Goodman-Gable-Gould Co. v. Tiara Condominium Ass'n

• Decision Date: 27 January 2010
• Docket Number: No. 07-15164.,No. 07-13536.,07-13536.,07-15164.
• Citation: 595 F.3d 1203
• Parties: GOODMAN-GABLE-GOULD COMPANY, a Maryland corporation d.b.a. Adjusters International, Plaintiff-Appellee, v. TIARA CONDOMINIUM ASSOCIATION, INC., a Florida non-profit corporation, in its own name and as Agent for and as Class Representative of all Owners of Record of all individual condominium parcels within the Tiara Condominium, Defendant-Appellant, Broad and Cassel, Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

595 F.3d 1203

GOODMAN-GABLE-GOULD COMPANY, a Maryland corporation d.b.a. Adjusters International, Plaintiff-Appellee, v. TIARA CONDOMINIUM ASSOCIATION, INC., a Florida non-profit corporation, in its own name and as Agent for and as Class Representative of all Owners of Record of all individual condominium parcels within the Tiara Condominium, Defendant-Appellant Broad and Cassel, Defendant.

No. 07-13536.

No. 07-15164.

United States Court of Appeals, Eleventh Circuit.

January 27, 2010.

Mark L. McAlpine, McAlpine & Associates, P.C., Auburn Hills, MI, for Defendant-Appellant.

C. Thomas Brown, Glenn H. Silver, Silver & Brown, PC, Fairfax, VA, for Plaintiff-Appellee.

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

Before TJOFLAT and CARNES, Circuit Judges, and BOWEN,^* District Judge.

TJOFLAT, Circuit Judge:

The dispute in this case arises out of a contract between an insurance adjuster and a condominium located on Singer Island in Palm Beach County, Florida. The condominium was heavily damaged in back to back hurricanes in September 2004, and it hired an insurance adjuster to assess the loss and present its claims to its insurance company. The condominium's loss exceeded both the insurance recovery and the policy limit.

Contending that the adjuster caused part of its loss by failing properly to supervise the contractor hired to restore the building, the condominium refused to pay the adjuster's fee. The adjuster therefore sued the condominium. The condominium counterclaimed, seeking recovery of the expenses the adjuster's negligence had allegedly caused. The case proceeded to trial, and the condominium changed the theory of its counterclaim. It contended that the adjuster was liable—on theories of fraudulent misrepresentation and delay in performance—for the sums the condominium spent drying out the building. On the adjuster's motion, the district court struck the evidence the condominium attempted to introduce to support these theories, and granted the adjuster judgment as a matter of law on the counterclaim. The jury then found for the adjuster on its claim and awarded it the fee it was seeking. The district court thereafter entered judgment for the adjuster in conformance with the jury's verdict.

The condominium now appeals, challenging both the district court's evidentiary and judgment as a matter of law rulings and requesting a new trial. We affirm.

I.

A.

On September 4, 2004, Hurricane Frances hit Singer Island, seriously damaging the Tiara Condominium ("Tiara"), a 320-unit, 42-story oceanfront condominium tower. Tiara had an insurance policy with Citizens Property Insurance Corporation ("Citizens") having a per occurrence limit of approximately $50 million. In the following days, Tiara retained Southern Services, Inc. ("Southern") to restore its building and Goodman-Gable-Gould Company/Adjusters ("GGG") to adjust its loss. Pursuant to a September 9, 2004 contract (the "Services Agreement"), GGG undertook to "measure and document [Tiara's] loss, and present [Tiara's] claim to the insurance company(s) for damage ... occurring on or about 9/4/04." Tiara agreed to pay GGG a percentage of the amount it recovered from Citizens on a sliding scale, based on the total amount of recovery.

Three weeks later, on September 25, Hurricane Jeanne hit Singer Island, rendering the Tiara uninhabitable. The Services Agreement was orally modified to include adjusting services for Jeanne, and GGG's fee was proportionately reduced to reflect the increased potential recovery. GGG and Tiara considered Hurricane Jeanne a separate occurrence, such that the insurance policy provided a maximum coverage of $100 million.

With the building uninhabitable, Tiara had the options of drying it out or gutting it. Tiara had Southern dry out the building at a cost of about $100,000 per day. Southern continued the dry-out effort from at least October 28, 2004, until August 7, 2005, charging Tiara $30 million for the work. Tiara had Southern cease the dry-out process when Citizens announced that it intended to treat the hurricanes as one occurrence with a coverage limit of $50 million.

Tiara responded to Citizens's announcement by seeking a declaratory judgment in a Florida state court¹ that the hurricanes were separate occurrences and that Citizens's exposure was $100 million, a sum insufficient to cover Tiara's losses.² The lawsuit was resolved through mediation in early March 2006; Tiara received about $89 million.

