[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
MAY 27, 2010
No. 09-11718
JOHN LEY
CLERK
D. C. Docket No. 08-80254-CV-DTKH
TIARA CONDOMINIUM ASSOCIATION, INC.,
a Florida non-profit corporation,
in its own name and as agent for all owners
of record of all individual condominium
parcels with the Tiara Condominium,
Plaintiff-Appellant,
versus
MARSH & MCLENNAN COMPANIES, INC.,
a Delaware Corporation,
MARSH, INC.,
MARSH, USA, INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Florida
(May 27, 2010)
Before DUBINA, Chief Judge, KRAVITCH, Circuit Judge, and EDENFIELD,*
District Judge.
DUBINA, Chief Judge:
This appeal arises from a contract between an insurance broker and the
association responsible for managing a condominium tower located on Singer
Island, Florida. The tower suffered extensive wind damage from two hurricanes in
September 2004. The condominium association claims that the broker caused part
of its losses by failing to procure an adequate insurance policy for the
condominium. Although we are able to resolve the issues raised with respect to
the association’s claims for breach of contract, breach of the implied covenant of
good faith and fair dealing, and negligent misrepresentation, resolution of its
claims for negligence and breach of fiduciary duty requires certification to the
Florida Supreme Court of a question regarding Florida’s application of the
economic loss rule.
I. BACKGROUND
Tiara Condominium Association (“Tiara”) manages the Tiara condominium
tower, located in Palm Beach County, Florida. In 2002, Tiara retained Marsh &
*
Honorable B. Avant Edenfield, United States District Judge for the Southern District of
Georgia, sitting by designation.
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McLennan Companies (“Marsh”) as its insurance broker and tasked it with
procuring insurance coverage for the condominium building. As a result, in 2004,
Tiara entered into an insurance agreement with Citizens Property Insurance
Corporation (“Citizens”). The policy with Citizens (“Citizens policy”) contained a
loss limit of nearly $50 million.
In September 2004, hurricanes Frances and Jeanne struck southeastern
Florida, each causing extensive damage to the condominium tower. Tiara began
its remediation efforts, but as costs approached the policy limit, Tiara contacted
Marsh for assurances that the policy contained a per-occurrence limit rather than
an aggregate limit on its coverage. If the policy were written as a per-occurrence
policy, the policy limit would “reset” with each occurrence—in this case, each
hurricane—during the policy period, making the total relief available
approximately $100 million in this case. Otherwise, as an aggregate policy, the
total available relief would be equal to the policy limit of nearly $50 million.
Marsh advised Tiara of its opinion that the insurance coverage provided by
the Citizens policy was per-occurrence, and therefore coverage reset with each
loss. Based on Marsh’s assurances, Tiara continued its remediation efforts,
abandoning the ineffective drying approach in favor of reconstruction, and spent
more than $100 million in the process. When Tiara sought payment from Citizens,
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however, Citizens asserted its position that the insurance policy contained an
aggregate limit of insurance, not a per-occurrence limit. Tiara sued Citizens to
recover the balance of its damages, and eventually settled with Citizens for about
$89 million. No determination was made on whether the policy established a per-
occurrence or aggregate limit.
Tiara now contends that its insufficient settlement with Citizens was due
primarily to Marsh’s failure to procure appropriate insurance coverage on its
behalf. In October 2007, Tiara filed this suit against Marsh for (1) breach of
contract, (2) negligent misrepresentation, (3) breach of the implied covenant of
good faith and fair dealing, (4) negligence, and (5) breach of fiduciary duty. After
discovery, the district court granted summary judgment in favor of Marsh on all
claims. Tiara appeals the district court’s order.
II. STANDARD OF REVIEW
This court reviews de novo a district court order granting summary
judgment. Fanin v. U.S. Dep’t of Veterans Affairs, 572 F.3d 868, 871 (11th Cir.
2009). Summary judgment is proper if “there is no genuine issue as to any
material fact and . . . the moving party is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552 (1986)
(quoting Fed. R. Civ. P. 56(c)) Summary judgment should be granted when there
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is “a complete failure of proof concerning an essential element of the nonmoving
party’s case.” Id. at 322–23, 106 S. Ct. at 2552.
