28 Fla. L. Weekly Supp. 542a
Online Reference: FLWSUPP 2806CLAV
Insurance — Personal injury protection — Attorney’s fees — Confession of judgment — Where insurer brought action for declaratory relief against insured and her medical providers seeking determination that it had no obligations under policy and ratifying its decision to rescind policy, and insurer voluntarily dismissed actions against providers after it obtained default judgment against insured, providers are not entitled to attorney’s fees under section 627.428 — Neither providers nor insured obtained any judgment or decree against insurer entitling them to recover fees under section 627.428 — Voluntary dismissal from which providers did not receive any benefit is not functional equivalent of confession of judgment
IMPERIAL FIRE & CASUALTY INSURANCE COMPANY, Plaintiff, v. HAYDEE ESTAFANIE CLAVIJO, et. al., Defendants. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 2019-028249-CC-05, Section CC02. August 14, 2020. Lody Jean, Judge. Counsel: Alexander L. Avarello, McFarlane Law, Coral Springs, for Plaintiff. Benjamin Mordes, Jimenez, Hart & Mazzitelli, L.L.P., Miami, for Defendant Ceda Orthopedics & Interventional Medicine of South Miami, LLC. Matthew L. Lines, Deerfield Beach, for Defendant Baptist Hospital of Miami, Inc.
ORDER DENYING MOTION FOR ATTORNEY FEES
This cause came before the Court, on the motions for attorney fees of Ceda Orthopedics & Interventional Medicine of South Miami, LLC d/b/a Ceda Health, Ceda Orthopedics & Interventional Medicine of F.I.U. /Kendall, LLC, and Baptist Hospital (collectively, the Providers). Having heard argument, reviewed the pleadings and motions, and being otherwise fully advised in the premises, it is hereby ORDERED AND ADJUDGED that the motions are DENIED, for the reasons explained below.
Plaintiff Imperial Fire and Casualty Insurance Company (Imperial), filed the instant Complaint for Declaratory Relief under Chapter 86 and section 627.409 of the Florida Statutes. Imperial sought Court determination that it had no obligations under the insurance policy previously sold to the insured, Defendant Haydee Estafanie Clavijo (Insured), essentially ratifying its decision to rescind the policy after it discovered that she had misrepresented relevant information about her criminal record when obtaining the policy.
In addition to Ms. Clavijo, Imperial named several other defendants in the declaratory action, each medical providers who had treated Ms. Clavijo following an automobile accident and who had obtained assignments of benefits from her under the insurance policy. A default judgment was entered against Ms. Clavijo on April 16, 2020, after she failed to respond or appear.1 Also on April 16, but after obtaining the default final judgment, Imperial filed voluntary dismissals as to all remaining defendants, including the Providers. The Ceda Providers filed their motion for attorney fees on May 12, 2020, and Baptist filed its motion on May 18, 2020. The Court held hearings on these motions on June 25 and July 15, 2020.
The Providers, having been assigned the policy benefits and thus standing in the shoes of the insured, Ms. Clavijo, see Fla. Stat. section 627.736(8), argue that they are entitled to attorney fees under section 627.428 of the Florida Statutes, which awards fees to insureds who prevail in insurance contract disputes, and which is often implicated in personal injury protection (PIP) cases.2 Citing the “confession of judgment” doctrine announced in Wollard v. Lloyd’s & Companies of Lloyd’s, 439 So.2d 217 (Fla. 1983), which interpreted section 627.428, the Providers argue that the Court should treat the voluntary dismissals as confessions of judgment, entitling their recovery of attorneys’ fees.
The Third District explained the derivation of the confession of judgment doctrine:
Section 627.428 was intended to discourage the contesting of valid claims against insurance companies and to reimburse successful insureds for their attorney’s fees when they are compelled to defend or sue to enforce their insurance contracts. To that end, the Florida Supreme Court held in Wollard, that, although the statute requires the “rendition of a judgment” in favor of the insured, where an insurer pays the policy proceeds after a suit has been filed but before a judgment has been rendered, the payment of the claim is, indeed, the functional equivalent of a confession of judgment or a verdict in favor of the insured.
As a result, when an insurer voluntarily pays the disputed loss after suit is filed, “[section 627.428] must be construed to authorize the award of an attorney’s fee to an insured . . . even though technically no judgment for the loss claimed is thereafter entered favorable to the insured.” Wollard, 439 So. 2d at 218
Do v. GEICO Gen. Ins. Co., 137 So. 3d 1039, 1043 (Fla. 3d DCA 2014) [39 Fla. L. Weekly D455b] (citations, quotation marks and internal quotation marks omitted).3
Since Wollard, the confession of judgement doctrine has been expanded to cases where insurers have unsuccessfully contested their obligations in declaratory actions. The Providers rely on such cases here. E.g., O’Malley v. Nationwide Mutual Fire Insurance Company, 890 So.3d 1163 (Fla. 4th DCA 2004) [30 Fla. L. Weekly D5b]; Coppola v. Federated National Insurance Company, 939 So.2d 1171 (Fla. 4th DCA 2006) [31 Fla. L. Weekly D2658a]. In those cases, the insurers sought court decrees to avoid liability but notwithstanding such litigation, ultimately yielded, by providing the disputed insurance benefits to the insureds. In such circumstances, the courts held that the insureds were entitled to fees.
