JUAN PEREZ, AS ADMINISTRATOR OF THE ESTATE OF JOHNNY PEREZ, A MINOR, DECEASED, APPELLANT,
v.
MARIA OTERO AND UNITED STATES FIDELITY & GUARANTY COMPANY, APPELLEES
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Juan Perez, as administrator of his minor son's estate, appealed a declaratory judgment that United States Fidelity & Guaranty Company (U.S.F.&G.) was not liable for interest on the punitive damages portion of a judgment against its insured. The court affirmed, holding that because insurance companies cannot pay punitive damages as a matter of public policy, they also need not pay interest on punitive damages awards.
Insurance companies are not liable for interest on punitive damages awards. The supplementary payments clause, requiring payment of interest on judgments, reasonably applies only to that portion of the judgment for which the insurer is legally obligated to pay, excluding punitive damages which are prohibited by public policy.
[1] Insurance companies are not liable for punitive damages assessed against their insured for torts committed by their insured as a matter of public policy.
[2] An insurance policy clause obligating the insurer to pay interest on a judgment does not extend to the punitive damages portion of the judgment, as the insurer is not lia…
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Join FLexlaw to unlock all legal intelligence“Insurance companies are not liable for punitive damages assessed against their insured for torts [*102] committed by their insured as a matter of public policy.”
Establishes the foundational public policy principle that prevents insurance coverage for punitive damages
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Join FLexlaw to unlock all legal intelligenceA judgment was entered against Maria Otero, insured by U.S.F.&G., in favor of Juan Perez as administrator of his deceased minor son's estate. The judg…
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MELVIN, WOODROW M. (Ret.), Associate Judge.
Perez appeals a final declaratory judgment wherein the trial court held that the appellee, United States Fidelity and Guaranty Company, did not have to pay interest on a punitive damages portion of a judgment that had been entered in favor of Perez against U. S. F. & G.’s insured, Otero.
The appellant, while recognizing that U. S. F. & G. is not liable to pay the punitive damages award [Nicholson v. American Fire and Casualty Insurance Company, 177 So. 2d 52 (Fla.2d DCA 1965); Hartford Accident & Indemnity Company v, U. S. Concrete Pipe Company, 369 So. 2d 451 (Fla. 4th DCA 1979) ] contends it is liable for interest on that portion of the judgment, due to an ambiguity in the contract of insurance. The claimed ambiguity is found in the following clause:
“HI. SUPPLEMENTARY PAYMENTS
The company will pay, in addition to the applicable limit of liability:
(a) all expenses incurred by the Company, all costs taxed against an insured in any suit defended by the company and all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before the Company has paid or tendered or deposited in the court that part of the judgment which does not exceed the limit of the Company’s liability thereon;”
The appellant contends this clause must be interpreted to include interest on the award of punitive damages in the instant case because, any ambiguity must be construed against the company. We disagree and affirm the trial court. Insurance companies are not liable for punitive damages assessed against their insured for torts committed by their insured as a matter of public policy. Nicholson v. American Fire and Casualty Insurance Company, supra; Hartford Accident & Indemnity Company v. U. S. Concrete Pipe Company, supra. For this court to adopt the interpretation of the clause in question as advocated by the appellant would result in the absurd result of penalizing the insurance company for not paying a judgment it is not legally obligated to pay. This we will not do. See Paddock v. Bay Concrete Industries, Inc., 154 So. 2d 313 (Fla.2d DCA 1963); Hunt v. First National Bank of Tampa, 381 So. 2d 1194 (Fla.2d DCA 1980). The only reasonable interpretation of the clause in question, is to hold that the insurer is only liable to pay interest on that portion of the judgment that is not in violation of the public policy of the State of Florida.
Therefore, the judgment under review is hereby affirmed.
Affirmed.
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Adams v. Brannan, 500 So. 2d 236 (Fla. 3d DCA 1986)…purpose of punitive damages to impose. See McNulty, 307 F. 2d at 435; Commercial Union Ins. Co. v. Reichard, 404 F. 2d 868 (5th Cir.1968); Travelers Ins. Co. v. Wilson, 261 So. 2d 545 (Fla. 4th DCA 1972); Nicholson, 177 So. 2d at 53; Perez v. Otero, 415 So. 2d 101 (Fla. 3d DCA 1982); Florida Patient’s Compensation Fund v. Mercy Hospital, Inc., 419 So. 2d 348 (Fla. 3d DCA 1982); see generally Comment, Punitive Damages Insurance: Why Some Courts Take the Smart out of “Smart Money,” 40 U.Miami L.Rev. 979 (1986).…
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Fla. Patient's Comp. Fund v. Mercy Hosp., Inc., 419 So. 2d 348 (Fla. 3d DCA 1982)…k or of a member. Despite the differences between the fund and private insurers, no valid reason exists to deny fund members the same benefit that inures to private insurers — the avoidance of liability for punitive damages. McNulty; Perez v. Otero, 415 So. 2d 101 (Fla. 3d DCA 1982); Nicholson. The assessment of punitive damages against the fund would force innocent fund members to share the punishment for the wrongful acts of a single member, a result we reject as a matter of public policy. We find no probl…
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Ins. Co. OF the State OF Pa. v. Puritan Ins. Co., 532 So. 2d 35 (Fla. 3d DCA 1988)…rest on the entire amount of the judgment where there is no excess carrier. Highway Cas. Co. v. Johnston, 104 So. 2d 734 (Fla.1958); Allstate Ins. Co. v. Warren, 125 So. 2d 886 (Fla. 3d DCA), cert. denied, 131 So. 2d 201 (Fla. 1961); Perez v. Otero, 415 So. 2d 101 (Fla. 3d DCA 1982). Penn argues that because both the primary and excess insurers were responsible for funds due the insured, the companies should share on a pro rata basis the interest costs incurred. Had both carriers assumed identical obligation…
Previewing 3 of 4 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Paddock v. BAY Concrete Indus., Inc., 154 So. 2d 313 (Fla. 2d DCA 1963)
- Hunt v. First Nat'l Bank OF Tampa, 381 So. 2d 1194 (Fla. 2d DCA 1980)
- Wilford M. Nicholson v. Am. Fire & Cas. Ins. Co., 177 So. 2d 52 (Fla. 2d DCA 1965)
- Hartford Accident & Indem. Co. v. U.S. Concrete Pipe Co., 369 So. 2d 451 (Fla. 4th DCA 1979)