Lewis v. Allied World Specialty Insurance Company

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 20-cv-20677-ALTMAN/Reid

GUY LEWIS, et al.,

Plaintiffs,

v.

ALLIED WORLD SPECIALTY

INSURANCE CO.,

Defendant.

_________________________________/

ORDER GRANTING MOTION FOR RECONSIDERATION

The Plaintiffs—Guy Lewis and Michael Tein—sued Jose M. Herrera and the Herrera Law

Firm, P.A., in state court, asserting claims of civil conspiracy, aiding and abetting malicious

prosecution, and abuse of process. After some litigation, the Plaintiffs settled their claims with Herrera

for $22,097,987. As part of that settlement, the Plaintiffs agreed never to collect from Herrera, who

then assigned to the Plaintiffs his right to sue his insurer, Allied World Specialty Insurance Company

(our Defendant). With that Coblentz1 agreement in hand, the Plaintiffs filed this lawsuit, advancing two

claims: a breach-of-contract claim (Count I) and a bad-faith claim (Count II)—both stemming from

1 These agreements get their name from the Fifth Circuit’s decision in Coblentz v. American Surety Co. of

New York, 416 F.2d 1059 (5th Cir. 1969). See Travelers Indem. Co. of Conn. v. Richard Mckenzie & Sons,

Inc., 10 F.4th 1255, 1260 (11th Cir. 2021) (“When an insurance company wrongfully refuses to defend

its insured, Florida law lets the insured settle the case himself in exchange for the plaintiff’s promise

to collect the settlement only from the insurance company. That type of settlement is called a ‘Coblentz

agreement,’ named for the Fifth Circuit case that first approved one.”) “Since the Coblentz decision,

courts in the Eleventh Circuit and Florida have set out three requirements that a party seeking to

recover the amount awarded in a consent judgment pursuant to a Coblentz agreement must prove: (1)

that the insurer wrongfully refused to defend; (2) that the insurer had an obligation to cover the loss

or indemnify under the policy; and (3) that the settlement was objectively reasonable and made in

good faith.” Petro v. Travelers Cas. & Sur. Co. of Am., 54 F. Supp. 3d 1295, 1302 (N.D. Fla. 2014)

(Rodgers, C.J.).

the Defendant’s alleged refusal (1) to defend Herrera in the underlying lawsuit and (2) to offer the

Plaintiffs the policy limits ($1,000,000). See Complaint [ECF No. 1] at 5–7. The Defendant promptly

moved to dismiss Count II, arguing that, under Florida law, “a cause of action for bad faith is not ripe

as there has been no determination of coverage or that the Coblentz Agreement is enforceable.”

Defendant’s Motion to Dismiss Complaint Count II (“MTD”) [ECF No. 9] at 5. As the insurer

explained in its MTD: “Because there has been no final determination as to coverage, liability, or

damages, the bad faith count is premature, and should be dismissed for failing to state a cause of

action on which relief can be granted.” Id. at 1. Citing two inapposite cases from Florida’s District

Courts of Appeal, the then-presiding Judge denied the MTD.2 See Order Denying MTD [ECF No.

31].

A couple weeks later, the Defendant filed this Motion for Reconsideration (“Motion”) [ECF

No. 32]. In that Motion, the Defendant asks us to reconsider the prior Judge’s Order Denying MTD

because “fundamental and established principles relating to the enforceability of Coblentz agreements,

and an insurer’s potential liability for bad faith after a Coblentz agreement has been entered, have been

conflated.” Id. at 1. According to the Defendant, “(1) coverage is not an element of a third party bad

faith claim in the context of enforcing a Coblentz agreement, and (2) a bad faith claim is ripe only after

there is a final determination of liability and damages against the insurer, not simply against the insured

in the underlying action.” Id. at 4. As the Defendant correctly explains, the enforceability of a Coblentz

agreement “proceeds in two separate parts.” Id. at 1. First, “the court determines the validity and

enforceability of the Coblentz agreement.” Ibid. At this first step, the plaintiff must prove: “(1) coverage

under the insurance policy, (2) that the insurer wrongfully refused to defend its insured, and (3) that

the settlement was objectively reasonable and made in good faith.” Id. at 5. Second, and only after “all

2 This case was originally assigned to Judge Ursula Ungaro of our Court. In June of 2021, however,

Judge Ungaro retired, and the case was reassigned to us. See Notice of Reassigned Case [ECF No. 49].

three of these elements have been finally decided, through final resolution in the appellate courts,” id.

at 2, the plaintiff can allege “that Allied World acted in bad faith” and seek “damages in excess of the

policy limit,” id. at 4.

