Dadeland Depot. v. St. Paul Fire and Marine

Decision Date21 December 2006
Docket NumberNo. SC04-1828.,SC04-1828.
Citation945 So.2d 1216
PartiesDADELAND DEPOT, INC., et al., Appellants, v. ST. PAUL FIRE AND MARINE INSURANCE CO., et al., Appellees.
CourtFlorida Supreme Court

Philip M. Burlington of Philip M. Burlington, P.A., Jeffrey M. Liggio and Richard Benrubi of Liggio, Benrubi and Williams, P.A., West Palm Beach, FL, for Appellant.

Lee Craig and Veronica D. Vellines of Butler, Pappas, Weihmuller, Katz and Craig, LLP, Tampa, FL, for Appellee.

Stephen A. Marino, Jr. of Ver Ploeg and Lumpkin, P.A., Miami, FL, on behalf of the Academy of Florida Trial Lawyers; E.A. "Seth" Mills, Jr. and Brett D. Divers of Mills, Paskert, Divers, P.A., Tampa, FL, on behalf of the Surety Association of America; and Bruce G. Alexander and Ronald E. Crescenzo of Boose, Casey, Ciklin, Lubitz, Martens, McBane and O'Connell, West Palm Beach, FL, on behalf of Florida AGC Council, Inc., Florida Transportation Builders' Association, Inc., and Associated Builders and Contractors of Florida, for Amicus Curiae.


We have for review five very discrete questions of Florida law certified by the United States Court of Appeals for the Eleventh Circuit that are determinative of a cause pending in that court and for which there appears to be no controlling precedent. We have jurisdiction. See art. V, § 3(b)(6), Fla. Const. Based on the facts and analysis outlined below, we answer the first, second, third, and fifth questions certified by the Eleventh Circuit in the affirmative, and hold that the fourth certified question should be answered in the negative.


This action arises from an appeal to the United States Court of Appeals for the Eleventh Circuit wherein the plaintiffs-appellants Dadeland Depot, Inc., and Dadeland Station Associates, Ltd. (hereinafter "Dadeland") asserted that the United States District Court for the Southern District of Florida erred in entering a summary judgment in favor of the defendants-appellees St. Paul Fire and Marine Insurance Company and American Home Assurance Company (hereinafter "St. Paul") and dismissing Dadeland's claim against St. Paul for bad faith in refusing to settle a claim under a performance bond issued by St. Paul on one of Dadeland's business developments. Dadeland Depot, Inc. v. St. Paul Fire & Marine Ins. Co., 383 F.3d 1273 (11th Cir.2004). In its opinion, the Eleventh Circuit deferred rendering a decision pending certification of several questions to this Court due to the circuit court's concern that "th[e] case turns on important questions of state law for which there is no controlling precedent." Id. at 1273.

The relevant facts, as outlined in the Eleventh Circuit's opinion, demonstrate that in 1995, Dadeland entered into a contract with Walbridge Contracting, Inc. (hereinafter "Walbridge"), for the construction of a shopping center (hereinafter the "project") located in Miami, Florida. See id. In connection with this project, St. Paul issued a standard performance bond (hereinafter "the bond") in the amount of $26,500,000, the face amount of the initial construction contract. See id. Pursuant to the terms of the bond, Walbridge was named as the principal, Dadeland was named as the owner, and St. Paul was named as the surety. See id. The bond incorporated the terms of the construction contract and bound both Walbridge and St. Paul to the performance of the contract. Under the terms of the bond, if the contractor failed to complete performance of the construction contract, Dadeland was required to take certain steps to trigger St. Paul's obligations under the bond. See id. Once Dadeland completed the steps outlined by the bond, St. Paul was required to fulfill its obligations in accordance with the terms of the bond. See id.

Walbridge began work on the project in September or October of 1995. See id. The project was completed, opened, and leased to commercial tenants in November of 1996. See id. On July 24, 1997, Dadeland and Walbridge entered into a settlement agreement which acknowledged that the project was complete and released each other, along with St. Paul, from future liability with the exception of certain specifically identified items. Subsequent to completion and tenant occupancy, Dadeland's consulting engineer notified Dadeland of the existence of certain construction defects, which information Dadeland accordingly passed to Walbridge. See id. at 1273-74. Shortly thereafter, county building officials determined that the project contained violations of numerous provisions of the South Florida Building Code. See id. at 1274. Dadeland then contacted Walbridge and requested that the defective work be repaired. See id. In response, Walbridge asserted that certain defects were due to Dadeland's structural engineer or its architect or both of them, and that Walbridge would not repair defects that were due to the fault of others or beyond the scope of its responsibility. See id.

