Southeast Floating Docks, Inc. v. Auto-Owners Ins. Co.

• Decision Date: 02 February 2012
• Docket Number: No. SC11–285.,SC11–285.
• Citation: 82 So.3d 73
• Parties: SOUTHEAST FLOATING DOCKS, INC., et al., Appellants, v. AUTO–OWNERS INSURANCE COMPANY, Appellee.
• Court: Florida Supreme Court

82 So.3d 73

SOUTHEAST FLOATING DOCKS, INC., et al., Appellants,

v.AUTO–OWNERS INSURANCE COMPANY, Appellee.

No. SC11–285.

Supreme Court of Florida.

Feb. 2, 2012.

James McCrae of Law Office of Jim McCrae, P.A., Lake Mary, FL, and Richard A. DeTar of Miles and Stockbridge, P.C., Easton, MD, for Appellants.

Robert E. Bonner of Meier, Bonner, Muszynski, O'Dell and Harvey, Orlando, FL, and Thomas E. Crafton of Alber Crafton, PSC, Louisville, KY, for Appellee.

LEWIS, J.

This case is before the Court for consideration of a question of Florida law certified by the United States Court of Appeals for the Eleventh Circuit to be 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. In Auto–Owners Insurance Co. v. Southeast Floating Docks, Inc., 632 F.3d 1195 (11th Cir.2011), the Eleventh Circuit certified the following questions to this Court:

DOES FLA. STAT. § 768.79 ALLOW FOR VALID OFFERS OF JUDGMENT IN A SEPARATE SECOND TRIAL; AND, IF SO, MAY OFFERS BE DEEMED VALID IN INSTANCES WHERE AN APPELLATE COURT REINSTATES THE JUDGMENT OF THE FIRST TRIAL?

DOES THE CONDITIONING OF AN OFFER OF JUDGMENT ON THE RESOLUTION AND DISMISSAL WITH PREJUDICE OF THE OFFEREE'S CLAIMS IN THE ACTION AGAINST A THIRD–PARTY RENDER THE OFFER OF JUDGMENT A JOINT PROPOSAL, AS THAT TERM IS USED IN FLORIDA RULE OF CIVIL PROCEDURE 1.442(c)(3)?

DOES FLA. STAT. § 768.79 APPLY TO CASES THAT ARE GOVERNED BY THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION; AND, IF SO, IS THIS STATUTE APPLICABLE EVEN TO CONTROVERSIES IN WHICH THE PARTIES HAVE CONTRACTUALLY AGREED TO BE BOUND BY THE SUBSTANTIVE LAWS OF ANOTHER JURISDICTION?

Id. at 1200, 1202–03. For the reasons stated below, we answer the third certified question in the negative which renders the first two certified questions moot. We, therefore, decline to address those moot issues.

Facts and Procedural History

The facts of this case are not in dispute. Auto–Owners Insurance Company (Auto–Owners) issued a performance bond in connection with the work of Southeast Floating Docks, Inc. (Southeast) pursuant to a contract which provided that Southeast would build a floating dock for Rivermar Contracting Company (Rivermar). See Southeast, 632 F.3d at 1197. A dispute arose with regard to the performance by Southeast under the contract, and Rivermar filed an action against both Southeast and Auto–Owners for breach of contract. See id. Auto–Owners settled the dispute with Rivermar for $956,987, and filed the instant action against Southeast in the United States District Court for the Middle District of Florida based on a written agreement between Auto–Owners, Southeast, and Southeast's president, Alan Simpson. See id. ¹ Of note, the agreement between Auto–Owners and Southeast included a choice-of-law clause that provided for the substantive law of Michigan to apply to all disputes arising under the contract. See id. at 1202. During trial, Southeast and Simpson contended that they were not responsible for the indemnification of Auto–Owners because the settlement Auto–Owners reached with Rivermar was in bad faith. See id. at 1197.

On June 1, 2006, the jury returned a verdict in favor of Southeast. See id. It found that Auto–Owners settled with Rivermar in bad faith, and, as a result, Southeast had no obligation to indemnify Auto–Owners. See id. A judgment of no liability was entered the next day. See id. Auto–Owners subsequently filed a motion for a new trial. See id. at 1198. The district court granted the motion and set aside the verdict and judgment of no liability previously entered. See Auto–Owners Ins. Co. v. Southeast Floating Docks, Inc., No. 6:05–cv–334–Orl–31JGG, 2006 WL 2598765, at *8 (M.D.Fla. Sept. 11, 2006), rev'd, Auto–Owners Ins. Co. v. Southeast Floating Docks, Inc., 571 F.3d 1143, 1155–56 (11th Cir.2009). On September 25, 2006, the district court scheduled a retrial for April 2, 2007. See Southeast, 632 F.3d at 1197.

