Explorer, issued an automobile insurance policy to its policyholder, Cajusma, who was involved in an accident wherein Cajusma and his two passengers sought PIP benefits for alleged injuries from the auto accident. The driver of the other vehicle involved in the accident as well as his passenger alleged injuries because of the negligence of Cajusma and filed suit against Cajusma.
A chiropractor, who treated Cajusma and his passengers, also filed a PIP suit against Explorer. Explorer subsequently filed a Petition for Declaratory Relief against all the parties seeking to be relieved of all policy duties based on alleged material misrepresentations made by the named insured. Cajusma then filed suit against Explorer for breach of contract and failure to provide policy benefits. Explorer and Cajusma reached a settlement of that action brought by Cajusma including attorney’s fees. However, the Petition for Declaratory Relief initiated by Explorer remained pending at the time of settlement.
- Dismissal of the Dec Action by Explorer and Entry of Fee and Cost Motion Against the Insurer Upon Dismissal
Cajusma and the passenger in his vehicle filed Motions for Summary Judgment in the pending declaratory action. Explorer moved to dismissed and the Court granted the Motion. However, the Court reserved on fees and costs. The Trial Court thereafter entered separate orders granting the attorney’s fees and cost motions. The Court found payment of the property damage and agreement to provide Cajusma with a defense operated as a “confession of judgment regarding insurance coverage under the policy.” The Court also found the voluntary dismissal triggered fees and costs as a functional equivalent of a confession of judgment in favor of the insured. Further, the Court found entitlement in favor of the insured passenger.
Explorer appealed the Trial Court. Citing to precedent, the Fifth District upheld fees and costs to Cajusma (named insured) because Cajusma received a “benefit” in the form of a defense and payment of claims on his behalf. These were the exact items Explorer contended that the insured was not entitled to receive via the dec. action against the policyholder prior to settling.
- Reversal as to the Passenger
The Fifth District reversed and remanded as to the insured passenger. The Court noted that the passenger did not receive a defense nor was any liability paid on his behalf. Thus, the passenger was not entitled to recover fees and costs.