Full Opinion

DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT WRIGHT INSURANCE AGENCY, INC. AND ANTHONY WRIGHT, Appellants, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Appellee. No. 2D19-1068 August 11, 2021 Appeal from the Circuit Court for Pinellas County; Patricia A. Muscarella, Judge Jason Mulholland of Mulholland Law, P.A., Tampa, for Appellants. Lee W. Marcus of Marcus & Myers, P.A., Orlando, for Appellee. KELLY, Judge. Wright Insurance Agency, Inc., and Anthony Wright appeal from the order that, among other things, dismissed the bad faith action they brought against Appellee Nationwide Mutual Fire Insurance Company. The trial court concluded the bad faith claim was barred by the statute of limitations. Because the trial court erred in doing so, we reverse. Twenty years ago, Anthony Wright crashed his car into a car driven by Michelle Wesbey. Wesbey sued Wright and the Agency, his employer, for the injuries she sustained in the crash. Wright and the Agency were insured for $100,000 under an automobile liability policy issued by Nationwide. Nationwide did not tender its policy limits to Wesbey when it had an opportunity to do so, a failure the appellants contended constituted bad faith. Because of this dispute, Nationwide, the appellants, and Wesbey ultimately agreed to resolve Wesbey's tort suit by entering into an agreement titled "STIPULATION AND JOINT MOTION TO STAY." At this point Wesbey's suit had been pending for six years. The parties' agreement explained it was a "variant" of the procedure the supreme court approved in Cunningham v. Standard Guaranty Insurance Co., 630 So. 2d 179 (Fla. 1994). A Cunningham agreement involves the situation where there is not a previous excess judgment, but an insurer and a third-party claimant enter into an agreement and stipulate to try the bad-faith 2 issues first. The parties further stipulate that if no bad faith is found, the third-party claimant will settle for the policy limits, thus protecting the insured from exposure to an excess judgment. Perera v. U.S. Fid. & Guar. Co., 35 So. 3d 893, 899 (Fla. 2010). In a modified Cunningham agreement, such as the one the parties entered into here, the parties also agree on the amount of damages the insurer will pay the third-party claimant if there is a verdict of insurer bad faith thus avoiding litigating the underlying claim entirely. The agreement here recited that Wright, the Agency, and Wesbey were in a dispute with Nationwide regarding whether Nationwide had acted in bad faith by not tendering its policy limits to Wesbey when it had the chance to do so. It provided that rather than going to trial on Wesbey's case, the parties would stipulate that the value of Wesbey's claim was $550,000. Further, in pertinent part the agreement provided: 1. This action will be stayed until the determination of the bad faith litigation referred to below. 2. Within 20 days of the approval of this Stipulation by the Court, Nationwide will tender the remaining policy limits of NINETY-NINE THOUSAND NINE HUNDRED SIXTY-NINE and 40/100 DOLLARS ($99,969.40) to Wesbey. 3 3. Wright and the Agency will file and prosecute a new and separate lawsuit against Nationwide for a declaratory judgment, seeking a judicial determination of whether Nationwide has committed common law bad faith in the handling of the claims of Wesbey against Wright or the Agency (hereinafter referred to as "the bad faith case"). 4. If the outcome of the bad faith case is a determination that Nationwide did not act in bad faith, then the policy limits paid to Wesbey before and upon the approval of this Stipulation shall be accepted as a full and final payment in release of Wright, the Agency and Nationwide . . . . 5. If the outcome of the bad faith case, after any appeals, is a determination that Nationwide did act in bad faith, Nationwide shall promptly pay and Wesbey shall accept an additional payment of FOUR HUNDRED FIFTY THOUSAND and 00/100 DOLLARS ($450,000.00), in full and complete settlement of all claims by Wesbey against Wright, the Agency and Nationwide, including but not limited to tort claims and bad faith claims . . . . The parties agree that the purpose of this Agreement is to permit the parties to obtain a judicial determination of whether Nationwide acted in bad faith, without first having to obtain a judicial determination on the merits of the underlying tort claim by Wesbey against Wright and the Agency . . . . .... 8. The parties agree to be bound by this Stipulation and Agreement. The parties agree that no judgment shall be entered against Wright and the Agency, but this Stipulation is the functional equivalent of an excess judgment for the purposes of determining damages in the contemplated bad faith lawsuit. 4 The agreement also contained a provision dictating what would happen if the court did not approve the agreement or construed it in a manner that would prevent bringing the bad faith action. In that circumstance, the settlement would remain intact, but the court would enter a judgment against Wright and the Agency for the agreed amount of Wesbey's claim less the $100,000 policy limits (i.e., the excess judgment necessary to pursue the bad faith claim), and the parties would proceed with the bad faith action based on the excess judgment. The final paragraph of the agreement stated that the "parties jointly move the Court to approve this stipulation." The agreement was signed by all parties during March and April 2011 and filed with the circuit court in June 2011. The court conducted a hearing on the agreement in April 2012, and on April 16, 2012, it entered an order approving the stipulation and staying Wesbey's case. On May 22, 2015, Wright and the Agency filed a one-count complaint for declaratory judgment "seeking a judicial determination of whether Nationwide has committed common law bad faith." It is unnecessary to detail the convoluted path the case took after that, other than to say that