On September 24, 1997, Dadeland notified Walbridge and St. Paul that Dadeland had reason to believe that Walbridge had failed to perform its obligations under the construction contract. See id. In accordance with the requirements of the bond, Dadeland informed St. Paul and Walbridge that Dadeland was considering declaring a contractor default and requested a conference to discuss repair issues. See id. This conference was held on October 22, 1997, with representatives for Dadeland, Walbridge, and St. Paul in attendance. See id. At the conclusion of this conference, Walbridge agreed to make certain repairs within a specified time period. See id. On March 18, 1998, Dadeland notified Walbridge and St. Paul that Walbridge had failed to perform any of its obligations pursuant to the October 22 agreement, and that Dadeland intended to proceed with arbitration and to arrange for another contractor to make the necessary repairs. See id.

On March 20, 1998, Dadeland filed an arbitration complaint naming Walbridge and St. Paul as respondents. See id. Dadeland alleged that Walbridge had failed to fulfill its obligation under the terms of the construction contract by neglecting to submit final as-built drawings to Dadeland and county officials. See id. Dadeland further asserted that Walbridge wrongfully failed and refused to perform all but a very small portion of the agreed-upon repairs, and that St. Paul had failed to take any action to correct the deficiencies. See id. Dadeland requested damages in the amount of approximately $4.4 million. See id.

The arbitration proceedings in this case involved thirty-five days of hearings, over one thousand exhibits, and twenty-five witnesses. See id. at 1275. By order dated May 15, 2000, the arbitration panel concluded that all parties, including the engineer, the architect, Dade County, Dadeland, and Walbridge were responsible for the deficient construction of the project. The arbitration panel determined that Walbridge owed Dadeland $1,417,842 for its defective work, and that Dadeland owed Walbridge $261,036 for contract balances and additional work performed. See id. In addition, the arbitration panel included the following provision with regard to St. Paul in its award:

[St. Paul] is bound to this award to the extent that [Walbridge] is obligated under the award and its defenses are denied.

The monetary award was timely paid by Walbridge with interest.

After entry of the arbitration order, Dadeland filed the instant action in the Fifteenth Judicial Circuit of Florida asserting that St. Paul had engaged in a bad-faith refusal to perform the duties required under the bond in contravention of sections 624.155(1)(b)(1) and 626.9541(1)(i) of the Florida Statutes (1995). See 383 F.3d at 1275. St. Paul removed the case to federal court and moved to dismiss the action. The trial court denied the motion and entered a detailed order which explained the applicable conclusions of law. The court reasoned, in part, that Dadeland had standing to advance this action because it had sufficiently presented discrete and concrete injury and damage due to nonperformance of the insurance contract which would support a claim for statutory bad faith. Two years later, St. Paul moved for summary judgment after this case was transferred to a different division of the trial court. The United States District Court for the Southern District of Florida then granted St. Paul's motion and entered a summary judgment. See id. The district court concluded that Dadeland had failed to allege that there had been a prior determination that St. Paul was actually liable to Dadeland under the terms of the bond—a condition precedent to instituting a bad-faith claim in Florida. See id. Additionally, the court found that any bad-faith claim was not sustainable because Dadeland had failed to establish that any alleged unfair claims practice of St. Paul was frequent enough to be considered a general business practice. See id. Lastly, as to any claim for breach of contract, the district court determined that such claim was barred by res judicata, reasoning that it could have been asserted during the arbitration proceedings. See id. Dadeland appealed the judgment of the district court, seeking review in the Eleventh Circuit. See id. Although the dissent would decline to answer the questions certified because in its view no discrete statutory bad faith damages exist, this position was not advanced by the appellees nor was it the basis of the trial court's decision. Additionally, no issue relating to damages has been certified to us, nor does the present record provide a sufficient basis for that analysis.

On appeal, the Eleventh Circuit noted that the issues were "entirely controlled by Florida law, and [that] because the Florida courts have yet to address the[ ] issues" decided by the district court, the Eleventh Circuit, prior to rendering its decision in the matter, deemed it necessary to certify the following questions to this Court:


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