IN THE SUPREME COURT OF FLORIDA CASE NO. SC05-856

IN THE SUPREME COURT OF FLORIDA CASE NO. SC05-856 RICHARD SNELL, Vs. Appellant/Petitioner ALLSTATE INDEMNITY CO., et al. Appellee/Respondent. / PETITIONER S THIRD AMENDED BRIEF ON JURISDICTION BOIES, SCHILLER & FLEXNER LLP H. Stephen Rash, Fla. Bar No.: 157727 Steven W. Davis, Fla. Bar No.:347442 Attorneys for Plaintiff Bank of America Tower, Suite 2800 100 S.E. 2nd Street Miami, Florida 33131 Tel: (305) 539-8400 Fax: (305) 539-1307

Table of Contents Page I. QUESTION PRESENTED...1 II. STATEMENT OF THE CASE AND FACTS...1 III. SUMMARY OF THE ARGUMENT...3 IV. ARGUMENT...5 V. CONCLUSION...8 CERTIFICATE OF SERVICE...9 CERTIFICATE OF COMPLIANCE...9 i

Table of Authorities Cases Page Byrd v. Atlanta Casualty Co., No. 2000-CA-2868 (Fla. 12 th Cir. Ct. 2003)...7 Centex-Rodgers Const. v. Herrera, 761 So.2d 1215 (Fla. 4 th DCA 1996)...1 Collins v. Wilcott, 578 So.2d 742, 744 (Fla. 5th DCA 1991)...1 DeCespedes v. Prudence Mutual Casualty Co. of Chicago, Ill. 193 So.2d 224, 227 (Fla. 3d DCA 1966), cert. denied 202 So.2d 561 (Fla. 1967...6 Florida Farm Bureau Insurance Co. v. Martin, 377 So.2d 827 (Fla. 1 st DCA 1979)...1 Ifrain Monte de Oca v. State Farm Fire & Casualty Company, Case No. 3D03-661 (Fla. 3d DCA 2004)...2 Magsipoc v. Larsen, 639 So.2d 1038 (Fla. 5 th DCA 1979)...4 Monte De Oca v. State Farm Fire & Casualty Company and Snell v. Allstate Indemnity Company and Allstate Insurance Company, 897 So.2d 471 (Fla. 3d DCA 2004)...2 National Surety Corp. v. Bimonte, 153 So.2d 709 (Fla. 3d DCA 1962)...1 Powers v. GEICO, 192 F.R.D. 313 (S.D. Fla. 1998)...7 Richard Snell v. Allstate Indemnity Company and Allstate Insurance Company, Case No. 3D03-1468 (Fla. 3d DCA 2004)...2 Rubio v. Rubio, 452 So.2d 130, 132 (Fla. 2d DCA 1984)...1 Whyel v. Smith, 134 So. 552, 554 (Fla. 1931)...1 ii

I. QUESTION PRESENTED Whether this Court has jurisdiction to review the decision below which holds that despite the made whole rule as adopted by the Florida courts, 1 which requires that an insured be made whole before the subrogated insurer may recover from a tortfeasor, a subrogated insurer may reduce the insured s recovery of his property loss deductible by the subrogated insurer s assessment of the insured s comparative fault. II. STATEMENT OF THE CASE AND FACTS Petitioner, Richard Snell ( Snell ) entered into an automobile insurance contract with Respondent, Allstate Indemnity Company ( Allstate ). Under the terms of the policy, Snell was provided with collision coverage that would compensate Snell for damage to his insured vehicle, minus a $500.00 deductible, while this policy was in full effect, Snell was involved in an automobile collision that resulted in damages to Snell s vehicle exceeding $500.00. Allstate paid the property claim minus the $500.00 deductible. Thereafter, Allstate pursued a subrogation claim against the third party tortfeasor and resolved 1 Whyel v. Smith, 134 So. 552, 554 (Fla. 1931); Collins v. Wilcott, 578 So.2d 742, 744 (Fla. 5th DCA 1991); Rubio v. Rubio, 452 So.2d 130, 132 (Fla. 2d DCA 1984); National Surety Corp. v. Bimonte, 153 So.2d 709 (Fla. 3d DCA 1962); Florida Farm Bureau Insurance Co. v. Martin, 377 So.2d 827 (Fla. 1 st DCA 1979); Centex-Rodgers Const. v. Herrera, 761 So.2d 1215 (Fla. 4 th DCA 1996). 1

