Maloy v. Scottsdale Ins. Co.

• Decision Date: 26 March 2019
• Docket Number: Case No: 2:17-cv-470-FtM-29MRM
• Citation: 376 F.Supp.3d 1249
• Parties: Penney MALOY, Plaintiff, v. SCOTTSDALE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Florida

376 F.Supp.3d 1249

Penney MALOY, Plaintiff,

v.SCOTTSDALE INSURANCE COMPANY, Defendant.

Case No: 2:17-cv-470-FtM-29MRM

United States District Court, M.D. Florida, Fort Myers Division.

Signed March 26, 2019

Gabriela Perez-Dumois, Kenneth R. Duboff, Duboff Law Firm, North Miami, FL, Jeffrey Warren Frazer, Ligman Martin, PL, Miami, FL, for Plaintiff.

Andrew Peter Rock, Robert Lee Rogers, III, Rock Law Group, P.A., Maitland, FL, for Defendant.

OPINION AND ORDER

JOHN E. STEELE, SENIOR UNITED STATES DISTRICT JUDGE

This matter comes before the Court on plaintiff's Motion for Determination of Entitlement to Reasonable Attorney[']s Fees and Courts Costs (Doc. # 26) filed on January 30, 2019. Defendant filed a Response in Opposition (Doc. # 27) and an Affidavit of David Gee in Support (Doc. # 28) on February 13, 2019. Also before the court is the Joint Stipulation For Order of Dismissal With Prejudice (Doc. # 29.)

Plaintiff seeks costs and attorney fees pursuant to Fed. R. Civ. P. 54(d), Fla. Stat. § 57.041, and Fla. Stat. § 626.9373. While defendant Scottsdale Insurance Company (defendant or Scottsdale) obtained jurisdiction in this Court by asserting plaintiff would be entitled to reasonable attorney fees if she prevailed (Doc. # 1, ¶ 7), it now asserts that plaintiff is entitled to no attorney fees or costs. Alternatively, Scottsdale asserts plaintiff is entitled only to fees for a portion of the litigation. For the reasons set forth below, the motion for attorney fees and costs is granted as to entitlement, and granted in part and denied in part as to the amount of attorney fees and costs.

I. Procedural History

The record in this case establishes the following chronology: On October 9, 2016, plaintiff's residence suffered damage to its roof and interior due to heavy wind and/or rain in a storm. Plaintiff filed a claim under her insurance policy with Nationwide Insurance Company, which was underwritten by Scottsdale, a surplus lines insurer.

Scottsdale first received notice of plaintiff's claim on November 2, 2016. (Doc. # 28, ¶ 5.) By letter dated November 28, 2016, Scottsdale notified plaintiff that a portion of the claimed damage was not covered by its policy, and that an independent adjuster had inspected the damages and determined that the "roof leaked due to wear and tear, deterioration, and inadequate maintenance, which are excluded causes of loss." After deducting the $ 1,000 deductible and non-recoverable depreciation, Scottsdale issued a $ 7,218.69 check to plaintiff under separate cover. (Doc. # 28-3, p. 3.)

Plaintiff disputed Scottsdale's determination of the claim, and therefore Scottsdale continued to investigate the claim, including hiring an engineering firm. On March 28, 2017 Scottsdale made an additional payment to plaintiff in the amount of $ 6,564.01. On May 10, 2017, Scottsdale made another supplemental payment to plaintiff in the amount of $ 1,407.24 (Doc. # 28-5.) Plaintiff continued to dispute the sufficiency of these amounts.

On May 17, 2017, an attorney faxed a letter to Scottsdale notifying it of his representation of plaintiff. (Doc. # 28-6.) On May 19, 2017, plaintiff's attorney sent a letter to Scottsdale noting, among other things, that "there is obviously a disagreement between the parties" as to three specifically identified matters. Plaintiff's attorney requested that Scottsdale "reevaluate its inadequate initial payment" and "make payment within the next 14 days". (Doc. # 28-7.) Counsel included an estimate of damages in the amount of $ 60,161.49 from CNI Concepts Enterprises Inc.

By a reply letter dated June 6, 2017, Scottsdale rejected counsel's estimate, but noted that another $ 5,115.20 supplemental payment was issued. (Doc. # 28-9.)

On June 9, 2017, plaintiff's attorney sent a letter to Scottsdale noting plaintiff's continued disagreement and again requesting reevaluation and payment of more money within fourteen days. Because of an address error, Scottsdale asserts it did not receive this letter until June 17, 2017.

On June 27, 2017, plaintiff filed a lawsuit against Scottsdale in state court for breach of the insurance policy. (Doc. # 1-1, p. 4.)

By letter dated July 11, 2017, Scottsdale advised plaintiff that "no additional payment is due." Scottsdale also invoked the appraisal clause of the insurance Policy and appointed Brian Wasserman of Worley as its appraiser. (Doc. # 28-1, Exh. A.)

