QBE Ins. Corp. v. Chalfonte Condo. Apartment Ass'n, Inc.

• Decision Date: 31 May 2012
• Docket Number: No. SC09–441.,SC09–441.
• Citation: 94 So.3d 541
• Parties: QBE INSURANCE CORPORATION, Appellant, v. CHALFONTE CONDOMINIUM APARTMENT ASSOCIATION, INC., Appellee.
• Court: Florida Supreme Court

94 So.3d 541

QBE INSURANCE CORPORATION, Appellant,

v.CHALFONTE CONDOMINIUM APARTMENT ASSOCIATION, INC., Appellee.

No. SC09–441.

Supreme Court of Florida.

May 31, 2012.

Raoul G. Cantero, III, of White and Case, LLP, Miami, FL, Rodolfo Sorondo, Jr. and Monica Vila of Holland and Knight LLP, Miami, FL, and William S. Berk of Berk Merchant and Sims, PLC, Coral Gables, FL, for Appellant.

Bruce S. Rogow and Cynthia E. Gunther of Bruce S. Rogow, P.A., Fort Lauderdale, FL, Daniel S. Rosenbaum and John M. Siracusa of Rosenbaum Mollengarde, et al., West Palm Beach, FL, Pamela Jo Bondi, Attorney General, Tallahassee, FL, and Richard C. Valuntas, Assistant Attorney General, West Palm Beach, FL, for Appellee.

Anthony J. Russo of Butler, Pappas, Weihmuller, Katz, Craig, LLP, Tampa, Florida, and Caryn L. Bellus of Kubicki, Draper, P.A., Miami, Florida, on behalf of Florida Defense Lawyers Association and Federation of Defense and Corporate Counsel; William F. Merlin, Jr. and Mary Kestenbaum Fortson of Merlin Law Group, P.A., Tampa, Florida, on behalf of United Policyholders'; and Stephen A. Marino, Jr. and Danya J. Pincavage of Ver Ploeg & Lumpkin, P.A., Miami, Florida, on behalf of Florida Justice Association, as Amicus Curiae.

QUINCE, J.

This case is before the Court for review of five questions of Florida law certified by the Eleventh Circuit Court of Appeals as being determinative of a cause pending in that court and for which there appears to be no controlling precedent. We have jurisdiction. Seeart. V, § 3(b)(6), Fla. Const. Based on the facts and analysis outlined below, we answer the first, third, fourth, and fifth questions certified by the Eleventh Circuit in the negative. In doing so, we need not reach the second certified question.

FACTS

This action arises from an appeal to the United States Court of Appeals for the Eleventh Circuit wherein the plaintiff-appellee and cross-appellant Chalfonte Condominium Apartments Association, Inc. (Chalfonte) appealed the dismissal of claims under section 627.701(4)(a), Florida Statutes (2009), and the denial of a motion to enforce execution of the judgment, and the defendant-appellant and cross-appellee QBE Insurance Corporation (QBE) appealed the denial of motions for a new trial and for judgment as a matter of law.

The facts in this case are succinctly set forth in Chalfonte Condominium Apartment Ass'n v. QBE Insurance Corp., 561 F.3d 1267, 1269–70 (11th Cir.2009):

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, 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.

Id. (footnote omitted). Chalfonte moved to enforce the judgment, claiming that the policy waived QBE's right to stay execution and obligated QBE to pay Chalfonte within thirty days of the judgment. In support of this motion, Chalfonte relied on the following provision in the insurance policy:

Provided you have complied with all the terms of the Coverage Part, we will pay for covered loss or damage: ... (2) Within 30 days after we receive the sworn proof of loss and: (a) There is an entry of final judgment....

The district court rejected Chalfonte's argument, finding that QBE had complied with the applicable procedural rules in filing its supersedeas bond and had not waived its right to a stay under the policy. On appeal, the Eleventh Circuit deemed it necessary to certify five questions to this Court, noting that “Florida courts have not definitively answered these questions.” The Eleventh Circuit asks:

1. Does Florida law recognize 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?

2. If Florida law recognizes 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, is the good faith and fair dealing claim subject to the same bifurcation requirement applicable to a bad faith claim under Fla. Stat. § 624.155?

3. May an insured bring a claim against an insurer for failure to comply with the language and type-size requirements established by Fla. Stat. § 627.701(4)(a)?

4. Does an insurer's failure to comply with the language and type-size requirements established by Fla. Stat. § 627.701(4)(a) render a noncompliant hurricane deductible provision in an insurance policy void and unenforceable?

5. Does language in an insurance policy mandating payment of benefits upon “entry of a final judgment” require an insurer to pay its insured upon entry of judgment at the trial level?

Id. at 1274–75. We address each question in turn below by reviewing the history of the law and analyzing its application to the certified questions.

ANALYSIS

This Court has recounted the evolution of insurance contract litigation in Florida in a number of its previous cases. See, e.g., Allstate Indem. Co. v. Ruiz, 899 So.2d 1121, 1125–1129 (Fla.2005); Talat Enters., Inc. v. Aetna Cas. & Sur. Co., 753 So.2d 1278, 1281 (Fla.2000); State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So.2d 55, 58–59 (Fla.1995). Until the twentieth century, actions for breaches of insurance contracts were treated the same as any other breach of contract action. Laforet, 658 So.2d at 58. However, as insurance took on a larger institutional role and liability policies began to replace traditional indemnity polices as the standard policy form, insurance contracts began to be seen as distinguishable from other types of contracts. Id. Under the liability policies, insurance companies took on the obligation of defending the insured and the power to settle or refuse to settle a claim. Id. In light of this, courts began to recognize that insurers owed a duty to their insureds to refrain from acting solely in the insurers' own interests in settlement. Id. “This concern gave life to the concept that insurance companies had an obligation of good faith and fair dealing.” Ruiz, 899 So.2d at 1125;see also Laforet, 658 So.2d at 58 (“This duty became known as the ‘exercise of good faith’ or the ‘avoidance of bad faith.’ ”).

For many years, Florida courts imposed an independent duty on liability insurers to act in good faith when defending insureds against third-party claims, see, e.g., Butchikas v. Travelers Indem. Co., 343 So.2d 816, 817–18 (Fla.1976), and recognized a common law cause of action for bad faith within the context of third-party actions. Boston Old Colony Ins. Co. v. Gutierrez, 386 So.2d 783, 785 (Fla.1980). In fact, Florida common law recognized third-party bad-faith actions involving insurance as early as 1938. See Auto Mut. Indem. Co. v. Shaw, 134 Fla. 815, 184 So. 852 (1938). These third-party bad-faith actions involved a claim “in which an insured sues his liability insurance company for bad faith in failing to settle a claim which ultimately results in a third-party judgment against him in excess of the policy limits.” Time Ins. Co. v. Burger, 712 So.2d 389, 391 (Fla.1998). Even though the bad faith occurred between an insurer and its insured, Florida courts have also allowed the injured third party to bring a bad-faith action directly against the first part...