Trans Coastal Roofing Co. v. David Boland Inc.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
October 10, 2002
No. 01-17246
THOMAS K. KAHN
________________________ CLERK

D. C. Docket No. 94-10062 CV-JCP

TRANS COASTAL ROOFING COMPANY, INC.,

Plaintiff-Counter-
Defendant-Appellee,

INTERCARGO INSURANCE COMPANY,
a foreign corporation,
Counter-Defendant-Appellee,

versus

DAVID BOLAND INCORPORATED,
a Florida corporation,
Defendant-Counter-
Claimant-Appellant,

AMERICAN INSURANCE COMPANY,
Defendant.
________________________

Appeal from the United States District Court
for the Southern District of Florida
_________________________
(October 10, 2002)
Before TJOFLAT and BARKETT, Circuit Judges, and WEINER*, District Judge.

BARKETT, Circuit Judge:

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA,

PURSUANT TO ARTICLE V, SECTION 3(b)(6) OF THE FLORIDA

CONSTITUTION. TO THE SUPREME COURT OF FLORIDA AND THE

HONORABLE JUSTICES THEREOF:

David Boland, Inc. (“Boland”), a general contractor, appeals an order

limiting his recovery of attorneys’ fees from Intercargo Insurance Company

(“Intercargo”). Intercargo’s liability to Boland stems from a performance bond on

which it was the surety for subcontractor Trans Coastal Roofing Company (“Trans

Coastal”). In 1998 a jury found Trans Coastal and Intercargo jointly and severally

liable to Boland for roughly $30,000. Boland thereafter moved for attorneys’ fees.

Although the district court awarded fees of roughly $275,000, it limited

Intercargo’s liability to $167,800, the sum specified on the face of the performance

bond. Because this case presents an important issue of Florida law that we believe

is appropriate for resolution by the state’s highest court, we defer our decision

*
Honorable Charles R. Weiner, U.S. District Judge for the Eastern District of
Pennsylvania.

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pending certification of the question to the Supreme Court of Florida.

BACKGROUND

Boland was the prime contractor on a training facility construction project

for the United States Navy in Key West, Florida. In April 1993 Boland and Trans

Coastal executed a subcontract under which Trans Coastal was to install roofing on

certain structures erected by Boland. Pursuant to the subcontract, Trans Coastal

provided a performance bond in the amount of $167,800, naming Boland as its

obligee and Intercargo as its surety.

A dispute emerged between Boland and Trans Coastal over the roofing

work, and litigation ensued in the Southern District of Florida. Both Trans Coastal

and Boland claimed damages. After the district court dismissed Trans Coastal’s

claims without prejudice, Boland won a jury verdict against Trans Coastal, but not

Intercargo, in the amount of $23,451.38. Boland prevailed on a motion for a new

trial and in October 1998 a second jury awarded it a verdict against both Trans

Coastal and Intercargo, jointly and severally, in the amount of $31,654.42. Boland

thereafter moved the court for attorneys’ fees of $357,121.52. The court awarded

it $276,950.33, but determined Intercargo’s liability to be limited to $167,800, the

amount of the performance bond it issued.

DISCUSSION

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 Since Boland’s claim for attorneys’ fees sounds in state law and reaches us

by way of federal diversity jurisdiction, we apply the substantive law of Florida,

the forum state. Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938).1

Florida Statutes § 627.428 provides:

Upon the rendition of a judgment or decree by any of the
courts of this state against an insurer and in favor of any
named or omnibus insured or the named beneficiary
under a policy or contract executed by the insurer, the
trial court or, in the event of an appeal in which the
insured or beneficiary prevails, the appellate court shall
adjudge or decree against the insurer and in favor of the
insured or beneficiary a reasonable sum as fees or
compensation for the insured’s or beneficiary’s attorney
prosecuting the suit in which the recovery is had.

The purposes of the statute are to “discourage the contesting of valid claims against

insurance companies” and “to reimburse successful insureds for their attorneys’

fees when they are compelled to defend or sue to enforce their insurance

contracts.” Insurance Co. of North America v. Lexow, 602 So.2d 528, 531 (Fla.

1992). Section 627.428 applies to sureties as well as underwriters of renewable

insurance policies. Nichols v. Preferred National Insurance Co., 704 So.2d 1371,

1374 (Fla. 1997); Financial Indem. Co. v. Steele & Sons, 403 So. 2d 600, 601-02

(Fla. 4th Dist. Ct. App. 1981) (applying provision to subcontractor’s surety); see

1
A federal district court’s interpretation of state law is reviewed de novo. Salve Regina
College v. Russell, 499 U.S. 225, 231 (1991); McMahan v. Toto, 256 F.3d 1120, 1130 (11th Cir.
2001).

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also First National Bank of Miami v. Insurance Co. of North America, 535 F.2d

284, 286 (5th Cir. 1976).

The district court, relying on Nichols v. Preferred National Insurance Co,

704 So.2d 1371, 1374 (Fla. 1997), interpreted Florida law to require Boland to

show independent misconduct by Intercargo before the latter’s liability as a surety

would be expanded beyond the performance bond’s face amount. Since Boland

had not shown any misconduct on Intercargo’s part, the district court limited

Boland’s recovery of attorneys’ fees to the bond’s specified sum. Boland now

argues that the bond’s face amount limits only the recovery of compensatory

damages, not attorneys’ fees under § 627.428. Relying on State Farm Fire &

Casualty Co. v. Palma, 629 So.2d 830 (Fla. 1993), Boland contends that § 627.428

makes an insurer’s liability for attorneys’ fees “an implicit part of every insurance

policy issued in Florida.”

We find no means of resolving the present controversy from the plain

language of § 627.428. The only manifest limitation embodied in this language is

that any fees awarded be “reasonable.” In our view this does not compel a

conclusion as to whether a surety may be charged fees in excess of a performance

bond’s face amount. Nor are we able to find conclusive guidance on this question

in any decision of the Florida Supreme Court.

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 “Where there is any doubt as to the application of state law, a federal court

should certify the question to the state supreme court to avoid making unnecessary

Erie ‘guesses’ and to offer the state court the opportunity to interpret or change

existing law.” Mosher v. Speedstar Div. of AMCA Intern., Inc., 52 F.3d 913, 916-

17 (11th Cir.1995) (citation omitted). We have previously found certification a

helpful device when confronted with the question of how broadly to construe a

Florida statute providing for the recovery of attorneys’ fees from insurers. See

Modder v. American Nat’l Life Insurance Co., 86 F.3d 1070 (1996) (addressing

Fla. Stat. § 627.6698’s authorization of fee recovery by persons insured under

group health insurance policy). Accordingly, we certify the following question to

the Florida Supreme Court:

DOES FLORIDA STATUTE § 627.428 AUTHORIZE RECOVERY OF

ATTORNEYS’ FEES IN EXCESS OF A PERFORMANCE BOND’S FACE

AMOUNT FROM A SUBCONTRACTOR’S SURETY, WHEN THE FEES

CLAIMANT HAS NOT SHOWN INDEPENDENT MISCONDUCT ON THE

PART OF THE SURETY?

Our particular phrasing of the question is not intended to limit the Florida

Supreme Court's inquiry. The entire record in this case, together with copies of the

briefs, shall be transmitted herewith to the Supreme Court of Florida.

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QUESTION CERTIFIED.

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