SUSAN C. BUCKLEW, District Judge.
This cause comes before the Court on two motions: (1) ACE American Insurance Company's ("ACE") Motion to Dismiss Lawrence's Second Amended Complaint (Doc. No. 74); which Lawrence opposes (Doc. No. 77); and (2) ACE's Motion to Dismiss USAA Casualty Insurance Company's ("USAA") Second Amended Complaint in Intervention (Doc. No. 73), which USAA opposes (Doc. No. 76). As explained below, the motions are granted in part and denied in part.
In deciding a motion to dismiss, the district court is required to view the complaint in the light most favorable to the plaintiff.
Plaintiff William Lawrence and USAA allege the following in their second amended complaints (Doc. No. 71, 72): ACE issued a business auto policy to Jacobs Engineering Group, Inc./Jacobs Technology ("Jacobs"). (Doc. No. 63). On August 18, 2014, Jacobs' employee, Benjamin Wintersteen, caused a car accident that injured Lawrence.
At the time of the accident, Wintersteen was driving a car leased by Hertz, because Jacobs was in the process of transferring Wintersteen to work in Germany for Jacobs. Jacobs had taken possession of Wintersteen's personal car in order to transport it to Germany. Because Wintersteen still needed a vehicle for personal errands and to travel to and from work for Jacobs prior to his move to Germany, Jacobs paid for the car leased from Hertz that Wintersteen had been driving at the time of the accident. The Hertz receipt lists Wintersteen's name along with "Jacobs Technology" and states that Wintersteen represents that he is authorized to receive the CDP benefits offered to employees of Jacobs Technology.
Prior to the lease of the car at issue, Jacobs and Hertz had entered into a Corporate Customer Agreement ("CCA"), in which Jacobs agreed to use Hertz as its rental car supplier. (Doc. No. 71-4, p. 2, 8). The CCA provides that Hertz will provide $100,000 in bodily injury coverage for Jacobs' employee-renters. (Doc. No. 71-4, p. 7). However, the CCA also provides that Jacobs, on behalf of itself and its employee-renters, rejects the inclusion of any supplementary insurance coverage in Hertz's rental agreements. (Doc. No. 71-4, p. 7).
Wintersteen did not get additional insurance coverage through Hertz for the leased car, because Jacobs instructed him not to get such coverage because Jacobs believed that the leased car had insurance coverage under the ACE insurance policy. According to Lawrence, "[r]epresentatives of Jacobs had been advised by representatives of [ACE] that the [ACE] policy would afford coverage for employees of Jacobs who were in a position like Wintersteen. Thus, Wintersteen and Jacobs both detrimentally relied on representations made by [ACE] that the [ACE] policy would afford coverage for Mr. Wintersteen's use of the Hertz vehicle." (Doc. No. 72, ¶ 17).
As a result of the car accident, Lawrence sued Wintersteen in state court. Wintersteen had insurance coverage through his own insurance policy with USAA, and he also made a claim for coverage under ACE's insurance policy that was issued to Jacobs. Wintersteen contended that he was an insured under the ACE policy because: (1) Jacobs provided Wintersteen with use of the leased car in conjunction with Wintersteen's employment activities for Jacobs; (2) the lease of the car was for the benefit of Jacobs and was part of its employment arrangement with Wintersteen; and (3) Wintersteen was entitled to insurance coverage based on promissory estoppel. ACE denied Wintersteen a defense and coverage under the policy.
Thereafter, Lawrence, Wintersteen, and USAA (collectively referred to as "the Settling Parties") stipulated to an entry of a consent judgment to resolve Lawrence's claims from the car accident and to provide a vehicle under which part of the consent judgment could be collected from ACE. Specifically, the Settling Parties intended that ACE would be required to pay the amount of the consent judgment that it was legally required to pay had it honored its coverage obligations under Jacobs' insurance policy.
The Settling Parties stipulated that Lawrence's damages from the car accident were $750,000, and they agreed to the entry of a $750,000 consent judgment in favor of Lawrence and against Wintersteen. In partial satisfaction of the consent judgment, Hertz paid Lawrence $100,000, and USAA paid Lawrence $250,000. Thus, $350,000 was paid by Hertz and USAA on Wintersteen's behalf. In exchange for the $350,000 and an agreement not to execute against Wintersteen on the unpaid $400,000 remaining, Wintersteen assigned to Lawrence all of his rights against ACE, including but not limited to, any and all of Wintersteen's insurance rights and benefits, as well as claims for attorney's fees, costs, and expenses. The Settling Parties also noted in their Settlement Agreement that they agreed that if ACE's policy did provide coverage for the accident, then ACE should have paid 97.09% of the $250,000 that USAA paid and that USAA should have only paid 2.91% of that amount.
