Sun Capital Partners, Inc. v. Twin City Fire Ins. Co.
| Decision Date | 05 August 2015 |
| Docket Number | CASE NO.: 12-CV-81397-KAM |
| Parties | SUN CAPITAL PARTNERS, INC., Plaintiff, v. TWIN CITY FIRE INSURANCE COMPANY, INC., Defendant. |
| Court | U.S. District Court — Southern District of Florida |
This cause is before the Court on Plaintiff Sun Capital's Motion for Choice of Law Determination. (DE 82). The motion is ripe for review. Stemming from this motion is Defendant Twin City's Motion to Strike [Plaintiff's reply in support of its choice-of-law motion] or File Surreply or for Additional Discovery. (DE 87). This motion is also ripe. After some time elapsed, Defendant filed a supplemental response in opposition to Plaintiff's choice-of-law motion, in which it brought newly discovered documents to the Court's attention. Plaintiff moved to strike that supplement or requested leave to file a response. (DE 126). The Court concludes that it has sufficient materials from which to conclude that New York law governs the interpretation of Plaintiff's insurance policies.
In a diversity action, a federal court must apply the choice-of-law rules of the forum state. LaFarge Corp. v. Travelers Indem. Co., 118 F.3d 1511, 1515 (11th Cir. 1997). The parties agree that Florida's rule of lex loci contractus governs the Court's choice-of-law determination in thiscontract dispute. (DE 82 at 3; DE 83 at 4). This rule Rando v. Gov't Employees Ins. Co., 556 F.3d 1173, 1176 (11th Cir. 2009).
"The determination of where a contract was executed is fact-intensive, and requires a determination of where the last act necessary to complete the contract was done." Prime Ins. Syndicate, Inc. v. B.J. Handley Trucking, Inc., 363 F.3d 1089, 1092-93 (11th Cir. 2004) (internal quotation marks and alteration omitted). As the Eleventh Circuit has held in the context of Florida's rule of lex loci contractus, "[t]he last act necessary to complete a contract is the offeree's communication of acceptance to the offeror." Id. at 1093 (citing Buell v. State, 704 So. 2d 552, 555 (Fla. Dist. Ct. App. 1997)). In the same opinion, however, the Court of Appeals noted—without calling into question—that some courts hold "that a contract dispute is governed by the laws of the state in which the contract was delivered." Id. ().
The parties take differing views on where the "last act" necessary to complete Plaintiff's insurance contracts occurred.1 Stressing the Eleventh Circuit's reliance on "communication ofthe acceptance," Defendant argues that the last act necessary to create a contract was the insurers' agents' communication of acceptance of Plaintiff's agent's order to bind coverage. (DE 83 at 13; DE 124 at 2). Because acceptance was communicated from New York (to one of Plaintiff's agents who was also in New York), Defendant argues that New York law applies. (DE 83 at 1-2).
On the other hand, Plaintiff argues that the last act was the delivery of the subject policies to Plaintiff at its place of business in Florida. (See DE 126-1 at 3). Consistently rejecting the notion that this Court should undertake a "fact-intensive" inquiry into where the last act of contract formation occurred, Plaintiff argues that Florida law rigidly "requires that the law of the state in which the policy was delivered be applied to interpretation of the policy." (DE 86 at 2).
The Court concludes that Defendant has identified the correct approach.
The Eleventh Circuit's decision in Prime Insurance Syndicate is illustrative. 363 F.3d 1089. There, a trucking company located in Alabama orally purchased a business auto-liability insurance policy covering the period of May 17, 2000, to May 17, 2001. Id. at 1091. On May 19, 2000, before the trucking company received its insurance binder, an employee was involved in an automobile accident in Florida. Id. On May 23, 2000, the insurance company issued the written binder confirming the earlier oral agreement. Id.