In their Response to the Motion for Reconsideration (“Response”) [ECF No. 33], the

Plaintiffs never really challenge the Defendant’s positions (or citations) directly. They, instead, cite the

standard for reconsideration under FED. R. CIV. P. 59(e) and quibble with whether—and to what

extent—the Defendant has ignored that standard. See generally Response. On December 5, 2022, we

held a hearing on the Motion, at which the parties presented their oral arguments. See Paperless Minute

Entry for Proceedings Held Before Judge Roy K. Altman [ECF No. 65]. Having now carefully

reviewed the parties’ briefs—and for the reasons outlined below—we GRANT the Motion and

DISMISS Count II of the Complaint without prejudice.

THE STANDARD OF REVIEW

In their Response, the Plaintiffs contend that, “[w]hen, as here, a motion for reconsideration

is served within twenty-eight days of the entry of the order at issue, [Rule 59(e)] applies.” Response at

2. “Rule 59(e) does not set forth specific criteria, but courts have delineated three grounds justifying

reconsideration under the rule: ‘(1) an intervening change in controlling law; (2) the availability of new

evidence; and (3) the need to correct clear error or prevent manifest injustice.” Ibid. According to the

Plaintiffs, “[n]one of these criteria apply here.” Ibid.

But, as the Defendant rightly notes, our power to reconsider the MTD is “not derived from

Federal Rule Civil Procedure 59, which applies to final judgments.” Reply [ECF No. 37] at 2. Since

Judge Ungaro entered no judgment as to Count II—indeed, since no judgment has been entered in

this case at all—Rule 59 doesn’t apply here, which is reason enough to reject the Plaintiffs’ principal

contention. See Ryan v. Allstate Ins. Co., 2020 WL 7353898, at *2 (S.D. Fla. Dec. 15, 2020) (Altman, J.)

(“As a preliminary matter, the Plaintiffs’ wholesale reliance on the wrong legal standard—indeed, on

the wrong jurisdiction’s legal regime—provides sufficient grounds, standing alone, to deny the

Motion.” (first citing Aldar Tobacco Grp. LLC v. Am. Cigarette Co., Inc., 2010 WL 11601994, at *1 (S.D.

Fla. Dec. 29, 2010) (Jordan, J.) (“[The plaintiff cites] seven cases, arguing that they show that, even

where the motion lacks legal authority, a court should consider the motion on the merits. But those

cases state the opposite.”); and then citing Belony v. Amtrust Bank, 2011 WL 2297669, at *2 (S.D. Fla.

June 8, 2011) (Marra, J.) (“Even if this were true, which depends on other factors Defendant does not

address, Defendant’s failure to cite any authority for this principle makes it difficult for the Court to

rule in its favor. Defendant’s deficient memorandum of law is itself a basis to deny its motion.”))).

But here’s the thing: The Plaintiffs would lose even if they had cited the right legal rule—

which, in this case, appears to be Rule 54(b). See FED R. CIV. P. 54(b) (“[A]ny order or other decision,

however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than

all the parties . . . may be revised at any time before the entry of a judgment adjudicating all the claims

and all the parties’ rights and liabilities.”). “Motions for reconsideration, whether considered under

Rule 54(b) (like this one), Rule 59(b), or Rule 60(b), are generally all evaluated under the same

standard.” Jones v. City of Palm Beach Gardens, 2022 WL 16745733, at *2 (S.D. Fla. Nov. 7, 2022) (Scola,

J.) (citing Region 8 Forest Serv. v. Alcock, 993 F.2d 800, 805–06 (11th Cir. 1993) (“We see no reason to

apply a different standard when the party seeks reconsideration of a non-final order.”)). To prevail

under Rule 60(b), the movant must show: “(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time

to move for a new trial under Rule 59(b); (3) fraud . . . misrepresentation, or misconduct by an

opposing party; (4) [that] the judgment is void; (5) [that] the judgment has been satisfied, released or

discharged; [that] it is based on an earlier judgment that has been reversed or vacated; or [that] applying

it prospectively is no longer equitable; or (6) any other reason that justifies relief.” FED. R. CIV. P.

60(b).

“In addressing a motion to reconsider a prior decision, two opposing policies must be

balanced: on the one hand, the desirability of finality, and on the other, the public interest in reaching

the right result.” Jones, 2022 WL 16745733, at *2 (citing Civ. Aero. Bd. v. Delta Air Lines, Inc., 367 U.S.

316, 321 (1961)). “To balance these competing principles, courts generally permit reconsideration

where there is newly discovered evidence, a manifest error of law or fact, or where justice so requires.”

Ibid. (first citing In re Kellogg, 197 F.3d 1116, 1119 (11th Cir. 1999); and then citing Vila v. Padron, 2005

WL 6104075, at *1 (S.D. Fla. Mar. 31, 2005) (Altonaga, J.)). Ultimately, we conclude that, whatever

the standard, the Defendant has shown that reconsideration is necessary to prevent “a manifest error

of law or fact[.]” Ibid.