the claim. Instead of making Snell whole by paying him his full $500.00 deductible, Allstate offered Snell a reduced amount, keeping 25% of the deductible based on Allstate s independent assessment of Snell s comparative fault. 2 Snell then filed this action, seeking his full deductible on behalf of himself and other Florida Allstate insureds, whose auto collision property losses have similarly been recovered by the Defendants from third party tortfeasors and/or their insurance carriers, but who have not been reimbursed by Defendants for the full amount of their deductible losses. This action challenged Allstate s general business practice of imposing comparative negligence determination in all subrogation recoveries. As a result, Allstate s insureds are not made whole before the subrogee (Allstate) may recover from the tortfeasor. 3 In April 2003, the trial court granted Allstate s motion to dismiss Snell s class claims which was affirmed by the Third District Court of Appeal, 4 on December 22, 2004, affirmed the order of the lower court in the Decision denying 2 In Monte de Oca, State Farm kept 50% of the deductible there. 3 Whyel v. Smith, 134 So. 552, 554 (Fla. 1931); Collins v. Wilcott, 578 So.2d 742, 744 (Fla. 5th DCA 1991); Rubio v. Rubio, 452 So.2d 130, 132 (Fla. 2d DCA 1984); National Surety Corp. v. Bimonte, 153 So.2d 709 (Fla. 3d DCA 1962); Florida Farm Bureau Insurance Co. v. Martin, 377 So.2d 827 (Fla. 1 st DCA 1979); Centex-Rodgers Const. v. Herrera, 761 So.2d 1215 (Fla. 4 th DCA 1996). 4 Richard Snell v. Allstate Indemnity Company and Allstate Insurance Company, Case No. 3D03-1468 (Fla. 3d DCA 2004); Also denied at the appeal was the companion case of Ifrain Monte de Oca v. State Farm Fire & Casualty Company, Case No. 3D03-661 (Fla. 3d DCA 2004). 2

Snell s cause of action. In passing on the issue, the court reasoned that an insured who is deemed comparatively at fault for the harm receives a windfall if he is made whole by the subrogated insurer. Therefore, the insured shall not be entitled to his full property loss deductible, and this offset in recovery represents the insured s liability. Snell then filed a motion to certify the question: Whether Florida s made whole doctrine entitles an insured under a property damage insurance policy to receive 100 percent of his deductible when his insurer collects on a subrogation claim, regardless of whether the insured is claimed by his insurer to have been comparatively negligent. 5 This motion was denied by the Third District Court of Appeal on April 14, 2005. Accordingly, Snell seeks this Court to exercise its discretionary review pursuant to Rule 9.030 of the Florida Rules of Appellate Procedure and resolve this question as one in direct conflict with decisions of other district courts of appeal and of the Supreme Court. III. SUMMARY OF THE ARGUMENT The Third District s en banc decision in Monte De Oca v. State Farm Fire & Casualty Company and Snell v. Allstate Indemnity Company and Allstate Insurance Company, 897 So.2d 471 (Fla. 3d DCA 2004) certification denied April 14, 2005 (6-4) (the Decision ) was the first time a Florida court has applied 5 Richard Snell v. Allstate Indemnity Co., et al., Case No. 3D03-1468 (Fla. 3d DCA 2005); Also denied was the companion motion to certify Ifrain Monte de Oca v. State Farm Fire & Casualty Company, Case No. 3D03-661 (Fla. 3d DCA 2005). 3

comparative negligence to the definition of the made whole rule to a Florida insured. This modification of the made whole doctrine effectively makes the rule inapplicable when there is a determination of comparative fault by the subrogee/insurer, and allows the insurer to offset its insured s recovery by the percentage of comparative fault it determined. Consequently, the insured is not made whole and the insurer is permitted to recover a windfall due to the alleged negligence of the insured. Collision coverage is based on the contractual obligation of the insurer in return for premiums paid by the insured: it is in effect a no-fault coverage because the insurer s duty to pay has nothing to do with the circumstances of the underlying collision. This modification of the made whole rule directly conflicts with the traditional made whole rule supported by other district courts and the this Honorable Court. Under the traditional made whole doctrine, the insurer s subrogation rights cannot be enforced unless the insured has been made whole. Whyel v. Smith, 134 So. 552, 554 (Fla. 1931); Collins v. Wilcott, 578 So.2d 742, 744 (Fla. 4th DCA 1991). The focus of the rule is not on what an insured may legally recover from the tortfeasor and the tortfeasor s insurer, but on the total damages or loss sustained by the insured. See Magsipoc v. Larsen, 639 So.2d 1038 (Fla. 5 th DCA 1979). Thus, comparative fault determination has no place in the traditional made whole rule as previously determined by Florida courts. 4

Furthermore, the modification of the traditional made whole rule is a question of great public importance as it will be replicable to thousands of Florida insureds. Every insured who owns automobile collision coverage, is involved in an accident, and whose insurer successfully pursues a subrogation claim on his or her behalf will be affected. Accordingly, this Court should grant review of this conflict. IV. ARGUMENT This Court Should Grant Review Because The Modification Of The Made Whole Rule Under The Doctrine Of Equitable Subrogation In The Opinion Below Is In Direct Conflict With Decisions Of Other District Courts Of Appeal And Of The Supreme Court. Florida s Supreme Court and appellate courts follow the made whole rule. Whyel v. Smith, 134 So. 552, 554 (Fla. 1931); Collins v. Wilcott, 578 So.2d 742, 744 (Fla. 5th DCA 1991); Rubio v. Rubio, 452 So.2d 130, 132 (Fla. 2d DCA 1984); National Surety Corp. v. Bimonte, 153 So.2d 709 (Fla. 3d DCA 1962); Florida Farm Bureau Insurance Co. v. Martin, 377 So.2d 827 (Fla. 1 st DCA 1979); Centex-Rodgers Const. v. Herrera, 761 So.2d 1215 (Fla. 4 th DCA 1996). Florida s made whole rule requires an insurer to reimburse the insured s loss in full before the insurer is entitled to retain any subrogation proceeds. Florida Courts recognize that between an insured and an insurance company that it is the insurer that bears the risk of loss. As described by the First District in Florida Farm Bureau Insurance Co. v. Martin, supra: 5