III. DISCUSSION
A. Breach of Contract Claims
Tiara asserts two categories of breach of contract claims. First, Tiara claims
that Marsh breached their agreement by failing to procure per-occurrence
insurance coverage. Second, it claims that Marsh breached an oral agreement to
take exclusive responsibility for ensuring the adequacy of Tiara’s coverage.
Specifically, Tiara claims that Marsh breached the agreement by, among other
things, failing to advise Tiara that it was under-insured because its two-year-old
appraisal was outdated.
The first portion of Tiara’s breach of contract claims turns on whether the
Citizens policy provided aggregate or per-occurrence coverage. In arguing that
the policy is for aggregate coverage, Tiara primarily relies on dicta from an earlier
Florida appellate case that indicates that an insurance policy is presumed to
provide aggregate coverage unless it expressly provides otherwise. See Palilla v.
St. Paul Fire & Marine Ins. Co., 322 So. 2d 46, 48 (Fla. Dist. Ct. App. 1975)
(“The law is clear that in the absence of [a clause indicating that loss does not
reduce the amount of the policy] the insurer is held liable at most . . . for only the
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difference between the amount paid on the first loss and the amount named on the
policy as its coverage.”). Tiara contends that Palilla conclusively establishes that
the insurance policy at issue here provided aggregate coverage because the
Citizens policy contains no statement to the contrary.
We disagree with the weight Tiara claims should be assigned to the dicta it
cites from Palilla. Here, there are two explicit references to per-occurrence
coverage in the Citizens policy. In the “Conditions” section, the policy reads:
“[Citizens] shall not be liable in any one loss . . . [f]or more than the applicable
Limit of Liability.” [R. 146-2 at 13.] The policy’s deductible provision similarly
notes that Citizens “will not pay for loss or damage in any one occurrence until the
amount of loss or damage exceeds the Deductible shown in the Declarations.” [Id.
at 21.] Even if we declined to read the provisions as establishing per-occurrence
coverage, the provisions at least render the contract ambiguous with respect to
aggregate versus per-occurrence coverage. Thus, the court is left with an
ambiguous contract that, under established rules of construction, should be
“construed in favor of the insured and against the insurer who drafted the policy.”
See First Specialty Ins. Co. v. Caliber One Indem. Co., 988 So. 2d 708, 712 (Fla.
Dist. Ct. App. 2008). This maxim holds true even where the insurance policy was
procured by an insurance broker. See Cast Steel Prods., Inc. v. Admiral Ins. Co.,
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348 F.3d 1298, 1300 n.1, 1304 (11th Cir. 2003). Therefore, the district court
correctly construed the Citizens policy as providing per-occurrence coverage.
Accordingly, we affirm the district court’s grant of summary judgment on the first
category of contract claims.
The district court was also correct in rejecting the remaining breach of
contract claims based on the inadequate evidence regarding the scope of the oral
agreement. Under Florida law, a claim for breach of an oral contract arises only
when the parties “mutually assented to a certain and definite proposition and left
no essential terms open.” Rubenstein v. Primedica Healthcare, Inc., 755 So. 2d
746, 748 (Fla. Dist. Ct. App. 2000) (internal quotation marks omitted). The
parties in this case essentially agree on the governing law, but dispute what the
facts indicate about the scope of Marsh’s contractual duties. Tiara contends that
the contents of an engagement letter, internal communications among Marsh staff,
notices that Marsh sent to third parties concerning Tiara’s insurance coverage, and
expert reports show that Marsh’s contractual duties made it responsible for
ensuring that Tiara was adequately insured. Marsh contends that none of the
evidence indicates that Tiara ceded ultimate responsibility for its insurance
decisions to Marsh.
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We agree with Marsh that there are no contractual provisions in the oral
agreement that extended Marsh’s responsibility beyond that which was stated in
the written agreement. Therefore, we affirm the district court’s grant of summary
judgment in favor of Marsh on Tiara’s breach of contract claims.
