TALLAHASSEE — The Florida Coalition Against Domestic Violence is suing two insurers, asking a court to force the companies to cover costs resulting from state lawsuits against the embattled domestic-violence agency because of allegedly “exorbitant” executive compensation.
Hanover Insurance Co. and Travelers Casualty and Surety Company of America each issued one-year policies to the coalition effective Dec. 19, 2019, according to a complaint filed Wednesday in Leon County circuit court.
Both liability policies included coverage for “defense expenses and the amount the insured is legally obligated to pay as a result of a claim,” according to excerpts of the contracts included in the complaint.
Hanover, meanwhile, filed a federal lawsuit in March asking a judge to rule that the insurer is not responsible for the coalition’s expenses.
The policies were executed amid probes into the coalition’s finances, which drew public scrutiny after reports by The Miami Herald that the nonprofit organization paid its former CEO, Tiffany Carr, more than $756,000 a year.
Investigations by a Florida House committee and the governor’s office revealed that Carr, who stepped down as head of the coalition in October, received more than $7.5 million in compensation over a three-year period, including millions of dollars in paid time off.
The coalition, which received $46.7 million this fiscal year in state and federal funding, oversaw domestic-violence programs as part of a contract with the Florida Department of Children and Families. The state in recent months has ended the contract.
The firestorm over compensation paid to Carr and other coalition executives sparked Attorney General Ashley Moody to file a lawsuit on March 4 against the former CEO, the coalition and a foundation that raised private money for the coalition. The lawsuit alleges the defendants “engaged in a pattern of serious conduct and abuse,” which included “the diversion of significant funding to enrich its officers to a shocking degree.”
Moody’s lawsuit also asks a judge to order Carr and the coalition to return to the state an unspecified amount of money. The insurance companies argue they should not be liable for paying any of that money or the coalition’s legal fees.
Leon County Circuit Judge Ronald Flury has granted the state’s request to put the coalition and the foundation in the hands of a receiver.
The same day Moody filed her lawsuit, the Department of Children and Families sued the coalition, Carr and the board of directors, alleging they had breached the contract with the state. The board members have all since resigned.
The lawsuits by the attorney general and the Department of Children and Families “contain claims for damages against FCADV that satisfy the definitions of ‘loss,’ ‘wrongful act’ and ‘claim’ under the Hanover policy,” attorneys for the coalition wrote in the lawsuit filed on Wednesday.
The coalition contends that the policies provide coverage for the claims asserted in the state’s lawsuits, as well as the nonprofit organization’s legal fees.
But Travelers maintains the allegations in the state’s lawsuits “do not trigger its obligation to defend or indemnify FCADV on the basis of one or more provisions or exclusions in the Travelers policy, which FCADV denies,” the coalition’s 18-page complaint says.
While Travelers maintains “there is no ‘claim’ during the policy period,” Hanover contends “all of the events giving rise to a ‘claim’ preceded its policy period,” lawyers for the coalition wrote.
Hanover “has only accepted FCADV’s defense pursuant to a complete reservation of rights and specifically reserved its perceived right to recover any and all defense fees and costs paid on FCADV’s behalf,” the coalition’s lawyers wrote.
“Moreover, Hanover has not paid FCADV’s defense fees and costs or otherwise provided a defense to FCADV,” said the coalition’s complaint, which seeks a judgment of damages against each insurance company in excess of $30,000.
Hanover, meanwhile, filed a federal lawsuit on March 20 that includes details of the state’s lawsuits against the nonprofit.
DCF began its investigation and repeatedly sought information related to the coalition’s executive compensation before the Hanover policy went into effect, the insurance company’s lawyers argued.
“Accordingly, because the state litigation is ‘based upon, arising out of or in any way related to’ DCF’s five written demands before Dec. 19, 2019, the Prior & Pending Litigation/Demand Exclusion bars coverage for the state litigation,” Hanover’s lawyers said.
In addition, the coalition and the board of directors submitted an insurance policy application “in which they were expressly asked if they were ‘aware of any fact, circumstance, or situation that might reasonably be expected to result in a claim,’ and incredibly, despite the five prior written demands for documents related to the DCF investigation, and insureds answered ‘no’ to this question,” the insurance company’s lawyers wrote.
Other provisions in the policy, including a “fraud exclusion” and a “profit exclusion,” also bar coverage for some or all of the state litigation, Hanover argued.
While the company has agreed to defend the coalition and its former board of directors, Hanover is asking U.S. District Judge Allen Winsor to decide that the company “has no duty to indemnify the insureds from any loss (e.g., damages, judgments or settlements) related to the state litigation.”
But on Monday, the former directors asked Winsor to dismiss the lawsuit. The allegations in the DCF lawsuit show “the mere possibility of misconduct,” attorneys for the former directors wrote in a 26-page motion.
“They do not show ‘that the pleader is entitled to relief.’ Accordingly, those sparse and threadbare allegations cannot form the basis for excluding coverage, and the ‘profit exclusion’ should be rejected,” they wrote.
The former directors are also seeking to be dismissed from the DCF lawsuit, which accuses the women — who ran domestic-violence shelters throughout Florida, which relied in part on the coalition for funding — of having received “a number of personal benefits, including, but not limited to, increased salaries, compensation, bonuses, and PTO (paid time off)” in exchange for approving Carr’s compensation.
“This conclusory allegation lacks even a scintilla of any underlying factual support in the complaint,” lawyers for the former directors wrote in Monday’s motion to dismiss Hanover’s complaint.