Illinois Union Insurance Co. v. Co-Free, Inc.

128 So. 3d 820, 2013 WL 5932244, 2013 Fla. App. LEXIS 17697
CourtDistrict Court of Appeal of Florida
DecidedNovember 6, 2013
DocketNo. 1D13-927
StatusPublished
Cited by2 cases

This text of 128 So. 3d 820 (Illinois Union Insurance Co. v. Co-Free, Inc.) is published on Counsel Stack Legal Research, covering District Court of Appeal of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Illinois Union Insurance Co. v. Co-Free, Inc., 128 So. 3d 820, 2013 WL 5932244, 2013 Fla. App. LEXIS 17697 (Fla. Ct. App. 2013).

Opinion

THOMAS, J.

Appellant seeks review of the trial court’s order denying its motion to dismiss based upon improper forum. The motion to dismiss was based upon a mandatory foreign forum selection clause contained within an environmental insurance policy. We have jurisdiction to review this non-final order. See Fla. R. App. P. 9.130(a)(3)(A). Based upon our analysis below, we reverse.

Factual Background

Appellant, a surplus lines insurance carrier, issued a storage tank liability insurance policy on Appellee’s gas station. Ap-pellee filed a complaint for declaratory and affirmative relief in Suwannee County, Florida, after Appellant denied coverage of a storage tank incident based upon its conclusion that the incident took place pri- or to the retroactive date of the policy.

Appellant filed a motion to dismiss based upon improper venue based upon the forum selection clause contained in the policy at issue. The clause states:

J. Jurisdiction and Venue
It is agreed that in the event of the failure of the Insurer to pay any amount claimed to be due hereunder, the Insurer and the “Insured” will submit to the Jurisdiction of the State of New York and will comply with all requirements necessary to give such court Jurisdiction. Nothing in this clause constitutes or should be understood to constitute a waiver of the Insurer’s right to remove an action to a United States District Court.

Appellee conceded that this was a mandatory forum selection clause, but argued below that it should not be enforced, as enforcement would be unreasonable and unjust. The trial court agreed, and denied Appellant’s motion to dismiss.

Analysis

We review the trial court’s order denying a motion to dismiss based on the interpretation of a forum selection clause de novo. See Mgmt. Computer Controls Inc. v. Charles Perry Constr. Inc., 743 So.2d 627, 630 (Fla. 1st DCA 1999). “A mandatory forum selection clause must be enforced unless it is shown to be unreasonable or unjust.” Land O’Sun Mgmt. Corp. v. Commerce and Indus. Ins. Co., 961 So.2d 1078, 1080 (Fla. 1st DCA 2007) (citing Manrique v. Fabbri, 493 So.2d 437, 440 (Fla.1986)). “In order to show that a clause is unreasonable, the party seeking to escape the clause must demonstrate more than ‘mere inconvenience or additional expense.’ ” Id. As noted in Man-rique:

[I]t should be incumbent on the party seeking to escape his contract to show that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court. Absent that, there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold that party to his bargain.

493 So.2d at 440 n. 4 (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 18, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)). In Haws & Garrett General Contractors, Inc. of Ft. Worth v. Panhandle Custom Decorators & Supply, Inc., this court found that “Mannque essentially adopted the three-pronged test announced by the United States Supreme Court in Bremen .... ” 500 So.2d 204, 205 (Fla. 1st DCA 1986). The Mannque three-prong test requires

that the chosen forum not be the result of unequal bargaining power by one of the parties; that enforcement of the agreement does not contravene strong public policy enunciated by statute or [823]*823judicial fiat in the forum where the litigation is required to be pursued or in the excluded forum; and that the clause does not transfer an essentially local dispute into a foreign forum.

Land O’Sun, 961 So.2d at 1080 (citing Haws & Garrett, 500 So.2d at 205). A clause that violates any one of these three enumerated factors should not be enforced. Id.

The trial court, while questioning the correctness of the Florida Supreme Court’s decision in Manrique to adopt the three-part test from Bremen, applied the correct test; however, the trial court erred in concluding that Appellee met its burden under the test.

The trial court concluded that the parties’ bargaining power was clearly unequal, because an insured is not permitted by statute to seek to obtain insurance from the surplus market without first having tried and failed to obtain insurance from admitted carriers. The trial court found that Appellee was left with two options when it could not obtain insurance from an admitted carrier, either to buy surplus lines coverage or go without insurance. The trial court, however, concluded that because federal law requires Appellee to have financial responsibility in order to own or operate underground petroleum tanks, Appellee was in a “take it or leave it” position. We decline to accept Appel-lee’s argument under this factor, and we reject the trial court’s conclusion, as it would amount to a per se rule that any foreign forum selection clause in a surplus lines policy would be unenforceable.

This is not to say that a foreign forum selection clause in a surplus lines insurance policy cannot be the result of unequal bargaining power. Appellee failed to meet its burden below, however, in submitting evidence to establish that this insurance policy was the result of unequal bargaining power. In particular, Appellee did not submit any evidence to establish that it had unsuccessfully tried to negotiate removing the foreign forum selection clause, that Appellant was the only surplus lines carrier offering such a policy to Florida insureds, or that Appellee had contacted other surplus lines carriers, but their policies also contained a foreign forum selection clause.

The trial court also found that the foreign forum selection clause was unenforceable, as its enforcement would contravene strong public policy enunciated by statute and judicial fiat, and cited for support unreported federal district court decisions applying a different test established based upon federal statutory forum non conveniens factors. See D/H Oil & Gas Co. v. Commerce and Indus. Ins. Co., No: 3:04-CV-448-RV/MD, 2005 WL 1153332 (N.D.Fla. May 9, 2005). In its reasoning under this factor, the trial court also concluded that this court’s opinion in Land O’Sun was distinguishable. Land O’Sun involved a storage tank policy from an admitted Florida carrier, and, unlike the surplus carrier’s policy in this case, the policy there had been reviewed by the Office of Insurance Regulation (OIR). Land O’Sun, 961 So.2d at 1080. The trial court, however, ignored the language in Land O’Sun where this court held that the “legislature has not specifically addressed forum selection clauses contained in environmental insurance policies.” 961 So.2d at 1080.

The trial court instead focused on this court’s analysis that a foreign forum selection clause reviewed in a policy approved by OIR could not be said to violate a strong public policy. The trial court asserted that the accuracy of this conclusion had been called into question, as Appellee had introduced evidence of two storage [824]*824tank policies that OIR had reviewed and had rejected the foreign forum selection clauses in the policies.

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Bluebook (online)
128 So. 3d 820, 2013 WL 5932244, 2013 Fla. App. LEXIS 17697, Counsel Stack Legal Research, https://law.counselstack.com/opinion/illinois-union-insurance-co-v-co-free-inc-fladistctapp-2013.