After the lawsuit settled, GGG presented Tiara with its final statement, which showed a balance of $1,439,259 due on its fee. Tiara refused to pay it, and, on May 2, 2006, GGG brought the present action.

B.

GGG's complaint alleged that GGG had fully performed the Services Agreement and that Tiara's refusal to pay the outstanding balance on its fee amounted to breach of contract.³ Tiara answered the complaint⁴ with a general denial⁵ and twenty affirmative defenses and a two-count counterclaim for breach of contract (the Services Agreement) and professional negligence.⁶ Both counts centered on Southern's performance of the restoration work. Tiara alleged that, under the Services Agreement, GGG was responsible for Southern's proper performance of the restoration work, that Southern overcharged for the work, i.e., engaged in "price gouging," and that GGG breached its duty to Tiara by "allowing" Southern to do so (the "price gouging theory").⁷

GGG replied to Tiara's two-count counterclaim by denying the material allegations of the breach of contract claim and by moving for judgment on the pleadings on the negligence claim. The district court granted the motion and struck the negligence claim from Tiara's counterclaim. The case therefore proceeded to trial before a jury on the issues framed by GGG's complaint, Tiara's answer,⁸ and Tiara's breach of contract counterclaim.

The trial began May 14, 2007. GGG's case consisted of testimony and documentary evidence of the work it had performed under the Services Agreement. After GGG rested its case on May 23,⁹ Tiara proceeded with its counterclaim for breach of contract. It abandoned the theory of liability it had pled—that GGG was liable for Southern's price gouging—and advanced two new theories of contract liability. The first was that GGG failed to perform timely its contractual obligations, causing Tiara damages (the "delay theory"). The Services Agreement provided that GGG would "measure," "document," and "present" Tiara's loss to Citizens. Tiara claimed that the presentation of the loss should have occurred through the submission of a Proof of Loss. Tiara articulated the claim this way: GGG should have filed a Proof of Loss with Citizens within ten-to-twelve weeks after the second hurricane;¹⁰ if timely filed, the Proof of Loss would have triggered a twenty-day deadline for Citizens to inform Tiara whether it would treat Tiara's loss as stemming from one or two occurrences; and had Tiara timely received the information that Citizens would only pay for one occurrence, it would have ceased the dry-out efforts immediately (and did so when it received that information in August 2005). Instead, GGG did not start working on Tiara's claim until January 2005 because it "was busy on other projects."

Tiara's second theory of contract liability was that GGG improperly advised Tiara regarding drying out the building. The district court labeled this theory a "misrepresentation theory" with three permutations.¹¹ First, Citizens never required that the building be dried out, but GGG nonetheless represented to Tiara that Citizens required the dry out. This representation forced Tiara to spend more money to restore the building, which in turn increased the amounts of its loss, its recovery from Citizens, and GGG's fee.¹² Second, Citizens recommended a dry out, but GGG failed to inform Tiara that gutting the building instead would be less expensive and just as effective.¹³ Third, regardless of whether Citizens required or merely recommended that the building be dried out, GGG failed to inform Tiara that drying the building would be a waste of money. Tiara sought the recovery of its dry-out expenses under both of its new theories of breach of contract liability: the delay theory and the misrepresentation theory.

When Tiara began introducing evidence in support of its misrepresentation theory, GGG immediately objected pursuant to Federal Rule of Civil Procedure 37(c) on the ground that Tiara had not disclosed the facts constituting the misrepresentations in response to GGG's interrogatories. GGG argued that Rule 37(c) authorized the court to exclude the introduction of evidence not properly disclosed in accordance with Federal Rule of Civil Procedure 26, and urged the court to impose that sanction.¹⁴ The district court sustained GGG's objection and excluded Tiara's misrepresentation evidence the next morning, May 24. The court noted that although GGG's motion was "grounded in Rule 37 of the Federal Rules of Civil Procedure," the basis of the motion, as the court understood it, was "somewhat broader than that" because there was an answer and a counterclaim, both of which were very specific only on the price gouging theory. The court therefore excluded the misrepresentation evidence on the additional ground that the misrepresentation theory "ha[d] not been pled, that it ha[d] not been disclosed, that there is extraordinary prejudice to the Plaintiff, that the case has totally changed complexion."¹⁵

Its misrepresentation theory having been foreclosed, Tiara proceeded with its delay theory, presenting evidence of the expenses it incurred in drying out the building, $30 million. After it rested its case and the evidence closed, on May 30, GGG moved the court to strike the evidence of the dry-out expenses. GGG also moved the court to grant it judgment as a matter of law, pursuant to Federal Rule of Civil Procedure 50(a)(2), on Tiara's counterclaim for...