Capitol Specialty Ins. Corp. v. Ortiz
| Decision Date | 15 January 2019 |
| Docket Number | Case No. 17-23329-Civ-SCOLA/TORRES |
| Parties | CAPITOL SPECIALTY INSURANCE CORP., Plaintiffs, v. PABLO RUBIO ORTIZ et al. Defendants. |
| Court | U.S. District Court — Southern District of Florida |
This matter is before the Court on Venetian by Luxcom LLC's and Francisco Lara's (collectively, "Luxcom") motion for attorneys' fees against Capitol Specialty Insurance Corp. ("Plaintiff"). [D.E. 81]. Plaintiff responded to Luxcom's motion on November 6, 2018 [D.E. 83] to which Luxcom replied on November 13, 2018. [D.E. 86]. Therefore, Luxcom's motion is now ripe for disposition. After careful consideration of the motion, response, reply, relevant authorities, and the record, Luxcom's motion should be GRANTED in part and DENIED in part.
Plaintiff filed this action on September 1, 2017, seeking a declaration that a policy (the "Policy") it issued to Luxcom does not afford coverage for the damages claimed in a state case brought against it and Defendant Lara ("Lara") by the other Defendants in this case, Pablo Rubio Ortiz, by and through his next friend and wife Beatriz Lara Corona, Jovani Rubio Lara, by and through his next friend and mother Beatriz Lara Corona, and Beatriz Lara Corona (the "Ortiz Defendants"). [D.E. 1]. Plaintiff alleged that it had no duty to defend or indemnify Defendants Luxcom or Lara in the state case, based on the claims and allegations made in the state court complaint.
On October 11, 2017, the Ortiz Defendants filed an amended complaint in the state case. [D.E. 9-2]. Plaintiff subsequently amended its complaint in this action to request a declaration of liability under the Policy as to the amended allegations and claims in the state case. [D.E. 9]. On December 5, 2017, the Ortiz Defendants filed a second amended complaint in the state case. The Court then granted Plaintiff leave to file a second amended complaint in this action. [D.E. 21-23]. Defendants filed motions to dismiss the second amended complaint [D.E. 28, 30, 47], which were denied on April 19, 2018, based on the Court's finding that Plaintiff "has no duty to defend or indemnify under the [P]olicy it issued to Defendants Luxcom and Lara based on the allegations in the underlying [second amended] state court complaint." [D.E. 57 at 8]. Based on that finding, the parties were ordered to show cause as to why judgment should not be entered in favor of Plaintiff.
On April 25, 2018, before the parties submitted briefing on the order to show cause, the Ortiz Defendants filed a third amended complaint in the state case, which contradicted allegations made in earlier pleadings in the state case that this Court relied on in denying Defendants' motions to dismiss. [Compare D.E. 57 at 7 and D.E. 23-2 at ¶ 9 with D.E. 65-1 at ¶ 9]. At oral argument, the parties represented that the Ortiz Defendants filed a fourth amended complaint in the state court action.
On August 24, 2018, the Court dismissed this case without prejudice, finding that it lacks subject matter jurisdiction because Plaintiff requested the Court to enter judgment in its favor based on an inoperative complaint in state court. The Court found that Plaintiff's "want of prosecution underscores the absence of a live case and controversy," and that this action must be dismissed for lack of subject matter jurisdiction. [D.E. 74].
Luxcom argues that it is entitled to recover its reasonable attorneys' fees pursuant to Florida Statute § 626.9373. This provision permits an insured to recover attorneys' fees against a surplus lines insurer upon the rendition of a judgment or decree:
(1) Upon the rendition of a judgment or decree by any court of this state against a surplus lines insurer in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer on or after the effective date of this act, the trial court or, if the insured or beneficiary prevails on appeal, the appellate court, shall adjudge or decree against the insurer in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured's or beneficiary's attorney prosecuting the lawsuit for which recovery is awarded.
Fla. Stat. § 626.9373. Luxcom claims that fee-shifting under 626.9373 is not dependent on a prevailing party standard because an insured "merely need[s] to obtain a judgment in his favor in order to be entitled to an award of attorneys' fees." Rodriguez v. Gov't Employees Ins. Co., 80 So. 3d 1042, 1044 (Fla. 4th DCA 2011). That is, Luxcom suggests that the insured need not obtain a successful merits/coverage determination or monetary recovery to recoup fees pursuant to section 626.9373. See id. at 1045 ().