B. Negligent Misrepresentation
Tiara next alleges that the district court erred in granting summary judgment
on its claim for negligent misrepresentation. Tiara contends that Marsh
negligently misrepresented to Tiara the nature of the Citizens policy both when it
purchased the policy and when it inquired about the available insurance during its
remediation and restoration of the tower. According to Tiara, Marsh misidentified
the policy as having a per-occurrence limit, when in reality the policy contained an
aggregate limit.
Under Florida law, a claim of negligent representation requires showing
four elements:
(1) there was a misrepresentation of material fact; (2) the representer
either knew of the misrepresentation, made the misrepresentation
without knowledge of its truth or falsity, or should have known the
representation was false; (3) the representer intended to induce
another to act on the misrepresentation; and (4) injury resulted to a
party acting in justifiable reliance upon the misrepresentation.
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Baggett v. Electricians Local 915 Credit Union, 620 So. 2d 784, 786 (Fla. Dist.
Ct. App. 1993). Tiara’s negligent misrepresentation claim turns on whether
Marsh’s description of the Citizens policy as per-occurrence was accurate. As
discussed above, Marsh correctly interpreted the policy as containing a per-
occurrence limit of liability. As a result, Tiara’s negligent misrepresentation claim
fails on the first element of the tort because no fact was misrepresented.
C. Breach of the Implied Covenant of Good Faith and Fair Dealing
Tiara alleges that Marsh’s failure to procure appropriate insurance coverage
amounts to a breach of its implied covenant of good faith and fair dealing. Under
Florida law, a party breaches this implied covenant by “a failure or refusal to
discharge contractual responsibilities, prompted not by an honest mistake, bad
judgment or negligence; but, rather by a conscious and deliberate act, which
unfairly frustrates the agreed common purpose and disappoints the reasonable
expectations of the other party.” Shibata v. Lim, 133 F. Supp. 2d 1311, 1319
(M.D. Fla. 2000). Because Tiara has not offered evidence that any of the alleged
errors made by Marsh were intentional or made in bad faith, we affirm summary
judgment on Tiara’s breach of implied covenant and fair dealing claim.
D. Claims for Negligence and Breach of Fiduciary Duty
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Tiara contends that Marsh was negligent in failing to procure for it an
insurance policy providing appropriate coverage and that Marsh’s actions fell
short of performing its duties as insurance broker and fiduciary. Specifically,
Tiara cites several “collateral failures” such as Marsh’s failure to advise Tiara of
its belief that it was under-insured and properly advise it regarding its complete
insurance needs. To the extent that Tiara’s claims for negligence or breach of
fiduciary duty rest on Tiara’s incorrect interpretation of the Citizens policy as per-
occurrence, the district court’s grant of summary judgment on these claims was
appropriate; however, to the extent that Tiara’s claims are based on collateral
failures, we find that Florida law is not sufficiently clear on whether such claims
are barred as extra-contractual under the economic loss rule.
Florida law provides that insurance agents and insurance brokers have some
extra-contractual duties. See Wachovia Ins. Servs., Inc. v. Toomey, 994 So. 2d
980, 990 n.4 (Fla. 2008) (noting that “negligent failure to procure requested
insurance coverage is a valid claim in Florida” and that agents and brokers who
give advice have a duty to exercise reasonable care in so doing); Bennett v. Berk,
400 So. 2d 484, 485 (Fla. Dist. Ct. App. 1981) (“An insurance broker may be
liable for damages where there is an agreement to procure insurance and a
negligent failure to do so.”); Sheridan v. Greenberg, 391 So. 2d 234, 236 (Fla.
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Dist. Ct. App. 1980) (holding that an insurance agent must “exercise the
reasonable skill and care to obtain the appropriate coverage”). In Toomey, the
Florida Supreme Court expressly approved of negligence actions against an
insurance broker and noted that a brokerage firm owes a fiduciary duty to its
insured. 994 So. 2d at 988, 990.
Florida also recognizes the economic loss rule as a bar to recovery in tort for
economic damages that arise in contract. See Indem. Ins. Co. of N. Am. v. Am.
