Navigating the “Good Faith” and “Reasonableness” Requirements of Coblentz
For a variety of reasons, a liability insurer may decline to cover an insured against whom a third party has asserted a claim. Perhaps the insurer believes that the language of the operative policy forecloses coverage for the claim or that the policy itself is void or otherwise invalid. When an insurer denies coverage to its insured for a particular claim, it may refuse to defend the action asserted against the insured, deny indemnification for any loss or damages suffered, or both.
Once the insurer denies coverage for a claim, the insured has the option of taking control of the case and settling with the claimant. The insured and the claimant may then enter into an agreement whereby the claimant obtains a negotiated consent judgment against the insured; the insured assigns its rights under the policy to the claimant; and the claimant releases the insured from any liability (through a covenant not to execute on the consent judgment or otherwise attempt to collect from the insured) regardless of whether the claimant successfully recovers anything from the insurer. This settlement device is known as a “ Coblentz agreement” after the Fifth Circuit Court of Appeals’ decision in Coblentz v. Am. Sur. Co. of New York, 416 F.2d 1059 (5th Cir. 1969).
Enforcement of a Coblentz Agreement
In Coblentz situations, the insurer can be bound by the settlement even if it was not a party to the agreement or the proceedings leading up to the settlement, and even if it was not made aware of the impending settlement, provided the claimant ( i.e. , the injured party or “ Coblentz plaintiff”) successfully “bring[s] an action against the insurer and prove[s] coverage, wrongful refusal to defend, and that the settlement was reasonable and made in good faith.”1 Importantly, the burden is on the Coblentz plaintiff to make a prima facie case that each prong has been met.2
The first two prongs — coverage and wrongful refusal to defend — have been extensively litigated in both Coblentz and non-Coblentz contexts. Courts routinely rely on non- Coblentz cases when evaluating, for the purposes of a Coblentz analysis, coverage under a particular policy of insurance or whether the insurer breached its duty to defend ( i.e. , whether there was a wrongful refusal to defend).3
The final prong of Coblentz, which combines an analysis of both the reasonableness and good-faith elements of the settlement agreement, has not been discussed in as much depth by Florida courts as the coverage and wrongful refusal to defend requirements. This article, thus, focuses on that prong, discussing what factors affect a court’s evaluation of whether a settlement was entered into in good faith and is reasonable in amount. We also highlight recent caselaw denying the enforcement of Coblentz agreements based on both the unreasonableness and lack of good faith infecting the stipulated settlements.
Analyzing Reasonableness and Good Faith
The policy behind making reasonableness and good-faith prerequisites to enforcement of a consent judgment against a nonparty insurer is best expressed by Florida’s Second District Court of Appeal in Steil v. Florida Physicians’ Ins. Reciprocal, 448 So. 2d 589 (Fla. 2d DCA 1984):
“The real concern in this type of case is that the settlement between the claimant and the insured may not actually represent an arm’s length determination of the worth of the plaintiff’s claim. In a situation where the insured actually pays for the settlement of the claim against him or where the case is fully litigated at trial before the entry of a judgment, the amount of the settlement or judgment can be assumed to be realistic. Therefore, if the insurer is later determined to have wrongfully refused to defend and the claim is within the coverage, it will be obligated to pay the amount of the settlement or judgment, at least within its policy limits, in the absence of a showing of collusion or fraud.
