014 Hillsborough Coblentz Case.

After the mandate issued in the 2009 Sarasota Declaratory Judgment case, Ms. Parrott and Ms. Crow filed suit in Hillsborough County circuit court against First Floridian seeking to collect on the $7.5 million judgment from the 2009 Manatee Negligence Case in a case styled Tammy A. Parrott and Valerie A. Crow v. First Floridian Auto and Home Insurance Co., 2014-CA-160. Attorney Reams appeared on behalf of Ms. Parrott and Ms. Crow in that suit.

In her oral ruling on summary judgment, Judge Rice concluded that “First Floridian had no duty to provide a concurrent defense to Mr. Miller in the [2009 Manatee Negligence Case] at any time prior to [National General’s] payment of its limit of liability for this coverage.” Page 51. Continuing, Judge Rice concluded: “First Floridian’s duty to defend remained consecutive to [National General’s] duty. And as the trust excess slash umbrella insurer, the Court concludes that First Floridian has satisfied its burden in demonstrating that as a matter of law, First Floridian did not wrongfully refuse to defend Mr. Miller in the [2009 Manatee Negligence Case].” Id. at 52. Judge Rice found that First Floridian did not sign and was not a party to the Coblentz agreement; accordingly Judge Rice concluded “that the settlement agreement between Mr. Miller and the plaintiffs is unenforceable as a matter of Florida law against First Floridian.” Id. at 54.

Ultimately, Judge Rice entered final summary judgment in favor of First Floridian and against Ms. Parrot and Ms. Crow. The Second District affirmed. See Tammy A. Parrott, et al. v. First Floridian Auto and Home Insurance Company, 2D15-4900. The mandate issued on March 22, 2017.

As Plaintiffs supplied sufficient information of the 2014 Hillsborough Coblentz Case in the Complaint to allow the Court to address res judicata and collateral estoppel claims, there is no need to resort to judicial notice of that case.

B. Analysis.

Both Willis and Comerica contend in this case that the determinations made in the 2009 Sarasota Declaratory Judgment Case, and to a lesser extent, the determinations made in the 2014 Hillsborough Coblentz Case, preclude Ms. Parrott’s and Ms. Crow’s current lawsuit against Defendants. Accordingly, Defendants claim that res judicata or collateral estoppel or both require dismissal. Willis also contends there is an independent basis precluding Plaintiffs’ suit.

1. The Court may take judicial notice of prior proceedings.

A preliminary issue the Court must address is the propriety of taking judicial notice of the contents of a prior court proceeding where the salient details of that prior proceeding were not referenced within the complaint of the pending case. In this case, Ms. Parrott and Ms. Crow acknowledge in their Complaint the existence of the 2009 Sarasota Declaratory Judgment Case but did not describe or reference significant details of that prior proceeding within the Complaint. In the absence of the Court taking judicial notice, allegations within the four corners of the Complaint do not give the Court sufficient information of that prior proceeding to address claim preclusion matters. To overcome that practical issue, Defendants request the Court take judicial notice of that prior proceeding. Plaintiffs object, contending these are maters for summary judgment after discovery.

The Court agrees with Willis’s and Comerica’s position that for the purpose of addressing res judicata and collateral estoppel on a motion to dismiss, the Court may take judicial notice of the contents of court files in prior proceedings where those prior proceedings were referenced by the complaint. In fact, the Court would go further and conclude that the interests of judicial economy are best served by, and the directive to secure the “just, speedy, and inexpensive determination of every action” is best effectuated by, the Court taking judicial notice of a prior proceeding. The Court would so hold regardless of whether a plaintiff referenced that prior proceeding in the complaint.

