[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
MAR 9, 2009
No. 08-10009
THOMAS K. KAHN
________________________
CLERK
D. C. Docket No. 06-81046-CV-DMM
CHALFONTE CONDOMINIUM APARTMENT ASSOCIATION, INC.,
Plaintiff-Appellee
Cross-Appellant,
versus
QBE INSURANCE CORPORATION,
Defendant-Appellant
Cross-Appellee.
________________________
No. 08-10783
________________________
D. C. Docket No. 06-81046-CV-DMM
CHALFONTE CONDOMINIUM APARTMENT ASSOCIATION, INC.,
Plaintiff-Appellant,
versus
QBE INSURANCE CORPORATION,
Defendant-Appellee.
______________________
08-11337
______________________
D. C. Docket No. 06-81046-CV-DMM
CHALFONTE CONDOMINIUM APARTMENT ASSOCIATION, INC.,
Plaintiff-Appellee,
versus
QBE INSURANCE CORPORATION,
Defendant-Appellant.
________________________
Appeals from the United States District Court
for the Southern District of Florida
_________________________
(March 9, 2009)
Before DUBINA and CARNES, Circuit Judges, and RESTANI,* Judge.
DUBINA, Circuit Judge:
CERTIFICATION FROM THE UNITED STATES COURT OF
APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT
*
Honorable Jane A. Restani, Chief Judge of the United States Court of International
Trade, sitting by designation.
2
OF FLORIDA, PURSUANT TO FLA. R. APP. P. 9.150(a). TO THE
SUPREME COURT OF FLORIDA AND ITS HONORABLE JUSTICES:
These consolidated appeals require us to determine whether Florida law
recognizes a claim for breach of the implied warranty of good faith and fair
dealing by an insured against its insurer based on the insurer’s failure to
investigate and assess the insured’s claim within a reasonable period of time. In
addition, we must decide whether Florida law recognizes a private right of action
under Fla. Stat. § 627.701(4)(a) and whether an insurer’s failure to comply with §
627.701(4)(a) renders a hurricane deductible void and unenforceable. We must
also decide whether, as a matter of Florida law, Defendant QBE Insurance
Corporation (“QBE”) contractually waived its procedural right to stay execution of
the amended final judgment entered in favor of Plaintiff Chalfonte Condominium
Association, Inc. (“Chalfonte”) by posting a supersedeas bond. Because the
Florida courts have not definitively answered these questions, we certify them to
the Supreme Court of Florida.
I. BACKGROUND
On October 24, 2005, Hurricane Wilma struck Boca Raton, Florida, causing
significant damage to property owned by Chalfonte. Shortly thereafter, Chalfonte
filed a claim with QBE, its property insurer, pursuant to an insurance policy (the
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“Policy”) providing property coverage to Chalfonte for the twelve month period
commencing January 1, 2005. Chalfonte submitted an estimate of damages to
QBE on December 18, 2005, and then submitted a sworn proof of loss to QBE on
July 12, 2006. Dissatisfied with QBE’s investigation and processing of its claim,
Chalfonte filed suit in the United States District Court for the Southern District of
Florida.
In the district court, Chalfonte raised claims for declaratory judgment
(Count I), breach of contract—failure to provide coverage (Count II), breach of
contract—breach of the implied warranty of good faith and fair dealing (Count
III), and violation of Fla. Stat. § 621.701(4)(a) (Count IV). The district court
dismissed Count IV of the complaint, concluding that § 621.701 does not provide
a private right of action, and then held a jury trial on Chalfonte’s remaining
claims. The jury found for Chalfonte on all of its claims, awarding Chalfonte
$7,868,211 for QBE’s failure to provide coverage ($2,000,000 of which was
awarded for “ordinance or law” coverage) and $271,888.68 for breach of the
implied warranty of good faith and fair dealing, for a total award of $8,140,099.68.
The jury also concluded that the Policy did not comply with § 627.701(4)(a).
The district court entered a final judgment in favor of Chalfonte in the
amount of $8,140,099.68, with post-judgment interest accruing in accordance with
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28 U.S.C. § 1961. QBE then filed a motion for judgment as a matter of law, a
motion for a new trial, and a motion to alter or amend the judgment. The district
court denied QBE’s motions for judgment as a matter of law and for a new trial,
but granted QBE’s motion to amend the judgment by applying the hurricane
deductible contained in the Policy despite the jury’s conclusion that the Policy did
not comply with the requirements for hurricane deductible provisions set forth in §
627.701(4)(a).
