A $3 million excess judgment and accusations of insurer bad faith have sparked a high-stakes legal battle between Nautilus Insurance Company and AmGuard Insurance Company in Florida.
Nautilus Insurance Company, as excess insurer, has filed a complaint against AmGuard Insurance Company, the primary insurer, in the United States District Court for the Southern District of Florida, West Palm Beach Division. At the center of the dispute is a premises liability verdict that Nautilus alleges could have been avoided if AmGuard had acted in good faith and settled within its policy limits.
The case centers on a commercial property at 9377 Alt A1A in Palm Beach County, Fla., owned by Hani Enterprises, Inc. In May 2018, Hani leased the property to A1A Grocery, Inc. The lease required A1A to maintain the premises, indemnify Hani, and obtain primary liability insurance naming Hani as an additional insured. AmGuard issued the primary commercial liability policy to A1A, while Nautilus provided excess coverage to Hani.
The underlying lawsuit was filed in September 2021 by Darrell Phillips, who alleged he was injured in March 2020 while repairing a cooler at the leased premises. Phillips claimed he tripped and fell over loose concrete wire hidden in unmaintained grass. The complaint alleged negligence against both A1A and Hani. Hani tendered its defense and indemnity rights to A1A and AmGuard, which accepted and appointed Mintzer Sarowitz Zeris Ledva & Meyers LLP (MSZLM) to represent both A1A and Hani.
Nautilus alleges that AmGuard and its appointed counsel failed to assert Hani’s strongest lease-based defense, did not communicate key settlement offers, and maintained conflicted joint representation. According to the complaint, AmGuard’s policy included an “ADDITIONAL INSURED – MANAGERS OR LESSORS OF PREMISES” endorsement, listing Hani as an additional insured for liability “arising out of the ownership, maintenance or use of that part of the premises leased to you [A1A].” Nautilus’s excess policy provided coverage “excess over … any other primary insurance available to you [Hani] covering liability for damages arising out of the premises … for which you [Hani] have been added as an additional insured,” and stated Nautilus would only pay amounts exceeding the primary policy’s limits.
The complaint details that, despite repeated time-limited demands to settle within AmGuard’s $1,000,000 policy limit -- including a $1 million global settlement offer and a subsequent $625,000 offer -- AmGuard did not settle. The case proceeded to trial in June 2023, resulting in a jury verdict of $3,000,315.07, later reduced to $2,442,562.50. Nautilus ultimately paid $610,640.63 to satisfy the judgment against Hani, plus $78,220.02 in interest and $20,037.55 in costs, totaling $708,898.20. The jury apportioned 25 percent of liability to Hani and the remainder to A1A.
The complaint further alleges that AmGuard failed to provide a supersedeas bond after the judgment, forcing Nautilus to post the bond to protect Hani from execution. Nautilus also claims AmGuard ignored post-trial opportunities to settle the judgment for less than the verdict amount, including a time-limited demand of $610,640.63.
Nautilus seeks to recover all amounts paid in excess of AmGuard’s policy limit, plus interest and costs, under the doctrine of equitable subrogation. The complaint asserts that AmGuard breached its duty of good faith by failing to settle within policy limits, appointing conflicted counsel, and failing to protect Hani’s interests.
It is important to note that these are allegations in a complaint, not established facts. No final decision has been made, and AmGuard has not yet responded in court.