For example, in O’Malley, the insurer filed a declaratory action against the insured claiming there was no duty to defend or to provide disputed coverage. Nevertheless, the insurer did defend the insured in the related separate tort action, through and beyond trial, and ultimately secured a settlement and a dismissal with prejudice on behalf of the insured. The insurer thereafter voluntarily dismissed the declaratory action against the insured. Holding that the insured was entitled to attorney fees in defending against the declaratory action, the court explained that the voluntary dismissal was the functional equivalent of a confession of judgment. It noted that the insurer “furnished the insured precisely what [it] was contending the insured was not entitled to in its declaratory action.” Id., 890 So.3d at 1164
Similarly, in Coppola, the insured sought coverage from its insurance carrier after being sued in tort. In response, the insurer brought a separate declaratory action claiming the policy provided no coverage. The insured resisted the declaratory action and moved to dismiss. In the meantime, despite the pendency of the declaratory action, the insurance company went on to defend the insured against the tort claim. Subsequently, the insurer voluntarily dismissed the declaratory action. The court held that since the insurer had provided a defense to the tort claim, something it sought but failed to achieve in the declaratory action, the insured had essentially prevailed and was thus entitled to attorney fees — just as in O’Malley.
The Providers further cite Basik Exports & Imports, Inc. v. Preferred National Insurance Company, 911 So.2d 291 (Fla. 4th DCA 2005) [30 Fla. L. Weekly D2359a], a case where attorney’s fees were denied. They quote the following language, distinguishing O’Malley and another case where fees were awarded, to support their position: “[in the prior cases] the insurers, not the insureds, initiated the declaratory judgment actions. This forced the insureds to retain counsel and incur expense in defending these coverage disputes. It makes sense for the insurer to be responsible for fees when it voluntarily dismissed the declaratory judgment.” Id. at 293. Providers thus suggest that once an insurer initiates a declaratory action any subsequent voluntary dismissal is itself enough to trigger entitlement to fees. But the Providers omit the next crucial line: “In both cases, the insurer initiated the action for declaratory relief, caused the insured to incur attorney’s fees, and then tried to get ‘off-the-hook’ for those fees by settling the underlying claims.” Id. (emphasis added). So Basik too requires there to be more than mere voluntary dismissal, e.g., the insurer wrongly attempted to evade valid claims and/or the insured ultimately received a benefit, such as being given the disputed coverage or defense.
The Third District has spoken on this issue. In O.A.G. Corp. v. Britamco Underwriters, 707 So. 2d 785, 787 (Fla. 3d DCA 1998) [23 Fla. L. Weekly D208e], the court was similarly faced with an insurer who brought an action seeking a determination of no coverage. Its first complaint asserted fraud and recission claims in addition to the declaratory count. It voluntarily dismissed that complaint but shortly thereafter refiled a new case asserting only the declaratory claim. The insured sought fees after the voluntary dismissal in the first case, relying on Wollard’s confession of judgment doctrine. The court disagreed, however, explaining, “the Wollard doctrine does not apply because Britamco did not decline to defend its position regarding coverage — it has not offered to settle or pay the claim. . . . Under Section 627.428, an insured must obtain some form of recovery due to the voluntary dismissal to be considered a prevailing party for attorney’s fees. In this case, the insureds recovered nothing from Britamco’s voluntary dismissal.” (citations omitted).
The The Court has been unable to identify any recovery or benefit here either. Providers argue only that “the benefit bestowed on CEDA by way of the voluntary dismissal was a confession of judgment which entitled it to an award of attorney’s fees.” But this is circular logic — a confession of judgment is only imputed when a benefit has been achieved. And while it may be true, as the Ceda Providers argue, that the default judgment against Ms. Clavijo, does not prevent them from seeking recovery under the assigned policy benefits, it must be equally true that it does not entitle them to such recovery either. Such questions will presumably be resolved if and when they are presented in an appropriate case.4 And so O.A.G. dictates the outcome here. As in O.A.G., but unlike O’Malley and the others, Providers have demonstrated no benefit from Imperial’s voluntary dismissal nor any improper efforts by Imperial to evade responsibility. Indeed, none of the defendants received any benefit from Imperial and Imperial has not agreed to defend any named party in any lawsuit. On the contrary, Imperial rescinded Ms. Clavijo’s policy and brought this action seeking, successfully, a declaration that it did not have to insure her.
