Miami sued by insurance company for paying Commissioner Joe Carollo's legal fees

The city of Miami may be on the hook for millions of dollars in a new lawsuit arising out of Commissioner Joe Carollo’s longstanding legal battle with Little Havana property owners.

QBE Specialty Insurance Company, a firm that provides legal insurance coverage for municipalities, this week sued the city in federal court. The company seeks to recover the millions of dollars it has paid to the city since 2018 to cover the legal costs of defending Carollo in a series of lawsuits.

“This action seeks a declaration that QBE has no duty under the … Policies to defend the City, Carollo or any of the other individuals who are defendants in the Underlying Lawsuits,” QBE wrote in its 66-page complaint. (A copy of the complaint is embedded at the end of this story.)

The decision to have the city pay Carollo’s legal fees was one of the foremost reasons former City Attorney Victoria Méndez was pushed out of her position last month. A staunch defender of Carollo, Méndez said it was the responsibility of the city to pay for his legal representation, despite arguments from critics that his actions fell outside the scope of his duties as a city commissioner.

READ MORE: U.S. Marshals set to auction Joe Carollo’s home over $63.5 million federal judgment

Little Havana entrepreneurs William Fuller and Martin Pinilla sued Carollo in federal court in 2018. They accused Carollo of repeatedly sending code enforcement, police and the city’s fire department to their properties to satisfy what they called a “vendetta” against them. Fuller and Pinilla had supported Carollo’s political opponent Alfie Leon in 2017. They argued Carollo was angry at them for backing his rival, and when he took office, he took it out on their businesses.

Last June, the two businessmen won their lawsuit against the commissioner after a Broward jury found Carollo liable for violating their First Amendment right to free speech. Carollo was ordered to pay $63.5 million in damages to Fuller and Pinilla, a decision the commissioner has since appealed.

In the intervening years, Fuller and his business partners — including Mad Room LLC, which represents the ownership of the Ball & Chain Bar on Calle Ocho — have brought other lawsuits against Carollo and the city of Miami with the same allegations.

Throughout all of the lawsuits, the City of Miami has paid the bill for Carollo’s legal defense out of their insurance policy with QBE.

Millions of dollars in defense

According to the insurer’s complaint, the cost of defending the city in all of the lawsuits has exceeded $10 million.

QBE argues it has no responsibility to insure the city for the facts alleged in Carollo’s lawsuits because they are predicated on “willful” and “deliberate” acts by the commissioner to deprive the plaintiffs of their individual rights.

“The fundamental premise underlying each and every one of the Underlying Lawsuits is that Carollo — through his own actions and by conscripting others to do his bidding — engaged in a years-long campaign of retaliation and harassment with the conscious objective of inflicting harm on the underlying plaintiff,” QBE wrote.

The complaint also alleges that the city was not entitled to make insurance claims for these lawsuits under their Law Enforcement Liability (LEL) policies, because none of the defendants named in the Fuller group’s lawsuits are law enforcement officials. Those defendants include Carollo, Méndez, City Manager Art Noriega, City Building Director Asael Marrero and Assistant City Attorney Rachel Dooley.

“None of the individual defendants (natural persons) in the Underlying Lawsuits hold any of the ‘Positions to be Insured’ that are listed on the applications for the LEL Policies,” QBE wrote.

The complaint also names Fuller, Pinilla and the other plaintiffs in their various lawsuits against the City of Miami as defendants in QBE’s case. The insurance company wants a federal judge to declare that QBE has no responsibility to insure the city for these cases, and give it permission to recover the funds it has already paid out.

City of Miami officials could not immediately respond to a request for comment from WLRN for this story.