HILLSBOROUGH COUNTY, a political subdivision of the State of Florida, JORGE L. DOMINGUEZ, as Personal Representative of the Estate of Darcia Dominguez, Plaintiffs - Appellees,
STAR INSURANCE COMPANY, a Michigan Corporation, Defendant-Appellant.
from the United States District Court for the Middle District
of Florida D.C. Docket No. 8:14-cv-02067-EAJ
MARTIN and JORDAN, Circuit Judges, and COOGLER, [*] District Judge.
JORDAN, Circuit Judge.
Dominguez died from injuries sustained in an automobile
accident with a Hillsborough County employee in February of
2010. Jorge Dominguez, the personal representative of Ms.
Dominguez's estate, filed a wrongful death suit against
Hillsborough County in state court, and that action, as far
as we know, is still pending. This federal diversity case
involves an insurance dispute between the County, Mr.
Dominguez, and Star Insurance, the County's excess
confront an issue of first impression under Florida law-the
interplay between the limited waiver of sovereign immunity
set forth in Fla. Stat. § 768.28(5) and the language of
the self-insured retention limit (SIRL) contained in an
endorsement to the excess liability policy issued to the
County by Star. One Florida appellate court has acknowledged
a virtually identical issue but declined to resolve it given
the case's procedural posture. See State Nat'l.
Ins. Co. v. Robert, 71 So.3d 238, 241 (Fla. 4th DCA
question, as best as we can briefly explain it, is whether
the County and Mr. Dominguez can settle the estate's
claim for the sum of $2.35 million-with the County paying its
SIRL of $350, 000 and Star purportedly paying the remaining
$2 million (the policy limits)-without Star's consent but
subject to the Florida Legislature approving a special claims
bill for the $150, 000 "gap" between the $200, 000
sovereign immunity cap established by § 768.28(5) and
the $350, 000 SIRL.
district court, exercising diversity jurisdiction and ruling
on cross-motions for summary judgment that the parties
submitted without the benefit of discovery, held that any
requirement that the Florida Legislature pass a claims bill
for the "gap" amount before coverage is triggered
under the policy frustrates the purpose of the County's
contract with Star. But it also ruled that the County cannot
unilaterally settle the estate's claim for an amount
within the policy limits without Star's consent.
See D.E. 55 at 7-13. See also Hillsborough Cnty.
v. Star Ins. Co., No. 8:14-CV-2067-T-EAJ, 2015
WL12765535 (M.D. Fla. June 24, 2015) (denying motion for
reconsideration). In granting Mr. Dominguez's motion for
entry of judgment, the district court clarified that, in
concluding that the County could not settle without
Star's consent, it necessarily ruled that, should Star
consent, the County could satisfy its SIRL without a claims
bill by the Legislature. See D.E. 82 at 3.
the three parties before us are unhappy with the district
court's ruling. Star argues that the district court
committed reversible error by ruling, pursuant to a
frustration of purpose theory, that the requirement of a
special claims bill is unenforceable. It also maintains that
the County breached the terms of the policy by entering into
a settlement without its consent. The County says that the
district court did not go far enough, and asks us to hold
that it does not need Star's consent to settle the claim
with the estate. Mr. Dominguez-who would be the other party
to a settlement with the County-oddly calls for affirmance of
the district court's judgment, which would mean
that-absent a jury verdict in his favor-he and the County
need Star's consent to consummate their settlement.
sounds like a mess, that is because it is.
begin with the text of § 768.28(5) as it existed at the
time of the deadly accident, because it provides the backdrop
for the parties' dispute. See Hattaway v.
McMillan, 903 F.2d 1440, 1444 n.3 (11th Cir. 1990)
(explaining that courts apply the Florida sovereign immunity
provisions in effect at the time a cause of action accrues).
We then turn to the language of the excess policy issued by
Star, the case's procedural history, the parties'
contentions, and the district court's rulings.
February of 2010, § 768.28(5) read in relevant part as
The state and its agencies and subdivisions shall be liable
for tort claims in the same manner and to the same extent as
a private individual under like circumstances, but liability
shall not include punitive damages or interest for the period
before judgment. Neither the state nor its agencies or
subdivisions shall be liable to pay a claim or judgment by
any one person which exceeds the sum of $100, 000 or any
claim or judgment, or portions thereof, which, when totaled
with all other claims or judgments paid by the state or its
agencies and subdivisions arising out of the same incident or
occurrence, exceeds the sum of $200, 000. However, a judgment
or judgments may be claimed and rendered in excess of these
amounts and may be settled and paid pursuant to this act up
to $100, 000 or $200, 000, as the case may be; and that
portion of the judgment that exceeds these amounts may be
reported to the Legislature, but may be paid in part or in
whole only by further act of the Legislature.
