Public Risk Management of Florida v. Munich Reinsurance America, Inc., No. 21-11774 (11th Cir. 2022)Annotate this Case
Public Risk Management of Florida (“PRM”) Munich Reinsurance America, Inc. (“Munich”) for breach of contract and sought declaratory relief that Munich is obligated by the parties’ reinsurance agreement (“the Reinsurance Agreement”) to reimburse PRM for the defense and coverage it provided to an insured in an underlying lawsuit. Munich counter-claimed for a declaratory judgment stating that it has no duty to reimburse PRM, and the district court granted that relief. On appeal, PRM argues, inter alia, that the Reinsurance Agreement contained a “follow the fortunes” clause, which forbids a reinsurer “from second guessing” an insurer’s “good faith decision” to pay a claim to the insured.
The Eleventh Circuit affirmed the grant of summary judgment holding that the district court correctly decided that Munich had no duty to reimburse PRM for its defense and indemnification of the City in the underlying Section 1983 suit. The court explained that The Reinsurance Agreement contains language that is plainly inconsistent with the follow the-fortunes doctrine. Accordingly, the district court properly rejected the doctrine’s application in this case. Further, the court held that it will not infer the application of the follow-the-fortunes doctrine in a reinsurance agreement where the agreement’s plain and unambiguous language is inconsistent with the doctrine. Applying this rule the court concluded that it would be inconsistent with the plain, unambiguous terms of the Reinsurance Agreement to infer that Munich should be bound by PRM’s coverage decision.