Chalfonte Condominium Apartment v. Qbe Ins. Corp.

• Decision Date: 09 March 2009
• Docket Number: No. 08-11337.,No. 08-10009.,No. 08-10783.,08-10009.,08-10783.,08-11337.
• Citation: 561 F.3d 1267
• Parties: CHALFONTE CONDOMINIUM APARTMENT ASSOCIATION, INC., Plaintiff-Appellee Cross-Appellant, v. QBE INSURANCE CORPORATION, Defendant-Appellant Cross-Appellee. Chalfonte Condominium Apartment Association, Inc., Plaintiff-Appellant, v. QBE Insurance Corporation, Defendant-Appellee. Chalfonte Condominium Apartment Association, Inc., Plaintiff-Appellee, v. QBE Insurance Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

561 F.3d 1267

CHALFONTE CONDOMINIUM APARTMENT ASSOCIATION, INC., Plaintiff-Appellee Cross-Appellant, v. QBE INSURANCE CORPORATION, Defendant-Appellant Cross-Appellee.

Chalfonte Condominium Apartment Association, Inc., Plaintiff-Appellant, v. QBE Insurance Corporation, Defendant-Appellee.

Chalfonte Condominium Apartment Association, Inc., Plaintiff-Appellee, v. QBE Insurance Corporation, Defendant-Appellant.

No. 08-10009.

No. 08-10783.

No. 08-11337.

United States Court of Appeals, Eleventh Circuit.

March 9, 2009.

Rodolfo Sorondo, Jr., Monica Vila, Holland & Knight, LLP, Miami, FL, for QBE Ins. Corp.

Daniel S. Rosenbaum, John M. Siracusa, Richard Chambers Valuntas, Katzman Garfinkel Rosenbaum, LLP, West Palm Beach, FL, for Chalfonte Codominium Apart. Ass'n, Inc.

Anthony J. Russo, Butler, Pappas, Weihmuller, Katz, Craig, Tampa, FL, for Amicus Curiae.

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

Before DUBINA and CARNES, Circuit Judges, and RESTANI,^* Judge.

DUBINA, Circuit Judge:

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA, PURSUANT TO FLA. R. APP. P. 9.150(a). TO THE SUPREME COURT OF FLORIDA AND ITS HONORABLE JUSTICES:

These consolidated appeals require us to determine whether Florida law recognizes a claim for breach of the implied warranty of good faith and fair dealing by an insured against its insurer based on the insurer's failure to investigate and assess the insured's claim within a reasonable period of time. In addition, we must decide whether Florida law recognizes a private right of action under Fla. Stat. § 627.701(4)(a) and whether an insurer's failure to comply with § 627.701(4)(a) renders a hurricane deductible void and unenforceable. We must also decide whether, as a matter of Florida law, Defendant QBE Insurance Corporation ("QBE") contractually waived its procedural right to stay execution of the amended final judgment entered in favor of Plaintiff Chalfonte Condominium Association, Inc. ("Chalfonte") by posting a supersedeas bond. Because the Florida courts have not definitively answered these questions, we certify them to the Supreme Court of Florida.

I. BACKGROUND

On October 24, 2005, Hurricane Wilma struck Boca Raton, Florida, causing significant damage to property owned by Chalfonte. Shortly thereafter, Chalfonte filed a claim with QBE, its property insurer, pursuant to an insurance policy (the "Policy") providing property coverage to Chalfonte for the twelve month period commencing January 1, 2005. Chalfonte submitted an estimate of damages to QBE on December 18, 2005, and then submitted a sworn proof of loss to QBE on July 12, 2006. Dissatisfied with QBE's investigation and processing of its claim, Chalfonte filed suit in the United States District Court for the Southern District of Florida.

In the district court, Chalfonte raised claims for declaratory judgment (Count I), breach of contract—failure to provide coverage (Count II), breach of contract— breach of the implied warranty of good faith and fair dealing (Count III), and violation of Fla. Stat. § 627.701(4)(a) (Count IV). The district court dismissed Count IV of the complaint, concluding that § 627.701 does not provide a private right of action, and then held a jury trial on Chalfonte's remaining claims. The jury found for Chalfonte on all of its claims, awarding Chalfonte $7,868,211 for QBE's failure to provide coverage ($2,000,000 of which was awarded for "ordinance or law" coverage) and $271,888.68 for breach of the implied warranty of good faith and fair dealing, for a total award of $8,140,099.68. The jury also concluded that the Policy did not comply with § 627.701(4)(a).

The district court entered a final judgment in favor of Chalfonte in the amount of $8,140,099.68, with post-judgment interest accruing in accordance with 28 U.S.C. § 1961. QBE then filed a motion for judgment as a matter of law, a motion for a new trial, and a motion to alter or amend the judgment. The district court denied QBE's motions for judgment as a matter of law and for a new trial, but granted QBE's motion to amend the judgment by applying the hurricane deductible contained in the Policy despite the jury's conclusion that the Policy did not comply with the requirements for hurricane deductible provisions set forth in § 627.701(4)(a).

