Auto–owners Ins. Co. v. Southeast Floating Docks Inc.

• Decision Date: 08 February 2011
• Docket Number: No. 09–15846.,09–15846.
• Citation: 632 F.3d 1195
• Parties: AUTO–OWNERS INSURANCE COMPANY, Plaintiff–Appellee,v.SOUTHEAST FLOATING DOCKS, INC., Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

632 F.3d 1195

22 Fla. L. Weekly Fed. C 1761

AUTO–OWNERS INSURANCE COMPANY, Plaintiff–Appellee,

v.SOUTHEAST FLOATING DOCKS, INC., Defendant–Appellant.

No. 09–15846.

United States Court of Appeals, Eleventh Circuit.

Feb. 8, 2011.

Richard A. DeTar, Miles & Stockbridge, PC, Easton, MD, James Michael McCrae, Lake Mary, FL, for Defendant–Appellant.Peter M. Gannott, Thomas E. Crafton, Alber Crafton, PSC, Louisville, KY, Robert E. Bonner, Meier, Bonner, Muszynski, O'Dell & Harvey, P.A., Longwood, FL, for Plaintiff–Appellee.Appeal from the United States District Court for the Middle District of Florida.Before WILSON, PRYOR and ANDERSON, Circuit Judges.ANDERSON, Circuit Judge:

In this offer of judgment case, we certify three questions to the Florida Supreme Court, seeking guidance as to the application of Florida's offer of judgment statute, Fla. Stat. § 768.79, and Florida Rule of Civil Procedure 1.442. First, we inquire whether an offer of judgment may be viable when filed under the following circumstances: the offer was filed by a defendant after a jury verdict for the defendant had been set aside by the district court's grant of a new trial, and after the new trial date had been scheduled, but more than 45 days before the scheduled retrial; and the defendant ultimately prevailed because the appellate court reversed the grant of a new trial and reinstated the initial verdict. Second, we ask whether the term “joint proposal” in Rule 1.442(c)(3) applies to cases where acceptance of the offer is conditioned upon dismissal with prejudice of an offeree's claims against an offeror and a third party. Finally, we seek a determination of whether the Florida offer of judgment statute applies to actions filed in Florida, in which there exists a contractually agreed upon choice-of-law clause providing for the application of the substantive law of another state. We certify these questions because we are unable to find definitive answers in clearly established Florida law, either case law or statutory. “Where there is doubt in the interpretation of state law, a federal court may 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.” Tobin v. Mich. Mut. Ins. Co., 398 F.3d 1267, 1274 (11th Cir.2005) (per curiam).

I. FACTS AND PROCEDURAL HISTORY

Plaintiff and Defendant are in virtual agreement as to the facts of this case. Auto–Owners Insurance Company (“Auto–Owners”) insured the performance of Southeast Floating Docks, Inc. (“Southeast”) pursuant to a contract between Southeast and Rivermar Contracting Company (“Rivermar”). Southeast was to build a floating dock for Rivermar. A dispute arose between Rivermar and Southeast as to whether the contract had been properly performed, and Rivermar sued Southeast and Auto–Owners. Auto–Owners agreed to settle the case with Rivermar for $956,987.00. In turn, Auto–Owners commenced the instant suit, seeking indemnification from Southeast based on a written agreement between it and Southeast (and its president, Alan L. Simpson¹). Southeast and Simpson contended that they were not responsible for indemnifying Auto–Owners because the surety payments to Rivermar were made in bad faith.

On June 1, 2006, the jury returned a verdict in favor of Southeast, finding that Auto–Owners had settled with Rivermar in bad faith, and thus finding that Southeast had no liability to Auto–Owners. Judgment was entered on Southeast's behalf the next day. Shortly thereafter, Auto–Owners filed a motion for a new trial in the district court, and the motion was granted in September of that year. On September 25, 2006, the district court scheduled a retrial for April 2, 2007.

On December 11, 2006, more than 6 months after the conclusion of the first trial and 4 months in advance of the scheduled second trial, Southeast sent Auto–Owners the § 768.79 proposal for settlement that is the subject of this appeal.² In the proposal, Southeast offered to settle the case by paying Auto–Owners $300,000, provided that Auto–Owners agree to resolve and dismiss with prejudice all claims asserted in this action by Auto–Owners against Southeast and Alan L. Simpson, including attorney's fees. Auto–Owners did not accept the settlement offer, and the case continued to proceed toward a second trial.

On March 1, 2007, the district court granted Auto–Owners's motion for summary judgment and, ultimately, entered an award of $1,135,658.98 in its favor. Southeast appealed from this judgment on July 18, 2008. That appeal argued, among other matters, that the court's grant of the motion for a new trial was erroneous.