“However, in the instant case or one involving a consent judgment with a covenant not to execute, the settlement figure is more suspect. The conduct of an insured can hardly be characterized as fraudulent simply because he stipulates to a large settlement figure in order to obtain his release from liability. He has little or nothing to lose because he will never be obligated to pay. As a consequence, the settlement of liability and damages may have very little relationship to the strength of the plaintiff’s claim. Due to this problem, the ordinary standard of collusion or fraud is inappropriate. Thus, we hold that in a case such as this, a settlement may not be enforced against the carrier if it is unreasonable in amount or tainted by bad faith.”4
In other words, if a Coblentz plaintiff were not required to prove that the settlement it reached with the insured was both reasonable and entered into in good faith in order to enforce its consent judgment against the insurer, the insured would be incentivized to “lie down” and offer the claimant a judgment for an exorbitant amount bearing no relationship to the damages actually suffered by the insured, because the insured knows the claimant would readily offer in exchange for this bounty a release from liability. The insurer — while not a party to any of the underlying proceeding and unable to protect its interests — would be bound and left “holding the bag,” responsible for reimbursing the claimant not only for any legitimate damages, but in addition a windfall the claimant never would have recovered had the insured, knowing it would be responsible for satisfying the judgment, provided any meaningful opposition. Thus, the third prong serves a vital function by preserving due process for insurers in Coblentz situations and preventing abuses of the settlement device by claimants and insureds.
The third Coblentz prong — bifurcated by courts into dual consideration of both the reasonableness and good faith of the settlement whose enforcement is sought — is unique in that it is the only aspect of obtaining an enforceable consent judgment against an insurer that is entirely within the control of the parties to the initial action, making it especially important for potential claimants to get it right if they want to collect. Coblentz plaintiffs cannot control whether the relevant insurance policy provides coverage for the claim at issue, nor can they decide whether an insurer will defend the claim or not, but they certainly can endeavor to accept a reasonable amount from the insured and conduct legitimate negotiations and consummate the settlement in good faith.
Securing a reasonable figure and obtaining it in good faith the first time around is of the utmost importance to any potential Coblentz plaintiff, since failure to make a prima facie case of either requirement will prevent enforcement of the settlement against the insurer.5 Furthermore, once the factfinder has determined that the Coblentz agreement is unreasonable in amount, there are no “do-overs,” and the claimant may not ask the factfinder to set an alternative (reasonable) amount of damages.6 Because of their fact-dependent nature, disputes over the third prong of Coblentz are generally resolved at trial rather than on summary judgment or a motion to dismiss.7
• Reasonableness — For a Coblentz agreement to be binding on an insurer, the judgment against the insured must be objectively reasonable in amount.8 One court has outlined the reasonableness framework as follows:
“In Florida courts the test as to whether the settlement is reasonable and prudent is what a reasonably prudent person in the position of the defendant [the insured] would have settled for on the merits of plaintiff’s claim. In determining whether a settlement is reasonable, a Florida court considers not only such objective factors as the extent of plaintiff’s injuries, but also certain subjective factors…including the degree of certainty of the tortfeasor’s subjection to liability, the risks of going to trial and the chances that the jury verdict might exceed the settlement offer…. A determination of reasonableness of the settlement agreement is made in view of the degree of probability of the insured’s success and the size of the possible recovery.”9
In other words, when determining the reasonableness of a consent judgment under the Coblentz framework, the factfinder must realistically value the underlying claim by considering the amount of provable damages suffered by the claimant and the chances of actually recovering this amount after fully litigating with the insured. The evaluation of reasonableness may also take into account the expenses the insured ( i.e. , the defendant in the underlying action) would have incurred had the case proceeded to trial.10 If the amount awarded by the Coblentz agreement exceeds what an objective factfinder considers to be reasonable based on the above factors, the settlement cannot be enforced against the insurer, although it is worth noting that “very generous” settlements “within the outer range of a reasonable amount” have been upheld in Florida.11 What is certain is that Coblentz does not permit an insured to “indiscriminately load the carrier’s wagon with bricks of damage that no reasonable person would expect as consequences of the underlying claim.”12
