Blumberg v. USAA Cas. Ins. Co.

• Decision Date: 12 July 2001
• Docket Number: No. SC95740.,SC95740.
• Citation: Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061 (Fla. 2001)
• Parties: Richard BLUMBERG, Petitioner, v. USAA CASUALTY INSURANCE COMPANY, Respondent.
• Court: Florida Supreme Court

790 So.2d 1061

Richard BLUMBERG, Petitioner, v.USAA CASUALTY INSURANCE COMPANY, Respondent.

No. SC95740.

Supreme Court of Florida.

July 12, 2001.

Eric Lee of Atlas Pearlman, P.A., Fort Lauderdale, FL, for Petitioner.

Hinda Klein of Conroy, Simberg & Ganon, P.A., Hollywood, FL, for Respondent.

HARDING, J.

We have for review Blumberg v. USAA Casualty Insurance Co.,729 So.2d 460(Fla. 4th DCA1999), which expressly and directly conflicts with this Court's previous opinion in Peat, Marwick, Mitchell & Co. v. Lane,565 So.2d 1323(Fla.1990).We have jurisdiction pursuant to article V, section 3(b)(3) of the Florida Constitution.For the reasons expressed in this opinion, we approve the result below.

Blumberg and Peat, Marwick are in conflict regarding when a cause of action for negligence/malpractice accrues.The facts of Blumberg are as follows:

Blumberg's residence was insured for a number of years through St. Paul Insurance Company("St. Paul").In December 1989, he bought a new home and contacted Bruner, his insurance agent, to request that St. Paul insure the new property.St. Paul, however, would not insure beach front property.Nevertheless, St. Paul continued to insure the old residence, which Blumberg rented out.Bruner reduced the insurance coverage at the old property to reflect the transfer of Blumberg's possessions to the new home and the premiums were accordingly reduced.

Blumberg had an interest in a sports card store, which proved to be unsuccessful.The store was closed in November 1991, and the inventory of cards, allegedly worth over $100,000, was turned over to Blumberg.He stored the cards in his old residence, which was still insured by St. Paul.As soon as the cards were brought to the old home, Blumberg called Bruner to verify that he had insurance coverage for the cards at that home.He also contacted the insurer of his new home who advised him that he could obtain coverage under his new policy for the cards if not covered under his existing policy.However, Bruner contacted Blumberg on November 9, 1991, and informed him that he had spoken to St. Paul and confirmed that the policy provided the necessary coverage.

On the same day that Bruner called Blumberg to confirm coverage, the old home was broken into and all of the cards were stolen.Blumberg made a claim with St. Paul, but coverage was denied.In the end of 1992, Blumberg filed suit for breach of contract and for promissory estoppel.In the complaint, Blumberg alleged that Bruner was the agent of St. Paul and, as an agent had represented to him that coverage was available under the policy.In the alternative, Blumberg alleged that, acting in reliance on St. Paul's representation of coverage, Bruner failed to secure for him other insurance on the cards.The case went to trial in August of 1996 and resulted in a directed verdict in favor of St. Paul on the breach of contract count because the trial court found that the policy did not cover the loss of the cards.The promissory estoppel count went to the jury who found in favor of Blumberg but awarded only $25,000 in damages.Before judgment was entered, Blumberg dismissed his claim with prejudice.

Blumberg then filed suit against Bruner, now alleging that Bruner was his agent for the procurement of insurance coverage, and Bruner negligently failed to procure insurance to cover the loss of the sports cards.Blumberg alleged that he believed that there was coverage until the trial court ruled adversely to him in the prior suit despite his alternative position in the previous complaint that Bruner did not obtain the requisite, additional insurance on the cards.Therefore, he alleged that he was not damaged by Bruner's negligence until August of 1996.

Bruner answered the complaint and raised the statute of limitations, contending that the statute began to run when St. Paul denied coverage, or at least when it denied coverage in its answer to Blumberg's suit.On Bruner's motion for summary judgment, the trial court agreed and granted the motion.

Blumberg,729 So.2d at 460-61.On appeal, the Fourth District Court of Appeal affirmed, reasoning that the statute of limitations began to run when Blumberg filed his action against St. Paul.Seeid. at 462.