As a result of the above, Lawrence has asserted two claims against ACE: (1) declaratory judgment of insurance coverage and payment of the remaining $400,000 in damages due under the consent judgment; and (2) insurance coverage based on promissory estoppel. Similarly, USAA has asserted four claims against ACE: (1) equitable contribution; (2) unjust enrichment; (3) declaratory judgment of insurance coverage and payment of $242,725 in damages; and (4) insurance coverage based on promissory estoppel. In response, ACE has filed the instant motions to dismiss.
ACE moves to dismiss Lawrence's second amended complaint, arguing that: (1) Wintersteen was not an insured under the insurance policy at the time of the accident; and (2) Lawrence's promissory estoppel claim is not sufficiently pled. Accordingly, the Court will address each argument.
ACE argues that Lawrence has not made sufficient allegations in the second amended complaint to show that Wintersteen was an insured under the ACE insurance policy, and as such, his claim for declaratory judgment of insurance coverage and payment of $400,000 in damages fails. Lawrence responds that Wintersteen is an omnibus insured under any of the following three policy provisions: (1) Jacobs' Hired Autos; (2) Employees as Insureds; and/or (3) Employee Hired Autos. Accordingly, the Court will analyze each of these policy provisions.
The parties agree that California law applies in construing the parties' obligations under the ACE policy. (Doc. No. 74, p. 7; Doc. No. 76, p. 5; Doc. No. 77, p. 7). The California Supreme Court has explained the principles governing the interpretation of insurance policies:
First, Lawrence contends that the leased car at issue is a covered auto under the "Hired Autos" provision, which defines covered "Hired `Autos'" as including only those autos leased, hired, rented, or borrowed by Jacobs. (Doc. No. 63-8, p. 14). The policy goes on to state that an "insured" includes anyone "while using with [Jacobs'] permission a covered `auto' [Jacobs] . . . hire[s] or borrow[s]." (Doc. No. 63-8, p. 15).
ACE argues that Wintersteen, not Jacobs, rented the car involved in the accident, and as such, Wintersteen is not an insured under the "Hired Autos" provision. Lawrence responds by pointing out that he has specifically alleged in the second amended complaint that Jacobs leased, hired, and/or rented the car involved in the accident.
Furthermore, Lawrence alleges facts to support his contention that Jacobs leased, hired, and/or rented the car at issue, including the following: Jacobs provided Wintersteen with the use of the rented car in conjunction with his employment with Jacobs, because: (1) Jacobs took possession of Wintersteen's personal car to ship it to Germany where Wintersteen was being relocated for work; and (2) Wintersteen needed a car to get to and from work for Jacobs until his relocation to Germany. Jacobs had an agreement with Hertz (the CCA) that Hertz would provide rental cars for Jacobs and its employees, and the car at issue was rented pursuant to the CCA. Additionally, Jacobs paid for the rental car at issue, some of Jacobs' information was on the rental documentation, and Wintersteen used the car to travel to and from work.
ACE's policy does not define "hire," and case law exists that supports Lawrence's argument that the underlying facts support the conclusion that Jacobs hired the car at issue. For example, in
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The Court notes that ACE cites to a California case in which the court did not find that the employer hired the car at issue. In Continental Casualty Co. v. Hartford Accident & Indemnity Co., 213 Cal.App.2d 78, 80 (1963), the employee rented a car and was driving it for business purposes when he was involved in an accident. The car was rented in the employee's name and was invoiced to the employee at his home address. See id. at 89-90. The employer reimbursed the employee for the rental car charges. See id. at 80.