The Providers caution against relying on O.A.G. They say that it was decided by the wrong legal standard and is no longer good law. It is true that O.A.G. held that an order on attorney’s fees were reviewable by certiorari, a more deferential standard than straight appeal, and also true that that holding was abrogated by Caufield v. Cantele, 837 So.2d (Fla. 2002) [27 Fla. L. Weekly S1046a] which held that such disputes were reviewable by direct appeal after all. They urge that in applying the wrong standard of review, O.A.G. is in doubt, since under the correct standard the outcome may have been different. Fortunately, this Court need not speculate, nor delve into the precedential value of holdings reached in a certiorari context, rather than under direct review. For the Third District has already resolved the issue, having since re-embraced O.A.G. and its holding, see e.g., Do v. GEICO, 137 So.3d 1039 at 1045.
Do concerned the insured’s stolen vehicle. He sued for recovery under his policy, which GEICO disputed, claiming that he was complicit in the theft. GEICO later asserted counterclaims including fraud and civil conspiracy. Before then, however, GEICO paid the vehicle’s lienholder (Audi Bank) the full net value of the car. After prolonged inactivity the trial court granted both sides’ motions to dismiss for lack of prosecution. The Third District held that the insured was entitled to fees as to his original complaint under the confession of judgment doctrine, given GEICO’s payment from the policy. Id. at 1044. But it also held that the insured was not entitled for fees related to defending GEICO’s counterclaim, explaining:
Although Wollard requires GEICO’s earlier payment to be treated as the functional equivalent of a confession of judgment in Do’s favor, the trial court’s later dismissal for lack of prosecution was not a determination on the merits. Because the order of dismissal was not a judgment in favor of the insured, or, under the circumstances of this case, its functional equivalent, we affirm the trial court’s order denying Do’s motion for fees and costs with respect to the counterclaims. See Guarantee Ins. Co. v. Worker’s Temporary Staffing, Inc., 61 So. 3d 1233, 1235 (Fla. 5th DCA 2011) [36 Fla. L. Weekly D1092a] (concluding that insurer’s voluntary dismissal without prejudice was not concession on the merits and therefore not a judgment or functional equivalent of a confession of judgment under section 627.428); O.A.G. Corp., 707 So. 2d at 787 (Fla. 3d DCA 1998) [23 Fla. L. Weekly D208e], abrogated on other grounds by Caufield v. Cantele, 837 So. 2d 371 (Fla. 2002) [27 Fla. L. Weekly S1046a] (holding that insurer’s voluntary dismissal did not constitute an adjudication on the merits and therefore was not a judgment or the functional equivalent of a confession of judgment under section 627.428).
Do, 137 So.3d 1039 at 1044-45 (citations omitted). Do‘s citation to O.A.G., and to Guarantee Ins. Co., make clear that the law remains that voluntary dismissals do not constitute adjudications on the merits and therefore are not judgments or the functional equivalent of a confession of judgment, a holding which this Court is bound to follow.
Providers also argue that O.A.G. (and would presumably argue that Do) is further infirm given the Third District’s more recent en banc decision in De La Osa v. Wells Fargo Bank, N.A., 208 So.3d 259, 260 (Fla. 3d DCA 2016) [41 Fla. L. Weekly D2771a] which, they argue, makes clear that dismissals without prejudice are treated like final judgments, and effectively embraces Judge Schwartz’s dissent in O.A.G., 707 So.2d at 788, where he maintained that after a voluntary dismissal the other party has effectively “won” that piece of the litigation. But that argument conflates finality with victory. De La Osa had nothing to do with the Wollard doctrine. It does nothing to undermine the well-established requirement that the insured benefit for the doctrine to apply. True, this case is over and therefore final, but there has been no decision on the merits with respect to these parties.
The plain reading of Fla. Stat. 627.428 requires that an insured (or, in conjunction with other provisions, an assigned beneficiary) obtain a judgment or decree against the insurer to recover attorney fees. Neither Ceda nor Baptist nor Ms. Clavijo have received such a judgment or decree in this case. Similarly, under the expanded Wollard doctrine, a voluntary dismissal against the Providers here was not the functional equivalent of a confession of judgment that would entitle them to attorney fees.
Therefore, the Motions for Attorney Fees are respectfully DENIED.
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1The default judgment was amended and re-entered on June 10, 2020.
2Section 627.428 provides, in relevant part:
(1) Upon rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.
3The confession of judgement doctrine, and its deviation from the plain language of the statute, is not without its skeptics. See e.g., Mercury Ins. Co. v. Cooper, 919 So. 3d 491, 495 (Shepherd, J., dissenting) [30 Fla. L. Weekly D2648a].
4Though not briefed by either side, Imperial’s counsel explained that naming the Providers as defendants was to simply put “them on notice” as interested parties and also referred to them as “ancillary.”
