6 Fla. L. Weekly Supp. 200b
Insurance — Automobile — Rule against splitting causes of action does not apply to resolve insured’s breach of insurance contract claim based on insurer’s refusal to honor declaratory judgment finding insurer owed coverage to insured where applying the rule would result in injustice and unfairness — It is fundamentally offensive to concepts of fairness and justice that insurer could refuse to honor a declaratory judgment finding that it owed coverage to its insured on basis that insured did not liquidate damages during declaratory judgment proceeding
CARLOS WORRELL, Appellant, vs. NEW ALLIANCE INSURANCE COMPANY, Appellees. 11th Judicial Circuit in and for Dade County, Appellate Division. Case No. 95-354AP. Lower Case No. 95-1260-CC-21. Opinion filed June 28, 1996. An Appeal from the County Court, Victoria Sigler, Judge, in and for Dade County. Counsel: Charles L. Vaccaro, for Appellant. Laurie J. Johnson, for Appellee.
(Before MURRAY GOLDMAN, JENNIFER D. BAILEY, and MICHAEL A. GENDEN, JJ.)
(PER CURIAM.) Carlos Worrell was involved in an automobile accident. He sustained damages and filed an insurance claim with his insurance company, New Alliance. New Alliance denied coverage. In 1993, Mr. Worrell sued New Alliance, seeking a declaratory judgment on the coverage issue and damages for breach of the insurance contract.
At trial, Mr. Worrell voluntarily dismissed Count II, Breach of Contract. The bench trial proceeded on the issue of coverage. After hearing the evidence and considering the insurance company’s defenses, Judge Lauren Miller determined that Carlos Worrell was insured under New Alliance’s policy and “entitled to collision and all other benefits afforded by the policy as a result of the subject automobile accident.” The Trial Order went on to hold:
With regard to Plaintiff’s ore tenus motion to bifurcate the liability and damages issues at trial, which was made prior to the close of Plaintiff’s case and upon which the Court reserved ruling, it is further ORDERED AND ADJUDGED that said Motion to Bifurcate be and the same is hereby denied in that Plaintiff voluntarily dismisses Count II — Breach of Contract.
(script indicating handwritten portion of Final Judgment)
Mr. Worrell, declaratory judgment in hand, then resubmitted his claim to New Alliance again. New Alliance refused to pay — not contesting the amount due, but simply claiming forfeiture of coverage because the amount of damages was not determined during the first trial. Mr. Worrell filed a new suit based on breach of the insurance contract by virtue of the refusal to pay after the declaratory judgment had been rendered. The insurance company moved to dismiss based on the prohibition against splitting causes of action and res judicata. Mr. Worrell’s complaint was dismissed and this appeal was taken.
Based on the facts above, Mr. Worrell’s second case should not have been dismissed. Judge Miller’s judgment clearly does not contemplate that the insurance company would be able to avoid coverage by virtue of the entry of the final judgment finding coverage. Moreover, Judge Miller’s judgment indicates that the motion to bifurcate was not resolved until after the close of the case and the entry of the Trial Order on August 1, 1994. The facts in this case are unique; clearly there was substantial confusion on the morning of the trial as to whether the issues of coverage and damages had been bifurcated and further, as reflected in the court’s final judgment, what the status of the damages claim was at the conclusion of the declaratory judgment.
Courts are permitted to refuse to apply the rule against splitting causes of action where injustice and unfairness result. As the Florida Supreme Court states in Rosenthal v. Scott, 150 So. 2d 433 (Fla. 1961): “We can not be persuaded that we should create a truism out of the hackneyed saw: `it’s all law and not justice’…A rule such as the one under consideration should not be declared rigid, inflexible, and inexorable when such declaration would in many, many instances for the sake only of convenience to a putative wrongdoer, defeat the ends of justice.” Id. at 438, 439. Mr. Worrell has never had his day in court on the issue of his damages. It is fundamentally offensive to concepts of fairness and justice that this insurance company could refuse to honor a declaratory judgment finding that it owed coverage to its insured on the basis that the insured did not liquidate the damages during a declaratory judgment proceeding in this case. To rule in favor of the appellee in this matter would eviscerate Judge Miller’s order.
The rule against splitting causes of action is one made by the courts, and it would not be applied if doing so would frustrate the law or result in injustice. Schimmel v. Aetna Casualty & Surety Company, 506 So. 2d 1162 (Fla. 3d DCA 1987). If the rule were to be applied as New Alliance advocates in this case, the insurance company’s wrongful denial of coverage to its insured and its apparently deliberate refusal to honor the Court’s declaratory judgment would be ratified by this Court. We decline to apply the rule against splitting causes of action to resolve this insurance claim on such “gotcha” tactics and reverse, remanding to the trial court for trial.
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