One of the issues before the court was whether the rented car was "hired" by the employer, because if it was, coverage was excluded under the insurance policy. See id. at 88. The insurance policy defined "hired automobile" as "an automobile used under contract in behalf of . . . the [employer]." See id. at 89. The court concluded that the rental car was not a car hired by the employer, stating:
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Second, Lawrence argues that if Jacobs is found not to have hired the rental car, then the rental car is a covered auto under Endorsement Number 77, which is titled, "EMPLOYEES AS INSUREDS." (Doc. No. 63-1, p. 104). This Endorsement provides the following: "Any `employee' of [Jacobs] is an `insured' while using a covered `auto' [Jacobs does not] own, hire, or borrow in [Jacobs'] business or [Jacobs'] personal affairs." (Doc. No. 63-1, p. 104). The policy defines "Non-owned `Autos'" as "those `autos' [Jacobs] do[es] not own, lease, hire, rent or borrow that are used in connection with [Jacobs'] business." (Doc. No. 63-8, p. 14).
ACE moves for dismissal, arguing that at the time of the accident, Wintersteen was not using the rental car in connection with Jacobs' business. ACE, however, bases this argument on facts that are not alleged in the second amended complaint. Instead, ACE relies on facts that came to light during the underlying car accident case.
Lawrence contends that at the time of the accident, Wintersteen was using the rental car in Jacobs' business or personal affairs, because Wintersteen had the rental car because Jacobs had taken possession of Wintersteen's personal car to transport it to Germany for his job, and Wintersteen needed a car prior to his relocation to Germany. Thus, Wintersteen's use of the rental car benefitted Jacobs by: (1) allowing Jacobs to relocate Wintersteen and his car to Germany; and (2) providing Wintersteen with transportation to and from work prior to the relocation. Lawrence argues that even if Wintersteen was using the rental car for a personal errand at the time of the accident, Wintersteen's use of the rental car at all times was tied to and related to his business relationship with Jacobs, thus bringing the accident within this coverage provision.
At this stage in the litigation, based on the facts alleged in the second amended complaint, the Court finds that Lawrence states a plausible claim for coverage under the "Employees as Insureds" provision (although ACE also makes a plausible argument that coverage does not exist). The Court notes that coverage under this provision exists if: (1) Jacobs did not rent the rental car, and (2) Wintersteen was using the rental car (a) in Jacobs' business affairs, or (b) in Jacobs' personal affairs. It is unclear to this Court what Jacobs' "personal affairs" can consist of, and that phrase is not defined in the insurance policy. Some courts have found that phrase to be ambiguous at the pretrial stage of proceedings. See Lincoln General Ins. Co. v. Gateway Security Services, 2007 WL 3203020, at *14 (E.D. Cal. Oct. 29, 2007)("The concept of `personal affairs' of an entity is anomalous because an entity, although a `person' in the eyes of the law, does not engage in `personal activities.' This creates ambiguity."); Blais v. Hartford Fire Ins. Co., 2011 WL 1303135, at *11 (D. Mass. Mar. 30, 2011)(evaluating the phrase "your business or personal affairs" and commenting that "a corporation cannot have `personal affairs.'"); Robart v. Horvath, 2002 WL 185179, at *3-4 (C.A. Ohio 2002). Given the ambiguity and both parties' plausible interpretations, the Court denies ACE's motion to dismiss to the extent that it contends that Lawrence has not sufficiently alleged that the ACE policy provides coverage for the accident under the "Employees as Insureds" provision.
Third, Lawrence alleges in his second amended complaint that the leased car at issue is a covered auto under Endorsement Number 283, which is titled, "EMPLOYEE HIRED AUTOS." (Doc. No. 63-7, p. 1). This Endorsement provides the following: "An `employee' of [Jacobs] is an `insured' while operating an `auto' hired or rented under a contract or agreement in an `employee's' name, with [Jacobs'] permission, while performing duties related to the conduct of [Jacobs'] business." (Doc. No. 63-7, p. 1).
ACE argues that Endorsement Number 283 does not provide coverage for the August 18, 2014 accident, because Endorsement Number 283, according to the policy documents, did not become effective until September 10, 2014—after the date of the accident. (Doc. No. 63-6, p. 23). Lawrence fails to respond to this argument, and as such, the Court deems his failure to respond as an acknowledgment that Endorsement Number 283 does not provide coverage for the accident. Accordingly, the Court grants ACE's motion to dismiss to the extent that it contends that its policy does not provide coverage for the accident under Endorsement Number 283.
