Certain Interested Underwriters at Lloyd's, London v. AXA Equitable Life Insurance
Certain Interested Underwriters at Lloyd's, London v. AXA Equitable Life Insurance
Opinion of the Court
ORDER GRANTING PLAINTIFFS’ MOTION FOR FINAL SUMMARY JUDGMENT
THIS CAUSE comes before the Court upon Plaintiffs Certain Interested Under
I. BACKGROUND
Lloyd’s issued a professional errors and omissions policy to Steven M. Brasner, a life insurance broker. Brasner then engaged in a criminal scheme of life insurance fraud, harming Defendants AXA, the party issuing the life insurance policies, and GUI Accumulation Trust, LLC (“GUI”), the party investing in them. Brasner entered a plea of guilty to his criminal scheme, discussed more fully in the Court’s opinion at Certain Interested Underwriters at Lloyd’s, London v. AXA Equitable Life Ins., Co., 981 F.Supp.2d 1302, 1303-05 (S.D.Fla. 2013).
AXA and GUI filed suit against Brasner for the harm caused to them by Brasner’s fraud. The cases were consolidated at AXA Equitable Life Ins. Co. v. Infinity Fin. Grp., LLC, No. 08-cv-80611. In its complaint, AXA alleged that its injuries arose from the misrepresentations Brasner made on the applications for the five following insurance policies: the Éarlan Altman policy, the Elaine Gelch policy, the Geoffrey Glass policy, the Walter Glass policy, and the Carol Sciolino policy. Each of the applications for these policies was dated between January 1, 2006 and December 31, 2007.
The Court stayed AXA’s case against Brasner pending arbitration. After the arbitration panel dismissed AXA’s action without prejudice, AXA requested that the Court do the same. Accordingly, the Court dismissed AXA’s action without prejudice on October 22, 2013.
During the pendency of the consolidated actions, Lloyd’s filed suit against AXA and GUI seeking a declaratory judgment that it had no duty to defend or indemnify Brasner for AXA or GUI’s lawsuits against him. Certain Interested Underwriters at Lloyd’s, London v. AXA Equitable Life Ins. Co., et al., No. 10-cv-62061. On Lloyd’s motion, the Court granted partial summary judgment on the issue of the duty of defense, finding that Lloyd’s had no duty to defend Brasner against either AXA or GUI. [ECF Nos. 89, 93], Although the Court later vacated its order as to GUI, it reaffirmed that Lloyd’s had no duty to defend Brasner against AXA. [ECF No. 136]. Lloyd’s then moved for summary judgment on the issue of indemnification. The Court granted the motion, finding that “the criminal conduct exclusion in Lloyd’s professional error and omissions policy is operative and relieves Lloyd’s of liability to Brasner and/or GUI.” Lloyd’s, 981 F.Supp.2d at 1308. Lloyd’s now moves for summary judgment on the issue of its duty to indemnify Bras-ner against AXA.
II. LEGAL STANDARD
A movant may obtain summary judgment if it “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Celotex Corp.
III. DISCUSSION
The “criminal conduct exclusion” of Lloyd’s insurance policy with Brasner bars coverage for claims against him
based upon, arising out of, directly or indirectly relating to or in any way involving ... Conduct which is fraudulent, dishonest, criminal, willful, malicious, intentionally or knowingly wrongful, or otherwise intended to cause damage or injury to personal property; however, this exclusion shall not apply ... unless there is a finding or adjudication in any proceeding of such conduct or an admission by an Insured of such conduct....
In its previous order, the Court found that “Brasner, between January 1, 2006 and December 31, 2007, engaged in an ongoing scheme to defraud multiple insurance companies, one of which was AXA, by providing materially false information on applications.” Lloyd’s, 981 F.Supp.2d at 1308. Reviewing Brasner’s plea colloquy, the Court determined that this scheme included the fraudulent applications for the Glass, Altman, Gelch, and Sciolino polices. Id. The Court found that it was this scheme to which Brasner pled guilty, and it was conduct arising from this scheme that the policy excluded from coverage. Id.
