“[A] third-party bad-faith claim arises when an insurer is charged with defending its insured against an injured party’s lawsuit, and the insurer fails to reasonably settle within policy limits.” (citing Fridman v. Safeco Ins. Co., 185 So.3d 1214, 1220 (Fla. 2016))
How later courts described this case
- “[A] third-party bad-faith claim arises when an insurer is charged with defending its insured against an injured party’s lawsuit, and the insurer fails to reasonably settle within policy limits.” (citing Fridman v. Safeco Ins. Co., 185 So.3d 1214, 1220 (Fla. 2016))
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
SOUTHERN-OWNERS INSURANCE
COMPANY,
Plaintiff,
v. Case No. 8:21-cv-2567-VMC-MRM
GALATI YACHT SALES, LLC,
JEFFCO MARINE SERVICES, INC.,
and JEFFERSON FORAKER,
Defendants.
______________________________/
ORDER
This matter is before the Court on consideration of the
Motion to Dismiss filed by Plaintiff/Counter-Defendant
Southern-Owners Insurance Company (“Southern-Owners”) on July
1, 2022. (Doc. # 59). Defendant/Counter-Plaintiff Galati
Yacht Sales Inc. (“Galati”) has responded. (Doc. # 60). For
the reasons described below, the Motion is granted.
I. Background
This case involves an insurance dispute and an
underlying lawsuit between some of the parties.
A. The Underlying Lawsuit
On August 19, 2021, Jefferson Foraker sued Galati in
Florida state court for negligence (the “Underlying
Lawsuit”). (Doc. # 1). In his state-court complaint, Foraker
alleged that, through his business, Jeffco Marine Services,
Inc., he performed marine detailing work for Galati. (Id. at
1-2). On or about October 9, 2020, Foraker boarded a vessel,
the “Red Lion,” at Galati’s request to perform some marine-
detailing work. (Id. at 3). Galati required its
subcontractors, like Foraker, to wear shoe coverings so as
not to scuff the deck of the boats. (Id.). Foraker alleged
that, due to Galati’s alleged negligence, he fell from the
top of a tower or ladder on the boat, sustaining significant
injuries. (Id. at 3-4).
Manatee County Clerk of Court records and the parties’
briefs indicate that the Underlying Lawsuit is still open and
active.
B. The Insurance Policy
According to the operative complaint, Plaintiff
Southern-Owners Insurance Company issued a Garage Liability
Policy (the “Policy”) to Defendant Jeffco that was effective
from March 25, 2020, until March 25, 2021. (Doc. # 6 at ¶
12). The Policy contains an Additional Insured Endorsement,
stating that Galati is an additional insured under the Policy
“but only with respect to liability arising out of [Jeffco’s]
work for that insured by or for [Jeffco].” (Id. at ¶ 20).
Pursuant to that endorsement, Galati sought a defense and
indemnification from Southern-Owners in the Underlying
Lawsuit. (Id. at ¶¶ 15, 17).
The Policy also contains an Employer’s Liability
Exclusion, which excludes from coverage “Bodily injury to:
(a) [a]n employee of any insured arising out of and in the
course of employment by any insured.” (Id. at ¶ 21); see also
(Doc. # 1-3 at 1).
Finally, the Policy also contains a Worker’s
Compensation Exclusion, which provides that the insurance
policy does not apply to “[a]ny obligations that would be
payable under . . . worker’s compensation law[.]” (Doc. # 6
at ¶ 22).
C. The Instant Complaint and Counterclaim
In its amended complaint, Southern-Owners seeks a
declaratory judgment that (1) the Policy does not provide
insurance coverage for the claims alleged in the Underlying
Suit or any and all other claims arising from the incident
that occurred on October 9, 2020; and (2) that Southern-
Owners has no duty to defend or indemnify Galati for any and
all claims alleged in the Underlying Suit or any and all other
claims arising from the incident that occurred on October 9,
2020. (Id. at 6, 7-8, 9).
On June 10, 2022, Galati filed an answer to Southern-
Owners’ complaint and counterclaimed. (Doc. # 57). Galati
alleges that Southern-Owners “has failed to settle the claim
by Foraker within the coverages afforded within the policy,
despite the clear terms of the Subcontractor Agreement and
the Policy.” As a result of failing to settle, Galati claims,
Southern-Owners has breached the insurance contract. (Id. at
15).
Southern-Owners filed a Motion to Dismiss the
counterclaim on July 1, 2022, and Galati filed its response
on July 19, 2022. (Doc. ## 59, 60). The Motion is now ripe
for review.