In support of taking judicial notice in this case, Defendants cite to All Pro Sports Camp, Inc. v. Walt Disney Company, 727 So. 2d 363, 366 (Fla. 5th DCA 1999) [24 Fla. L. Weekly D572a] (approving trial court’s taking judicial notice on a motion to dismiss of prior proceedings to address collateral estoppel claim). In All Pro Sports Camp, the complaint did not reference the existence of the prior proceeding. Although not entirely clear, the Court believes there was an objection by the plaintiff to the taking of judicial notice of the prior proceeding because the Fifth District stated plaintiff’s position that collateral estoppel was “improperly raised.” Although there was not substantial analysis of the propriety of the trial court taking judicial notice of the prior proceeding over a plaintiff’s objection, All Pro Sports‘ implicit holding is that the trial court may. That decision provides the Court with authority to take judicial notice of the 2009 Sarasota Declaratory Judgment Case.

The Court is aware that All Pro Sports Camp cited City of Clearwater v. U.S. Steel Corp, 469 So. 2d 915 (Fla. 2d DCA 1985), for support. In City of Clearwater, the Second District addressed the related situation where both sides agreed the trial court could take judicial notice of the prior proceedings. The City of Clearwater holding is essentially the same as the First District’s recent decision in Seminole Tribe of Florida v. State, Dep’t of Revenue, 202 So. 3d 971, 973 (Fla. 1st DCA 2016) [41 Fla. L. Weekly D2477b], holding that the trial court properly took judicial notice where plaintiff’s complaint referenced prior lawsuit and plaintiff did not object to the court taking judicial notice. See also Duncan v. Prudential Ins. Co., 690 So. 2d 687 (Fla. 1st DCA 1997) [22 Fla. L. Weekly D892a] (judicial notice of prior proceeding where complaint in subsequent proceeding “specifically incorporated the previous proceedings into her complaint by reference” such that “the trial court had before it a complete history of [the prior] litigation.”). Those decisions do not directly address this situation where Plaintiffs objected to the judicial notice at the motion to dismiss stage.

The Court understands that the Fourth District in Norwich v. Global Financial Associates, Inc., 882 So. 2d 535, 536-37 (Fla. 4th DCA 2004) [29 Fla. L. Weekly D2136b], reached the contrary conclusion than the Fifth District did in All Pro Sports Camp. In Norwich, the Fourth District held that where the complaint did not reference the prior proceeding and the opposing party objects, the trial court could not take judicial notice in order to dismiss the complaint at the motion to dismiss stage. In the absence of All Pro Sports Camp, the Court would have been required to follow Norwich if this were the only district court appellate decision on point. See Pardo v. State, 596 So. 2d 665, 666-67 (Fla. 1992). The Court believes All Pro Sports Camp contains the point of law the Court should follow for at least three separate reasons.

First, Florida Rule of Civil Procedure 1.010 — the first listed civil procedure rule — provides in relevant part that the rules “shall be construed to secure the just, speedy, and inexpensive determination of every action.” There is no principled reason to require the parties to undertake discovery — expensive both in time and money — to arrive back at the very same point: the court files in prior proceedings are what they are. To be sure, the Second District previously has denied a third-party’s objection to responding to discovery because the plaintiff’s lawsuit would later be barred based on res judicata. Keller v. Healthcare-IQ, Inc., 230 So. 3d 955 (Fla. 2d DCA 2017) [42 Fla. L. Weekly D2523a].⁶ Perhaps acknowledging the practical expense to the parties and judicial system, the court commented whether discovery “should be delayed or denied pending a decision on a party’s defense is classically suited to the discretion of the trial judge based on the facts and circumstances of the case.” Id. at 959.

Second, Florida’s judicial notice procedures contain mechanisms allowing a party to challenge the propriety of a court taking judicial notice of any matter, including documents in another court file. See §§90.203(1), .204, Fla. Stat. There can be no reasonable debate concerning the contents of court files in prior proceedings, especially where the judicial notice process contains a challenge provision. Of course, if there were some matter that required factual development despite the existence of the judicial notice the trial court would be required to deny a motion to dismiss.

Third, denying a court the authority to take judicial notice of prior court proceedings to address claim preclusion matters increases the consumption of judicial resources that otherwise would not need to be consumed, which adversely impacts the administration of justice. While in this case the parties agreed to stay discovery pending the Court’s resolution of this motion, not all parties will work together as professionally as the attorneys in this case, likely leading to hearings relating to the appropriate scope of discovery pending a summary judgment on the claim preclusion matter. Without the ability to take judicial notice, the judiciary surrenders its ability to analyze judicial notice and collateral estoppel concepts to skillful attorneys’ artful pleadings.

For those reasons, and based on the authority of All Pro Sports Camp, the Court takes judicial notice of the 2009 Sarasota Declaratory Judgment Case.

2. The elements of res judicata and collateral estoppel.

The Defendants raise both res judicata and collateral estoppel doctrines to content Plaintiffs’ current complaint must be dismissed with prejudice. Although related, res judicata and collateral estoppel address slightly different situations. The Third District recently restated the requirements for res judicata to apply:

To successfully invoke a res judicata defense, a party must satisfy two prerequisites. First, a judgment on the merits must have been rendered in a former suit. Second, four identities must exist between the former suit and the suit in which res judicata is to be applied: (1) identity in the thing sued for; (2) identity of the cause of action; (3) identity of the persons and parties to the actions; and (4) identity of the quality or capacity of the persons for or against whom the claim is made. . . . The policy underlying res judicata is that if a matter has already been decided, the petitioner has already had his or her day in court, and for purposes of judicial economy, that matter generally will not be reexamined again in any court (except, of course, for appeals by right). Based on principles of res judicata, a judgment on the merits will thus bar a subsequent action between the same parties on the same cause of action. Importantly, the doctrine of res judicata not only bars issues that were raised, but it also precludes consideration of issues that could have been raised but were not raised in the first case.

Pearce v. Sandler, 219 So. 3d 961, 966-67 (Fla. 3d DCA 2017) [42 Fla. L. Weekly D1214b] (internal citations and quotations omitted).

Importantly, case law interpreting the identity of persons and parties element is broader than simply the specific named party; it includes those in privity with or virtually represented by one who is a party to a lawsuit. Jasser v. Saadeh, 103 So. 3d 982, 985 (Fla. 4th DCA 2012) [38 Fla. L. Weekly D16a]. For the privity/virtual representation exception to apply, “one must have an interest in the action such that she will be bound by the final judgment as if she were a party.” Id.

Collateral estoppel is like res judicata in many respects by precluding relitigation of various issues. Collateral estoppel, though, applies in a more discrete manner. The test for collateral estoppel has been restated recently by the Third District thusly:

Collateral estoppel, also known as issue preclusion, applies where: (1) the identical issues were presented in a prior proceeding; (2) there was a full and fair opportunity to litigate the issues in the prior proceeding; (3) the issues in the prior litigation were a critical and necessary part of the prior determination; (4) the parties in the two proceedings were identical; and (5) the issues were actually litigated in the prior proceeding. Where these elements are satisfied, collateral estoppel may be applied to bar subsequent causes of action even where the second claim requires proof of different essential facts than those required to be proved in the initial suit. Collateral estoppel precludes re-litigating an issue where the same issue has been fully litigated by the parties or their privies, and a final decision has been rendered by a court.

To be in privity with one who is a party to a lawsuit, or for one to have been virtually represented by one who is a party to a lawsuit, one must have an interest in the action such that she will be bound by the final judgment as if she were a party. Southeastern Fidelity Ins. Co. v. Rice, 515 So.2d 240 (Fla. 4th DCA 1987) (“One not a party to a suit is in privity with one who is where his interest in the action was such that he will be bound by the final judgment as if he were a party.”); Aerojet-General Corp. v. Askew, 511 F.2d 710, 719 (5th Cir.), cert. denied, 423 U.S. 908, 96 S. Ct. 210, 46 L.Ed.2d 137 (1975) (“A person may be bound by a judgment even though not a party if one of the parties to the suit is so closely aligned with his interests as to be his virtual representative.”). See also Stogniew v. McQueen, 656 So. 2d 917, 920 (Fla. 1995) [20 Fla. L. Weekly S208a].