Chalfonte also filed a motion to amend the final judgment. The district
court granted Chalfonte’s motion to amend the judgment to include prejudgment
interest and calculated prejudgment interest for the period beginning August 1,
2006, twenty days after Chalfonte submitted a sworn proof of loss, and ending
September 6, 2007, the date that judgment was entered. On December 18, 2007,
the district court entered an amended final judgment in favor of Chalfonte in the
amount of $7,237,223.88,1 with post-judgment interest accruing in accordance
with 28 U.S.C. § 1961. QBE filed a notice of appeal of the amended final
judgment and posted a supersedeas bond amounting to 110% of the amended final
1
The district court reduced the original award of $8,140,099.68 by $1,605,653.00, the
amount of the hurricane deductible, and then added $702,777.20 in prejudgment interest.
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judgment. Chalfonte subsequently filed a notice of cross-appeal of the amended
final judgment.
Following the district court’s entry of the amended final judgment,
Chalfonte filed a motion to enforce execution of the amended final judgment. The
district court denied the motion, and Chalfonte appealed. The district court
subsequently granted in part and denied in part Chalfonte’s motion for attorneys’
fees and costs, awarding Chalfonte $678,160.60 in fees and costs, and QBE
appealed. We consolidated all of these related appeals.
II. DISCUSSION
A. Issues Raised in QBE’s Appeals
QBE appeals the district court’s denial of its motion for a new trial and its
motion for judgment as a matter of law.2 QBE asserts that Florida law does not
recognize a claim for breach of the implied warranty of good faith and fair dealing
based on an insurer’s failure to investigate and assess its insured’s claim within a
reasonable period of time. Because the district court allowed Chalfonte to try such
2
QBE also contends that the district court erred in instructing the jury on the issue of
“ordinance or law” coverage under the Policy and that this court should vacate the district court’s
award of attorneys’ fees if we conclude that a new trial is warranted. Because the Supreme Court
of Florida’s answers to our certified questions could render either of these issues moot, we
decline to resolve them at this time.
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a claim, QBE contends that it is entitled to either a new trial or judgment as a
matter of law.
In the alternative, QBE argues that this court should view Chalfonte’s good
faith and fair dealing claim as the equivalent of a statutory bad faith claim under
Fla. Stat. § 624.155. Under Florida law, an insured’s § 624.155 claim does not
accrue until the insured prevails against its insurer on a claim for benefits under an
insurance policy. Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So. 2d 1289,
1291 (Fla. 1991). QBE contends that this bifurcation requirement applies to
Chalfonte’s claims and that the district court erred by allowing Chalfonte to try its
good faith and fair dealing claim simultaneously with its claim for benefits under
the Policy. QBE asserts that this alleged error entitles QBE to either a new trial or
judgment as a matter of law.
We review motions for a new trial under the abuse of discretion standard.
Millennium Partners, L.P. v. Colmar Storage, LLC, 494 F.3d 1293, 1301 (11th
Cir. 2007). “Legal error is an abuse of discretion.” Woodard v. Fanboy, L.L.C.
298 F.3d 1261, 1268 n.14 (11th Cir. 2002). “We review a district court’s denial of
a motion for judgment as a matter of law de novo, applying the same standards as
the district court.” Montgomery v. Noga, 168 F.3d 1282, 1289 (11th Cir. 1999).
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The Supreme Court of Florida has repeatedly observed that Florida does not
recognize a common law first-party action for bad faith failure to settle a claim
under an insurance contract. See, e.g., Allstate Indem. Co. v. Ruiz, 899 So. 2d
1121, 1125 (Fla. 2005) (“Traditionally and historically, the courts in this state did
not, however, recognize a corresponding common law first-party action that would
protect insured individuals and enable them to seek redress of harm against their
insurers for the wrongful processing or denial of their own first-party claims or
failure to deal fairly in claims processing.”); Talat Enters., Inc. v. Aetna Cas. &
Sur. Co., 753 So. 2d 1278, 1281 (Fla. 2000) (“Although the Florida common law
recognized third-party bad-faith claims, it did not recognize claims made by an
insured against its own insurer for failing to act in good faith when settling a
claim.” (citation omitted)).