Subrogation is a normal incident of indemnity insurance where the primary purpose of the insurance is to allow true restitution for the loss suffered...furthermore, it is not available to an extent greater than the amount paid by the insurer, and then only after the insured has been fully indemnified. DeCespedes v. Prudence Mutual Casualty Co. of Chicago, Ill. 193 So.2d 224, 227 (Fla. 3d DCA 1966), cert. denied 202 So.2d 561 (Fla. 1967). The entire purpose of indemnity insurance is the formation of a contractual obligation where the insurer must pay the insured under the terms of the policy irrespective of any wrongdoing on the part of the insured. 6 This contractual obligation is secured by the payment of premiums by the insured. The common law made whole rule further encompasses this purpose as it requires the insured, who has paid premiums to secure financial reimbursement under the insurance contract, to be fully reimbursed for his losses by the insurer, who is then free to pocket any of the excess recovery provided that the contractual obligation is fulfilled. See Id. By permitting the insurer to modify this contractual obligation by reducing the insured s recovery by the insured s alleged comparative fault, the lower court acted in contravention of the established made whole rule as established by Florida Courts. Indeed, the made whole doctrine requires an insured to be made whole regardless of comparative negligence. No Florida case holds otherwise. For 6 See Justice Wells, dissenting opinion. Richard Snell v. Allstate Indemnity Company and Allstate Insurance Company, Case No. 3D03-1468 (Fla. 3d DCA 2004). 6

example, in Florida Farm Bureau Ins. Co., subrogation of the insurer was denied on the basis of the made whole rule when the insured decided to settle for less than the full amount of his damage. Florida Farm Bureau Ins. Co., 377 So.2d at 829-30. Therefore, despite the fact that the insured independently elected to settle for less, the insurer was not entitled to share in the settlement proceeds because the insured had not been made whole. Id. at 830. Furthermore, other courts have found that a plaintiff can bring a class action against an insured for violation of the made whole rule. In Powers v. GEICO, 192 F.R.D. 313 (S.D. Fla. 1998), the court upheld a class action for Florida plaintiffs against an insurance company for the company s practice of reimbursing its insureds with a pro-rata amount in proportion to the amounts the insurer recovers on its subrogation claims. 7 Supra. In Byrd v. Atlanta Casualty Co., No. 2000-CA-2868 (Fla. 12 th Cir. Ct. 2003), the lower court entered an order of preliminary approval of a settlement and granted class certification in a similar case for violation of the made whole rule against an insurance company. Potentially, every insured in the State of Florida who pays a deductible as a term of his or her automobile collision policy may be affected by this ruling in the 7 In the case of Powers, the representative plaintiff, Geico, the insurer, sent a demand letter to State Farm Insurance, the insurer of the other party that was involved in the accident with Powers. When State Farm agreed to pay Geico onehalf of the amounts expended in connection with Powers claim, Geico subsequently refunded Powers one-half of her deductible. Powers v. Geico, 192 F.R.D. 313 (S.D. Fla. 1998). 7

event the insured were to get into an automobile accident. Therefore, it is imperative that this conflict between the traditional made whole rule as established and followed by Florida Courts and the modified made whole rule pronounced by the Lower Court be resolved by this Court. V. CONCLUSION The Decision impacts every property damage claim in the State of Florida where subrogation is sought. For these reasons, this Court should exercise its discretionary jurisdiction and review the Decision. BOIES, SCHILLER & FLEXNER LLP Attorneys for Plaintiff Bank of America Tower, Suite 2800 100 S.E. 2nd Street Miami, Florida 33131 Tel: (305) 539-8400 Fax: (305) 539-1307 By: Steven W. Davis Florida Bar No. 347442 8

CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true copy of the foregoing was served by U.S. mail this day of July 2005 upon Marcy L. Aldrich, Nancy Copperthwaite, Akerman Senterfitt, One S.E. 3 rd Avenue, Suite 2800, Miami, Florida 33131 and Diane H. Tutt, Diane H. Tutt, P.A., P.O. Box 292436, Davie, Florida 33329. Steven W. Davis Fla. Bar No. 347442 CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that this Brief is in compliance with the requirements of Rule 9.210(a)(2), Fla. R. App. P. Steven W. Davis 9