II. Legal Standard
On a motion to dismiss pursuant to Rule 12(b)(6), this
Court accepts as true all the allegations in the complaint
and construes them in the light most favorable to the
plaintiff. Jackson v. Bellsouth Telecomms., 372 F.3d 1250,
1262 (11th Cir. 2004). Further, the Court favors the plaintiff
with all reasonable inferences from the allegations in the
complaint. Stephens v. Dep’t of Health & Human Servs., 901
F.2d 1571, 1573 (11th Cir. 1990). But,
[w]hile a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
level.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted). Courts are not “bound to accept as true
a legal conclusion couched as a factual allegation.” Papasan
v. Allain, 478 U.S. 265, 286 (1986). The Court must limit its
consideration to well-pleaded factual allegations, documents
central to or referenced in the complaint, and matters
judicially noticed. La Grasta v. First Union Sec., Inc., 358
F.3d 840, 845 (11th Cir. 2004).
III. Analysis
Southern-Owners argues that Galati’s counterclaim should
be dismissed on ripeness grounds because the counterclaim is
“essentially alleging a claim for bad faith.” (Doc. # 59 at
2). Galati agrees that a bad faith claim would not be ripe;
however, Galati contends that the counterclaim is not for bad
faith but instead for breach of contract. (Doc. # 60 at 2).
If Galati’s counterclaim is properly characterized as a bad
faith claim, then Galati’s counterclaim is not ripe.
“Under Florida law, it is inappropriate to litigate a
bad faith claim against an insurer until after any underlying
coverage dispute is resolved.” Md. Cas. Co. v. Alicia
Diagnostic, Inc., 961 So. 2d 1091, 1092 (Fla. 5th DCA 2007).
“If there is no insurance coverage, nor any loss or injury
for which the insurer is contractually obligated to
indemnify, the insurer cannot have acted in bad faith in
refusing to settle the claim . . . [and] the insured would
suffer no damages resulting from its insurer’s unfair
settlement practices.” Braddy v. Infinity Assurance Ins. Co.,
6:15-cv-00119-JA-GJK, 2016 WL 1446202, at *2 (M.D. Fla. Apr.
11, 2016) (quoting OneBeacon Ins. Co. v. Delta Fire
Sprinklers. Inc., 898 So. 2d 113, 115 (Fla. 5th DCA 2005)).
The Court agrees with Southern-Owners: Galati’s
counterclaim is one for bad faith. When determining the nature
of a claim, the Court looks through the form to the substance
of the claim. Valley Forge Christian Coll. v. Americans United
for Separation of Church & State, Inc., 454 U.S. 464, 477
(1982). Galati’s only substantive, factual allegation is that
Southern-Owners has failed to settle within the policy
limits. The allegation is better categorized as a third-party
bad faith claim, regardless of Galati’s desire to label it a
breach of contract claim. McNamara v. Gov’t Emps. Ins. Co.,
30 F.4th 1055, 1059 n.3 (11th Cir. 2022) (“[A] third-party
bad-faith claim arises when an insurer is charged with
defending its insured against an injured party’s lawsuit, and
the insurer fails to reasonably settle within policy limits.”
(citing Fridman v. Safeco Ins. Co., 185 So.3d 1214, 1220 (Fla.
2016))).1 Galati cannot couch its counterclaim that Southern-
Owners has failed to settle within the policy limits — a
classic bad faith claim — as a breach of contract claim to
avoid the ripeness issue.
Galati’s counterclaim is a bad faith claim and,
therefore, is not ripe. The underlying litigation is still
ongoing, and there has been no determination of coverage. The
Court dismisses Galati’s counterclaim without prejudice.
Razaqyar v. Integon Nat’l Ins. Co., No. 8:20-cv-2444-VMC-CPT,
2020 WL 6591195, at *3 (M.D. Fla. Nov. 11, 2020) (“The trend
in Florida’s appellate courts is to dismiss the bad faith
claim without prejudice, rather than abate it, and the weight
of authority from Florida’s District Courts of Appeal and
Supreme Court supports dismissal.”).
1 Whether the claim is a first-party or third-party bad claim
has no impact on the ripeness analysis. “For both first party
and third-party bad faith claims against insurers, recent
case law has clarified the point that coverage and liability
issues must be determined before a bad faith cause can be
prosecuted.” Razaqyar v. Integon Nat’l Ins. Co., No. 8:20-
cv-2444-VMC-CPT, 2020 WL 6591195, at *3 (M.D. Fla. Nov. 11,
2020) (quoting Gen. Star Indem. Co. v. Anheuser-Busch Cos.,
741 So. 2d 1259, 1261 (Fla. 5th DCA 1999)).
Accordingly, it is now
ORDERED, ADJUDGED, and DECREED:
(1) Plaintiff/Counter-Defendant Southern-Owners Insurance
Company’s Motion to Dismiss (Doc. # 59) is GRANTED.
(2) Defendant/Counter-Plaintiff Galati Yacht Sales LLC’s
counterclaim (Doc. # 57) is dismissed without prejudice.
DONE and ORDERED in Chambers in Tampa, Florida, this
25th day of August, 2022.
VIRGINIA M. HERNANDEZ’COVINGTON
UNITED STATES DISTRICT JUDGE