Dadeland Depot v. St. Paul Fire and Marine Ins.

• Citation: 483 F.3d 1265
• Decision Date: 12 April 2007
• Docket Number: No. 03-13540.,03-13540.
• Parties: DADELAND DEPOT, INC., Dadeland Station Associates, Ltd., Plaintiffs-Appellants, v. ST. PAUL FIRE AND MARINE INSURANCE CO., American Home Assurance Company, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

483 F.3d 1265

DADELAND DEPOT, INC., Dadeland Station Associates, Ltd., Plaintiffs-Appellants, v. ST. PAUL FIRE AND MARINE INSURANCE CO., American Home Assurance Company, Defendants-Appellees.

No. 03-13540.

United States Court of Appeals, Eleventh Circuit.

April 12, 2007.

Philip M. Burlington, Burlington & Rockenbach, P.A., Jeffrey M. Liggio, Liggio, Benrubi & Williams, PA, West Palm Beach, FL, for Plaintiffs-Appellants.

Veronica Danko Vellines, Donald L. Craig Butler, Pappas, Weihmuller, Katz, Craig, LLP, Eules A. Mills, Jr., Brett D. Divers, Mills, Paskert, Divers, P.A., Tampa, FL, for Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Florida.

ON PETITION FOR REHEARING

Before BIRCH and WILSON, Circuit Judges, and DOWD,^* District Judge.

BIRCH, Circuit Judge:

Upon review of the defendants' timely petition for rehearing, requesting that we reconsider that portion of our opinion granting the plaintiffs' attorneys' fees incident to this appeal, we agree that Dadeland is not yet entitled to attorneys' fees under the applicable Florida statute. Accordingly, we vacate that portion of our opinion, see 479 F.3d 799 (11th Cir.2007), and substitute the following revised opinion in its place.

This case returns to us for disposition from the Supreme Court of Florida, to which we certified five questions of Florida state law. See Dadeland Depot, Inc. v. St. Paul Fire and Marine Ins. Co., 383 F.3d 1273 (11th Cir.2004). Based on the Florida Supreme Court's responses to those questions, see Dadeland Depot, Inc. v. St. Paul Fire and Marine Ins. Co., 945 So.2d 1216 (Fla.2006), we now conclude that the district court erred in its disposition of the defendants' summary judgment motion and of the plaintiffs' motion for partial summary judgment. Accordingly, we REVERSE the grant of summary judgment in favor of the defendants, GRANT the plaintiffs' motion for partial summary judgment, and REMAND this case for further proceedings consistent with this opinion. We also GRANT the plaintiffs' motion for attorneys' fees on appeal, conditioned, however, on appellant's ultimate recovery in the trial court. See McDonald v. Southeastern Fid. Ins. Co., 373 So.2d 94 (Fla.Dist.Ct.App.1979).

I. BACKGROUND

The procedural history, facts, and issues of this case are summarized in our previous opinion, published at 383 F.3d 1273 (11th Cir.2004). For purposes of background, this appeal arises out of a lengthy and complicated dispute between Dadeland Station Associates, Ltd. and Dadeland Depot., Inc. (collectively, "Dadeland"), a lessor and manager of commercial properties, and St. Paul Fire and Marine Insurance Co. and American Home Assurance Co. (collectively, "St. Paul"), who acted as the sureties on a performance bond issued in connection with a shopping center that Dadeland was developing.

A number of structural and design defects were subsequently discovered with the development, and the parties — Dadeland, St. Paul, and the general contractor, Walbridge Contracting, Inc. ("Walbridge") — entered into an arbitration proceeding to resolve the disputes over the construction. At the conclusion of the proceeding, Dadeland obtained an award in the amount of $1,417,842 for the contractor's defective workmanship. St. Paul, as surety, was bound to that award to the extent that the principal, Walbridge, was bound. Walbridge timely paid the award.

Dadeland then brought this action in the Fifteenth Judicial Circuit of Florida, alleging that St. Paul, as sureties, had acted with bad faith and had failed to perform its duties under the performance bond. Specifically, Dadeland alleged that St. Paul had intentionally attempted to avoid and delay the arbitration as it had been unfolding; that St. Paul had effectively ignored its obligations under the bond by repeatedly failing to address Dadeland's complaints concerning the defects with the development; and that St. Paul had done so without ever conducting any independent investigation into Dadeland's complaints. Dadeland asserted claims against St. Paul for bad-faith refusal-to-settle, Fla. Stat. § 624.155(1)(b)(1), and unfair insurance practices, Fla. Stat. § 624.155(1)(a)(1).¹

After removing this case to federal court, St. Paul filed a motion for summary judgment or for judgment on the pleadings. Dadeland filed a separate motion for partial summary judgment on the narrow question of whether St. Paul was collaterally estopped from raising defenses that had been raised and disposed of in the earlier arbitration proceeding. The district court granted summary judgment in favor of St. Paul on all counts of Dadeland's complaint, and denied Dadeland's motion for partial summary judgment. The district court then entered final judgment in favor of St. Paul. This appeal followed.