As support, Luxcom relies primarily on the Eleventh Circuit's decision in Prime Ins. Syndicate, Inc. v. Soil Tech Distributors, Inc., 270 F. App'x 962, 964 (11th Cir. 2008). In that case, the Eleventh Court affirmed the district court's award of attorneys' fees to the insured under section 627.428 even though the case had been dismissed for lack of jurisdiction:
We are not persuaded by Prime Insurance's argument that a dismissal for lack of subject matter jurisdiction is insufficient to warrant an award of attorney's fees under Fla. Stat. § 627.428(1). By its very terms, the statute does not require an insured party to succeed on the merits of a case in order to recover attorney's fees. See Fla. Stat. § 627.428(1).
Id. at 964. Because the Eleventh Circuit and Florida courts2 are purportedly in agreement on the application of section 627.428 - and this informs the application of 626.9373 - Luxcom concludes that it is entitled to attorneys' fees.
Plaintiff's response is that Luxcom has misconstrued the procedural posture of this case. Plaintiff claims that the Court dismissed the complaint for lack of subject matter jurisdiction with leave for Plaintiff to refile its complaint in a separate action. Plaintiff argues that it promptly did so on October 4, 2018 and filed a motion to transfer this case to Judge Scola (which remains pending for disposition before Judge Ungaro). Plaintiff also suggests that Luxcom has neither prevailed nor obtained a judgment or decree against Plaintiff or any other type of recovery in this ongoing coverage dispute. As such, Plaintiff contends that Luxcom's arguments are irreconcilable with Florida law and must be rejected accordingly.
Plaintiff states, for example, that the purpose of section 626.9373 is to penalize insurers that wrongfully caused their insureds to resort to litigation and to "discourage insurers from contesting valid claims and to reimburse successful insureds for attorney's fees when they must sue to enforce their insurance contracts." State Farm Fla. Ins. Co. v. Lorenzo, 969 So. 2d 393, 397 (Fla. 5th DCA 2007) (quoting Progressive Express Ins. Co. v. Schultz, 948 So.2d 1027, 1029-30 (Fla. 5th DCA 2007)). That purpose would allegedly not be served here because Plaintiff is rightfully asserting a lack of coverage. Plaintiff also claims that the express language of section 626.9373 forecloses Luxcom's entitlement to fees because the statute is only triggered upon the entry of a judgment or decree where the insured or beneficiary recovers. And unlike the case of a final order of dismissal based on an inability to establish a jurisdictional amount, Plaintiff believes that Luxcom gained nothing when the Court dismissed Plaintiff's complaint without prejudice with leave to refile. See, e.g., S.-Owners Ins. Co. v. Tomac of Fla., Inc., 687 F. Supp. 2d 665, 671 (S.D. Tex. 2010) ().
Parties generally are required to bear their own litigation expenses regardless of who wins or loses. See Fox v. Vice, 563 U.S. 826, 832 (2011). Exceptions exist, however, where Congress has authorized courts to deviate from this rule in certain types of cases by shifting fees from one party to another. See id. And "in diversity cases a party's right to attorney's fees is determined by reference to state law." Prime Ins. Syndicate, Inc., 270 F. App'x at 963.
Here, the parties rely on cases that relate to the application of § 627.428 - not § 626.9373. Both parties appear to agree, however, that the language in the statutes are nearly identical and that courts apply the two fee provisions in the same way. And based on our review of the relevant case law, we agree as the only difference between the two statutes is that § 627.428 applies generically to insurers whereas § 626.9373 applies to surplus line insurance carriers. See, e.g., Lumpuy v. Scottsdale Ins. Co., 2015 WL 1708875, at *3 (M.D. Fla. Apr. 15, 2015) ( ); see also Stavrakis v. Underwriters at Lloyd's London, 2018 WL 4908104, at *2 (M.D. Fla. June 29, 2018) () (citations omitted). Because the two statutes are virtually identical, we must now determine whether a dismissal without prejudice for lack of subject matter jurisdiction warrants attorneys' fees.
The most analogous case to the facts presented is the decision in National Union Fire Ins. Co. of Pittsburgh, PA v. F Vicino Drywall II, Inc. et al...
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