The Blumberg decision is in conflict with Peat, Marwick.In that case, the Lanes in 1976-77 retained Peat, Marwick as their accountants.In 1976, Peat, Marwick recommended that the Lanes invest in a limited partnership.The Lanes invested in that partnership, and in filing their federal income tax returns for 1976 and 1977, they claimed deductions, on the advice of Peat, Marwick, based upon losses of the partnership.In 1981, the IRS sent the Lanes a ninety-day letter, informing them that it had determined that there were deficiencies in their 1976 and 1977 tax returns because of the claimed deductions for the partnership losses.The letter informed them of the amount of the deficiencies and of the procedures available to them for challenging the IRS's deficiency determination.One of the alternatives available to the Lanes was to challenge the IRS's deficiency determination in the United States Tax Court.The Lanes pursued this option and filed their challenge in tax court later that year (1981).In 1983, the Lanes agreed to the entry of a stipulated order which required them to pay a tax deficiency amount agreed to by them and the IRS.In 1985, less than two years after the entry of the tax court order based on the stipulation, the Lanes filed a complaint against Peat, Marwick for accounting malpractice.As one of its affirmative defenses, Peat, Marwick asserted that the claim was barred by the statute of limitations.The trial court agreed with Peat, Marwick that the Lanes' claim was barred and granted summary judgment in Peat, Marwick's favor.

On appeal, the Third District Court of Appeal reversed, finding that the limitations period commenced when the judgment was entered in tax court.SeeLane v. Peat, Marwick, Mitchell & Co.,540 So.2d 922(Fla. 3d DCA1989).After granting the petition for review, this Court agreed with the district court:

In this case, the Lanes chose to appeal the IRS's determination to the United States Tax Court, in accordance with the advice given them by Peat Marwick.We find, consistent with the holdings of numerous attorney malpractice cases, that until their tax court action was final, the Lanes did not have an action for malpractice.We reject Peat Marwick's contention that an IRS deficiency determination conclusively establishes an injury upon which to base a professional malpractice action.If we were to accept that argument, the Lanes would have had to have filed their accounting malpractice action during the same time that they were challenging the IRS's deficiency notice in their tax court appeal.Such a course would have placed them in the wholly untenable position of having to take directly contrary positions in these two actions.In the tax court, the Lanes would be asserting that the deduction Peat Marwick advised them to take was proper, while they would simultaneously argue in a circuit court malpractice action that the deduction was unlawful and that Peat Marwick's advice was malpractice.To require a party to assert these two legally inconsistent positions in order to maintain a cause of action for professional malpractice is illogical and unjustified.Until the tax court determination, both the Lanes and Peat Marwick believed that the accounting advice was correct; consequently, there was no injury.To hold otherwise would mean that an accountant's client would have an action for malpractice as soon as the client received a "Ninety-Day Letter" from the IRS.That result is contrary to common sense and reason.Further, to construe the legislative enactment of the statute of limitations for accounting malpractice in the manner suggested by Peat Marwick would, in our view, be contrary to the legislature's intent in enacting this limitations period.

Peat, Marwick,565 So.2d at 1326.

In the case below, the district court attempted to distinguish its holding from our holding in Peat, Marwick:

First, appellant in this case had reason to know that the agent had acted negligently long before the final disposition of the case by this court in 1988.Unlike in Peat, Marwick,the court's ruling here did not make the injury apparent to the appellants for the first time, but rather confirmed what the appellants had reason to know previously— that there was a gap in the coverage.

Second, in Peat, Marwickthe plaintiffs were the defendant's clients, and were being advised by defendant on how to challenge an IRS determination.The clients took the defendant's advice and challenged the IRS determination in the tax court, unsuccessfully.It was not until that determination by the tax court that it became apparent that the accountants were negligent.Here, the appellee insurance agent was not representing the insureds and advising them regarding this very dispute.To us, this is a distinction with a substantial difference.

Blumberg,729 So.2d at 462(quotingRussell v. Frank H. Furman, Inc.,629 So.2d 297, 298-99(Fla. 4th DCA1993)).We, however, are not persuaded by this reasoning.The logic behind the Peat, Marwick decision was that a client should not be forced to bring a claim against an accountant prior to the time that the client has incurred damages.A rule that would mandate simultaneous suits would hinder the defense of the underlying claim and prematurely disrupt an otherwise harmonious business relationship.Surely, this same logic should hold true for the client that has an established relationship with a particular insurance agent, especially if the agent maintains that coverage exists even after coverage has been denied by the insurance company.The record in this case demonstrates that Bruner maintained that coverage existed throughout the St. Paul suit.Moreover, the insurer's...