Chalfonte also filed a motion to amend the final judgment. The district court granted Chalfonte's motion to amend the judgment to include prejudgment interest and calculated prejudgment interest for the period beginning August 1, 2006, twenty days after Chalfonte submitted a sworn proof of loss, and ending September 6, 2007, the date that judgment was entered. On December 18, 2007, the district court entered an amended final judgment in favor of Chalfonte in the amount of $7,237,223.88,¹ with post-judgment interest accruing in accordance with 28 U.S.C. § 1961. QBE filed a notice of appeal of the amended final judgment and posted a supersedeas bond amounting to 110% of the amended final judgment. Chalfonte subsequently filed a notice of cross-appeal of the amended final judgment.

Following the district court's entry of the amended final judgment, Chalfonte filed a motion to enforce execution of the amended final judgment. The district court denied the motion, and Chalfonte appealed. The district court subsequently granted in part and denied in part Chalfonte's motion for attorneys' fees and costs, awarding Chalfonte $678,160.60 in fees and costs, and QBE appealed. We consolidated all of these related appeals.

II. DISCUSSION

A. Issues Raised in QBE's Appeals

QBE appeals the district court's denial of its motion for a new trial and its motion for judgment as a matter of law.² QBE asserts that Florida law does not recognize a claim for breach of the implied warranty of good faith and fair dealing based on an insurer's failure to investigate and assess its insured's claim within a reasonable period of time. Because the district court allowed Chalfonte to try such a claim, QBE contends that it is entitled to either a new trial or judgment as a matter of law.

In the alternative, QBE argues that this court should view Chalfonte's good faith and fair dealing claim as the equivalent of a statutory bad faith claim under Fla. Stat. § 624.155. Under Florida law, an insured's § 624.155 claim does not accrue until the insured prevails against its insurer on a claim for benefits under an insurance policy. Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So.2d 1289, 1291 (Fla.1991). QBE contends that this bifurcation requirement applies to Chalfonte's claims and that the district court erred by allowing Chalfonte to try its good faith and fair dealing claim simultaneously with its claim for benefits under the Policy. QBE asserts that this alleged error entitles QBE to either a new trial or judgment as a matter of law.

We review motions for a new trial under the abuse of discretion standard. Millennium Partners, L.P. v. Colmar Storage, LLC, 494 F.3d 1293, 1301 (11th Cir.2007). "Legal error is an abuse of discretion." Woodard v. Fanboy, L.L.C., 298 F.3d 1261, 1268 n.14 (11th Cir. 2002). "We review a district court's denial of a motion for judgment as a matter of law de novo, applying the same standards as the district court." Montgomery v. Noga, 168 F.3d 1282, 1289 (11th Cir.1999).

The Supreme Court of Florida has repeatedly observed that Florida does not recognize a common law first-party action for bad faith failure to settle a claim under an insurance contract. See, e.g., Allstate Indem. Co. v. Ruiz, 899 So.2d 1121, 1125 (Fla.2005) ("Traditionally and historically, the courts in this state did not, however, recognize a corresponding common law first-party action that would protect insured individuals and enable them to seek redress of harm against their insurers for the wrongful processing or denial of their own first-party claims or failure to deal fairly in claims processing."); Talat Enters., Inc. v. Aetna Cas. & Sur. Co., 753 So.2d 1278, 1281 (Fla.2000) ("Although the Florida common law recognized third-party bad-faith claims, it did not recognize claims made by an insured against its own insurer for failing to act in good faith when settling a claim." (citation omitted)).

Florida law does, however, provide a statutory first-party action for bad faith failure to settle a claim under an insurance contract. The Florida Legislature enacted Fla. Stat. § 624.155 "to provide a civil remedy for any person damaged by an insurer's conduct, including `[n]ot attempting 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.'" Ruiz, 899 So.2d at 1124 (quoting Fla. Stat. § 624.155(1)(b)(1)). QBE contends that § 624.155 provides Chalfonte's exclusive remedy for QBE's alleged failure to investigate and assess Chalfonte's claim within a reasonable time.

In addition to the statutory first-party action for bad faith recognized by Florida law, "Florida contract law recognizes the implied covenant of good faith and fair dealing in every contract." Ins. Concepts & Design, Inc. v. Healthplan Servs., Inc., 785 So.2d 1232, 1234 (Fla.Dist. Ct.App.2001); accord County of Brevard v. Miorelli Eng'g, Inc., 703 So.2d 1049, 1050 (Fla.1997) ("[E]very contract includes an implied covenant that the parties will perform in good faith."). Chalfonte contends that a claim for breach of the implied warranty of good faith and fair dealing is distinct from a statutory bad faith claim, even where the good faith and fair dealing claim contains allegations of an insurer's failure to investigate and assess its insured's claim within a reasonable period of time. According to Chalfonte, if courts do not read the implied warranty of good faith and fair dealing into all insurance contracts, insurers will be...