In Jimenez v. Gov’t Employees Ins. Co., 651 F. App’x 850 (11th Cir. 2016), the insured brought suit against GEICO to enforce a $1 million settlement with a deceased claimant’s estate after an auto accident in which the insured was at fault.13 The case proceeded to trial, after which a jury determined that GEICO had acted in bad faith, and the settlement was unreasonable and tainted by bad faith on the part of the settling parties.14 The district court denied the insured’s motion for judgment as a matter of law and entered judgment for GEICO, which prompted the insured’s appeal to the 11th Circuit Court of Appeals. The 11th Circuit affirmed the judgment in favor of GEICO, holding that because no discovery was conducted before entering into the Coblentz agreement, a reasonable jury could conclude that the $1 million settlement figure was unreasonable. The court noted:
“No depositions were taken. No interrogatories were sent. In determining that $1,000,000 was an appropriate settlement amount, the parties did not reference worklife tables to determine the worklife expectancy of the deceased. Nor could counsel for the [e]state or [the insured]’s expert witness answer basic questions about [the deceased]’s financial situation. Cunningham, counsel for the [e]state, did not know how much [the deceased]’s tax return showed he was making at the time of his death, the amount of his rent, or the amount he spent on utilities, food, or entertainment. Nor did Cunningham know how much money [the deceased] was sending to Uruguay to support his child. De Armas, the attorney called by [the insured] to offer expert witness testimony on the reasonableness of the settlement, admitted that he also had not examined [the deceased]’s tax returns, his earnings, or his spending patterns. The parties did not hire a life planner or economist to project out net accumulations or expenses.”15
The insured made almost no effort to show that the number reflected in the judgment was in any way tethered to reality — it propounded no discovery on damages and offered no substantiation of the reasonableness of the settlement. Based on the lack of proof and absence of expert testimony put forth by the plaintiff, a reasonable factfinder could have determined that the $1 million figure was essentially pulled out of the air with no realistic connection to actual damages suffered by the deceased claimant’s estate. This, coupled with the windfall the insured’s attorneys were poised to receive for agreeing to the large settlement on their client’s behalf, compelled the court to uphold the district court’s ruling and preserve the jury’s verdict.16
It is worth noting that the judgment in favor of the insurer was upheld even though the jury determined GEICO acted in bad faith. Clearly, when evaluating the third prong of Coblentz, courts focus solely on the conduct of the insured and the claimant when settling the underlying action. A Coblentz plaintiff cannot successfully argue that it is excused from complying with the third Coblentz prong because of the insurer’s purported wrongful conduct.17
• Good Faith — As noted above, Florida courts have determined that the ordinary criteria for refusing to enforce a judgment, fraud and collusion, are unsuitable in Coblentz cases because a settlement between a claimant and an insured does not necessarily need to be fraudulent or collusive to be unfair to an insurer.18 As a result, to be binding on an insurer, the settlement between the Coblentz plaintiff and the insured must have been reached in good faith.
Courts have mentioned false claims, fraud, collusion, and a claimant’s sharing of recovery with the insured as potential examples of bad faith in the context of Coblentz settlements.19 Although a settlement tainted by any of these characteristics clearly lacks the requisite good faith to be enforceable against an insurer, the most common (and perhaps less obvious) embodiment of bad faith in Coblentz situations is the absence of meaningful efforts to minimize the amount of the judgment in question ( i.e. , lack of serious negotiations on damages). The caselaw makes it clear that an insured may not simply “lie down” and stipulate to an artificially inflated or arbitrary amount of damages in exchange for the claimant agreeing not to execute against the insured and to look solely to the insurer for satisfaction of the judgment.
