CLEARY BROTHERS CONSTRUCTION CO., APPELLANT,
v.
UPPER KEYS MARINE CONSTRUCTION, INC., APPELLEE
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Cleary Brothers Construction Co. appealed a summary judgment in favor of Upper Keys Marine Construction, Inc., claiming entitlement to indemnification under a contract. The court reversed, holding that the trial court mistakenly conflated indemnity claims with subrogation claims and that insolvency of the indemnitor's insurer does not bar indemnity claims.
Indemnity and subrogation are distinct legal concepts with different requirements and limitations. An indemnity claim is not barred by the insolvency of the indemnitor's insurer, and the statutory prohibition on subrogation actions does not apply to indemnity claims. A party may recover partial payments through indemnity, whereas subrogation requires satisfaction of the entire obligation.
[1] Indemnity and subrogation are distinct legal concepts, though both involve reimbursement for payments made that should have been borne by another.
[2] Subrogation places a party in the legal position of the one who has been paid, granting them the same rights and liabilities.
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Join FLexlaw to unlock all legal intelligence“In principle, there is a clear distinction between subrogation rights and indemnification rights. Subrogation is designed to afford relief when one is required to pay a legal obligation which ought to be met, either wholly or partially, by another.”
Establishes the foundational distinction between subrogation and indemnity claims
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Join FLexlaw to unlock all legal intelligenceCleary Brothers and a co-party (Cothron) each paid partial settlements to a decedent's personal representative in a personal injury matter. Both parti…
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HENDRY, Judge.
In accordance with our earlier opinions in this matter, where the insolvency of the indemnitor’s insurer was not found to bar indemnitee’s claim under a contract between the parties providing for indemnification, Alonzo Cothron, Inc. v. Upper Keys Marine Construction, Inc., 480 So. 2d 136 (Fla. 3d DCA 1985) and Upper Keys Marine Construction, Inc. v. Alonzo Cothron, Inc., 507 So. 2d 1135 (Fla. 3d DCA 1987), we reverse the trial court’s order granting summary judgment and entering final judgment in favor of Upper Keys Marine Construction, Inc. Mistakenly treating appellant’s indemnity claims as subroation claims, the court granted summary judgment in favor of Upper Keys, basing its conclusions upon section 631.54(3), Florida Statutes (1979), which prohibits subrogation actions by one insurer against the insured of another insolvent insurer. Although similar in nature, in that the parties involved are seeking reimbursement for monies paid which should have been paid by another, subrogation and indemnity are distinctly different concepts.
In Allstate Insurance Co. v. Metropolitan Dade County, 436 So. 2d 976 (Fla. 3d DCA 1983), this court distinguished sub-rogation from indemnity where the question was whether an insurer’s claim was barred by the statute of limitations. The insurer characterized the action as a “sub-rogated claim for indemnity,” necessitating this court’s clarification of the “true distinction” between these concepts:
In principle, there is a clear distinction between subrogation rights and indemnification rights. Subrogation is designed to afford relief when one is required to pay a legal obligation which ought to be met, either wholly or partially, by another. Subrogation rights place a party ... in the legal position of one who has been paid money because of the acts of a third party. Thus, the subrogee “stands in the shoes” of the subrogor and is entitled to all of the rights of its subrogor, but also suffers all of the liabilities to which the subrogor would be subject. In sub- rogation, the subrogee, now in the same posture as the plaintiff/subrogor, acquires all rights as against the defendant/wrongdoer and is thus able to bring an action against that party to recover the monies paid.
Indemnity, on the other hand, shifts the entire loss from one who, although without active negligence or fault, has been obligated to pay, because of some vicarious, constructive, derivative, or technical liability, to another who should bear the cost because it was the latter’s wrongdoing for which the former is held liable. Indemnification rights derive from the relationship between a party like the appellant and the party causing the injury. Given the requisite relationship, and assuming that the party seeking indemnification was not at all responsible for the injury, the injuring party becomes liable to the payor. Allstate, 436 So. 2d at 978 (citations omitted).