In this case, AXA’s complaint against Brasner arises from the same misrepresentations that constituted Brasner’s criminal scheme. As before, Brasner’s policy must exclude these claims from coverage. The parties have litigated this issue at length and the record is fully developed for the Court to determine, without hesitation, that Lloyd’s has no duty to indemnify Brasner for AXA’s claims against him. The underlying policy simply provides no coverage to Brasner given his undisputed actions. Given these facts, Lloyd’s is entitled to a final judgment against AXA resolving this question for all time.
AXA opposes Lloyd’s motion by arguing that the Court cannot decide this issue, for AXA has rendered it moot by dismissing its claims against Brasner. Lloyd’s seeks declaratory judgment against AXA pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, which applies only in “a case of actual controversy,” id., a requirement coterminous with the “case” or “controversy” requirement of Article III, Section 2, of the Constitution.
While AXA’s argument may apply to a dismissal with prejudice, it does not apply to a dismissal without prejudice. If the filing of an original suit satisfied an actual controversy that could warrant the issuance of a declaratory judgment, then a dismissal of that suit without prejudice does not moot that controversy. See Klay v. United Healthgroup, Inc., 376 F.3d 1092 (11th Cir. 2004) (Tjoflat, J.). In Klay, the Court of Appeals considered whether a claim dismissed without prejudice could proceed to arbitration. Id. Reversing the district court, the Court of Appeals held that it could. Id. at 1111. Applying Article Ill’s case or controversy requirement to arbitration, the Court of Appeals reasoned that “notwithstanding the plaintiffs]”] dismissal, they could have refiled suit — in state or federal court, potentially in a myriad of jurisdictions — based on those claims at any time. As such, we cannot conclude that the defendants, in seeking declaratory relief through arbitration, were not pursuing a live case or controversy.” Id. at 1107 (citations omitted).
The parties do not dispute that AXA’s claims against Brasner initially created an actual controversy. And here, as in Klay, the Court dismissed AXA’s claims against Brasner without prejudice. AXA can therefore refile its claims against Brasner, thereby triggering the potential for Lloyd’s duty to indemnify. AXA’s dismissal without prejudice implies the potential of renewed action with all the accompanying expense. Accordingly, there remains a live case or controversy to be adjudicated, and Lloyd’s motion is not rendered moot.
Nevertheless, even if the Court found that Lloyd’s motion were moot, there remains a second equally compelling justification for today’s decision. The pleadings in this case reflect that the Court and the parties focused their attention on the distinction between an insurer’s duty to defend and its duty to indemnify. They recognized that “[a]n insurer’s duty to defend its insured is separate from and broader than its duty to indemnify the insured.” Hale v. State Farm Fla. Ins. Co., 51 So.3d 1169, 1171 (Fla. 4th DCA 2010). Both the Court and the parties, however, overlooked the correlative principle that a finding of no duty to defend, as a matter of Florida law, necessarily includes a finding of no duty to indemnify. See Trailer Bridge, Inc. v. Ill. Nat’l Ins. Co., 657 F.3d 1135, 1146 (11th Cir. 2011) (“[A] court’s determination that the insurer has no duty to defend requires a finding that there is no duty to indemnify.”) (quoting Philadelphia Indem. Ins. Co. v. Yachtsman’s Inn Condo Ass’n, Inc., 595 F.Supp.2d 1319, 1322 (S.D.Fla. 2009)) (internal quotation marks omitted).
iy. CONCLUSION
For the aforementioned reasons, it is hereby
ORDERED and ADJUDGED that:
1. Plaintiffs’ Motion for Final Summary Judgment [ECF No. 150] is GRANTED. The Court will enter Final Judgment by separate order.
. On March 18, 2013, the Court entered a consent judgment between GUI and Brasner, expressly reserving GUI’s right to pursue to Lloyd's.
. Peters v. Trousclair, 431 So.2d 296, 298 (Fla. 1st DCA 1983) ("Thus, a determination that there is no duty to defend against a particular claim carries with it 'the inevitable conclusion
Reference
- Full Case Name
- CERTAIN INTERESTED UNDERWRITERS AT LLOYD'S, LONDON v. AXA EQUITABLE LIFE INSURANCE, COMPANY, and GIII Accumulation Trust
- Cited By
- 3 cases
- Status
- Published