Aviation, Inc., 891 So. 2d 532, 536 (Fla. 2004). The rule “is designed to prevent
parties to a contract from circumventing the allocation of losses set forth in the
contract by bringing an action for economic loss in tort.” Id. An exception to the
economic loss rule applies where the contract at issue relates to the provision of
professional services because “public policy dictates that liability not be limited to
the terms of the contract.” Id. at 537.
It is, however, not clear whether an insurance broker provides professional
services under Florida law. In Moransais v. Heathman, 744 So. 2d 973 (Fla.
1999), the Florida Supreme Court considered whether an engineer was a
professional, and thus unable to take advantage of the economic loss rule. The
court cited its decisions that defined “profession” in applying the statute of
limitations for malpractice actions and concluded that an engineer was a
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professional under the law because the state requires at least a four-year college
degree before licensing. Id. at 976. By contrast, an insurance agent is generally
not considered a professional under Florida law. Pierce v. AALL Ins. Inc., 531 So.
2d 84, 88 (Fla. 1988); but see Randolph v. Mitchell, 677 So. 2d 976, 978 (Fla.
Dist. Ct. App. 1996) (holding that economic loss rule did not bar claim against
insurance agent because “[h]is obligation was extracontractual and he should be
liable for any malpractice, negligent or intentional” and suggesting that an
insurance agent is a professional). Florida courts, however, have rarely discussed
the economic loss rule when evaluating claims against insurance agents and
brokers. See, e.g., Toomey, 994 So. 2d 980 (permitting negligence and breach of
fiduciary duty claims against insurance broker without considering the economic
loss rule).
We conclude that the question of whether the economic loss rule bars tort
claims brought against insurance brokers is unsettled under Florida law and should
be certified to the Supreme Court of Florida. MCI WorldCom Network Servs. v.
Mastec, Inc., 370 F.3d 1074, 1078 (11th Cir. 2004) (“This court may certify
questions of state law to the state’s highest court.”). Florida law provides that the
Supreme Court of Florida may answer questions of state law, certified by this
court, that are “determinative” of the appeal when “there are no clear controlling
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precedents in the decisions of the Supreme Court of [Florida].” Fla. Stat. Ann. §
25.031(West 2009); see also Fla. R. App. P. 9.150(a).
IV. QUESTION CERTIFIED
CERTIFICATION FROM THE UNITED STATES COURT OF
APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT
OF FLORIDA, PURSUANT TO FLA. R. APP. P. 9.150(a). TO THE
SUPREME COURT OF FLORIDA AND ITS HONORABLE JUSTICES:
DOES AN INSURANCE BROKER PROVIDE A “PROFESSIONAL
SERVICE” SUCH THAT THE INSURANCE BROKER IS UNABLE TO
SUCCESSFULLY ASSERT THE ECONOMIC LOSS RULE AS A BAR TO
TORT CLAIMS SEEKING ECONOMIC DAMAGES THAT ARISE FROM THE
CONTRACTUAL RELATIONSHIP BETWEEN THE INSURANCE BROKER
AND THE INSURED?
In certifying this question, we do not intend to restrict the issues considered
by the Supreme Court of Florida. See Miller v. Scottsdale Ins. Co., 410 F.3d 678,
682 (11th Cir. 2005) (“Our phrasing of the certified question is merely suggestive
and does not in any way restrict the scope of the inquiry by the Supreme Court of
Florida.”). We note that the Supreme Court of Florida retains the discretion to
restate the issue and to answer the question in the manner it chooses. See Stevens
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v. Battelle Mem’l Inst., 488 F.3d 896, 904 (11th Cir. 2007). To assist the Supreme
Court of Florida in considering this issue, we transmit to the court the entire record
in this case along with the briefs of the parties.
V. CONCLUSION
After reviewing Florida case law, we are uncertain whether the economic
loss rule forecloses Tiara’s claims for negligence and breach of fiduciary duty
under Florida law. Because the question presents an issue of state law that should
be decided by the state’s highest court, we certify the question to the Supreme
Court of Florida. We do, however, affirm the district court’s grant of summary
judgment in favor of Marsh on Tiara’s claims for breach of contract, negligent
misrepresentation, and breach of the implied covenant of good faith and fair
dealing.
AFFIRMED in part and QUESTION CERTIFIED.
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