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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 11-15246
________________________
D.C. Docket No. 2:07-cv-00258-CEH-SPC
MID-CONTINENT CASUALTY COMPANY,
Plaintiff - Appellee
Counter - Defendant,
versus
AMERICAN PRIDE BUILDING COMPANY,
LLC, a Florida limited liability company,
AMERICAN PRIDE BUILDING CO., LLC,
a Florida limited liability company,
AMERICAN PRIDE BUILDER, LLC,
a Florida limited liability company,
GROFF CONSTRUCTION, INC.,
a Florida corporation,
Defendants - Appellants
Counter - Claimant.
___________________________
Appeal from the United States District Court
for the Middle District of Florida
____________________________
(August 22, 2013)
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Before DUBINA, JORDAN, and BALDOCK, * Circuit Judges.
PER CURIAM:
Following oral argument and a review of the record, and for the reasons
which follow, we affirm.
This case arises from a dispute between a homebuilder, American Pride, and
its insurer, Mid-Continent. In May 2006, Groff Construction sued American Pride,
alleging that American Pride had infringed its copyrighted home designs and
building plans. Mid-Continent defended American Pride pursuant to a full
reservation of rights for over a year, and eventually filed this declaratory action
against American Pride, alleging that it had no duty to defend or indemnify
American Pride against Groff Construction’s copyright claims. Shortly thereafter,
American Pride entered into a consent judgment with Groff Construction for $1.7
million, under which it was protected from all liability. See Coblentz v. Am. Surety
Co., 416 F.2d 1059, 1062-63 (5th Cir. 1969); Chomat v. Northern Ins. Co., 919 So.
2d. 535, 537 (Fla. 3rd DCA 2006). Settlement agreements between a claimant and
an insured, when the insurer rejects coverage and refuses to indemnify, have
become known as Coblentz agreements after the Fifth Circuit’s decision in 1969.
The district court granted summary judgment to Mid Continent on its lack of
cooperation claim against American Pride. On appeal, we reversed and remanded
*
Honorable Bobby R. Baldock, United States Circuit Judge for the Tenth Circuit, sitting by
designation.
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for further proceedings, finding genuine issues of material facts as to whether
American Pride informed Mid-Continent of its proposed settlement agreement and
settled the underlying litigation after properly rejecting Mid-Continent's
conditional defense. See Mid-Continent Casualty Co. v. Am. Pride Bldg. Co., LLC,
601 F.3d 1143 (11th Cir. 2010).
After trial, the jury answered “no” to the question of whether the settlement
“was reasonable in amount and not tainted by bad faith, fraud, collusion or without
any effort to minimize liability.” Doc. 191 at 2. Accordingly, the district court
entered judgment in favor of Mid-Continent, finding the consent judgment
unenforceable under Florida law.
We begin by addressing the central and dispositive issue raised by American
Pride on appeal: the propriety of the jury instructions and verdict form. “We will
reverse a refusal to give a requested instruction only if: (1) the requested
instruction correctly stated the law, (2) the instruction dealt with an issue properly
before the jury, and (3) the failure to give the instruction resulted in prejudicial
harm to the requesting party.” Bearint ex rel. Bearint v. Dorell Juvenile Grp., Inc.,
389 F.3d 1339, 1350 (11th Cir. 2004) (citation omitted). Because we find that
American Pride’s requested jury instruction−which separated the issues of
reasonableness and bad faith and allowed the jury to determine the reasonable
amount of a consent judgment after first finding the amount
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unreasonable−constitutes an incorrect statement of Florida law, we need not
address the other requirements. As we explain, the instructions and interrogatories
the district court gave to the jury were correct and complete statements of Florida
law, and the requested instruction was not.
American Pride takes issue with, in particular, Jury Instruction No. 3 and
Special Verdict Form Interrogatory No. 4. Jury Instruction No. 3 states: “If you
decide Defendants [i.e., American Pride] met their burden, Mid-Continent must
prove, by the preponderance of the evidence, that the consent judgment was not
reasonable in amount or tainted by bad faith, fraud, collusion, or without effort to
minimize liability.” Doc. 190 at 12 (emphasis added). As the district court noted,
the Florida courts have definitively spoken on what must be proven to prevent
enforcement of a Coblentz agreement. Steil v. Fla. Physicians’ Ins. Reciprocal,
448 So. 2d 589, 592 (Fla. 2d DCA 1984) (“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.”) (emphasis added). In light of cases like Steil, for
an insurer to win, only one of two conditions (i.e., unreasonable settlement or bad
faith) must exist. For an insured to prevail, it must have both issues resolved in its
favor. See, e.g., Chomat, 919 So. 2d. at 537. (“Where an injured party wishes to
recover under a Coblenz agreement, the injured party must bring an action against
the insurer and prove coverage, wrongful refusal to defend, and that the settlement
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was reasonable and made in good faith.”) (emphasis added). Jury Instruction No.
3 is an accurate statement of Florida law, and provides no basis for reversal.
Special Verdict Form Interrogatory No. 4 asked the jury to answer the
following question: “Do you find the consent judgment entered into by American
Pride was reasonable in amount and not tainted by bad faith, fraud, collusion or
without any effort to minimize liability?” Doc. 191 at 2 (emphasis added). The
jury answered “no.” As noted above, Florida law could not be clearer as to the
elements necessary to enforce a consent judgment. “Subsequent to the entry of the
agreement, the injured party must bring an action against the insurer and prove
coverage, wrongful refusal to defend, and that the settlement was reasonable and
made in good faith.” Quintana v. Barad, 528 So. 2d 1300, 1301 n.1 (Fla. 3d DCA
1988) (emphasis added). Special Verdict Form Interrogatory No. 4 is also an
accurate statement of Florida law.
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.
See Quintana, 528 So. 2d 1300. If an insurer can prove that either element is
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unsatisfied, the consent judgment cannot be enforced. See Steil, 448 So. 2d 589.
We also reject American Pride’s argument that the jury, even if it found the
settlement to be unreasonable, should be allowed to fix a reasonable settlement
amount. Even if this argument made “common sense,” as suggested by American
Pride, it is not the law in Florida. American Pride concedes that no court applying
Florida law has ever held that after a jury determines that the amount of a consent
judgment is unreasonable it is then allowed to determine a lower reasonable
amount. We decline to be the first.
As to the other issues raised on appeal, including the district court’s denial
of America Pride’s motion for judgment as a matter of law on the issue of bad faith
and the district court’s inclusion of a purportedly inapplicable insurance policy
exclusion in the jury instructions, as well as Mid-Continent’s renewed motion for
judgment as a matter of law as to American Pride’s breach of cooperation, we
affirm without further discussion.
AFFIRMED.
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