In Bond Safeguard Ins. Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 2014 WL 5325728 (M.D. Fla. Oct. 20, 2014), aff’d, 628 F. App’x 648 (11th Cir. 2015), a land development company obtained bonds from two issuers to guarantee completion of several development projects. Pursuant to a separate contract, the company and its principal, Ward, were obligated to indemnify the bond issuers for “any liability, cost, charge, or expense [the issuers] may incur in relation to the bonds.”20 W hen the bonds defaulted due to problems with the development projects, the issuers sued Ward for approximately $40 million in losses, and in turn Ward demanded coverage from his insurer, which denied coverage. The underlying action was subsequently settled pursuant to a Coblentz agreement for over $40 million, with Ward assigning his interests under the insurance policy to the bond issuers.21 The bond issuers then filed a lawsuit seeking the amount of the consent judgment from Ward’s insurer, which eventually prevailed on summary judgment based on the first (coverage) and third prongs of Coblentz. With respect to the third prong, the court held:
“Here, the Coblentz agreement plainly afforded additional benefits to members of Ward and his family beyond the mere conclusion of the [u]nderlying [a]ction. Further, although some aspects of the settlement were subject to negotiation, neither Ward nor any other party endeavored to minimize the amount of the [j]udgment. This is so even though Ward had viable defenses in the [u]nderlying [a]ction, and [p]laintiffs had previously offered to settle with Ward and had actually settled with other defendants in the [u]nderlying [a]ction for a fraction of the [j]udgment. On this record, the conclusion that the Coblentz agreement was reached by collusion or an absence of effort to minimize liability is compelling.”22
Ward had also testified that he did not recall any serious negotiation on damages and that he had no money left anyway.23 Faced with several indicia of bad faith and the unavoidable fact that the settlement eventually reached was essentially equal to the amount initially demanded by the plaintiffs in the underlying action, the court ruled that even if the relevant policy provided coverage for the claim, the settlement would be unenforceable against the insurer.24
In Bradfield v. Mid-Continent Cas. Co. , 143 F. Supp. 3d 1215 (M.D. Fla. 2015), the plaintiffs, whose home was delivered with substantial structural deficiencies, negotiated a Coblentz agreement with the home builders in the underlying action and then sought to enforce the judgment against the home builders’ insurer. Although the case was decided in the insurer’s favor because the policy afforded no coverage and the insurer had no duty to defend, the court determined that the insurer would have prevailed regardless ( i.e. , even if there had been coverage and a wrongful refusal to defend) because the settlement was not reached in good faith.25
The Bradfield court came to the conclusion that the Coblentz agreement was not made in good faith because, inter alia, the insured builders never made any settlement counteroffers to the homeowners, no allocation between covered and uncovered damages was attempted, and the settlement was clearly drafted to bring it within the insurance coverage provided by the policy.26
“More persuasive, however, [was] the fact that [the builder] made no attempt to minimize the amount of the [c]onsent [j]udgment….Even more damning [was] [the builder’s] admission that from the beginning of the mediation conference, the parties endeavored to make Mid-Continent liable for everything: ‘I threw [Mid-Continent] under the bus for me, yes. Just like they throwed [sic] me under the bus.’”27
The court was also swayed by the fact that the insured abandoned viable affirmative defenses, sought no discovery on damages, and simply agreed to the damage figures initially proposed by the homeowners.28 Because various hallmarks of bad faith were present, the consent judgment was unenforceable against the insurer.
The Latest Case
• The District Court Proceeding — Culbreath Isles Prop. Owners Ass’n, Inc. v. Travelers Cas. & Sur. Co. of Am. , 151 F. Supp. 3d 1282 (M.D. Fla. 2015), involved an insured condominium association that filed two separate state court lawsuits against two different homeowners. When the homeowners prevailed, the insured became liable for their attorneys’ fees pursuant to F.S. §720.305. Prior to a hearing on the fee quantum, the insured settled with one of the homeowners by agreeing to the entry of a consent judgment awarding the homeowner’s attorneys $295,000 in fees for 350 hours of work (an effective rate of approximately $842 per hour).29 The insured then assigned its rights under the relevant insurance policy to the homeowner and her attorneys, who subsequently sued the insurer, Travelers, for indemnification. After Travelers removed the case to the federal district court, the court granted summary judgment to Travelers based on a lack of coverage under the policy’s insuring agreement. That ruling, however, was overturned by the 11th Circuit Court of Appeals and the case was remanded, eventually proceeding to a bench trial on the issues of the reasonableness and good faith of the settlement.
