Florida Nonjoinder Statute
The Florida nonjoinder statute provides, in relevant part:
(1) It shall be a condition precedent to the accrual or maintenance of a cause of action against a liability insurer by a person not an insured under the terms of the liability insurance contract that such person shall first obtain a settlement or verdict against a person who is an insured under the terms of such policy for a cause of action which is covered by such policy.
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(3) Insurers are affirmatively granted the substantive right to insert in liability insurance policies contractual provisions that preclude persons who are not designated as insureds in such policies from joining a liability insurer as a party defendant with its insured prior to the rendition of a verdict. The contractual provisions authorized in this subsection shall be fully enforceable.
(4) At the time a judgment is entered or a settlement is reached during the pendency of litigation, a liability insurer may be joined as a party defendant for the purposes of entering final judgment or enforcing the settlement by the motion of any party, unless the insurer denied coverage under the provisions of s. 627.426(2) or defended under a reservation of rights pursuant to s. 627.426(2).
“Stated differently, ‘[u]nder … the [Florida nonjoinder statute], an injured third party may not file a direct action against a liability insurer for a cause of action covered by a liability insurance policy without first satisfying either one of two conditions precedent: (1) obtaining a settlement against the insured or (2) obtaining a verdict against the insured.” Progressive Select Ins. Co. v. Bigney, 264 So. 3d 222, 224 (Fla. 5th DCA 2018) (quotation omitted).
“The legislative intent behind … [the Florida nonjoinder statute] is to ensure that the availability of insurance has no influence on the jury’s determination of the insured’s liability and damages.” Starr Indem. & Liab. Co. v. Morris, 155 So. 3d 429, 431–32 (Fla. 3d DCA 2015) (quotation omitted). “Thus, the trial court should either dismiss or sever related actions against a liability insurer to prevent prejudice.” Id. at 432.
The Florida nonjoinder statute “does not technically apply when a claimant alleges that he or she is an insured under the policy terms.” Starr Indem. & Liab. Co., 155 So. 3d at 432. “However, the legislative intent underlying section 627.4136 mandates that the direct action … be severed to prevent jurors from discovering that an insurance company may be held responsible for some or all of the judgment in the negligence suit against [the at fault party].” Id.
Importantly, the Florida nonjoinder statute “does not bar a direct action against an insurer by a third party on an obligation that is independent of the insurance contract.” Progressive Select Ins. Co., 264 So. 3d at 224 (emphasis added). Nevertheless, expect defendant insurance companies to rant and rave that the plaintiff’s claims are not independent. In Progressive Select Ins. Co., the Fifth District Court of Appeals was asked to answer “whether the counts of civil conspiracy and aiding and abetting the breach of fiduciary duties are independent from the insurance contract.” Id. at 224–25.
For purposes of the Florida nonjoinder statute, the Court reasoned, “[i]nasmuch as both counts are explicitly based on ‘fiduciary duties,’ ‘legal obligations,’ ‘Med Pay benefits,’ and ‘liability limits’ established in the insurance contract, we conclude they are not independent.” Progressive Select Ins. Co., 264 So. 3d at 225. “Indeed, the insurance contract is the only reason Progressive has to deal with [the plaintiff].” Id. “Because [the] counts … are not independent of the insurance contract, they are premature until [plaintiff] obtains a judgment or settlement against [the defendant].” Id.