The U.S. Eleventh Circuit Court of Appeals, applying Florida law, recently held that an insured was entitled to attorneys’ fees and costs pursuant to section 627.428, Florida Statutes, because the insurer settled the underlying tort claim and voluntarily dismissed its declaratory judgment action, which constituted a confession of judgment. W & J Group Enter., Inc. v. Houston Specialty Ins. Co., 2017 WL 1279045 (11th Cir. Apr. 6, 2017).
The insured sought coverage under its liability policy for a claim against it. While the insurer had a pending declaratory judgment action against its insured seeking a ruling of no duty to defend or indemnify and rescission of the policy, the insurer and insured reached a settlement with the underlying plaintiff that included payments made by both the insurer and the insured. After the settlement, the insurer voluntarily dismissed its declaratory judgment action. The insured then moved for attorneys’ fees pursuant to section 627.428, which provides that an insured is entitled to its fees when judgment is entered in favor of the insured. The insurer argued that the insured’s contribution to the settlement took it outside the scope of section 627.428. The court agreed and denied the insured’s motion for entitlement to attorneys’ fees. The insured appealed.
The Eleventh Circuit reversed, finding that the insurer’s settlement of the underlying tort claim and voluntary dismissal of the declaratory judgment action constituted a confession of judgment. The Eleventh Circuit noted that the insurer could have avoided these circumstances by negotiating a global settlement that included attorneys’ fees. Thus, the insured was entitled to attorneys’ fees pursuant to section 627.428.