United States District Court, M.D. Florida, Tampa Division
D. MERRYDAY UNITED STATES DISTRICT JUDGE
April 2014 Zurich sued seventeen defendants for breaching
twenty-one insurance policies. Each policy covers
workers' compensation claims between March 1, 2011, and
March 1, 2012. Under a “large-deductible
endorsement” to each policy, Zurich agrees to pay a
claim, and the insured agrees to reimburse Zurich for the
deductible up to $2 million. Because the policies
unambiguously obligate the defendants to reimburse Zurich for
a claim up to $2 million, three orders (Docs. 119, 122, and
124) grant summary judgment for Zurich on liability. A June
2017 jury trial on damages yielded a $9.1 million award for
half a dozen purported errors in the summary-judgment orders
and the trial, the LRA defendants and G&S Leasing move
(Docs. 184 and 185) for judgment as a matter of law or
alternatively for a new trial. Also, Zurich moves (Doc. 192)
for costs and pre-judgment interest.
Motions for judgment as a matter of law or for a new
days before the trial, the defendants moved (Doc. 155) to
dismiss for lack of subject-matter jurisdiction and argued
that the defendants' belated attempt to invoke a
purported administrative remedy divested subject-matter
jurisdiction. A June 12 order (Doc. 156) denies the motion.
The LRA defendants and G&S Leasing repeat the arguments
in the unsuccessful motion to dismiss. For the reasons
explained in the June 12 order (Doc. 156), the
defendants' argument fails.
“Collateral” or “set-off”
defendants claim as error the exclusion of testimony about
the “collateral” or the “collateral
setoff.” Rather than pay Zurich directly, the
defendants remitted money to a third party, PMSG,
which “managed the operations” for the defendants
and for several companies not a party to this action.
(Opferman, Tr. Vol. IV at 10-11 and 14-15) In addition to
contracting with Zurich on the defendants' behalf, PMSG
contracted with Zurich on behalf of the non-parties,
of which owed Zurich at least several million dollars.
(Opferman, Tr. Vol. IV at 41)
defendants proffered testimony from Daniel Opferman, the
former vice-president of operations for PMSG, that PMSG
deposited $22, 135, 675 in a trust. (Tr. Vol. IV at 25) Also,
PMSG paid into escrow $200, 000 and posted (purportedly on
the defendants' behalf) a $2, 500, 000 letter of credit.
According to Opferman, PMSG posted as collateral a total of
$24, 835, 675, but no collateral remains. (Tr. Vol. IV at 25
and 32) The defendants argue that the collateral posted by
PMSG reduces or eliminates the defendants' debt for the
2011-2012 claims and that the jury could properly consider
testimony about the collateral.
explained above, a non-party company owned by Hendry Hardin
and managed by PMSG owed Zurich money under pre-2011
policies. (Tr. Vol. IV at 37-38) Opferman testified that the
parties agreed that Zurich could apply the collateral in
PMSG's trust to the non-party's pre-2011 debt. (Tr.
Vol. IV at 33-38) In accord with the parties' agreement,
Zurich applied the collateral to the pre-2011 debt.
(Opferman, Tr. Vol. IV at 37-38) Opferman, who could identify
no error in Zurich's applying the collateral to the
pre-2011 debt, stated that he knew about nothing that
required Zurich's applying the collateral to the
defendants' 2011-2012 debt. (Tr. Vol. IV at 36-39)
proffered testimony about the “collateral” or the
“setoff” warranted exclusion. Testimony about
money withdrawn from a third party's trust and applied -
with the parties' agreement and without the
defendants' timely objection - to another debt could not
aid the jury's determination of damages caused by the
defendants' failure to reimburse Zurich for the 2011-2012
debt. Even if relevant, the testimony risked confusing the
jury with an erroneous belief that the defendants reimbursed
through the third party's trust the same money over which
Zurich sues in this action. Although the defendants
undoubtedly prefer that the jury credit the defendants for
the money in PMSG's trust, the defendants could identify
at trial nothing that obligated Zurich to apply the
collateral to the 2011-2012 debt. Absent evidence that
connected the collateral to the 2011-2012 debt, testimony
about the collateral remained both irrelevant and highly
likely to unduly distract, mislead, and confuse the jury.
points about the collateral warrant brief attention. First,
the defendants cite the testimony of Opferman and Zurich
underwriter March Bashore and argue that the parties
“intended” that the collateral satisfy the
2011-2012 debt. But Bashore's proffered testimony (Tr.
Vol. III at 185-238) neither mentions the pre-2011 debt nor
contemplates the effect of the “standstill
agreement” on the collateral. In any event, one
underwriter's subjective characterization of the
“intent, ” “purpose, ” or
“intended function” of the collateral cannot
absolve the defendants of the reimbursement obligation.
Second, the defendants argue that Zurich failed to identify
the account or debt to which Zurich applied the collateral.
For example, the LRA defendants assert that the defendants
“had every equitable right to tell the jury they paid
substantial collateral to Zurich . . . and to insist to the
jury that Zurich account for where that collateral
went.” (Doc. 185 at 21) But the defendants' failure
to counterclaim for an accounting prevents success on that
argument (or on several “accounting” variants
that appear throughout the record).
Who is “you”?
endorsement representative of the twenty-one policies
provides that “You agree to reimburse us” for up
to $2 million per claim. (Doc. 165-1 at 93) The defendants
argue (Doc. 185 at 5-15) for the first time that uncertainty