On July 17, 2017, plaintiff's attorney sent the Complaint and Summons to the Chief Financial Officer of the State of Florida, who then electronically delivered a copy to defendant on July 21, 2017. (Doc. # 1-1, p. 3.)

On August 18, 2017, defendant removed the case to federal court based upon diversity of citizenship (Doc. # 1) and filed a Motion to Compel Appraisal and Abate All Proceedings Pending Completion of Appraisal, or, in the Alternative, to Dismiss or Require a More Definite Statement (Doc. # 3.) On August 30, 2017, the parties filed a Joint Motion to Abate All Proceedings Pending Completion of Appraisal (Doc. # 7), which was granted and the case was stayed (Doc. # 8.) The appraisal process did not go smoothly, and required court intervention. (Docs. ## 9, 10, 11, 12, 14, 18, 19, 20, 21, 22, 23, 24.)

On December 4, 2018, a $ 94,083.58 appraisal award was drafted and signed by defendant's appraiser and a neutral umpire. (Doc. # 26-3.) On December 26, 2018, Scottsdale sent checks for the full amount of the appraisal award, offset by the prior payments, to plaintiff's counsel. (Doc. # 24, ¶ 4.) The parties notified the Court on January 7, 2019, that the appraisal process was complete and they were exploring the possibility of settling remaining issues, including attorney fees. (Doc. # 24, ¶ 5.) The Court directed the parties to file a stipulation for dismissal and agreed that unresolved issues regarding attorney fees would be addressed after dismissal. (Doc. # 25.) On February 18, 2019, the parties filed a Joint Stipulation for Order of Dismissal With Prejudice (Doc. # 29).

II. Entitlement to Attorney Fees

When federal jurisdiction is based upon diversity of citizenship, a party's right to attorney's fees is determined by state law. Prime Ins. Syndicate, Inc. v. Soil Tech Distribs., Inc., 270 F. App'x 962, 963 (11th Cir. 2008) (citing All Underwriters v. Weisberg, 222 F.3d 1309, 1312 (11th Cir. 2000) ("[W]e hold that Fla. Stat. § 627.428 is substantive law for Erie ¹ purposes.") ). The only basis for an award of attorney fees in this case is Fla. Stat. § 626.9373(1), which provides:

(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(1). The Court finds cases interpreting the very similar Fla. Stat. § 627.428 to be persuasive as to § 626.9373(1). The purpose behind both statutes is "...to place the insured ... in the place she would have been if the carrier had seasonably paid the claim or benefits without causing the payee to engage counsel and incur obligations for attorney's fees." Lewis v. Universal Prop. & Cas. Ins. Co., 13 So.3d 1079, 1081 (Fla. 4th DCA 2009) (citation omitted). "It is the incorrect denial of benefits, not the presence of some sinister concept of ‘wrongfulness,’ that generates the basic entitlement to the fees if such denial is incorrect." Ivey v. Allstate Ins. Co., 774 So.2d 679, 684 (Fla. 2000).

Plaintiff satisfies the requirements of the Fla. Stat. § 626.9373(1). Florida courts have allowed recovery of attorney fees even in the absence of a literal judgment when an insured obtains the "functional equivalent of a confession of judgment or a verdict," such as by the insurer's payment of a claim based upon settlement. Wollard v. Lloyd's & Cos. of Lloyd's, 439 So.2d 217, 218 (Fla. 1983). See also Ivey v. Allstate Co., 774 So.2d 679, 684 (Fla. 2000) ; Pepper's Steel & Alloys, Inc. v. United States, 850 So.2d 462, 465 (Fla. 2003). Here, plaintiff has obtained the functional equivalent of a judgment by virtue of the appraisal award, and will have an order pursuant to the Joint Stipulation (Doc. # 29), which effectively approves the appraisal award in favor of plaintiff and against Scottsdale. The amount of the appraisal is greatly in excess of the amount otherwise paid by Scottsdale.

Scottsdale argues, however, that plaintiff is not entitled to any attorney fees under Fla. Stat. § 627.9373(1) because she did not serve her Complaint, which was filed before Scottsdale invoked the appraisal procedure, until after the invocation of the appraisal process. The service of the complaint after invocation of the appraisal process, Scottsdale argues, establishes that plaintiff unnecessarily filed the suit, and therefore is not entitled to any attorney fees. The Court disagrees.

Florida case law establishes that service of process is not the proper focal point, rather it is the filing of a complaint. In any event, under Florida law attorney fees may be appropriate even when appraisal is invoked prior to the filing of a complaint.

Florida's cases have uniformly held that a section 627.428 attorney's fee award may be appropriate where, following some dispute as to the amount owed by the insurer, the insured files suit and, thereafter , the insurer invokes its right to an appraisal and, as a consequence of the appraisal, the insured recovers substantial additional sums. See, e.g., Goff v. State Farm Fla. Ins. Co., 999 So.2d 684 (Fla. 2d DCA 2008) ; Jerkins v. USF & G Specialty Ins. Co., 982 So.2d 15 (Fla. 5th DCA 2008) ; First Floridian Auto & Home Ins. Co. v.

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