ANALYSIS

The parties agree that Florida law governs this case.3 And Florida law is clear that, in the

context of a first-party insurance claim, “[a]n insured’s underlying first-party action for insurance

benefits against the insurer necessarily must be resolved favorably to the insured before the cause of

action for bad faith in settlement negotiations can accrue.” Blanchard v. State Farm Mut. Auto. Ins. Co.,

575 So. 2d 1289, 1291 (Fla. 1991). As the Florida Supreme Court has explained:

If an uninsured motorist is not liable to the insured for damages arising from an

accident, then the insurer has not acted in bad faith in refusing to settle the claim.

Thus, an insured’s underlying first-party action for insurance benefits against the

insurer necessarily must be resolved favorably to the insured before the cause of action

for bad faith in settlement negotiations can accrue. It follows that an insured’s claim

against an uninsured motorist carrier for failing to settle the claim in good faith does

not accrue before the conclusion of the underlying litigation for the contractual

uninsured motorist insurance benefits. Absent a determination of the existence of

liability on the part of the uninsured tortfeasor and the extent of the plaintiff’s

damages, a cause of action cannot exist for a bad faith failure to settle.

3 See MTD (relying only on Florida law); Plaintiffs’ Response in Opposition to Defendant’s Motion to

Dismiss Complaint Count II (“MTD Response”) [ECF No. 16] (same); Defendant’s Reply to

Response in Opposition to Motion to Dismiss Count II (“MTD Reply”) [ECF No. 18] (same); see also

Motion for Reconsideration (citing only Florida law); Response (same); Reply (same).

Ibid.; see also Vest v. Travelers Ins. Co., 753 So. 2d 1270, 1276 (Fla. 2000) (“We continue to hold in accord

with Blanchard that bringing a cause of action in court for violation of section 624.155(1)(b) [bad faith]

is premature until there is a determination of liability and extent of damages owed on the first-party

insurance contract.” (cleaned up)).

The Plaintiffs don’t contest any of this. Instead, they insist that Florida courts have carved out

an exception to this well-established rule for third-party claims—i.e., for situations like the one we have

here, where the insurer is sued, not by its insured, but by the party who’s settled with the insured. In

the Plaintiffs’ view, then, their “bad faith claim is not premature because it is a third-party bad faith

claim” based on the Defendant’s failure to defend its insured (Herrera). MTD Response at 3 (cleaned

up). According to the Plaintiffs, “third-party bad faith cases involving an insurer’s failure to defend”

have treated “proof of coverage” as an element—and “not as a precondition”—to the filing of the

bad-faith claim. Id. at 4. The Plaintiffs also maintain that “the[ir] Coblentz agreement is the functional

equivalent of a judgment in excess of the policy.” Ibid.

In her Order Denying the MTD, the prior Judge agreed with the Defendant that a first-party

bad-faith claim cannot proceed until questions of coverage have been resolved. See Order Denying

MTD at 6–7 (“It is well settled that a statutory first-party bad faith action is premature until two

conditions have been satisfied: (1) the insurer raises no defense which would defeat coverage (an issue

for the judicial process rather than the appraisal process), or any such defense has been adjudicated

adversely to the insurer; and, (2) the actual extent of the insured’s loss must have been determined.”

(cleaned up)). But she sided with the Plaintiffs on the all-important question of whether Florida law

has cut out an exception to this principle for third-party claims. See id. at 5–6 (“While coverage may be

a condition precedent to bring a statutory first-party bad faith claim, it is not a condition precedent to

bringing a common law third-party bad faith claim.”). For three reasons, we think the prior Judge was

plainly wrong to say so.

First, the Florida Supreme Court has repeatedly made clear that “first-party bad faith claims .

. . should be treated in the same manner as third-party bad faith claims.” Fridman v. Safeco Ins. Co. of Ill.,

185 So. 3d 1214, 1221 (Fla. 2016); see also Allstate Indem. Co. v. Ruiz, 899 So. 2d 1121, 1126 (Fla. 2005)

(“[W]ith the enactment of section 624.155 in 1982 . . . the Florida Legislature resolved this inequity

and recognized the power disparity as it created a statutory first-party bad faith cause of action for

first-party insureds, thereby eliminating the disparity in the treatment of insureds aggrieved by an act

of bad faith on the part of their insurers regardless of the nature of the type of claim presented.” (emphasis

added)). And with good reason:

As this Court has recognized, “previous actions of this Court limiting

the relief afforded under section 624.155 based upon distinctions

between first- and third-party claims have been rebuked by the

Legislature” by the 1992 enactment. Indeed, section 624.155 itself does

not distinguish between first- and third-party bad faith actions and

contains the same language that has been used in the third-party bad

faith context. Consequently, first-party bad faith claims under section 624.155

should be treated in the same manner as third-party bad faith claims.

Importantly, in both first- and third-party bad faith actions, an element

of damages includes any amount in excess of the policy limits.

Fridman, 185 So. 3d at 1221 (emphasis added & cleaned up) (quoting Ruiz, 899 So. 2d at 1128 n.2).