The insurance company disputed coverage in the underlying state court litigation, and it filed a declaratory action in the Southern District of Florida to resolve the coverage issue. Id. The state-court action settled, and the insurance company voluntarily dismissed its declaratoryaction; however, the district court retained jurisdiction to consider attorneys' fees. Id. The insureds sought attorneys' fees in accordance with Florida law; the insurer argued that Alabama law—which did not allow an insured to recover attorneys' fees in a coverage dispute—applied. Id. at 1091, 1093.
The Eleventh Circuit affirmed the district court's holding that Alabama law applied. After concluding that the dispute was governed by lex loci contractus, the court agreed that the insurer's "communication of the oral binder to [the insured] constituted acceptance of [the insured's] offer to purchase insurance and, therefore, was the last act necessary to complete the contract" Id. at 1093. Id.
Under facts closely analogous to the instant case, district courts in Florida have found that an insurer's (or its agent's) communication of acceptance of the insured's (or its agent's) offer to purchase insurance is the last act necessary to execute an insurance contract. In National Trust Insurance Company v. Graham Brothers Construction Company, the insurance company argued that Georgia law applied "because the Policy was delivered to the Georgia insured at its principal office in Georgia," whereas the third-party claimant argued Florida law applied because "the last act necessary to complete the contract is the offeree's communication of acceptance to the offeror, which . . . occurred in Florida." 916 F. Supp. 2d 1244, 1252 (M.D. Fla. 2013). After noting the Eleventh Circuit's decision in Prime Insurance Syndicate, the court agreed with thethird-party claimant. Id. The evidence demonstrated that, Id. (). Given this evidence, the court held that "the last act necessary to complete the contract occurred in Florida when [the insurer] accepted the agent's offer to bind coverage by issuing the Policy."
The court in National Trust relied on a similar decision in Granite State Insurance Company v. American Building Materials, No. 10-CV-1542, 2011 WL 6025655, at *1 (M.D. Fla. Dec. 5, 2011), aff'd 504 F. App'x 815 (11th Cir. 2013) (), in which the insured's agent emailed the insurer's agent an offer to purchase insurance by requesting that coverage be bound. The court in Granite State2 held that Massachusetts law applied based on the following facts:
In each year, the agents for [the insureds] (who are both located in Florida), received a quote for the policies from the managing general underwriter for the Insurer, VMGU (who is located in Massachusetts). Next, [the insureds'] agent emailed VMGU an offer to purchase the insurance at the prices quoted, by requesting that coverage be bound. VMGU then accepted that offer on behalf of the Insurer and issued a binder for the coverage from its offices in Massachusetts. Each year, after issuing the binder from its offices in Massachusetts, VMGU itself completed the information on the declarations pages of the policies, generated the policies, and emailed electronic versions of the policies to [the insureds'] agents in Florida.
Id. at *4. The court rejected the insurer's contention "that the last act occurred upon receipt ofthe binders and policies by [the insured's] agents in Florida, rather than the issuance of the same by VMGU in Massachusetts." Id. at *5 (emphasis in original). This argument, the court held, conflicted with the principle of Florida contract law that "a written contract acceptance is effective at the time it is dispatched—not when it is received by the offeror." Id. (citing Florida cases).
Finally, in a detailed opinion that predates Prime Insurance Syndicate,3 a bankruptcy court in the Middle District of Florida concluded that the actions of the parties' agents in binding insurance coverage was the last act necessary to create the insurance contract at issue. The Celotex Corp. v. AIU Insurance Co. (In re The Celotex Corp.), 194 B.R. 668 (Bankr. M.D. Fla. 1996). In Celotex Corp., the bankruptcy court discussed the importance of binders in insurance contract formation. Id. at 673 n.5. Citing treatises, the court concluded that "the binder [is] the last act necessary to complete a contract for coverage." Id. ().
Turning to the case at hand, the materials in the record demonstrate as follows:
Plaintiff Sun Capital assigned the duty of purchasing its insurance policies to its national insurance broker, Marsh Inc. (See DE 82 at 2; DE 82-1; DE 124-2, -3). Underwriting for the excess policy (Twin City) was handled by the Hartford. (See DE 82-1 at 5; DE 83 at 3)....
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