Coverage Action Allowed to Proceed While Tort Action Pending
In Progressive Express Ins. Co. v. Reed (Fla. App., 5 Dist., Dec. 28, 2007), a Florida appeals court considered whether an insurer with a genuine coverage dispute should be allowed to litigate coverage in a separate declaratory judgment action while the underlying tort action is still pending. The underlying claim arose from a motor vehicle accident that allegedly caused injuries to a passenger on the insured’s motorcycle. The insurer agreed to defend the tort action subject to a reservation of rights based on an exclusion for bodily injury to any person “occupying a covered vehicle … unless you have paid a premium for Guest Passenger Liability coverage.” The insurer then filed this action seeking a declaration that its policy did not provide coverage because the insured had not purchased the requisite coverage. The injured claimant intervened in the coverage action, and moved to abate it until the tort action was resolved. The motion was granted, and the insurer appealed. On appeal, the court held that the coverage action should have been allowed to proceed. Relying on Florida Supreme Court precedent, Higgins v. State Farm Fire & Cas. Co., 894 So.2d 5 (Fla.2004), the court concluded that “an insurance company may pursue a declaratory judgment action which requires a determination of the existence or nonexistence of a fact upon which depend its obligations as the insurer under a policy of insurance.” The court considered a number of factors from Higgins relevant to the timing of a coverage action, including: (1) whether the two actions are mutually exclusive; (2) whether proceeding to decision on the indemnity issue would promote settlement and avoid collusive actions between claimant and insured to create coverage; and (3) whether the insured had resources independent of insurance, so that it would be immaterial to the claimant whether the insured's conduct was covered or not covered by indemnity insurance. In this case, the court found the coverage action should be permitted to proceed because the actions were mutually exclusive and the contestability of the coverage issue would likely impact settlement of the tort action.