The trial court found that $842 per hour was unreasonable as a matter of law because the parties to the underlying action, contrary to Florida law, did not hold an evidentiary hearing and obtain specific findings on the reasonableness of the fee award.30 The court also based its ruling on testimony from the insured’s counsel that he had never seen an hourly rate that high awarded in such an action, an expert’s opinion that $400 was the upper limit of acceptable hourly rates for the law firm’s services, and the court’s own inherent expertise on the issue of attorneys’ fees.31
Most importantly, the court concluded that the insured never would have agreed to pay $295,000 to the homeowner’s attorneys had it been required to satisfy the judgment itself, especially since it was prepared to introduce expert testimony in the state court fee hearing that $400 per hour was the maximum rate awardable to the prevailing party’s attorneys.32 F inding that the insured essentially offered the homeowner’s law firm any amount it desired as long as enforcement of the judgment was sought against the insurer, the court called the insured’s capitulation a “lie down.”33 This characterization of the insured’s conduct was substantiated by the nonsettling homeowner’s counsel, who said that the insured made the same offer to his client, to wit: an unspecified multiplier on top of the law firm’s actual fees in exchange for a promise not to collect from the insured.34
Travelers also argued, and the court agreed, that the conduct of the claimant’s counsel constituted bad faith. Although the prevailing homeowner’s attorney represented to the state court in the underlying action that he executed the settlement at issue with the full informed consent of the homeowner (and after having been expressly instructed by her to do so), Travelers discovered during the ensuing Coblentz action that the homeowner suffered a stroke that rendered her incapacitated at the time the settlement was negotiated and signed.35 Thus, after considering the homeowner’s counsel’s false representations to the state court and the “lie down” by the insured, in which no attempt was made to minimize the amount of the judgment, the court concluded that the Coblentz agreement was the product of bad faith.36
Having decided that the amount of the settlement was unreasonable and that it had been reached in bad faith, the court considered and rejected the plaintiffs’ argument that Travelers was bound by the judgment under the doctrine of “vouching in” because it was made aware of the particulars of the settlement prior to the state court fee hearing and still chose not to defend the insured at that hearing.37 The court reasoned that allowing the plaintiffs to circumvent the third prong of Coblentz by relying on the “vouching in” doctrine would render the reasonableness and good faith requirements of Coblentz superfluous.38 The court entered judgment for Travelers, which the plaintiffs appealed to the 11th Circuit.
• The Appellate Opinion — The 11th Circuit affirmed the trial court’s decision in Sidman v. Travelers Cas. & Sur., 841 F.3d 1197 (11th Cir. 2016). As a threshold matter, the court rejected plaintiffs’ argument that the enforcement of the consent judgment between the insured and the homeowner (collectable only from Travelers) should not be evaluated under Coblentz, and, thus, the reasonableness and good faith — or lack thereof — of the settlement was irrelevant because Travelers had notice of the impending settlement and did not object. Finding this argument to be meritless, the court chose to “follow the Florida courts in rejecting a framework that would, in effect, prohibit indemnitors and insurers from challenging settlement agreements as fraudulent or collusive simply because they had knowledge of the settlement terms, even though the fraudulent or collusive nature of the agreement was not apparent from the face of the settlement….”39 This marks the first time a court interpreting Florida law has affirmatively held that an insurer’s notice of a settlement and its terms were irrelevant when deciding whether to analyze a consent judgment under the Coblentz framework . Notably, the opinion also characterized the requirements of reasonableness and good faith as “proxies” for fraud and/or collusion. The Sidman decision, thus, makes explicit the connection between “fraud or collusion” and unreasonableness and bad faith, meaning an insurer can demonstrate the former by proving the latter.40
Proceeding to the merits of the case, the court affirmed the district court’s ruling in favor of the insurer. Although the district court decided the case based on both aspects of the third Coblentz prong — i.e. , a lack of reasonableness and bad faith on the part of the insured and the claimant’s counsel — the 11th Circuit’s affirmance was based only on the lack of good faith in negotiating the $295,000 settlement. The court acknowledged the substantial evidence that the insured simply did a “lie down” and agreed to an inflated settlement as long as the insurer was footing the bill, holding that “an agreement in which an insured agrees to accept essentially any judgment amount that the injured party seeks in exchange for a promise to not execute against it is collusive for Coblentz purposes.”41
In Sidman, the lie down alone was sufficient under Coblentz to sustain a judgment in favor of the insurer, so the panel declined to address the reasonableness of the settlement or the effect of the homeowner’s attorney’s false representations to the state court. Although the Sidman opinion did not discuss both aspects of the third Coblentz prong, it is a welcome addition to the somewhat limited precedent addressing the issue and any practitioner faced with litigating a Coblentz action would be wise to study it.