In Count II, Lawrence alleges insurance coverage for the accident based on promissory estoppel. Specifically, Lawrence alleges "[r]epresentatives of Jacobs had been advised by representatives of [ACE] that the [ACE] policy would afford coverage for employees of Jacobs who were in a position like Wintersteen. Thus, Wintersteen and Jacobs both detrimentally relied on representations made by [ACE] that the [ACE] policy would afford coverage for Mr. Wintersteen's use of the Hertz vehicle." (Doc. No. 72, ¶ 17).
Using promissory estoppel to create insurance coverage is available in a very narrow set of circumstances where to refuse to do so would sanction fraud or other injustice.
ACE moves to dismiss Lawrence's promissory estoppel claim, arguing that it is not sufficiently pled.
The Court agrees that specific factual detail is lacking, but Lawrence should be permitted to conduct discovery before more specific factual information is required. At this stage of the litigation, Lawrence has asserted sufficient allegations to put ACE on notice of his promissory estoppel claim. Accordingly, the Court denies ACE's motion to dismiss Lawrence's promissory estoppel claim.
USAA has asserted four claims against ACE: (1) equitable contribution; (2) unjust enrichment; (3) declaratory judgment of insurance coverage and payment of $242,725 in damages; and (4) insurance coverage based on promissory estoppel. ACE moves to dismiss all four claims asserted by USAA. Accordingly, the Court will analyze each claim.
USAA asserts a claim for declaratory judgment of insurance coverage and payment of $242,725 in damages. This claim is based on the contention that Wintersteen was an insured under ACE's policy at the time of the accident, and USAA makes the same coverage arguments as made by Lawrence. Specifically, USAA contends that Wintersteen was an omnibus insured under any of the following three policy provisions: (1) Jacobs' Hired Autos; (2) Employees as Insureds; and/or (3) Employee Hired Autos.
ACE moves to dismiss this claim, making the same arguments as it did in response to Lawrence's claim for declaratory judgment and damages. ACE's motion and USAA's response as to two provisions—(1) Jacobs' Hired Autos and (2) Employees as Insureds—are nearly identical to the motion and response directed to Lawrence's claim. As such, and for the same reasons, the Court denies ACE's motion to dismiss to the extent that it contends that USAA has not sufficiently alleged that the ACE policy provides coverage for the accident under those two provisions.
ACE's argument as to USAA's contention that the Employee Hired Autos provision applies is the same as was directed to Lawrence's contention that the Employee Hired Autos provision applies. While Lawrence failed to respond to ACE's argument, USAA does respond, and therefore, the Court must analyze the Employee Hired Autos provision.
USAA contends that the leased car at issue is a covered auto under Endorsement Number 283, which is titled, "EMPLOYEE HIRED AUTOS." (Doc. No. 63-7, p. 1). This Endorsement provides the following: "An `employee' of [Jacobs] is an `insured' while operating an `auto' hired or rented under a contract or agreement in an `employee's' name, with [Jacobs'] permission, while performing duties related to the conduct of [Jacobs'] business." (Doc. No. 63-7, p. 1).
ACE argues that Endorsement Number 283 does not provide coverage for the August 18, 2014 accident, because Endorsement Number 283, according to the policy documents, did not become effective until September 10, 2014—after the date of the accident. (Doc. No. 63-6, p. 23). In response, USAA argues that ACE has previously stated that whether Endorsement Number 283 was in effect at the time of the accident was "a factual issued that need[ed] to be resolved during discovery." (Doc. No. 60, ¶ 4). However, USAA takes ACE's statement out of context; the statement was made when the parties could not agree on the operative version of the ACE insurance policy. Since that time, the parties have agreed that the operative insurance policy has been filed on the docket at Document Number 63, and that document clearly states that Endorsement Number 283 did not become effective until September 10, 2014—after the date of the accident.
USAA asserts a claim for equitable contribution against ACE. Specifically, USAA alleges that ACE's policy provides coverage for the accident, and as such, ACE should have paid 97.09% of the $250,000 that USAA paid to settle Lawrence's claim against Wintersteen. As a result, USAA seeks payment from ACE of $242,725 of the $250,000 that USAA paid towards Lawrence's damages in the underlying state court lawsuit.
ACE moves to dismiss this claim, arguing that Florida does not recognize a cause of action for equitable contribution between co-insurers. The flaw in this argument, however, is that Florida does not recognize a cause of action for equitable contribution by co-insurers in order to recover defense costs.
Florida does recognize a cause of action for equitable contribution by co-insurers for the amounts the insurer paid to indemnify the insured.