Pearce, 219 So. 3d at 965 (most internal citations and quotations omitted).

The court pauses to note a curious — and troubling — dichotomy in the application of collateral estoppel where the prior proceeding was in state court versus in federal court. The test identified above applies in a prior state court proceeding. Goodman v. Aldrich & Ramsey Enterprises, Inc., 804 So. 2d 544, 546-47 (Fla. 2d DCA 2002) [27 Fla. L. Weekly D162a]. Where the prior proceeding occurred in federal court, Florida applies the federal rules of issue preclusion. Gawker Media, LLC v. Bollea, 129 So. 3d 1196, 1203 (Fla. 2d DCA 2014) [39 Fla. L. Weekly D174a].⁷ The four-part federal test requires a showing that:

(1) the issue at stake is identical to the one involved in the prior proceeding; (2) the issue was actually litigated in the prior proceeding; (3) the determination of the issue in the prior litigation must have been ‘a critical and necessary part’ of the judgment in the first action; and (4) the party against whom collateral estoppel is asserted must have had a full and fair opportunity to litigate the issue in the prior proceeding.

Id. at 1204. This difference in tests controls the outcome here.⁸

3. Neither res judicata nor collateral estoppel applies here.

Turning to the merits, Ms. Parrott and Ms. Crow filed a two-count complaint, with Count 1 against Willis and Count 2 against Comerica. At oral argument on the motion to dismiss, Ms. Parrott and Ms. Crow clarified that their claims against Defendants were based on both the assigned claims belonging to Mr. Miller as well as their own individual claims against the Defendants. For clarity, Plaintiffs should have separated those putative separate claims.

Plaintiffs contend that Mr. Miller was damaged by not having an excess liability policy in effect at the time of the car crash. Defendants contend that claim preclusion principles preclude this claim because Mr. Miller extensively litigated the coverage issue in the 2009 Sarasota Declaratory Judgment Case through judgment and appeal. The Court reluctantly disagrees with Defendants’ position.

Plaintiffs focus their attention on the relationship between Ms. Parrott and Ms. Crow, on the one hand, and the Millers on the other hand. Under either a res judicata theory or collateral estoppel theory, the Court does not hesitate to conclude that they were in privity with each other on the assigned claim in both the 2009 Declaratory Judgment Case as well as the 2014 Hillsborough Coblentz Case. Similarly, on their individual claims, under the facts of this case the Millers virtually represented the Plaintiffs in those actions. Their interests were aligned. And while not legally dispositive, the fact that Plaintiffs’ attorney here appeared and argued on behalf of the Millers in those case confirm the Court’s conclusion.

The problem for Defendants is not the relationship between the Plaintiffs and the Millers; instead, the problem for Defendants is on the other side of the “v.”

Florida’s res judicata and collateral estoppel doctrines each require the identical parties in the prior proceeding. As explained, a party includes both those in privity and those who could virtually represent the party. As alleged by Ms. Parrott and Ms. Crow in the Complaint, each of Willis and Comerica were operating on behalf of the Millers when they were supposed to have obtained the excess liability insurance policy. In other words, Willis and Comerica were not operating on behalf of First Floridian, precluding a finding that they were in privity with or virtually represented by First Floridian in those prior lawsuits.

Perhaps understanding this to be the case, Willis and Comerica contend that they were parties in the 2009 Sarasota Declaratory Judgment Case by virtue of a third-party complaint brought by the Millers. And while they were sued as third-party defendants, Willis and Comerica successfully argued in the 2009 Sarasota Judgement Case that the third-party complaint against them should be abated pending the resolution of the declaratory judgment action between the Millers and First Floridian. There never was a resolution on the merits to that third-party complaint. As there was no litigation of, or resolution of, that third-party complaint, the preclusion doctrines do not apply by virtue of having been sued a third-party defendant. Accordingly, neither Willis nor Comerica in this lawsuit can preclude Plaintiffs from relitigating the excess liability coverage issue.