Notwithstanding the limited waiver of sovereign immunity
provided herein, the state or an agency or subdivision
thereof may agree, within the limits of insurance coverage
provided, to settle a claim made or a judgment rendered
against it without further action by the Legislature, but the
state or agency or subdivision thereof shall not be deemed to
have waived any defense of sovereign immunity or to have
increased the limits of its liability as a result of
obtaining insurance coverage for tortious acts in excess of
the $100, 000 or $200, 000 waiver provided above[.]
sentence in bold provides that any judgment or settlement
above the sovereign immunity waiver is payable, in whole or
in part, only through a special claims bill approved by the
Florida Legislature. See Wallace v. Dean, 3 So.3d
1035, 1041 n.9 (Fla. 2009). The sentence in italics allows a
municipality like the County to purchase liability insurance
and to settle a claim within the limits of coverage (and
above the stated sovereign immunity caps) without further
action by the Legislature. See Mich. Millers Mut. Ins.
Co. v. Bourke, 607 So.2d 418, 421-22 (Fla. 1992);
Tramel v. Bass, 707 So.2d 847, 848 (Fla. 1st DCA
1998). But it also states that the purchase of insurance does
not waive the defense of sovereign immunity.
County purchased an excess liability insurance policy
(including excess automobile coverage) from Star for the
period spanning from October 1, 2009, to October 1, 2010. The
policy, which cost the County $527, 360, has a $2 million
limit for each accident or occurrence, as well as a $350, 000
SIRL. See Public Entity Excess Liability Policy,
D.E. 18-1, at Declarations Page.
policy states that Star will "pay all sums" that
the County "legally must pay as damages because of
'bodily injury' or 'property damage' to which
this insurance applies, caused by an 'accident' and
resulting from the ownership, maintenance or use of a covered
'auto.'" Id. at § II.A. It also
provides that the County cannot assume any obligation, make
any payment, or incur any expense "without [Star's]
consent, except at [the County's] own cost, " and
requires the County to cooperate with Star "in the
investigation, settlement or defense of the claim or
'suit.'" Id. at § IV.A.2.b(1)
SIRL endorsement, which applies to automobile excess
coverage, states that the County, "[i]n consideration of
the premium charged and as a condition to the issuance and
continuation of the [p]olicy, " agrees to be
responsible, "per occurrence, " for the first $350,
000 in "allocated costs and expenses of investigation,
defense, negotiation and settlement." Id. at
SIRL Endorsement, ¶ 1. Star's "limit of
liability [of $2 million per occurrence] shall apply solely
in excess" of the County's SIRL. Id.
4 of the SIRL endorsement provides that the County shall not
incur any costs or expenses, "other than for immediate
first aid to others, . . . except at [its] own cost, . . .
without the written consent" of Star. Id. at
¶ 4. That same paragraph requires the County to provide
an "adequate defense and investigation" of any
action, and "accept any reasonable offer or
settlement" within the $350, 000 SIRL. Id. at
¶ 4.A-B. If the County fails to comply with any of the
provisions of paragraph 4, Star "shall not be liable for
any damages or costs or expenses[.]" Id. at
Dominguez, in an attempt to have a Florida court determine
the nature and extent of coverage under Star's excess
policy, asserted a declaratory judgment claim against the
County and Star in his state-court wrongful death action. The
state trial court denied Star's motion to dismiss, but in
June of 2014 the Second District granted Star's petition
for certiorari and reversed, holding that Mr. Dominguez-who
was not an insured under Star's excess policy-had not
satisfied Florida's non-joinder statute, Fla. Stat.
§ 627.4136(1), because he had not yet obtained a
judgment against, or settled with, the County. See Star
Ins. Co. v. Dominguez, 141 So.3d 690, 691-92 (Fla. 2d
DCA 2014). So no Florida Court has addressed Star's
obligations under the policy.
amended complaint for declaratory relief in federal court,
the County alleged (and Star admitted) that Ms. Dominguez had
died as a result of injuries sustained in an automobile
accident with a County employee (though the complaint was
silent about who was at fault and Star said it was without
knowledge as to the details of the accident); that Mr.
Dominguez, as administrator of Ms. Dominguez's estate,
had filed a wrongful death action in state court; that the
case was then set for trial in February of 2015; and that
Star had issued a reservation of rights letter in July of
2014. See Am. Compl., D.E. 18, at ¶¶ 5,
15; Answer and Defenses, D.E. 28, at ¶¶ 5, 15. In
its reservation of rights letter, which was attached to the
amended complaint, Star took the position that it was only
obligated to pay those sums that the County "legally
must pay, " and that under § 768.28(5) the County
had sovereign immunity for any sums over $200, 000 absent an
act of the Florida Legislature. Because the Florida
Legislature had not taken any action (like passing a special
claims bill) that would ...