Florida law does, however, provide a statutory first-party action for bad
faith failure to settle a claim under an insurance contract. The Florida Legislature
enacted Fla. Stat. § 624.155 “to provide a civil remedy for any person damaged by
an insurer’s conduct, including ‘[n]ot attempting in good faith to settle claims
when, under all the circumstances, it could and should have done so, had it acted
fairly and honestly toward its insured and with due regard for her or his interests.’”
Ruiz, 899 So. 2d at 1124 (quoting Fla. Stat. § 624.155(1)(b)(1)). QBE contends
8
that § 624.155 provides Chalfonte’s exclusive remedy for QBE’s alleged failure to
investigate and assess Chalfonte’s claim within a reasonable time.
In addition to the statutory first-party action for bad faith recognized by
Florida law, “Florida contract law recognizes the implied covenant of good faith
and fair dealing in every contract.” Ins. Concepts & Design, Inc. v. Healthplan
Servs., Inc., 785 So. 2d 1232, 1234 (Fla. Dist. Ct. App. 2001); accord County of
Brevard v. Miorelli Eng’g, Inc., 703 So. 2d 1049, 1050 (Fla. 1997) (“[E]very
contract includes an implied covenant that the parties will perform in good
faith.”). Chalfonte contends that a claim for breach of the implied warranty of
good faith and fair dealing is distinct from a statutory bad faith claim, even where
the good faith and fair dealing claim contains allegations of an insurer’s failure to
investigate and assess its insured’s claim within a reasonable period of time.
According to Chalfonte, if courts do not read the implied warranty of good faith
and fair dealing into all insurance contracts, insurers will be able to defer
perpetually settlement of the claims of their insureds under the guise of
“adjusting” the claims.
Several of the federal district courts in Florida have held that common law
good faith and fair dealing claims are distinct from statutory bad faith claims in the
context of a first-party action on an insurance contract. See, e.g., Townhouses of
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Highland Beach Condo. Ass’n, Inc. v. QBE Ins. Corp., 504 F. Supp. 2d 1307, 1312
(S.D. Fla. 2007) (stating that “a cause of action for breach of the implied warranty
of good faith and fair dealing is separate and distinct from [a] cause of action for
first party bad faith” and allowing plaintiff to proceed on its implied warranty
claim).
In addition, at least one Florida appellate court has implicitly recognized
that a good faith and fair dealing claim can be distinct from a statutory bad faith
claim in a first-party action on an insurance contract. See O’Shields v. United
Auto. Ins. Co., 790 So. 2d 570, 571 (Fla. Dist. Ct. App. 2001) (“An insurance
company owes a duty of good faith and fair dealing to its insured under the terms
of the insurance policy.”). The plaintiff in O’Shields, however, did not sue his
insurer for failure to investigate and assess his claim within a reasonable time, but
rather for failure to provide information relating to the settlement of his claim. Id.
No Florida court has explicitly held that an insured may bring a claim for breach
of the implied warranty of good faith and fair dealing for an insurer’s failure to
investigate and assess its insured’s claim within a reasonable period of time.
We are not convinced that the Florida courts have definitively concluded
that an insured may bring a good faith and fair dealing claim for an insurer’s
failure to investigate and assess its insured’s claim within a reasonable period of
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time. Nor do we believe that the Florida courts have decisively held that a
statutory bad faith action provides the exclusive remedy for an insurer’s failure to
investigate and assess its insured’s claim within a reasonable period of time.
Furthermore, because the Florida courts have not squarely addressed this type of
good faith and fair dealing claim, the Florida courts have not determined whether
the bifurcation requirement applicable to statutory bad faith claims also applies to
a claim for breach of the implied warranty of good faith and fair dealing based on
an insurer’s failure to investigate and assess its insured’s claim within a reasonable
period of time.