And the DCAs have followed suit. Take, for instance, GEICO General Ins. Co. v. Harvey, 109

So. 3d 236 (Fla. 4th DCA 2013), where an insurer appealed from the trial court’s denial of its motion

to dismiss. Reversing the trial court, Judge Gross (writing for the Fourth DCA) explained:

An insurance bad faith action does not accrue until the issue of

coverage under the policy has been determined. See Blanchard v. State

Farm Mut. Auto. Ins. Co., 575 So. 2d 1289, 1291 (Fla. 1991); Vest v.

Travelers Ins. Co., 753 So. 2d 1270, 1276 (Fla. 2000) (clarifying Blanchard

and continuing to hold that a bad faith claim is premature and should

be dismissed where the issues of liability and the extent of coverage

under the policy are unresolved); Progressive Select Ins. Co. v. Shockley, 951

So. 2d 20 (Fla. 4th DCA 2007) (granting certiorari from an order

denying a motion to dismiss a first party bad faith claim and granting

relief because the issue of damages had not yet been determined in the

coverage action). Thus, the bad faith cause of action did not accrue

until well after the tort cause of action and did not arise from the same

occurrence.

The Florida Supreme Court has repeatedly recognized that a “‘claim

arising from bad faith is grounded upon the legal duty to act in good

faith, and is thus separate and independent of the claim arising from

the contractual obligation to perform.’” Dadeland Depot, Inc. v. St. Paul

Fire & Marine Ins. Co., 945 So. 2d 1216, 1235 (Fla. 2006) (quoting

Blanchard, 575 So. 2d at 1291). Similarly, a defendant’s bad faith claim

against his insurer is distinct, separate and independent from the

plaintiff’s tort claim against the defendant.

Id. at 239–40. “[T]he trial court” had thus “departed from the essential requirements of law by denying

the insurer’s motion to dismiss,” because a “third party bad faith claim against an insurer for failure

to settle may not be brought in the underlying tort action but must be raised in a separate cause of action.” Id. at 240

(emphasis added). Since Florida courts have expressly and unanimously held that first- and third-party

bad-faith claims should be treated the same, we’re not free to treat them differently. See, e.g., Cadle v.

GEICO Gen. Ins. Co., 838 F.3d 1113, 1121 (11th Cir. 2016) (“In diversity cases, we apply the

substantive law of the forum state.” (citing Bravo v. United States, 577 F.3d 1324, 1325 (11th Cir. 2009)));

Venn v. St. Paul Fire & Marine Ins. Co., 99 F.3d 1058, 1063 (11th Cir. 1996) (“[T]he district court is

required to follow the Florida Supreme Court’s decision on an issue of Florida law[.]”).

Second, in the world of Coblentz agreements, there’s really no reason to create an exception for

third-party claims. The Plaintiffs, after all, may only sue the Defendant by virtue of an assignment they

received from the (first-party) insured. Through that assignment, the Plaintiffs now “stand[ ] in the

shoes of the insured”—and are thus suing the Defendant under the guise of the insured himself.

Fridman, 185 So. 3d at 1220 n.2; see also Bos. Old Colony Ins. Co. v. Gutierrez, 325 So. 2d 416, 417 (Fla. 4th

DCA 1976) (“As a third party beneficiary of the insurance policy, Gutierrez [the plaintiff] stands in

the same posture as that of Brown, the insured.”); United Servs. Auto. Ass’n v. Jennings, 707 So. 2d 384,

385 (Fla. 1st DCA 1998) (“Generally, the third party in a third party bad-faith action stands in the

shoes of the insured[.]”), aff’d 731 So. 2d 1258 (Fla. 1999); Ilias v. USAA Gen. Indem. Co., 545 F. Supp.

3d 1296, 1301 (M.D. Fla. June 24, 2021) (Jung, J.) (“Florida case law also allows a third-party claimant

. . . to step into the shoes of the insured and sue an insurer directly for its bad faith in failing to settle

a claim on behalf of its insured.”). We usually don’t carve out exceptions to well-worn rules without a

good reason for doing so.

Third, no Florida court has ever recognized a third-party exception to the rule the Florida

Supreme Court first enunciated in Blanchard—the rule it has since reiterated in Ruiz, Vest, and Fridman.

In suggesting that Florida law does countenance such an exception, the prior Judge—and our

Plaintiffs—relied on two DCA cases: Independent Fire Ins. Co. v. Paulekas, 633 So. 2d 1111(Fla. 3d DCA

1994); and Fla. Farm Bureau Mut. Ins. Co. v. Rice, 393 So. 2d 552 (Fla. 1st DCA 1980). But, as we’re

about to see, neither case even hints at any such exception.

The plaintiff in Paulekas “was piloting his boat in the Florida Keys, when he was approached

by a boat piloted by Clifford Richardson.” Paulekas, 633 So. 2d at 1111. Unfortunately, “Richardson

failed to turn his boat to the right . . . causing the two vessels to collide.” Ibid. Paulekas and his wife

“sued Richardson and the owner of the boat, Gerald Severinghaus,” who “had a homeowner’s policy

with Independent.” Ibid. While Independent “initially represented” Severinghaus and Richardson, it

“denied that the Severinghaus boat was covered under the policy, and subsequently filed a declaratory

judgment action against Severinghaus and Richardson.” Id. at 1112. Finding “that there was no

coverage under Independent’s policy,” the trial court “granted Independent’s motions for summary

judgment” in the declaratory action, and (as a result) “Independent withdrew its defense of

Richardson.” Ibid. Richardson—who “feared that he was facing a large adverse judgment”—“agreed

to judgment in favor of the Paulekases for $650,000” and “assigned any claims he had against

Independent for policy benefits or bad faith.” Ibid.

With this assignment in hand, the Paulekas Plaintiffs turned around and sued Independent,

“seeking to enforce the consent judgment and asserting a bad faith claim.” Ibid. (emphasis added). Put a

pin in this last (highlighted) phrase because, as it turns out, it’s the only part of this case our Plaintiffs

(and the prior Judge) relied on. As the litigation proceeded, the Paulekases filed a motion for summary

judgment, arguing that “Independent could not avoid coverage, citing to Florida’s anti-technical

statute, Section 627.409(2), Florida Statutes (1987).” Ibid. “The trial court granted the Paulekases’

motion for summary judgment, concluding that there was coverage for the accident,” and the case

went to trial on the “issue of the enforceability of the consent judgment against independent.” Ibid.

“[T]he jury returned a verdict in favor of the Paulekases, finding that the consent judgment was

reasonable and the trial court entered judgment against Independent for $650,000, plus accrued

interest.” Ibid.

On appeal, the Third DCA affirmed the trial court’s finding that “the consent judgment [was]

valid.” Id. at 1113. But “it was error for the trial court to [conclude], as a matter of law, that

Independent was obligated to provide coverage for the accident in question” because Florida’s anti-

technical statute “does not apply to homeowner’s insurance,” and because there was a “material

question of fact [ ] as to the date on which the boat was purchased by its insured[.]” Ibid. “Naturally,”

the court added, “that judgment will only become relevant, as to Independent, if, and when, the trial

court determines that Independent is obligated to provide coverage for the accident in question.” Id.

at 1114.

As this recitation makes plain, despite the DCA’s passing reference to a “bad faith claim,” id.

at 1112, the appellate court never had occasion to decide whether the plaintiffs’ bad-faith claim should

be conjoined with the breach-of-contract claim, because the bad-faith claim was never presented to the

jury—and thus was never discussed on appeal. As we noted during the hearing we held on this issue,

the verdict form the jury signed at the end of the Paulekas trial makes clear that the jurors considered

one—and only one—question: “Was the amount of Final Consent Judgement entered February 22,

1991 reasonable?” Verdict Form, Indep. Fire Ins. Co. v. Paulekas et al., 91-20007 (Fla. 16th Cir. Ct. Dec.

23, 1992).4 Since the jury never addressed the plaintiffs’ bad-faith claim, the Third DCA’s opinion—

which didn’t consider or resolve any part of that claim—cannot be read as creating an exception for

that kind of claim.

The First DCA’s opinion in Rice is no more helpful. In that case, Gene Rice “recovered a

consent judgment of $75,000 (plus costs) against Wayne Eichholz, driver of the car which struck the

motorcycle ridden by Rice.” Rice, 393 So. 2d at 553. Eichholz’s insurer, Farm Bureau, “denied coverage

for the accident and refused to defend Eichholz in the suit.” Ibid. “The trial court appointed an

attorney to represent Eichholz,” and “judgment was subsequently entered based on the consent

agreement.” Ibid. With his assignment complete, Rice sued Farm Bureau “for the full amount of the

judgment obtained.” Ibid. After a bench trial, the court entered judgment against Farm Bureau “on

the full amount of the personal injury judgment plus interest and costs.” Ibid. Farm Bureau appealed,

arguing that the trial court erred by “(1) holding that there was coverage under the insurance policy;

(2) finding Farm Bureau was guilty of bad faith; and (3) approving the consent judgment entered in

the personal injury action.” Id. at 554. Affirming the trial court, the First DCA had only this to say

about the bad-faith claim: “Assuming that bad faith is required for recovery over policy limits in a case

such as this where there is a refusal to defend, the trial court’s finding of bad faith is supported by the

evidence.” Id. at 555 (cleaned up).

Our Plaintiffs (and the prior Judge) glommed on to the First DCA’s implicit willingness to

resolve the coverage question together with the merits of Rice’s bad-faith claim. See MTD Response at

4 (“The trial court [in Rice] determined that there was indeed coverage under the policy, that the insurer

was guilty of bad faith, and that the consent judgment was reasonable all in the same action.” (emphasis

in original)); Order Denying MTD at 6 (“The trial court [in Rice] determined that there was coverage

under the policy, that the insurer was guilty of bad faith, and that the consent judgment was reasonable,

4 We’ve attached that verdict form as Exhibit 1 to this Opinion.

all in the same action.”). But the parties in Rice never asked the court to bifurcate the bad-faith claim

from the rest of the case, so the First DCA never had occasion to consider—let alone to create—a

third-party exception to the first-party rule. As the U.S. Supreme Court has repeatedly reminded us,

“[q]uestions which merely lurk in the record, neither brought to the attention of the court nor ruled

upon, are not to be considered as having been so decided as to constitute precedents.” Cooper Indus.,

Inc. v. Aviall Servs., Inc., 543 U.S. 157, 170 (2004) (quoting Webster v. Fall, 266 U.S. 507, 511 (1925)).

Given everything we’ve said thus far, it’s probably unsurprising that just about every other

federal court in Florida to have passed on this question has, consistent with our Defendant’s position

here, dismissed (or abated) the bad-faith claim pending resolution of the plaintiff’s breach-of-contract

action. See, e.g., Choi v. Ace Am. Ins. Co., 2022 WL 1199645, at *2 (S.D. Fla. Feb. 17, 2022) (Martinez,

J.) (“The Court finds that the best course of action is to dismiss Count II without prejudice as the bad

faith claim is premature at this juncture.”); Babilla v. Allstate Ins. Co., 2020 WL 6870610, at *1 (M.D.

Fla. Aug. 27, 2020) (Dalton, J.) (“[U]nder Florida law bad faith claims will not ripen unless the movant

prevails on the underlying coverage and liability issues[.]”); ibid. (holding that, because the bad-faith

claim was “unripe, the Court must dismiss it without prejudice rather than abate or stay the claim”);

Terenzio v. LM Gen. Ins. Co., 423 F. Supp. 3d 1354, 1357 (S.D. Fla. 2019) (Cohn, J.) (“[I]t appears that

a majority of federal district courts in Florida have ruled in favor of dismissal . . . . Therefore, the

Court will dismiss without prejudice, rather than abate, Plaintiff’s bad-faith claim.” (cleaned up));

Riascos-Mazo v. Certain Underwriters at Lloyd’s of London, 2018 WL 4258278, at *4 (S.D. Fla. Sept. 5, 2018)

(Simonton, Mag. J) (“[T]o the extent that the Plaintiff’s Count II claim for breach of fiduciary duty is

properly characterized as a cause of action for bad faith, it [was] premature until there ha[d] been a

determination of coverage under the Renewal Policy[.]”), report and recommendation adopted, 17-cv-23988,

Final Order (S.D. Fla. Sept. 18, 2018) (King, J.), ECF No. 33; id. at *7 (dismissing the bad-faith claim

because, “to have the Coblentz agreement enforced above the relevant policy limits, a separate

proceeding to establish bad faith [was] required for that purpose. Thus, the Plaintiff’s allegations of

bad faith are properly stayed or abated from this action.”); Merique v. Progressive Select Ins. Co., 2017 WL

4410186, at *2 (M.D. Fla. Oct. 4, 2017) (Merryday, C.J.) (abating the bad-faith claim “[b]ecause an

allegation of bad-faith ripens into a justiciable action only after a determination of the insurer’s

liability”); Gilbert v. State Farm Mut. Auto. Ins. Co., 95 F. Supp. 3d 1358, 1364 (M.D. Fla. 2015) (Conway,

J.) (“Defendant argues that this claim must be dismissed because no actual controversy exists. The

Court agrees with the authorities cited in Defendant’s motion, as well as a majority of the courts which

have recently addressed this issue.” (cleaned up)); Mobley v. Capitol Specialty Ins., 2013 WL 3794058, at

*3 (S.D. Fla. July 19, 2013) (Moreno, C.J.) (“[U]ntil a determination of coverage is made in this case,

any claim for bad faith, including a claim for enforcement of a claim above the policy limits, is

premature. Because striking a pleading is a ‘drastic’ remedy, this Court finds that the claim for money

in excess of policy limits should be abated until a determination of coverage under the policy is

made.”).

And the federal courts are not alone in doing so. Indeed, the Florida DCAs that have opined

on this issue since Blanchard and Vest have consistently held that “an insurance bad faith claim must

be raised in a separate cause of action and cannot be brought in an underlying tort action.” Harvey,

109 So. 3d at 237; see also GEICO Gen. Ins. Co. v. Martinez, 240 So. 3d 43, 45 (Fla. 3d DCA 2018)

(“Martinez concedes that her third-party bad-faith claim against GEICO has not yet accrued, and

concedes that Martinez is not an insured under the terms of the liability insurance contract between

Guevara, the insured and GEICO, the insurer. Nevertheless, Martinez argues that it was within the

trial court’s discretion to abate, rather than to dismiss, the premature bad-faith claim. We are

unpersuaded by Martinez’s arguments . . . . We accordingly grant the petition and quash the order

denying the motion to dismiss Martinez’s unaccrued third-party bad-faith claim against GEICO.”);

Wright Ins. Agency, Inc. v. Nationwide Mut. Fire Ins. Co., 328 So. 3d 331, 334 (Fla. 2d DCA 2021) (“A

cause of action for third-party bad faith against an insured’s liability carrier is not ripe until the third

party obtains a judgment against the insured for an amount that exceeds the insured’s policy limits.”).

We thus join Judge Gross, the Fourth DCA, and the vast majority of our federal colleagues in holding

that, under Florida law, we must resolve a Coblentz plaintiff’s breach-of-contract claim before we can

adjudicate his bad-faith action.5

The only remaining question, then, is whether we should abate Count II or dismiss it. “The

ultimate decision [on abating versus dismissing] is within the sound discretion of the trial court.”

Terenzio, 423 F. Supp. 3d at 1356. The Plaintiffs ask us not to prejudice them by dismissing the claim.

But the Defendant has agreed, on the record in open court, not to seek dismissal of Count II—if and

when it’s brought—on statute-of-limitations grounds. And the law seems clear that, since the claim

isn’t ripe in any event, its statute of limitations hasn’t yet begun to run. So, as we pointed out at the

hearing, it isn’t clear what prejudice the Plaintiffs would face from a dismissal—aside from the extra

filing fee. On the other side of the ledger, there’s something not altogether right about abating an

unripe claim in federal court.6 We, after all, are courts of limited jurisdiction.

5 In their Response, the Plaintiffs don’t really take issue with any of this. Instead, they mostly contend

that the Defendant has failed to satisfy the rigorous standard for reconsideration set out in Rule 59(e).

But, as we’ve said, under Rules 60 and 54, a district court can reconsider its prior decisions for “any

other reason justifying relief from the operation of the judgment.” Frederick v. Kirby Tankships, Inc., 205

F.3d 1277, 1288 (11th Cir. 2000) (citing FED. R. CIV. P. 60(b)(6)). Since the prior Judge erred in denying

the Defendant’s motion to dismiss Count II, the Defendant has met its burden here.

6 We say “in federal court” because the Florida Supreme Court has made clear that, under state law, a

trial court has the discretion to abate the unripe claim. See Fridman, 185 So. 3d at 1229 (“[T]he trial

court has authority to abate the statutory claims, rather than to dismiss them, if it appears to the court

that abatement would be in the interest of judicial economy.”). At the same time, of course, state

courts aren’t constrained by Article III’s “Cases” or “Controversies” requirement. See Hall v. Cooks,

346 So. 3d 183, 191 (Fla. 1st DCA 2022), reh’g denied (Sept. 2, 2022) (“[A] Florida state court need not

rotely apply Lujan and its progeny, as is required under article III of the federal constitution, because

Florida has no case or controversy requirement. Instead, Florida has a different test for standing[.]”);

Casiano v. State, 310 So. 3d 910, 914 (Fla. 2021) (“The ‘decisions interpreting article III [ ] of the United

States Constitution, which extends to the federal courts the ‘judicial Power . . . to all Cases . . . [and]

Controversies’ enumerated therein, are not binding upon this Court[.]”); Dep’t of Revenue v. Kuhnlein,

646 So. 2d 717, 720 (Fla. 1994), as clarified (Nov. 30, 1994) (“Unlike the federal courts, Florida’s circuit

“Article III of the United States Constitution limits the jurisdiction of the federal courts to

cases and controversies of sufficient concreteness to evidence a ripeness for review.” Cowan v. Provident

Life & Accident Ins. Co., 2018 WL 7577756, at *2 (S.D. Fla. Nov. 28, 2018) (Williams, J.) (quoting Digital

Props., Inc. v. City of Plantation, 121 F.3d 586, 589 (11th Cir. 1997)). “The ripeness doctrine is drawn

both from Article III limitations on judicial power and from prudential reasons for refusing to exercise

jurisdiction.” Nat’l Park Hosp. Ass’n v. Dep’t of Interior, 538 U.S. 803, 808 (2003) (cleaned up). “The

ripeness doctrine protects federal courts from engaging in speculation or wasting their resources

through the review of potential or abstract disputes.” Digital Properties, Inc., 121 F.3d at 589; see also

Nat’l Advert. Co. v. City of Miami, 402 F.3d 1335, 1339 (11th Cir. 2005) (“Strict application of the

ripeness doctrine prevents federal courts from rendering impermissible advisory opinions and wasting

resources through review of potential or abstract disputes.”). When in doubt, we should “favor[ ] the

outcome that does not risk running afoul of Article III of the Constitution or the Federal Rules of

Civil Procedure.” Terenzio, 423 F. Supp. 3d at 1357. “And of course, timing is also important when it

comes to Article III justiciability. File before the facts underpinning the claim have been sufficiently

developed, and a court must dismiss the claim because it is not ripe for the court’s review.” Club

Madonna, Inc. v. City of Miami Beach, 924 F.3d 1370, 1375 (11th Cir. 2019).

