Scottsdale Ins. Co. v. DeSalvo
| Decision Date | 09 September 1999 |
| Docket Number | No. 92,467.,92,467. |
| Citation | 748 So.2d 941 |
| Parties | SCOTTSDALE INSURANCE COMPANY, etc., Petitioner, v. John DeSALVO, etc., Respondent. |
| Court | Florida Supreme Court |
W. Lane Neilson, Heath B. Nailos and David C. Lucey of Neilson and Tosko, Orlando, Florida, for petitioner.
John F. Fannin, H. Tyrone Tyler, and J. Clark Hamilton, Jr., of Fannin, Tyler and Hamilton, P.A., Jacksonville, Florida, for respondent.
We have for review DeSalvo v. Scottsdale Ins. Co., 705 So.2d 694 (Fla. 1st DCA 1998), in which the district court held that, under section 627.428, Florida Statutes (1997), when an insured is awarded some recovery at trial, the insured may be entitled to recover a portion of its attorney fees and costs, even if the insured's recovery is less than the insurer's highest offer of settlement. We accepted jurisdiction in this case based on express and direct conflict with Baker Protective Services v. FP, Inc., 659 So.2d 1120 (Fla. 3d DCA 1995), review denied, 669 So.2d 250 (Fla.1996), and Mendez v. Bankers Insurance Co., 696 So.2d 1210 (Fla. 4th DCA 1997). See Art. V, § 3(b)(3), Fla. Const. In both Baker and Mendez, the district courts concluded that an insured may only recover attorney fees under section 627.428 if the insured's recovery is greater than a valid offer of settlement made by the insurer. For the reasons expressed, we approve the district court's decision in this case, and we disapprove Baker and Mendez to the extent they are inconsistent with our opinion in this case.
The relevant facts of this case are as follows. John DeSalvo was the personal representative of the estate of H.P. Demery. Demery owned insured property that was damaged by fire on January 13, 1995. The coverage limit was $563,000. DeSalvo filed a claim with the insurer, Scottsdale Insurance Company (Scottsdale), on January 25, 1995, asserting that the value of the loss totaled the coverage limit. On January 31, 1995, Scottsdale sent DeSalvo a reservation of rights letter.1 DeSalvo contended that the reservation of rights letter was an improper response to his claim under the policy and filed this action in March 1995 to recover the amount of the claim plus interest, attorney fees, and costs. That same month, Scottsdale paid DeSalvo $405,402 and moved to dismiss or abate the litigation while the case proceeded to appraisal as provided by the policy. The trial court denied the motion based on case law that found similar appraisal provisions to be invalid. Scottsdale appealed, and the district court found the appraisal provision to be valid. See Scottsdale Ins. Co. v. Desalvo, 666 So.2d 944 (Fla. 1st DCA 1995)
.2
After remand and prior to the completion of the appraisal process, Scottsdale filed three offers of settlement over the amount already paid, which included taxable costs and attorney fees: the first was for $101; the second was for $50,000; and the third was for $100,001. DeSalvo declined all three offers.
The subsequent appraisal process resulted in an assessment of loss of $489,536, which was $84,133 more than the amount already paid to DeSalvo. Scottsdale paid DeSalvo the $84,133 difference on July 16, 1996. The trial court confirmed the appraisal award. DeSalvo then asked the court to award attorney fees and costs pursuant to section 627.428 and to award prejudgment interest on the amount recovered in appraisal to be calculated from thirty days after the proof of loss was submitted. The trial court denied attorney fees and costs, finding that DeSalvo was not the "prevailing party" under section 627.428 because the amount recovered was less than Scottsdale's highest offer of settlement. The trial court did award prejudgment interest from the date of the appraisal.
On appeal, the district court affirmed the award of prejudgment interest but reversed the denial of the award of attorney fees and costs. The district court noted that an insured under section 627.428 is entitled to attorney fees if the insured is a "prevailing party." The district court also noted that in Baker Protective Services v. FP, Inc., 659 So.2d 1120 (Fla. 3d DCA 1995), the Third District Court of Appeal had concluded that a prevailing party under this statute is one whose recovery is greater than the highest valid offer of settlement made by the insurer. However, the district court concluded that, under Danis Industries Corp. v. Ground Improvement Techniques, Inc., 645 So.2d 420 (Fla.1994), the intent of section 627.428 is to encourage early and fair settlements of valid claims. Using that rationale, the district court further concluded that DeSalvo, 705 So.2d at 696.
The district court also found that the trial court erred in calculating whether the amount recovered by DeSalvo exceeded the third offer of settlement by Scottsdale. The district court determined that the trial court erroneously used only the additional amount actually awarded for the fire damage. The district court concluded that the offer of settlement included any amounts for attorney fees and costs, and accordingly, for the trial court to determine whether DeSalvo's recovery for damages exceeded the offer of settlement, the trial court would first have to determine the amount of reasonable attorney fees and costs that had accrued as of the time of the offer of settlement as well as what prejudgment interest was owed at that time. The district court directed the trial court to hold further proceedings to make the appropriate calculations. We accepted jurisdiction based on conflict with Baker and Mendez based on statements in those cases that a prevailing party under section 627.428 is one whose recovery is greater than the highest valid offer of settlement made by the insurer. These district courts have cited Danis Industries for the simple proposition that a "prevailing party against an insurer under section 627.428 is one who obtains a judgment against an insurer in an amount greater than any offer of settlement previously made by the insurer." Mendez, 696 So.2d at 1211. For instance, in Mendez, the insurer made an offer of settlement for $3501 (exclusive of attorney fees), which was rejected. Subsequently, a verdict was rendered for the insured in the amount of $1544. The trial court determined that the insured was not the prevailing party because the verdict rendered was less than the offer of settlement. The Fourth District Court of Appeal affirmed, citing to Danis Industries.
Likewise, in Baker, Baker was awarded an amount less than the highest valid offer of settlement. On appeal, the Third District Court of Appeal cited to Danis Industries and found that Baker was not a prevailing party for purposes of awarding attorney fees under section 627.428, because Baker's recovery was less than the highest valid offer of settlement.
Because these district courts have limited our holding in Danis Industries, we expressly state our agreement with the First District's holding in this case that "the failure to recover more than an offer of settlement does not mean that an insured that is awarded some recovery is precluded from being awarded any portion of their attorney's fees and costs." DeSalvo, 705 So.2d at 696. In that event, the trial judge is to determine reasonable attorney fees, costs, and prejudgment interest through the date of the first offer of settlement which exceeds the recovery amount, including the damage award and the attorney fees, costs, and interest the insured would have received if the insured had accepted that offer of settlement on the date it was made. The insured would be then entitled to a judgment which would include the insurance or surety amount determined in the trial to be owed by the insurer plus the attorney fees, costs, and prejudgment interest which have been determined as incurred through the date of the first offer of settlement which exceeds the recovery...
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