“Substantial doubt about a question of state law upon which a particular
case turns should be resolved by certifying the question to the state supreme
court.” Jones v. Dillard’s, Inc., 331 F.3d 1259, 1268 (11th Cir. 2003). The
Florida Constitution authorizes the Supreme Court of Florida to “review a
question of law certified by . . . a United States Court of Appeals which is
determinative of the cause and for which there is no controlling precedent of the
supreme court of Florida.” Fla. Const. art. V, § 3(b)(6). Because questions of
Florida law are determinative of the outcome of this case, and we have not found
controlling precedent of the Supreme Court of Florida on these issues, we believe
that certification of these questions to the Supreme Court of Florida is appropriate.
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B. Issues Raised in Chalfonte’s Cross-Appeal
Chalfonte asserts that the district court made two errors involving Fla. Stat.
§ 627.701(4)(a).3 Section 627.701(4)(a) provides that:
Any policy that contains a separate hurricane deductible must on its face
include in boldfaced type no smaller than 18 points the following statement:
“THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR
HURRICANE LOSSES, WHICH MAY RESULT IN HIGH
OUT-OF-POCKET EXPENSES TO YOU.” A policy containing a
coinsurance provision applicable to hurricane losses must on its face include
in boldfaced type no smaller than 18 points the following statement: “THIS
POLICY CONTAINS A CO-PAY PROVISION THAT MAY RESULT IN
HIGH OUT-OF-POCKET EXPENSES TO YOU.”
Fla. Stat. § 627.701(4)(a).
In Count IV of its amended complaint, Chalfonte alleged that the Policy did
not comply with the requirements for hurricane deductibles or coinsurance
provisions applicable to hurricane losses set forth in § 627.701(4)(a). The district
court dismissed Count IV because the court concluded that § 627.701 does not
3
Chalfonte also contends that the district court erred in calculating prejudgment interest.
Because the Supreme Court of Florida’s answers to our certified questions could result in a new
trial, we decline to address the propriety of the prejudgment interest calculation at this time.
12
authorize a private right of action. Chalfonte argues that the district court erred in
dismissing its § 627.701(4)(a) claims.
In the amended final judgment, the district court applied the hurricane
deductible contained in the Policy to reduce the damages awarded by the jury to
Chalfonte on its breach of contract claims. Chalfonte contends that the district
court should not have applied the Policy’s hurricane deductible to reduce the
jury’s award of damages because the jury found that the Policy did not comply
with the requirements for hurricane deductibles set forth in § 627.701(4)(a).
Chalfonte’s cross-appeal requires us to determine what penalty an insurer
must pay for noncompliance with § 627.701(4)(a) as well as what remedy an
insured aggrieved by noncompliance with the statute may pursue. Resolution of
both of these issues requires a determination of how the Florida Legislature
intended courts to handle violations of § 627.701(4)(a) in the absence of an
explicit statutory remedy provision. The parties have cited numerous Florida
cases addressing similar issues in the context of various other statutory provisions,
but the Supreme Court of Florida has not yet directly addressed the consequences
of noncompliance with § 627.701(4)(a). Accordingly, we believe that certification
of these issues to the Supreme Court of Florida is appropriate.
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C. Chalfonte’s Appeal of the District Court’s Denial of Its Motion to
Enforce Execution of the Amended Final Judgment
Chalfonte argues that the plain language of the Policy required QBE to pay
Chalfonte within 30 days of the district court’s entry of the amended final
judgment on December 18, 2007, and thus that the district court erred when it
denied Chalfonte’s motion to enforce execution of the amended final judgment.
The Policy states:
Provided you have complied with all terms of this Coverage Part, we will
pay for covered loss or damage:
(1) Within 20 days after we receive the sworn proof of loss and reach
written agreement with you; or
(2) Within 30 days after we receive the sworn proof of loss and:
(a) There is an entry of a final judgment; or
(b) There is a filing of an appraisal award with us.
(R. 21 at 44.)
According to Chalfonte, the phrase “entry of a final judgment”
unambiguously means the conclusion of proceedings at the trial level. Chalfonte
contends that by using the phrase “entry of a final judgment,” QBE waived its
procedural right to stay execution of the judgment pending appeal by posting a
14
supersedeas bond. QBE responds that “final judgment” unambiguously means the
conclusion of the appellate process as a matter of Florida law. Moreover, QBE
argues that the Policy does not explicitly reference the right to stay execution by
posting a supersedeas bond and thus that the Policy cannot constitute a waiver of
this right.
