Jones, Foster, Johnston & Stubbs, P.A. v. Prosight-Syndicate 1110 at Lloyd's

680 F. App'x 793
CourtCourt of Appeals for the Eleventh Circuit
DecidedFebruary 14, 2017
Docket15-12399 Non-Argument Calendar
StatusUnpublished
Cited by2 cases

This text of 680 F. App'x 793 (Jones, Foster, Johnston & Stubbs, P.A. v. Prosight-Syndicate 1110 at Lloyd's) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jones, Foster, Johnston & Stubbs, P.A. v. Prosight-Syndicate 1110 at Lloyd's, 680 F. App'x 793 (11th Cir. 2017).

Opinion

PER CURIAM:

This appeal concerns whether professional liability insurer ProSight-Syndicate 1110 at Lloyd’s (“ProSight”) was contractually obligated to defend several attorneys employed by its insured, Jones, Foster, Johnston & Stubbs, P.A. (“Jones Foster”), against a motion for an order to show cause why they should not be held in contempt and sanctioned. After Pro-sight refused to provide a defense, Jones Foster initiated this action seeking both damages for breach of contract and declaratory relief. ProSight responded by filing a motion to dismiss under 12(b)(6) of the Federal Rules of Civil Procedure claiming that the insurance policy at issue did not create any obligation to defend Jones Foster’s employees against the underlying contempt motion. The District Court granted Prosight’s motion to dismiss with prejudice. After careful review of the parties’ briefs and the record, we affirm.

I.

Prosight issued a Primary Lawyer’s Professional Liability Insurance Certificate (the “Policy”) to Jones Foster covering the time period between May 1, 2013 and May 1, 2014. The Policy purported to cover “all sums which the Insured shall become legally obligated to pay as damages for claims .,. arising out of any act, error, [or] omission ... in the rendering of or failure to render Professional Services by any Insured covered under this policy.” The Policy also obligated Prosight to “defend any suit against the Insured seeking Damages to which this insurance applies.” Under the Policy, a claim is “a demand for money or services ... [but does not] include proceedings seeking injunctive or other non-pecuniary relief.” And, damages are “compensatory judgments, settlements or awards [not including] punitive or exemplary damages, sanctions, fines or penalties assessed directly against any insured.” It is undisputed that the Policy applied to Jones Foster as an entity as well as all the lawyers employed by the firm.

When the Policy first went into effect, attorneys employed by Jones Foster were representing Gary Donald Carroll in a defamation suit filed in the Circuit Court of the Fifteenth Judicial Circuit of Florida, in and for Palm Beach County, against TheS-treet.com, Inc., an online news source. See Carroll v. TheStreet.com, Inc., No. 502008CA021014XXXXMB AN, 2008 WL 7297696 (Fla. Cir. Ct. 2008). One issue in that litigation involved whether the Florida statutory journalist’s privilege extended to protect TheStreet.com’s sources, the iden *795 tities of which the TheStreet.com had inadvertently disclosed to Carroll during discovery. Pertinent to the instant case, the Circuit Court entered an order granting TheStreetcom’s motion for a protective order concerning those disclosures that barred Carroll from “any further use of, reference to, or reliance on, the privileged information.” TheStreet.com, Inc. v. Carroll, 20 So.3d 947, 950 (Fla. Dist. Ct. App. 2009). Following an extensive investigation, Carroll claimed that he had independently identified Third Point 1 as the source of the defamatory statements, and amended his complaint to add Third Point as a defendant. The case was subsequently removed by Third Point to the United States District Court for Southern District of Florida. See Carroll v. TheStreet.com, Inc., No. 9:11-CV-81173 (KLR), 2011 WL 9226581 (S.D. Fla. 2011).

After months of motion practice and discovery concerning whether Carroll used privileged information to identify it as the source of the allegedly defamatory statements, Third Point moved the District Court to issue an order requiring Carroll, and his attorneys, collectively referred to in the motion as “Jones Foster,” 2 to show cause why they should not be held in contempt and sanctioned for their use of privileged information in direct violation of the Circuit Court’s protective order (the “Contempt Motion”). 3 In the motion, Third Point argued that the court should impose sanctions pursuant to Federal Rule of Civil Procedure 11, 28 U.S.C. § 1927, and its own inherent powers to punish misconduct for, among other things, the filing of an affidavit that Carroll’s lawyers knew to be materially false. 4 The Contempt Motion sought the following remedies for the alleged misconduct of Caroll and his lawyers: (1) removal of all references to Third Point in the lawsuit; (2) dismissal of Carroll’s claims against Third Point with prejudice; and (3) attorneys’ fees and costs incurred by Third Point in the litigation.

On June 5, 2013, Jones Foster filed a claim requesting that ProSight defend its lawyers against the Contempt Motion pursuant to the terms of the Policy. After a preliminary investigation, Prosight declined the request explaining that the remedies sought by the Contempt Motion, sanctions and non-pecuniary damages, were specifically excluded from coverage. Consequently, it had no obligation to defend Jones Foster’s lawyers, specifically Wilkins and Rothman, with respect to Third Point’s motion. 5

*796 On November 10, 2014, Jones Foster commenced this action against Prosight alleging breach of contract, breach of the covenant of good faith, and declaratory relief in the Circuit Court of the Fifteenth Judicial Circuit, in and for Palm Beach County, Florida. 6 Prosight removed the action to federal court in the Southern District of Florida on December 19, 2014. Days later, Prosight filed a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6), arguing that the plain terms of the Policy specifically excluded coverage for proceedings seeking sanctions and other non-pecuniary forms of relief. The District Court agreed, and in its well-reasoned and comprehensive order held, that the Policy’s plain language extended insurance coverage, and a corresponding duty to defend, only to claims seeking damages, not including sanctions. Because civil contempt is a sanction, no coverage existed under the Policy. Accordingly, the District Court explained that Prosight was not obligated to defend Jones Foster or the firm’s attorneys, and, on May 1, 2015, granted Prosight’s motion dismissing Jones Foster’s lawsuit with prejudice. This appeal follows.

II.

We review both the District Court’s grant of a 12(b)(6) motion to dismiss and its interpretation of an insurance contract de novo, “taking as true the facts alleged in the complaint.” James River Ins. Co. v. Ground Down Eng’g, Inc., 540 F.3d 1270, 1273-74 (11th Cir. 2008). We are also obligated to “draw all reasonable inferences in the plaintiffs favor.” Randall v. Scott, 610 F.3d 701

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Bluebook (online)
680 F. App'x 793, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jones-foster-johnston-stubbs-pa-v-prosight-syndicate-1110-at-ca11-2017.