We thus agree with Judge Dalton that, because the bad-faith claim is “unripe,” we should

“dismiss it without prejudice rather than abate or stay the claim.” Babilla, 2020 WL 6870610, at *1.

And this appears to be the majority view in federal courts around our Circuit. See, e.g., Choi, 2022 WL

1199645, at *2 (“To be sure, support for dismissal of a premature bad faith claim without prejudice,

rather than abatement, is legion.” (collecting cases)); Poltar v. LM Gen. Ins. Co., 473 F. Supp. 3d 1341,

1347 (M.D. Fla. 2020) (Mendoza, J.) (“Plaintiffs’ bad faith claim is not ripe, and this Court lacks

courts are tribunals of plenary jurisdiction [under] Art. V, § 5, Fla. Const. They have authority over

any matter not expressly denied them by the constitution or applicable statutes.”).

jurisdiction over it. Count II of the Complaint will be dismissed without prejudice for lack of subject

matter jurisdiction.”) (cleaned up)); Dandeneau v. Hanover Ins. Co. o/b/o All my Sons Moving & Storage of

W. Palm Beach, Inc., 476 F. Supp. 3d 1280, 1282–83 (S.D. Fla. 2020) (Singhal, J.) (“Under Florida law,

the proper course of action for premature third-party claims is to dismiss without prejudice.”); Bele v.

21st Century Centennial Ins. Co., 126 F. Supp. 3d 1293, 1297 (M.D. Fla. 2015) (Byron, J.) (“[T]he

determination of liability and the total amount of damages suffered in the underlying contract claim

have not been determined. Thus, as it now stands, there is no actual and definite controversy as [t]he

Declaratory Judgment Act does not permit a present attempt to quantify an amount of damages for a

future bad faith claim because such a declaration does not resolve the entire controversy of whether

bad faith occurred. Accordingly, Count III will be dismissed with prejudice.” (cleaned up)); Novak v.

Safeco Ins. Co. of Ill., 94 F. Supp. 3d 1267, 1269 (M.D. Fla. 2015) (Mendoza, J.) (denying motion for

leave to amend the complaint because the “Plaintiffs’ bad faith claim is not yet ripe and the Court

would be required to dismiss the claim without prejudice for want of subject-matter jurisdiction”).

***

Accordingly, after careful review—and with the benefit of oral argument—we hereby

ORDER and ADJUDGE as follows:

1. The Defendant’s Motion for Reconsideration [ECF No. 32] is GRANTED.

2. The prior Order Denying MTD [ECF No. 31] is VACATED.

3. The Defendant’s MTD [ECF No. 9] is GRANTED. Count II of the Plaintiff’s Complaint

[ECF No. 1] is DISMISSED without prejudice.7

7 The Defendant asks us to dismiss the bad-faith claim until “all three [Coblentz] elements have been

finally decided, through final resolution in the appellate courts[.]” Motion at 2. We need not—and do

not—resolve this question today. We hold only that, under Florida law, the Plaintiffs’ bad-faith claim

isn’t ripe and that it won’t become ripe until the insurer’s liability has been established. Whether that

liability can be established in this action—or whether, as the Defendant suggests, a determination of

DONE AND ORDERED in the Southern District of Florida on April 3, 2023.

ROY K. ALTMAN

UNITED STATES DISTRICT JUDGE

cc: counsel of record

that hability must wait until the parties have fully exhausted “heir appeals—is a question we leave for

another day.

17

EXHIBIT 1

IN THE QACUIT COURT OF THE 16TH

JUDICIAL CIRCUIT IN AND FOR

MONROE COUNTY, FLORIDA

CASE NO. §1-20007 CA 18

INDEPENDENT FIRE INSURANCE COMPANY,

Plaintit,

va

JOSEPH PAULER.AS and MARSHA PAULEKAS, os

□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ feet

Wee

INDEPENDENT FIRE INSURANCE COMPANY,

Counter-Defendant. ;

VERDICT

WE, THE JURY, find as follows:

1. Mas the amount of tha Final Consent Jodgegnt entered February

22,1991 reasonable?

ves _/ no

lf answer to the above question is WO, then your verdict is far the

plaintiff/counter-dafandant, Independent Fire Insurance Company.

I your answer to the above questions is YES, then your verdict is for the

claimants, Joseph Paulekas and Marsha Paulekas,

50 SAY WE ALL,

DATED at Plantation Key, Florida this 4 3, _ of December, 1992.

gO) 8