II. DISCUSSION

Dadeland argues that the district court erred in granting summary judgment in favor of St. Paul and in denying its motion for partial summary judgment. We review a district court's grant of summary judgment de novo, applying the same legal standard used by the district court. Johnson v. Bd. of Regents, 263 F.3d 1234, 1242 (11th Cir.2001). Under that standard, summary judgment is appropriate where "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Id. (citing Fed.R.Civ.P. 56(c)). In reviewing the motion, we view the evidence and all factual inferences in a light most favorable to the non-moving party, and all reasonable doubts about the facts are resolved in favor of the non-movant. Id. at 1243 (citation and internal quotations omitted).

"The plain language of Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'" Johnson, 263 F.3d at 1243 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)). That is, "[i]f the non-moving party fails to make a sufficient showing on an essential element of [his] case with respect to which [he] has the burden of proof, then the court must enter summary judgment for the moving party." Gonzalez v. Lee County Hous. Auth., 161 F.3d 1290, 1294 (11th Cir.1998) (quoting Celotex, 477 U.S. at 323, 106 S.Ct. at 2552).

In this case, the district court granted summary judgment for St. Paul as a matter of law. More specifically, the district court's decision hinged on three points of Florida law.² First, the district court concluded that Dadeland was not entitled to bring an action for a bad-faith refusal-to-settle an insurance claim under Fla. Stat. § 624.155(1)(b)(1) because it had not established the validity of the underlying claim, which is a condition precedent to bringing such an action under Florida law. Second, the district court concluded that the earlier arbitration proceeding would have a res judicata effect on Dadeland's current claim for damages against St. Paul, and that, consequently, Dadeland was now barred from "com[ing] to this court to assert the same claim against [St. Paul]." R3-137 at 23. Finally, the district court concluded that Dadeland had failed to allege a general business practice on the part of St. Paul, which the district court believed was a pre-requisite to bringing a claim under Fla. Stat. § 624.155(1)(a)(1). Id. at 28. Based on those determinations, it granted summary judgment in favor of St. Paul.

As to Dadeland's separate motion for partial summary judgment on the issue of whether the earlier arbitration proceeding would collaterally estop St. Paul from raising the same affirmative defenses in the current case, the district court concluded that the issue was moot in light of its prior finding that Dadeland's claims were barred by res judicata. Accordingly, the district court denied Dadeland's motion for partial summary judgment on that issue.

On appeal, Dadeland contends that the district court's conclusions were legally erroneous and that therefore summary judgment was improperly granted to St. Paul. In addition, Dadeland argues that the disposition of the arbitration proceeding collaterally estops St. Paul from raising the same defenses in the current proceeding, and that therefore it was entitled to partial summary judgment on that issue. We address each of these contentions in turn, guided by the unambiguous responses of the Florida Supreme Court to the questions that we certified.

A. District Court's Grant of Summary Judgment In Favor of St. Paul

1. Standing

As a preliminary issue, we address the question of Dadeland's standing to bring an action for bad-faith refusal-to-settle an insurance claim under Fla. Stat. § 624.155(1)(b)(1). Under the language of Florida's insurance code, any person may bring a civil action against an insurer when the insurer does not attempt "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." Fla. Stat. § 624.155(1)(b)(1). The district court began its summary judgment order by querying whether an owner-obligee of a surety bond constituted an "insured" for purposes of the statute. The court also questioned whether the contractual obligations imposed in a surety relationship could properly be construed as insurance "claims" so as to give rise to a cause of action under Fla. Stat. § 624.155(1)(b)(1). Noting the differences between a traditional insurance relationship and a suretyship, the district court expressed doubt as to "whether an obligee may sue a surety under the bad faith insurer provision for its alleged refusal to perform its contractual duties." R3-137 at 17. The district court assumed, for purposes of its disposition, that an owner-obligee was an "insured" who could bring an action against a surety under §...