“The interpretation of an insurance contract is a matter of law subject to de
novo review.” Admiral Ins. Co. v. Feit Mgmt. Co., 321 F.3d 1326, 1328 (11th Cir.
2003). “Sitting in diversity, we apply the substantive law of the forum state unless
federal constitutional or statutory law compels a contrary result. The rulings of the
highest court of the forum state control our decision.” Id. (internal citation
omitted). Thus, we apply Florida substantive law to interpret the Policy.
To resolve Chalfonte’s appeal of the district court’s denial of its motion to
enforce execution of the amended final judgment, we must determine the meaning
of the phrase “entry of a final judgment” as used in the Policy. Under Florida law,
“[i]t is well settled that the actual language used in the contract is the best
evidence of the intent of the parties and, thus, the plain meaning of that language
controls.” Rose v. M/V “Gulf Stream Falcon”, 186 F.3d 1345, 1350 (11th Cir.
1999) (citing Green v. Life & Health of Am., 704 So. 2d 1386, 1391 (Fla. 1998);
Hurt v. Leatherby Ins. Co., 380 So. 2d 432, 433 (Fla. 1980); Arnold v. First Sav. &
15
Trust Co., 104 Fla. 545, 141 So. 608 (1932)). However, where a phrase in a
contract is subject to more than one meaning, it is “ambiguous.” Friedman v. Va.
Metal Prods. Corp., 56 So. 2d 515, 517 (Fla. 1952).
The Supreme Court of Florida has defined “final judgment” different ways
in different contexts. In determining that the statute of limitations on a claim for
attorney malpractice does not begin to run until “the final judgment becomes
final,” the Supreme Court of Florida explained that “a judgment becomes final
either upon the expiration of the time for filing an appeal or postjudgment
motions, or, if an appeal is taken, upon the appeal being affirmed and either the
expiration of the time for filing motions for rehearing or a denial of the motions
for rehearing.” Silvestrone v. Edell, 721 So. 2d 1173, 1175 & n.2 (Fla. 1998).
However, in determining whether a party could appeal an order awarding
attorneys’ fees and costs entered after a voluntary dismissal, the Supreme Court of
Florida stated that “[a] final judgment is one which ends the litigation between the
parties and disposes of all issues involved such that no further action by the court
will be necessary.” Caufield v. Cantele, 837 So. 2d 371, 375 (Fla. 2002). Because
the trial court in Caufield had completed its judicial labor, the Supreme Court of
Florida held that the order was final and appealable. Id.
16
In our view, neither of these decisions of the Supreme Court of Florida
conclusively determines, as a matter of Florida law, the meaning and effect of the
phrase “entry of a final judgment” as used in the Policy. Therefore, we certify this
question to the Supreme Court of Florida as well.
III. CERTIFIED QUESTIONS
We certify the following questions to the Supreme Court of Florida:
(1) Does Florida law recognize a claim for breach of the implied warranty of
good faith and fair dealing by an insured against its insurer based on the
insurer’s failure to investigate and assess the insured’s claim within a
reasonable period of time?
(2) If Florida law recognizes a claim for breach of the implied warranty of
good faith and fair dealing based on an insurer’s failure to investigate and
assess its insured’s claim within a reasonable period of time, is the good
faith and fair dealing claim subject to the same bifurcation requirement
applicable to a bad faith claim under Fla. Stat. § 624.155?
(3) May an insured bring a claim against an insurer for failure to comply
with the language and type-size requirements established by Fla. Stat. §
627.701(4)(a)?
17
(4) Does an insurer’s failure to comply with the language and type-size
requirements established by Fla. Stat. § 627.701(4)(a) render a
noncompliant hurricane deductible provision in an insurance policy void
and unenforceable?
(5) Does language in an insurance policy mandating payment of benefits
upon “entry of a final judgment” require an insurer to pay its insured upon
entry of judgment at the trial level?
In certifying these questions, 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 these issues and to answer these questions in the manner it
chooses. See Stevens v. Battelle Mem’l Inst., 488 F.3d 896, 904 (11th Cir. 2007).
QUESTIONS CERTIFIED.
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