since then Nationwide has 5 relentlessly sought to rid itself of the bad faith litigation to which it had agreed. The path ended when the trial court dismissed Wright and the Agency's second amended complaint with prejudice finding, among other things, that the statute of limitations barred the bad faith claim. We agree with the appellants that this was error.1 The statute of limitations begins to run from the time a cause of action accrues. § 95.031, Fla. Stat. (2011). A cause of action for third-party bad faith against an insured's liability carrier is not ripe until the third party obtains a judgment against the insured for an amount that exceeds the insured's policy limits. Cunningham, 630 So. 2d at 181-82. Here, the parties entered into the Stipulation and Joint Motion to Stay intending for it to serve as the functional 1 The second amended complaint contained four counts. Wright and the Agency challenge the dismissal of three of them. Because we find the statute of limitations argument raised with respect to the bad faith claim in count four dispositive, we decline to address the remaining issues raised in this appeal. We note that count three duplicates count four in that it also states a claim for bad faith but does so in the form of an action for declaratory relief. Nationwide argues that not only was the action barred by the statute of limitations but also that common law bad faith is not a proper subject for declaratory relief. We do not address the latter argument because our reversal as to count four suffices to clear the path for the appellants to proceed with their common law bad faith claim, which was the purpose of the parties' agreement. 6 equivalent of the excess judgment needed to pursue the bad faith claim. Nationwide's motion to dismiss argued the agreement became the functional equivalent of an excess judgment in April 2011 when the last party signed it, while the appellants argued it did not constitute the functional equivalent of an excess judgment until the court approved it in April 2012. The court accepted Nationwide's argument and found the statute of limitations barred the appellants' bad faith claim.2 To determine when the parties intended for the agreement to serve as the functional equivalent of an excess judgment, we look to the agreement itself. "The interpretation of a contract is a question of law and an appellate court is not restricted in its review powers from reaching a construction contrary to that of the trial court." City of Tampa v. Ezell, 902 So. 2d 912, 914 (Fla. 2d DCA 2005) (citing Gemini Ventures of Tampa, Inc. v. Hamilton Eng'g & Surveying, Inc., 784 So. 2d 1179, 1180 (Fla. 2d DCA 2001)). While 2 Nationwide contends the applicable limitations period is four years, and the appellants argue it is five years. The trial court did not state why it concluded the action was untimely. We do not decide this issue because under either limitations period, the bad faith claim was timely. 7 the trial court did not specify why it concluded that the bad faith claim was barred by the statute of limitations, to reach that conclusion it had to have found that the agreement did not require court approval before it could serve as the functional equivalent of an excess judgment. This conclusion is not supported by the plain language of the agreement, and it is inconsistent with the parties' stated purpose for entering into the agreement. "In construing a contract, the intent of the parties should be determined from the words of the contract as a whole." Id. (citing Fla. Power Corp. v. City of Tallahassee, 18 So. 2d 671, 674 (1944)). "The court also should consider the conditions and circumstances surrounding the parties and the objects to be obtained in executing the contract." Id. (citation omitted). Here, the agreement states its purpose is to allow the parties to proceed with the bad faith case without first litigating Wesbey's tort case. The agreement proposes two alternatives to accomplish this—either obtain court approval of the agreement, or failing that, have the court enter an excess judgment against Wright and the Agency in the amount to which the parties had stipulated. If the latter occurred, the bad faith action would still proceed, and Nationwide's liability would be 8 limited to the stipulated damages. The parties did not, however, have to resort to the entry of an actual excess judgment because after the parties filed the signed agreement and sought the court's approval, the court approved it, thus providing them with the functional equivalent of an excess judgment.3 Further, the fact that Nationwide's obligation to pay the policy limits to Wesbey was not triggered until the court approved the agreement lends further support to the conclusion that the parties did not intend for the stipulation to be effective before it was approved by the court.4 Wright and the Agency filed their bad faith action within four years from the date the court approved the agreement; accordingly, it was not barred by either the four-year or five-year limitations periods the parties have argued are applicable to an action for bad 3 We note that had this court agreed with the trial court's interpretation of the stipulation, thus preventing the bad faith case from proceeding, it would seem to be an empty victory for Nationwide because the agreement seems to provide that under that circumstance the court would enter an actual excess judgment which would then trigger the running of the statute of limitations for the bad faith claim to proceed under the excess judgment. 4 Nationwide waited until August 2012 to pay the balance of the policy limits—long past the twenty days after approval contemplated in the agreement. 9 faith. We therefore reverse the dismissal of count four of the second amended complaint and remand for further proceedings. Reversed and remanded. CASANUEVA and BLACK, JJ., Concur. Opinion subject to revision prior to official publication. 10