On June 16, 2009, this Court reversed the district court's grant of a new trial and reinstated the jury verdict in favor of Southeast from the first trial. Southeast subsequently filed the motion for attorney's fees that is the subject of this appeal.

The district court denied the attorney's fees motion, finding that Southeast had failed to comply with the requirement in Florida Rule of Civil Procedure 1.442(b) that an offer of judgment be served at least 45 days in advance of trial. The district court held that the trial date in question was that of the first trial, which had occurred several months before the settlement offer. Thus, Southeast's proposal was deemed untimely. Auto–Owners opposed Southeast's motion on several other grounds, but the district court declined to reach them because they did not affect its disposition of the case. These issues are also addressed in this appeal.

II. DISCUSSION

A. Was Southeast's offer of judgment rendered non-viable by the 45–day requirement in Rule 1.442?

The issue here is whether Southeast's offer of judgment, which came after the first trial had ended but more than 45 days in advance of the scheduled second trial, was timely according to Rule 1.442. Section 768.79(1) provides, in relevant part:

In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney's fees incurred by her or him or on the defendant's behalf ... if the judgment is one of no liability....

Fla. Stat. § 768.79(1). Florida Rule of Civil Procedure 1.442 controls the process for making offers of judgment and states, in relevant part:

No proposal shall be served later than 45 days before the date set for trial or the first day of the docket on which the case is set for trial, whichever is earlier.

Fla. R. Civ. P. 1.442(b). Because the Florida offer of judgment statute provides for attorney's fees in derogation of the common law, the statute, and its accompanying rule of procedure, must be strictly construed. See Campbell v. Goldman, 959 So.2d 223, 226–27 (Fla.2007); Willis Shaw Express, Inc. v. Hilyer Sod, Inc., 849 So.2d 276, 278 (Fla.2003).

The language of Rule 1.442 is not clear as applied to the current controversy. The word “trial” could be used to refer to either the first or second trial in this case or to both. Southeast supplies several examples of persuasive authority that have held that an offer of judgment can be made after the first phase of trial has been completed in a bifurcated trial scenario. See, e.g., Cover v. Chi. Eye Shield Co., 136 F.2d 374 (7th Cir.1943); Allianz Ins. Co. v. Gagnon, 109 Nev. 990, 860 P.2d 720 (1993) (per curiam). Typically, these bifurcated trials are comprised of separate trials for liability and damages. Courts considering offer of judgment statutes analogous to Florida's have determined that parties may propose offers of judgment after the first phase of the trial is resolved, as long as the timeliness requirement is met in relation to the date of the second phase of the trial.

Auto–Owners distinguishes these cases on the basis of the procedural history of the instant dispute. Auto–Owners's primary argument is that there must be a nexus between the dispositive judgment and the timeliness requirement of the offer of judgment. That is to say, they believe that it is improper to measure the timeliness of Southeast's offer according to the date of the second trial when the outcome of the case was decided by the judgment in the first trial. Auto–Owners also notes that Florida, like Nevada, the District of Columbia, and other jurisdictions that have an offer of judgment statute, provides for payments of attorney's fees to a defendant only if the judgment is less favorable to the plaintiff than the proposed offer.³ Auto–Owners argues that this statutory comparison of the offer and the ultimate judgment supports its position that there must be a nexus between the two. In bifurcated trial cases like Allianz, the party seeking attorney's fees was dependant on the outcome of the forthcoming trial to determine the reasonableness of their offer; therefore, these cases represented instances where the offer in question satisfied the nexus with the determinative judgment for which Auto–Owners advocates.

Southeast argues that Auto–Owners's proposed nexus requirement is at odds with the purpose of the statute. “[R]ule 1.442 is punitive in nature, [and] its purpose is to sanction a party who unreasonably refuses to settle by shifting the payment of attorney's fees.” Mills v. Martinez, 909 So.2d 340, 343 (Fla. 5th DCA 2005). “ ‘Encouraging settlement lowers litigation costs for the parties and reduces the fiscal impact of litigation on the court system....’ ” Allstate Prop. & Cas. Ins. Co. v. Lewis, 14 So.3d 1230, 1235 (Fla. 1st DCA 2009) (quoting BDO Seidman, LLP v. British Car Auctions, Inc., 802 So.2d 366, 371–72 (Fla. 4th DCA 2001) (Gross, J., concurring specially) (citations omitted)). The purpose of settling cases and avoiding litigation and court costs would be furthered by allowing offers of judgment before second trials, regardless of any nexus to the judgment that ultimately decided ...