In order to state a claim for equitable contribution, USAA must allege that it paid in excess of its pro rata share of a common liability shared by USAA and ACE.
USAA asserts a claim for unjust enrichment against ACE. Specifically, USAA alleges that by paying the $250,000 towards the settlement of Lawrence's claim against Wintersteen, USAA conferred a benefit upon ACE. USAA further alleges that ACE accepted that benefit by not contributing any money towards the settlement of Lawrence's claim despite the fact ACE's insurance policy covered Lawrence's claim. Therefore, USAA contends that it is inequitable and unfair for USAA to pay the entire $250,000, since both ACE and USAA insured Wintersteen on an equal basis.
ACE moves to dismiss this claim, arguing that USAA cannot assert an unjust enrichment claim because an express contract exists—namely, the ACE insurance policy sets forth ACE's obligations. The flaw in ACE's argument, however, is that USAA is not a party to the ACE insurance policy, and as such, the existence of the ACE insurance policy does not bar USAA's unjust enrichment claim.
USAA asserts a claim for promissory estoppel against ACE. Specifically, USAA alleges that Jennifer Petr, the person at Jacobs responsible for travel logistics, told Wintersteen not to purchase additional insurance coverage for the rental car because ACE confirmed that insurance coverage for the rental car was provided by the ACE policy. USAA further alleges that Wintersteen detrimentally relied on the alleged representations made by ACE.
USAA contends that its insurance policy that covered Wintersteen in the accident has a subrogation provision that allows USAA to assert this promissory estoppel claim against ACE. Specifically, USAA points to the following provision in its policy: "If [USAA] make[s] a payment under this policy and the person . . . for whom payment was made has a right to recover damages from another, [USAA] will be subrogated to that right." (Doc. No. 71-1, p. 20 of 33). Thus, USAA contends that because it made a settlement payment to Lawrence on Wintersteen's behalf, and because Wintersteen has a right to recover payment from ACE under a promissory estoppel theory, USAA stands in the shoes of Wintersteen to assert a claim for promissory estoppel for the amount that USAA paid that should have been paid by ACE.
Additionally, USAA alleges that principles of equitable subrogation apply, which allows USAA to stand in the shoes of Wintersteen to assert a claim for promissory estoppel for the amount that USAA paid that should have been paid by ACE. In response, ACE moves to dismiss this claim, arguing that principles of equitable subrogation do not apply; ACE does not address contractual subrogation based on the USAA insurance policy.
There are two types of subrogation in Florida: (1) conventional or contractual subrogation, and (2) equitable subrogation.
USAA has grounded its promissory estoppel claim on both types of subrogation, but differences exist between them. Conventional or contractual subrogation arises when the parties contractually agree that the party paying the debt will have the rights and remedies of the original creditor.
Equitable subrogation, on the other hand, arises by operation of law after one party pays the debt of another.
ACE argues that equitable subrogation is not appropriate in this case, because USAA did not pay the entire amount owed to Lawrence, given that $400,000 of Lawrence's damages remain unpaid. The Court agrees that, because ACE remains potentially liable for the remaining $400,000 of Lawrence's damages, equitable contribution is not the appropriate vehicle for USAA to use. Accordingly, the Court grants ACE's motion to dismiss to the extent that it argues that equitable subrogation is not available in this case. However, USAA's promissory estoppel claim remains due to contractual subrogation.
Next, ACE argues that USAA cannot stand in Wintersteen's shoes to pursue a promissory estoppel claim, because Wintersteen assigned all of his rights to bring suit against ACE to Lawrence via the Settlement Agreement. USAA responds that the Settling Parties specifically stated in the Settlement Agreement that the Settlement Agreement "is not intended to, and should not be construed as, a release or limitation in any manner of the rights of . . . [USAA] to pursue claims against [ACE]." (Doc. No. 71-3, p. 5, ¶ 7). The Settlement Agreement further provides that USAA expressly reserved all of its rights to recovery against ACE. (Doc. No. 71-3, p. 5, ¶ 7). The Court agrees with USAA that the Settlement Agreement did not extinguish USAA's contractual subrogation rights. Therefore, the Court denies ACE's motion to dismiss USAA's promissory estoppel claim brought pursuant to contractual subrogation.
Accordingly, it is ORDERED AND ADJUDGED that: