27 Fla. L. Weekly Supp. 193a

Online Reference: FLWSUPP 2702GREEInsurance — Personal injury protection — Motion to amend answer and affirmative defenses to include counterclaim for declaratory relief and third-party claim against named insured, seeking declaration that PIP policy was void ab initio due to misrepresentation on application, is denied, as insurer can secure complete relief in breach of contract action — Proposed counterclaim is untimely under rule 7.100 — Proposed third-party complaint against named insured does not comply with rule 7.100(e) where it fails to state how named insured would be liable to insurer for any part of claim of plaintiff/medical provider, an assignee of an omnibus insured

PHYSICIANS GROUP, L.L.C., a/a/o James Greene Sr., Plaintiff, v. CENTURY-NATIONAL INSURANCE COMPANY, a foreign profit corporation, Defendant. County Court, 12th Judicial Circuit in and for Sarasota County. Case No. 2018 SC 004549 NC. April 1, 2019. Maryann Boehm, Judge. Counsel: Nicholas A. Chiappetta, Lake Worth, for Plaintiff. Alexander Avarello, Coral Springs, for Defendant.ORDER ON DEFENDANT’S MOTION FOR LEAVETO AMEND ANSWER AND AFFIRMATIVE DEFENSESTO INCLUDE COUNTERCLAIM FOR DECLARATORYRELIEF AGAINST PLAINTIFF. THIRD-PARTY CLAIMFOR DECLARATORY RELIEF AGAINST EARL WORTHY

THIS MATTER, having come before the Court on March 11, 2019 for hearing on Defendant’s Motion for Leave to Amend Answer and Affirmative Defenses to include Counterclaim for Declaratory Relief against Plaintiff, Third-Party Claim for Declaratory Relief against Earl Worthy, and the Court having reviewed the motion, thoroughly reviewing the entire Court file, the relevant legal authorities, heard argument of counsel, and having been otherwise sufficiently advised in the premise, the Court finds as follows:

FACTS

1. On August 01, 2018, the Plaintiff filed a one count, breach of contract action against the Defendant in small claims court, for its failure to pay Personal Injury Protection benefits.

2. On December 20, 2018, the Defendant filed its Answer to the Complaint. In its Answer, the Defendant asserted material misrepresentation and rescission of insurance policy as its sole affirmative defense.

3. On January 22, 2019 the Defendant filed its Motion for Leave to Amend Answer and Affirmative Defenses to include Counterclaim for Declaratory Relief against Plaintiff (“Counterclaim”), Third-Party Claim for Declaratory Relief against Earl Worthy (“Third-Party Claim”) (collectively “Motion for Leave”).

4. The Defendant’s Counterclaim and Third-Party Complaint both sought declaratory relief in the form of a judicial decree declaring the applicable policy of insurance void ab initio due to alleged misrepresentations by the named insured on the policy application.

5. On January 25, 2019 the Plaintiff responded to Defendant’s Motion for Leave. In its response, the Plaintiff raised several issues, which included the following: (1) the Counterclaim and Third-Party Claim is subsumed by Plaintiff’s breach of contract claim; (2) there is no actual present or practical need for the declaration; (3) Defendant’s Counterclaim and Third-Party Claim for declaratory relief is procedurally improper; and (4) would create an absurd result that may have constitutional implication and is highly prejudicial to the Plaintiff.

6. The following additional motions were heard by the Court on March 11, 2019:

a. Defendant’s ore tenus Motion to Transfer Proceeding from Small Claims Court to County Civil (an untimely motion to invoke the Florida Rules of Civil procedure);

b. Defendant’s Motion for Relief from technical Admissions; and

c. Plaintiff’s Motion to Strike Defendant’s First Affirmative defense and/or Motion for More Definite Statement.

STANDARD

A court does not abuse its discretion in denying an amendment when “(1) the privilege to amend has been abused, (2) the amendment would be futile, or (3) the amendment would prejudice the opposing party.” S. Developers & Earthmoving, Inc. v. Caterpillar Fin. Services Corp., 56 So. 3d 56, 62-63 (Fla. 2d DCA 2011) [36 Fla. L. Weekly D405a]. The test of prejudice to the nonmoving party is the primary consideration in determining whether a motion to amend should be granted or denied. Lasar Mfg. Co. Inc. v. Bachanov, 436 So. 2d 236, 238 (Fla. 3d DCA 1983). “Futility justifies the denial of leave to amend where the complaint, as amended, would still be subject to dismissal.” Patel v. Georgia Dept. BHDD, 485 Fed. Appx. 982, 982 (11th Cir. 2012)(citing Burger King Corp. v. Weaver, 169 F.3d 1310, 1320 (11th Cir. 1999)).

CONCLUSIONS OF LAW

When a proceeding for a declaratory decree is initiated, if a law suit is already pending, which involves the same substantive issues and the party seeking the declaratory decree action may secure full, adequate and complete relief, such bill for declaratory decree will not be permitted to stand. See Taylor v. Cooper, 60 So. 2d 534, 535 (Fla. 1952); Cf. §86.111, Fla. Stat. (2018) and §87.12, Fla. Stat (1951). Similarly, in order to state a proper cause of action for declaratory relief pursuant to Chapter 86, Florida Statutes, the party seeking relief must plead and show the following:

i. There is a bona fide, actual, present practical need for the declaration;

ii. That the declaration deals with a present, ascertained or ascertainable state of facts or present controversy as to a state of facts;

iii. That some immunity, power, privilege or right to the complaining party is dependent upon the facts or the law applicable to the facts;

iv. That there is some person or persons who have, or reasonably may have, an actual, present, adverse and antagonistic interest in the subject matter, either in fact or law;

v. That the antagonistic and adverse interests are all before the Court by proper process or class representation; AND,

vi. That the relief sought is not merely giving of legal advice by the Court or the answer to questions propounded from curiosity.

Coal. for Adequacy & Fairness in Sch. Funding Inc. v. Chiles, 680 So. 2d 400, 404 (Fla. 1996) [21 Fla. L. Weekly S271a](emphasis added); City Of Hollywood v. Petrosino, 864 So. 2d 1175, 1177 (Fla. 4th DCA 2004) [29 Fla. L. Weekly D163a].

The Court finds that Chapter 86, Florida Statutes requirement for an actual present practical need for the declaration is negated by the Defendant’s ability secure full, adequate and complete relief in Plaintiff’s breach of contract action. Simply stated, there is no present need for the declaration because the Defendant can secure full, adequate and complete relief from the pending breach of contract claim. At the hearing the Defendant argued that the scope of its requested declaratory actions are larger in scope than the Plaintiff’s breach of contract action and that it could be subject to multiple lawsuits under the same insurance policy. The Court find that these arguments are speculative and without merit because the Defendant failed to present any evidence to support its contention as to multiple lawsuits arising in this case. And, even if it could, the Court finds that the doctrine collateral estoppel or issue preclusion could potentially prevent re-litigation of the issues in this case since the underlying right to sue is derived from an indirect party; the named insured.

A party includes both those in privity and those who could virtually represent the party. Tammy Parrot. et al. v. Willis of Florida, Inc., et al., 26 Fla. L. Weekly Supp. 196a. 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) (“[o]ne 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].