Getting It Right
Perhaps the simplest and most succinct way to summarize how a claimant can avoid running afoul of the third prong of Coblentz is this: Don’t get greedy. A Coblentz plaintiff must prove reasonableness of amount and good faith to collect on a consent judgment entered against an insured whose insurance company has denied coverage. Since the aim of Coblentz is to fairly compensate the claimant when an insurer wrongfully abandons its insured, any attempt by the settling parties to secure a windfall or throw the insurer under the bus will render the Coblentz agreement unenforceable against the insurer, even if the insurer wrongfully denied coverage. Reasonableness and good faith are the only elements of Coblentz that the insurer has no control over; thus, it is imperative that 1) a claimant seek no more than the amount to which it is reasonably entitled from the insured; 2) the amount reflected in the judgment is substantiated by competent evidence and expert testimony; and 3) the insured make a legitimate effort to minimize the amount of damages awarded to the claimant. If possible, the claimant should negotiate the insertion of a clause whereby the insured is liable to the claimant for some or all of the consent judgment if the Coblentz action against the insurer fails. This serves the dual purpose of preserving some opportunity to collect if the Coblentz agreement is deemed invalid by a court and giving the insured a monetary incentive to work toward minimizing the amount of the consent judgment against it (which is a hallmark of a good faith Coblentz agreement). Ignoring any of these critical steps will likely leave the injured claimant in an unenviable position — in possession of a judgment for damages in its favor but unable to collect from any party.
1 Chomat v. N. Ins. Co. of N.Y., 919 So. 2d 535, 537 (Fla. 3d DCA 2006).
2 See Chomat, 919 So. 2d at 537; Mid-Continent Cas. Co. v. Royal Crane, LLC, 169 So. 3d 174, 179 (Fla. 4th DCA 2015).
3 See, e.g., Royal Crane, 169 So. 3d 174 (examining coverage and wrongful refusal to defend); Stephens v. Mid-Continent Cas. Co., 749 F.3d 1318 (11th Cir. 2014) (same); Petro v. Travelers Cas. & Sur. Co. of Am., 54 F. Supp. 3d 1295 (N.D. Fla. 2014) (same); W. Heritage Ins. Co. v. Montana, 30 F. Supp. 3d 1366 (M.D. Fla. 2014) (same); Sinni v. Scottsdale Ins. Co., 676 F. Supp. 2d 1319 (M.D. Fla. 2009) (same).
4 Steil, 448 So. 2d at 592 (emphasis added) (citations omitted).
5 Whether addressing what an insurer must prove to prevent enforcement of a consent judgment — an unreasonable amount or bad faith — or what an insured must prove to enforce a consent judgment — a reasonable amount and the absence of bad faith — the district court’s jury instructions and verdict form accurately reflected Florida law. In Florida, it is, as Mid-Continent contends, an all or nothing proposition. A consent judgment will only be enforced if both elements are met. If an insurer can prove that either element is unsatisfied, the consent judgment cannot be enforced.” Mid-Continent Cas. Co. v. Am. Pride Bldg. Co., LLC, 534 F. App’x 926, 928 (11th Cir. 2013) ( American Pride II ) (internal citation omitted); see also Chomat, 919 So. 2d at 538 (“In addition to making a prima facie showing of reasonableness, the plaintiffs must also make a prima facie showing of good faith.”).
6 American Pride II, 534 F. App’x at 928.
7 See, e.g., Chicken Kitchen USA, LLC v. Maiden Specialty Ins. Co., 2016 WL 4542126 (S.D. Fla. Aug. 31, 2016).
8 Petro, 54 F. Supp. 3d at 1302; Sinni, 676 F. Supp. 2d at 1324.
9 Wrangen v. Pennsylvania Lumbermans Mut. Ins. Co., 593 F. Supp. 2d 1273, 1279 (S.D. Fla. 2008) (Rosenbaum, J.) (internal quotations and citations omitted).