The Court also reaches the same conclusion with Defendants’ claims as to the validity of the Coblentz agreement adjudicated in the 2014 Hillsborough Coblentz Case. There is no identify of parties between First Floridian and either Willis or Comerica. Thus, neither Willis nor Comerica in this lawsuit can preclude Plaintiffs from relitigating the validity of the Coblentz Agreement.

The Court pauses to note that this outcome is the same when applying Florida’s res judicata and collateral doctrines. But, the outcome would be different if the Court applied the federal issue preclusion rules. The federal issue preclusion test does not require identical parties in order for issue preclusion to apply. Instead, the doctrine requires that the party against whom collateral estoppel is asserted must have had a full and fair opportunity to litigate the issue in the prior proceeding. Without question, Ms. Parrott and Ms. Crow, as assignee of the Millers’ claims, had that full and fair opportunity to litigate the excess liability coverage issue and the validity of the Coblentz Agreement in the prior proceedings. And as the other elements of the federal issue preclusion test are satisfied, had the Court applied the federal test, the Court would preclude in this lawsuit Ms. Parrott and Ms. Crow from litigating again the very same excess liability coverage issue and the validity of the Coblentz Agreement they previously, and comprehensively, addressed.

The Court agrees that courts should apply stare decisis for a variety of reasons. See, e.g., Puryear v. State, 810 So. 2d 901, 904-905 (Fla. 2002) [27 Fla. L. Weekly S122a]. Reliance n stare decisis, however, is not unwavering. Id. at 905. The Court posits this is a situation where there has been a change in circumstances and where the actual practice is proving unacceptable. The Court is troubled that these parties will have to litigate anew matters already decided by two separate trial judges and affirmed by two separate panels at the Second District simply because those prior cases were decided in the state system instead of the federal system.

The Court does not quarrel with the federalism principles that today dictate this disparate treatment. Instead, the Court’s point is that the federal test is better suited to address preclusion matters than Florida’s test. The federal test better promotes a just, speedy, and inexpensive determination of successive lawsuits without denying access to courts, as that test still requires identity of the party against whom preclusion is sought. Florida could — and should — alter its preclusion test and adopt the federal system’s preclusion test.

4. The remaining issues.

As noted above, Plaintiffs clarified at oral argument that their claims include those they hold by virtue of the Coblentz Agreement as well as those they contend they can bring on their own behalf. Comingling separate putative causes of actions into a count, as was done here, is improper. See, e.g., Eagletech Communications, Inc. v. Bryn Mawr Inv. Group, Inc., 79 So. 3d 855, 862-63 (Fla. 4th DCA 2012) [37 Fla. L. Weekly D285b] (holding that a trial court properly dismisses a count that comingles multiple claims); K.R. Exch. Servs., Inc. v. Fuerst, Humphrey, Ittleman, PL, 48 So. 3d 889, 893 (Fla. 3d DCA 2010) [35 Fla. L. Weekly D2317a] (“A party should plead each distinct claim in a separate count[.]”). Accordingly, the Court will dismiss both counts with leave to amend.

The Court has not overlooked Willis’ separate contention that Plaintiffs in their individual capacities have no cause of action against Willis. Because Plaintiffs will have to amend its Complaint to separate each Plaintiff’s putative individual claim from the putative assigned claim, and because Willis is seeking a with-prejudice dismissal, the Court would rather see how each Plaintiff pleads her putative individual claim prior to ruling on Willis’ alternative contention. The Court therefore does not address Willis’s separate contention at this time.

IT IS ORDERED as follows:

1. The Court takes judicial notice of the court file in the 2009 Sarasota Declaratory Judgment Case.

2. Neither res judicata nor collateral estoppel applies to preclude Plaintiffs’ claims in this lawsuit that there was no excess liability policy in effect for the October 2009 crash or the validity of the resulting Coblentz Agreement. This, of course, is not a ruling whether there was coverage or whether the Coblentz Agreement is valid.