These differences are further defined with the recognition that the right to subrogation does not arise until the entire obligation is satisfied by the subrogee. No rights of subrogation arise from a partial satisfaction of an obligation. Munson & Associates, Inc. v. Doctors Mercy Hosp., 458 So. 2d 789 (Fla. 5th DCA 1984); Florida Farm Bureau Ins. Co. v. Martin, 377 So. 2d 827 (Fla. 1st DCA 1979); DeCespedes v. Prudence Mut. Casualty Co. of Chicago, Ill., 193 So. 2d 224 (Fla. 3d DCA 1966), cert. denied, 202 So. 2d 561 (Fla.1967).
Where there is a claim for indemnity, no such limitation exists. A party is permitted to pay a portion of an injured party’s damages and still seek indemnity from another for the payment made. That is the situation in the present case, as it was in the prior Cothron appeals, 480 So. 2d 136; 507 So. 2d 1135, where both Cleary Brothers and Cothron paid partial settlements to the decedent’s personal representative, and each pursued separate actions against the active and contractually liable tortfeasor, Upper Keys. Accordingly, the final summary judgment is reversed and the cause remanded for further proceedings.
Reversed and remanded.
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Dade Cnty. Sch. Bd. v. Radio Station Wqba, 731 So. 2d 638 (Fla. 1999)…harged, thereby succeeding to the rights and priorities of the original creditor.” Eastern Nat’l Bank v. Glendale Fed. Sav. & Loan Ass’n, 508 So. 2d 1323, 1324 (Fla. 3d DCA 1987); see also Cleary Bros. Constr. Co. v. Upper Keys Marine Constr., Inc., 526 So. 2d 116, 116-17 (Fla. 3d DCA 1988) (“In subrogation, the subrogee, now in the same posture as the plaintiff/subro-gor, acquires all rights as against the de-fendantywrongdoer and is thus able to bring an action against that party to recover the monies paid.…
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Fla. Patient's Comp. Fund v. ST. Paul Fire & Marine Ins. Co., 559 So. 2d 195 (Fla. 1990)…equitable subrogation and equitable assignment, all of which arose out of the same incident. The district court expressly stated that its holding might possibly conflict with Cleary Brothers Construction Co. v. Upper Keys Marine Construction, Inc., 526 So. 2d 116 (Fla. 3d DCA), review denied, 534 So. 2d 402 (Fla.1988), and Jones v. Williams Steel Industries, Inc., 460 So. 2d 1004 (Fla. 5th DCA 1984), review denied, 467 So. 2d 1000 (Fla.1985). We conclude there is conflict on the face of the opinions, which m…
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Fla. Patient's Comp. Fund v. ST. Paul Fire & Marine Ins. Co., 535 So. 2d 335 (Fla. 4th DCA 1988)…oth the Fifth District, in Jones v. Williams Steel Industries, Inc., 460 So. 2d 1004 (Fla. 5th DCA 1984), rev. denied, 467 So. 2d 1000 (Fla.1985) and the Third District, [see Clearly Brothers Construction Co. v. Upper Keys Marine Construction, Inc., 526 So. 2d 116 (Fla. 3d DCA 1988)] might possibly be in conflict. AFFIRMED. DOWNEY, LETTS and WALDEN, JJ., concur. . By then, it had paid off the offending promissory note which had resulted in the original suit's dismissal.…
Previewing 3 of 12 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Praxedes DeCESPEDES v. Prudence Mut. Cas. Co. of Chicago, 193 So. 2d 224 (Fla. 3d DCA 1966)
- Allstate Ins. Co. v. Metro. Dade Cnty., 436 So. 2d 976 (Fla. 3d DCA 1983)
- Fla. Farm Bureau Ins. Co. v. Martin, 377 So. 2d 827 (Fla. 1st DCA 1979)
- Praxedes DeCESPEDES and Gladys DeCespedes v. Prudence Mut. Cas. Co. of Chicago, 202 So. 2d 561 (Fla. 1967)
- Blanche Birch and her husband v. The Shelby Mut. Ins. Co. OF Shelby, 202 So. 2d 561 (Fla. 1967)
- Munson & Assocs., Inc. v. Doctors Mercy Hosp., 458 So. 2d 789 (Fla. 5th DCA 1984)
- Miller Trailers, Inc. v. Allen, 480 So. 2d 136 (Fla. 1st DCA 1985)
- Upper Keys Marine Constr., Inc. v. Alonzo Cothron, Inc., 507 So. 2d 1135 (Fla. 3d DCA 1987)