A Traveler Cos. Inc. unit is not liable to pay a nearly $ 3 million settlement between a Florida citrus grove owner and its chief based on an exclusion from the chief policy, a court of appeals said Thursday and upheld a lower court ruling. .
In 2009, Richard Hermanns bought his first citrus grove and hired Richard McKenzie, who had experience in starting and managing citrus groves, to take care of it, according to the ruling of the 11th U.S. District Court in Atlanta in The Travelers Indemnity Co. in Connecticut v. Richard McKenzie & Sons Inc., Hermanns Real Estate Ventures, LLC.
"Trusting McKenzie was a mistake," the verdict said. Mr. Hermanns would later claim that McKenzie billed him for hundreds of thousands of dollars for trees that were never planted, manure that was never applied and diesel that was never delivered steals some of Mr. Hermann's diesel fuel for his own use and damage the groves, the verdict said.
Subsequent litigation between the two men led to a $ 2,965,750 consent, in which Hermanns agreed to seek coverage under McKenzie & # 39 ;s Travelers' coverage, the verdict said.
Travelers sued the U.S. District Court in Tampa, Florida, claiming that the consent decision could not be enforced because it was the result of a collusion between the two men and for an unreasonable amount of money.
The District Court ruled in favor of the travelers and was upheld by a unanimous Board of Appeal with three judges.
The panel referred to an exclusion from the policy on property damage that arises as a result of activities in its decision.
“One of the grounds for the (district court) judgment was that the damages alleged in Hermann's amended complaint were not covered by the insurance due to applicable insurance. We agree.
"And since there was no obligation to defend, there was no erroneous refusal by the travelers to defend McKenzie, which means that the settlement agreement cannot be enforced," the judgment states.
Lawyers in the case had no comment or did not respond to a request for comment.