On December 11, 2006, more than six months after the conclusion of the first trial and four months before the date scheduled for the second trial, Southeast sent Auto–Owners an offer of judgment pursuant to section 768.79, Florida Statutes (2006). See id. Southeast offered to pay Auto–Owners $300,000 in exchange for the resolution and dismissal, with prejudice, of all claims asserted by Auto–Owners against Southeast and Simpson, including attorney's fees. See id. Auto–Owners rejected the offer, and the case proceeded toward the scheduled retrial. See id.

On March 1, 2007, the district court granted Auto–Owners's motion for summary judgment, and entered an award of $1,135,658.98 in favor of Auto–Owners. See id. Southeast appealed that judgment and argued, among other things, that the district court's original grant of the motion for new trial after the first trial was erroneous. See id. On June 16, 2009, the Eleventh Circuit Court of Appeals reversed the judgment and the district court's order for a new trial and reinstated the jury verdict from the original trial in favor of Southeast. See id.² Shortly thereafter, Southeast filed a motion for attorney's fees in federal district court pursuant to section 768.79, which establishes a party's entitlement to attorney's fees upon certain conditions related to filing an offer of judgment. See id. That motion for attorney's fees was denied on the basis that Southeast failed to serve the plaintiff a proposal for settlement at least forty-five days before trial as required by Florida Rule of Civil Procedure 1.442(b). See id. The foundation of the district court's determination was that the trial date in question for consideration of the issue of attorney's fees was only that of the first trial, which rendered Southeast's December 11, 2006 offer, a date more than six months after the conclusion of the first trial, untimely. See id.

Southeast sought review of the determination of attorney's fees in the Eleventh Circuit. The circuit court, based upon an inability to find “definitive answers in clearly established Florida law,” certified the previous three questions to this Court with regard to the application of section 768.79 and Florida Rule of Civil Procedure 1.442. See id. at 1197. This proceeding followed.

Analysis

We begin our analysis by addressing the third certified question, which involves a determination of whether section 768.79(1) constitutes substantive law and, therefore, is inapplicable in instances where parties to a contract have agreed to be bound by the substantive law of another forum. We begin here because the answers to the first two certified questions are dependent on a determination of whether section 768.79 applies in this case, which requires us to determine whether the fee statute is substantive or procedural. This dispute originates from the choice-of-law clause in Southeast and Auto–Owners's contract that provides for the substantive law of Michigan to apply to disputes that arise under the agreement. Southeast argues that section 768.79 is procedural for conflict of law purposes, warranting its application in this dispute, while Auto–Owners argues that the statute is substantive, and, therefore, is not applicable because the parties have agreed that the substantive law of Michigan shall apply.³ The issue before the Court involves a question of statutory interpretation and we review it de novo. See Borden v. East–European Ins. Co., 921 So.2d 587, 591 (Fla.2006).

Article V, section 2(a), of the Florida Constitution grants this Court the exclusive authority to adopt rules of judicial practice and procedure for actions filed in this State, while the Legislature is charged with the responsibility of enacting substantive law. See Allen v. Butterworth, 756 So.2d 52, 59 (Fla.2000); see also TGI Friday's, Inc. v. Dvorak, 663 So.2d 606, 611 (Fla.1995). The distinction between substantive laws enacted by the Legislature and procedural rules governed by the Court is not always clear. See Caple v. Tuttle's Design–Build, Inc., 753 So.2d 49, 53 (Fla.2000). Therefore, this Court has provided the following guidelines to determine whether a statute is procedural or substantive in nature:

Substantive law has been defined as that part of the law which creates, defines, and regulates rights, or that part of the law which courts are established to administer. It includes those rules and principles which fix and declare the primary rights of individuals with respect towards their persons and property. On the other hand, practice and procedure “encompass the course, form, manner, means, method, mode, order, process or steps by which a party enforces substantive rights or obtains redress for their invasion. ‘Practice and procedure’ may be described as the machinery of the judicial process as opposed to the product thereof.” It is the method of conducting litigation involving rights and corresponding defenses.

Massey v. David, 979 So.2d 931, 936–37 (Fla.2008) (emphasis in original) (quoting Haven Fed. Sav. & Loan Ass'n v. Kirian, 579 So.2d 730, 732 (Fla.1991)). Article II, section 3 proscribes one branch of government from exercising “any powers appertaining to either of the other branches unless expressly provided herein[,]” and it is clear that both the Legislature and the judiciary are jointly responsible for ensuring that statutes which may contain both procedural and substantive aspects work harmoniously to prevent one branch from encroaching on the constitutional powers of another. See TGI Friday's, 663 So.2d at 611.⁴

Although the Florida Legislature did not codify section 768.79 until 1986, see § 768.79, Fla. Stat. (Supp.1986), the origins of Florida's offer of judgment statute date back to 1972, when this Court initially adopted a variation of section 768.79 that mirrored Federal Rule of Civil Procedure 68. See In re Fla. Bar, 265 So.2d 21 (Fla.1972); see also Sarkis v. Allstate Ins. Co., 863 So.2d 210 (Fla.2003)...