3. Plaintiffs’ complaint is dismissed in its entirety with leave to amend. Plaintiffs shall file an amended complaint within 20 days of the date of this Order. Thereafter each Defendant shall have 20 days to respond.

__________________

¹“In ruling on a motion to dismiss, the trial court must confine itself to the four corners of the complaint, accept the allegations of the complaint as true, and construe the allegations in the light most favorable to the plaintiff.” Spradley v. Spradley, 213 So. 3d 1042, 1044 (Fla. 2d DCA 2017) [42 Fla. L. Weekly D548a] (internal quotation omitted).

²This fact is taken from page 24 of Judge Rice’s oral ruling in the 2014 Hillsborough Coblentz Case. Ms. Parrott and Ms. Crow in the instant case referenced Judge Rice’s ruling in footnote 9 of their Complaint, explaining that the transcript was “too voluminous to attach to this Complaint but will be filed separately in support of Plaintiff’s allegations made in this lawsuit.” This is more than sufficient for the Court to consider Judge Rice’s ruling as an attachment to the Complaint without the need to resort to judicial notice; thus its contents are within the four corners of the Complaint.

³Coblentz v. American Surety Co., 416 F.2d 1059 (5th Cir. 1969) (applying Florida law). “A ‘Coblentz agreement’ refers to a negotiated consent judgment entered into between an insured and a claimant in order to resolve a lawsuit in which the insurer has denied coverage and declined to defend.” Mid-Continent Cas. Co. v. Royal Crane, LLC, 169 So. 3d 174, 180 (Fla. 4th DCA 2015) [40 Fla. L. Weekly D1371c] (internal quotation omitted).

⁴The Court hastens to note that its references to Attorney Reams throughout this Order in no way is a criticism of Mr. Reams. On the contrary, the Court understands that the attorneys simply are advocating for their clients within the confines of the law, which so far all attorneys in this case have done professionally. The Court references Attorney Reams in this Order to help explain why the Court believes Florida should adopt the federal preclusion test.

⁵By this time, both Mr. and Mrs. Miller had passed. The actual parties were the personal representatives of their estates. This distinction is not relevant for the outcome of the case, and thus for ease of reference the Court simply refers to Mr. and Mrs. Miller.

⁶The Keller decision did not address the situation here where a plaintiff objects to taking judicial notice of a prior proceeding. Instead, the Second District noted that the defendant did not challenge the discovery order on review on res judicata grounds. 230 So. 3d at 595 n.2. For that reason, the Court does not read Keller to align itself with the Fourth District’s decision in Norwich.

⁷This federalism-based difference in tests can lead to complications in application by courts. In explaining why federal preclusion rules apply to federal judgments, Justice Scalia writing for the Court explained that “State courts are bound to apply federal rules in determining the preclusive effect of federal-court decisions on issues of federal law.” Heck v. Humphrey, 512 U.S. 477, 488 n.9 (1994). Several terms later, Justice Scalia in writing for the Court in Semtek Intern., Inc. v. Lockheed Martin Corp., 531 U.S. 497, 506-509 (2001), clarified that under federalism principles that when a federal court sits in diversity, the preclusion law of the state applies to determine the preclusive effect of the judgment rendered by that federal court sitting in diversity. This has created competing lines of cases regarding the preclusive effect of federal judgments sitting in diversity. E.g., CSX Transportation, Inc. v. General Mills, Inc., 846 F. 3d 1333 (11th Cir. 2017) [26 Fla. L. Weekly Fed. C1157a]; Philadelphia Financial Management of San Francisco, LLC v. DJSP Enterprises, Inc., 227 So. 3d 612 (Fla. 4th DCA 2017) [42 Fla. L. Weekly D1693b].

⁸The federal test for res judicata requires that “(1) the prior decision was rendered by a court of competent jurisdiction; (2) there was a final judgment on the merits; (3) the parties were identical in both suits; and (4) the prior and present causes of action are the same.” Jang v. United Techs. Corp., 206 F.3d 1147, 1149 (11th Cir. 2000).