10 See Chomat, 919 So. 2d at 538.
11 See, e.g., Hyatt Legal Servs. v. Ruppitz, 620 So. 2d 1134 (Fla. 2d DCA 1993).
12 Bond Safeguard Ins. Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 2014 WL 5325728 at *9 (M.D. Fla. Oct. 20, 2014), aff’d, 628 F. App’x 648 (11th Cir. 2015) (ruling consent judgment of over $40 million unenforceable against insurer in part based on third prong of Coblentz ).
13 The settlement stipulated that the estate, as assignee of the $1 million Coblentz judgment (which would ordinarily be the Coblentz plaintiff), could bring the suit in its own name or alternatively, it could require the insured to bring the suit against GEICO in his name. In the latter instance, the insured’s attorneys from the underlying action, prosecuting a case where the recovery would ultimately go to the estate, would be entitled to compensation on a contingent basis from the gross recovery from GEICO. The parties agreed on the latter option and, thus, the suit against GEICO was brought in the insured’s name. Jimenez, 651 F. App’x at 852.
14 Jimenez, 651 F. App’x at 853.
15 Id. at 854.
16 Id.
17 Although the insurer’s conduct is certainly relevant to the other Coblentz prongs.
18 See Steil, 448 So. 2d at 592.
19 See Jimenez, 651 F. App’x at 854; American Pride II, 534 F. App’x at 928.
20 Bond Safeguard, 2014 WL 5325728 at *2.
21 Id. at *2-3.
22 Id. at *9 (citations omitted).
23 Id.
24 Id.
25 Bradfield, 143 F. Supp. 3d at 1248-1251.
26 Id.
27 Id. at 1250-51.
28 Id. at 1251.
29 Culbreath v. Travelers, 151 F. Supp. 3d at 1284-88.
30 The court rejected plaintiffs’ argument that a contingency fee multiplier applied since no evidence of any of the factors discussed in Patient’s Comp. Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985), and Quanstrom v. Standard Guar. Ins. Co., 519 So. 2d 1135 (Fla. 1988), was presented in the underlying action or the Coblentz proceeding.
31 Culbreath, 151 F. Supp. 3d at 1289-90.
32 Id. at 1290-91.
33 Id. at 1292.
34 Id. at 1291.
35 Id. at 1285.
36 Id. at 1291-92.
37 Id. at 1292-93.
38 Id.
39 Sidman, 841 F.3d at 1205. The appellate panel agreed with the district court that “[a] contrary approach would render Coblentz’s fraud or collusion exception meaningless, as all Coblentz agreements arise out of an insurer’s refusal to defend its insured. Thus, an insurer may challenge a Coblentz agreement as fraudulent or collusive notwithstanding its prior notice of and opportunity to challenge the agreement.” Id.
40 Characterizing reasonableness and good-faith requirements as proxies for fraud and collusion also prevents claimants from circumventing the third prong of Coblentz by using the doctrine of “vouching in,” which binds — albeit only in the absence of fraud or collusion — an indemnitor to a judgment rendered against its indemnitee as long as the indemnitor was given notice of the action and an opportunity to appear.
41 The panel rejected the plaintiffs’ argument that a finding of collusion could only be supported by an arrangement whereby the insured and the claimant shared any recovery. Sidman, 841 F.3d at 1206.
Andrew V. Tramont is a shareholder in Rodriguez Tramont + Nunez, P.A., in Coral Gables. Licensed in New York, Florida, Illinois, and Missouri, he litigates insurance coverage, bad faith, and accounting malpractice cases. He was Travelers’ lead counsel in Culbreath Isles v. Travelers , and co-lead counsel in Sidman v. Travelers.
Bradley B. Aserlind is an associate at Rodriguez Tramont + Nunez, P.A. He graduated from Boston College Law School and now litigates insurance coverage, bad faith, and accounting malpractice cases. He served as second chair at trial in Culbreath Isles v. Travelers and as appellate counsel in Sidman v. Travelers.
