Rissman Secures Summary Judgment in Post-Tort Reform Interpleader Action
In what is believed to be the first ruling on the new interpleader statute enacted as part of the 2023 Tort Reform, Rissman attorney Katie Gannon obtained summary judgment and discharge of insurer Progressive Select. See Progressive Select Ins. Co. v. Watson, et al., Broward County Court, Case No. COSO-2023-5255.
In March 2023, subsection (6) of 624.155 was amended to establish alternative safe harbors for insurers via interpleader or arbitration to avoid bad-faith liability when confronted with multiple claimants making competing claims that, in total, exceed policy limits. The new subsection addressed prior Florida case law holding that the interpleader is not available to resolve multiple-claimant insurance disputes involving claims that exceed policy limits. See Hernandez v. Travelers Ins. Co., 356 So. 2d 1342(Fla. 3d DCA 1978).The new provision also represents a significant overhaul of the civil remedies statutory framework that increases protections for insurers operating in the state. According to the newly enacted subsection (6)(a),
(6) If two or more third-party claimants have competing claims arising out of a single occurrence, which in total may exceed the available policy limits of one or more of the insured parties who may be liable to the third-party claimants, an insurer is not liable beyond the available policy limits for failure to pay all or any portion of the available policy limits to one or more of the third-party claimants if, within 90 days after receiving notice of the competing claims in excess of the available policy limits, the insurer complies with either paragraph (a) or paragraph (b).
(a) The insurer files an interpleader action under the Florida Rules of Civil Procedure. If the claims of the competing third-party claimants are found to be in excess of the policy limits, the third-party claimants are entitled to a prorated share of the policy limits as determined by the trier of fact. An insurer’s interpleader action does not alter or amend the insurer’s obligation to defend its insured.
During a one-day bench trial in Broward County Court, Progressive established it was subject to two or more third-party claims arising out of a five-car collision in April 2023. Progressive submitted evidence that the injured parties’ competing claims in total may exceed the available $10,000/$20,000 policy limits. Prior to the hearing, Progressive deposited the policy funds into the Court registry. The County Court granted Progressive summary judgment and discharge, finding it established entitlement under the new statute to discharge and an interpleader judgment leaving it to the claimants to resolve the issue sharing of the limits. The third-party claimants were ordered to schedule a final hearing for presentation of evidence supporting their client’s respective claims for a prorated share of the policy limits.
In accordance with the statute, the interpleader judgment now protects Progressive from liability in any future bad faith claim “beyond the available policy limits for failure to pay all or any portion of the available policy limits to one or more of the third-party claimants.” See s. 624.155(6)(a), Florida Statutes.
The result obtained by Ms. Gannon has significant, far-reaching implications. The prior quagmire of multiple claimants with limited coverage created nightmares for carriers with significant bad faith exposure above the policy limits. This interpleader result demonstrates the effectiveness of the new statute. The insurance carrier was able to limit its exposure to the bargain and paid for limits of liability coverage with its insured and remove the extra-contractual risks the multiple claimant scenario often presents.
