Eleventh Circuit Agrees with District Court that $4.35 Million Settlement Cannot Be Enforced Against Insurer

Working for a subcontractor of a project’s general contractor, a worker fell off a ladder and died as a result of his injuries.  His estate brought a wrongful death suit against several defendants including the general contractor.  The general contractor claimed that its insurer under a commercial general liability insurance policy had a duty to defend and indemnify the suit.  The insurer, relying on a policy exclusion relating to injuries for any of the general contractor’s employees, refused coverage on the grounds that the exclusion extended to the subcontractor’s employees as a matter of Florida law.  The estate and general contractor agreed to a Coblentz settlement whereby a judgment of $4.35 million was entered in favor of the estate and the general contractor assigned the estate its rights to its claims against the general contractor’s insurer.

The estate then brought suit against the insurer alleging that the insurer wrongfully refused coverage and sought the full judgment amount.  The district court held that the Coblentz agreement could not be enforced against the insurer as a matter of law and granted summary judgment for the insurer.  Yesterday, the Eleventh Circuit agreed, relying on the overwhelming evidence establishing the contractor/subcontractor relationship and the fact that under Florida law, a contractor who sublets part of its work to a subcontractor develops a statutory employment relationship with the employees of that subcontractor.  Accordingly, the insurance policy exclusion applied, and summary judgment was appropriate in favor of the insurer.