In that same vein, the Defendant’s petition(s) for declaratory relief pursuant to Chapter 86, Florida Statutes, is in reality, a simple breach of contract action in a first-party insurance claim for damages. Both the Defendant’s Counterclaim and Third-Party Claim pertain to its breach of contract defense of material misrepresentation and rescission (per section 627.409, Florida Statutes and/or the insurance policy), and the requested declaratory relief pertains to same. The Defendant in both, its Counterclaim and Third-Party Complaint, has not alleged any new issues nor has it requested relief that would fall outside the scope its breach of contract defense for rescission. A plain reading of the Defendant’s Counterclaim and Third-Party Claim, staying strictly within the proposed Amended Complaints’ four corners, there is no doubt that the real dispute is a factual one concerning whether or not a material misrepresentation was made by the Defendant’s insured. Accordingly, the Court finds that the Defendant’s requested declaratory judgment action is subsumed by the previously pending breach of contract action, it would not serve any useful purpose under the circumstances of this case and that it very well may impair the Plaintiff’s rights. See, e.g., Legion Ins. Co. v. Moore, 846 So. 2d 1183, 1187 (Fla. 4th DCA 2003) [28 Fla. L. Weekly D1195a] (distinguishing between first and third-party insurance claims and stating that an insurer cannot avoid a jury trial by simply filing a declaratory judgment action in which the judge alone is to determine the disputed fact); Taylor, 60 So. 2d 535; Miami Yacht Charters, LLC. v. National Union Fire Ins. Comp. of Pittsburgh Penn., 2012 WL 1416428 (S.D. Fla. 2012)(citing to Fernando Grinberg Trust Success Int’l Props., LLC v. Scottsdale Ins. Co., No. 10-20448-Civ, 2010 WL 2510662, at *1 (S.D. Fla. Jun.21, 2010), for the proposition that “[a] court must dismiss a claim for declaratory judgment if it is duplicative of a claim for breach of contract. . . .”); Tampa Park Apartments v. Sec’y., Hous. & Urban Dev., 8:14-CV-1230-T-23AEP, 2015 WL 1418750, at *3 (M.D. Fla. Mar. 27, 2015)(dismissing Defendant’s counterclaim counts as redundant affirmative defenses).

The Court is cognizant of Higgins v. State Farm Fire & Cas. Co., 894 So. 2d 5 (Fla. 2004) [29 Fla. L. Weekly S630a] (“Higgins II”), which found that an insurer may pursue declaratory relief that requires a judicial determination of the existence or nonexistence of a fact upon which the insurer’s obligation to defend or indemnify may arise in a third-party insurance claim. However, the court based its ruling on the premise that before parties litigate a third-party action, an insured should know if insurance coverage exists — to determine how best to proceed; and an insurer should know whether they have a duty to defend or indemnify its insured in the event liability is determined or established. In this first party insurance claim, the rational presented in Higgins II, is simply not present. See. Legion Ins. Co., 846 So. 2d at 1187.

In this case, the Defendant is not simply looking to the Court to declare that it has no duty to defend or indemnify its insured. The reason the Defendant cannot request the aforementioned relief is because its insured is not a party to this first party action. Moreover, the Defendant is simply attempting to take over the litigation for its own benefit and at the expense of the Plaintiff. The Court finds that the Defendant’s proposed amendment would be highly prejudicial and may imped on the Plaintiff’s rights. A declaratory remedy is not a tactical device whereby a party who would be a defendant in a coercive action may choose to be a plaintiff if he can beat the other party to the courthouse. Casualty Indem. Exch. v. High Croft Enters., Inc., 714 F.Supp. 1190, 1193 (S.D.Fla.1989).

Additionally, the Court finds Defendant’s proposed Amendments untimely under Florida Small Claims Rule 7.100 (requiring a compulsory counterclaim to be filed five days prior to the pretrial conference or deeming the counterclaim abandoned).

Lastly, Defendant’s proposed Third-Party Complaint fails to comply with 7.100(e) in that it fails to state how, if at all, the named insured would be liable to the Defendant for all or part of the Plaintiff’s claim (whose assignor was an omnibus insured). See, e.g., Dacryn Corporation v. Peacock, 630 So.2d 1169, 1170 (Fla. 2d DCA 1993) (third-party claim cannot exist in absence of a claim for indemnity); see State Farm Mut. Auto. Ins. Co. v. People’s Gas Systems. Inc. and Avery L. Jones. et al., 6 Fla. L. Weekly Supp. 50b (citing to Dacryn Corporation).

Accordingly, it is hereby, ORDERED AND ADJUDGED:

1. The Defendant’s Motion for Leave to Amend Answer and Affirmative Defenses to include Counterclaim for Declaratory Relief against Plaintiff, and Third-Party Claim for Declaratory Relief against Earl Worthy is hereby DENIED;

2. The Defendant’s ore tenus Motion to Transfer Proceeding from Small Claims Court to County Civil is hereby DENIED;

3. The Plaintiff’s Motion to Strike Defendant’s First Affirmative defense and/or Motion for More Definite Statement is hereby DENIED; and

4. The Defendant’s Motion for Relief from technical Admissions is hereby GRANTED per agreement of the parties.