Joining a Liability Insurer to a Judgment Against the Insured

I have discussed joining a liability insurer to a judgment against an insured under Florida Statute s. 627.4136(4).  There are situations when this is the strategy that a claimant in the process of obtaining a judgment against an insured wants to pursue.  If the insurer is joined to the judgment against the insured than the insurer is precluded from arguing coverage-issues.

Under this statute, however, the motion to join the liability insurer MUST be made prior to or at the time of entry of judgment against the insured; in no case should the motion be filed after the time to file a motion for rehearing expired.

In a recent case, an owner sued a general contractor for defective construction. The general contractor filed a third-party complaint against an implicated subcontractor. A default judgment was entered against the subcontractor (meaning the subcontractor did not respond to the third-party complaint and the contractor obtained a default and then a monetary default judgment against the subcontractor). The general contractor then instituted proceedings supplementary to join the subcontractor’s commercial general liability insurer as a party to the judgment against the subcontractor.   The trial court joined the insurer to the judgment against the subcontractor.

The appellate court reversed. The insurer was not challenging the proceedings supplementary because such proceedings would still allow the insurer to defend itself by arguing that there was no coverage under the insurance policy.  Rather, the insurer argued that the motion to join it to the judgment against the insured was untimely. The appellate court agreed since the motion was NOT filed prior to or at the time the entry of judgment against the insured.   See Nova Casualty Co. v. Wilson Developers, LLC, 42 Fla. L. Weekly D464c (Fla. 2d DCA 2017).

This opinion is interesting (at least to me) as the appellate decision does not give a wealth of facts. To begin with, it is uncertain why the general contractor moved for a default final judgment against the subcontractor. By doing so, technically, the general contractor was acknowledging liability in that amount to the owner (that sued it) since the general contractor would be liable to the owner for the subcontractor’s work. (In a third-party claim, the general contractor is simply flowing down liability to the subcontractor based on its potential liability to the owner.)  Likely, there is more to this from a strategic perspective or there was an agreement worked out with the owner. Also, joining an insurer to a final judgment against an insured is not an easy feat as the insurer has certain safeguards to allow it to argue coverage if it denied coverage or defended the insured under a reservation of rights. The general contractor could have instituted an action against the subcontractor’s insurer as an additional insured (assuming it was an additional insured under the subcontractor’s liability policy) or negotiated a Coblenz Agreement if the default stemmed from the insurer refusing to defend the insured. Like I said, there is probably a lot more to the strategy in this case and the lack of factual details leaves more questions than answers.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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