In Download Kelly v. Lodwick (Fla. 4th DCA Case No. 4D09.4501, Opinion Filed April 6, 2011) PUBLIC ACCESS; STATED NOT FINAL, also published as 2011 WL 1261163 (Fla. 4th DCA April 6, 2011)(authorized password required to access Westlaw), the Appellate Court was faced with three choices for when the Statute of Limitations begins on an action for alleged negligence and breach of fiduciary duties:
- The date that the policyholder discovered that it lacked insurance coverage which the insurance agent allegedly was supposed to put in place;
- The date that the policyholder began to incur defense fees and expenses after it and another insured were sued by the injured claimant; or
- The date that the policyholder, the other insured, and the injured claimant agreed to a consent final judgment in the underlying case (which was in the amount of what would have been the policy limit of the "casualty policy" the agent allegedly was supposed to obtain for the policyholder).
Under Florida's four-year statute for bringing an action for negligence or for breach of fiduciary duties, only the second or third choice would allow the action against the agent to proceed. The Trial Court chose the first option. It twice granted the agent's motion to dismiss, with prejudice.
The Appellate Court chose the second option and rejected both the first and third choices. It apparently announced a new rule in doing so, although not the rule that might first appear.
The Appellate Court applied the law to the facts of the case before it. The law is well-known: "The last element constituting a cause of action for negligence or breach of fiduciary duty is the occurrence of damages." Kelly v. Lodwick, 2011 WL 121163 at *2.
The facts of this particular case were of course revealed only by allegations in the complaint against the insurance agent, because this was an appeal from a dismissal with prejudice. The policyholder in this case did not begin to incur damages until it began to incur expenses to defend itself. This particular policyholder alleged that it began to incur defense expenses after it was sued by the injured claimant.
That is when the Statute of Limitations began to run on the subsequent lawsuit filed against the insurance agent, because that is when the policyholder first incurred damages allegedly due to the absence of the "casualty policy" which it was the agent's alleged responsibility to get for the policyholder. "At that time, if the school had coverage with the second insurer, then the plaintiffs' suit against the school and the employee would have triggered the second insurer's duty to defend the school and the employee." Id. at *3.
The Appellate Court was careful to state that the holding it pronounced in this case was not intended to be a rule for all seasons, so to speak. The Court rejected the date of the settlement consent judgment in the underlying case because although that may have been the date when the policyholder and the other insured incurred the most damages, it was not the date that they first began to incur damages and thereby started the Statute of Limitations to run. Id. at *4.
Further, the Court rejected the argument (and the Trial Court's ruling) that the Statute of Limitations began to run in this case on the date that the policyholder in this case discovered that it did not have the insurance coverage (which was also the date of the underlying incident in this case). Moreover, there could be a fourth date when the Statute of Limitations might begin in other, future alleged negligence or fiduciary breach lawsuits against insurance agents for failure to procure insurance coverage. That would be in a case where the policyholder immediately incurred (or alleged that it immediately incurred) expenses after the alleged incident, to defend itself "against the plaintiffs' possible claim." Id. at *4. [Emphasis by the Appellate Court.]
The Appellate Court said again that the allegations in the complaint controlled the outcome on an appeal from a dismissal with prejudice in this case, just as the existence of genuine issues of material fact, or not, would govern the outcome of cases involving motions for summary judgment following discovery. "Rather, we recognize, as a factual matter, that situations may occur in which the party lacking insurance takes immediate steps to defend itself against the underlying plaintiffs' possible suit.... However, if such allegations do not appear on the face of the complaint, but discovery reveals the existence of such evidence, then a motion for summary judgment based on a statute of limitations affirmative defense may be granted instead." Id. at *4.
Please Read The Disclaimer.
Comments