SUN INSURANCE OFFICE, LIMITED v. Clay

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: JONES and BELL, Circuit , and ESTES
• Citation: SUN INSURANCE OFFICE, LIMITED v. Clay, 319 F.2d 505 (5th Cir. 1963)
• Decision Date: 19 June 1963
• Docket Number: No. 17525.,17525.
• Parties: SUN INSURANCE OFFICE, LIMITED, Appellant, v. John CLAY, Appellee.

319 F.2d 505 (1963)

SUN INSURANCE OFFICE, LIMITED, Appellant, v. John CLAY, Appellee.

No. 17525.

United States Court of Appeals Fifth Circuit.

June 19, 1963.

Bert Cotton, New York City, for appellant.

Paschal C. Reese, West Palm Beach, Fla., Henry Carter Carnegie, Palm Beach, Fla., for appellee.

Before JONES and BELL, Circuit Judges, and ESTES, District Judge.

JONES, Circuit Judge.

By this opinion this Court writes another chapter, perhaps not the final one, in this litigation which commenced more than six years ago and has commanded the attention of four courts.

The appellee, John Clay, procured a personal property floater policy of insurance from the appellant, Sun Insurance Office, Limited. The policy was issued in 1952 in Illinois where Clay was then living. Clay moved to Florida. The policy contained a suit clause which provided that no action could be maintained unless commenced within twelve months after the discovery of the loss, with a proviso that if the limitation was invalid under the law of the state in which the policy was issued, then suit must be brought within the shortest time permitted by the law of that state. The suit clause was valid in Illinois. A Florida statute declared such provision contrary to the public policy of the state and to be illegal and void, and directed that no court in the state should give effect to any such contract provision. In the winter of 1954-1955 property of Clay, covered by the policy, was deliberately destroyed by Clay's wife. The loss was reported to Sun on February 1, 1955, and it denied liability on April 1, 1955.

On May 20, 1957, Clay brought an action on the policy against Sun in the District Court for the Southern District of Florida, basing jurisdiction on diversity of citizenship. Sun asserted two defenses, that the action was not brought within the time limited by the suit clause, and that the policy did not cover losses willfully caused by the spouse of the insured. The district court entered judgment for Clay on a jury verdict for $6,800. On appeal, this Court declined "to make the difficult guess as to what the Florida state courts might decide if they were presented with" the issue as to whether the Florida statute applies to a contract such as was before it. This Court held that constitutional due process requirements precluded Florida from applying its statute to the contract made in Illinois. Sun Insurance Office, Limited v. Clay, 5th Cir., 1959, 265 F.2d 522. Reliance was placed by this Court, in reaching its decision, upon Home Insurance Co. v. Dick, 281 U.S. 397, 50 S.Ct. 338, 74 L.Ed. 926, 74 A.L.R. 701, and Hartford Accident & Indemnity Co. v. Delta & Pine Land Co., 292 U.S. 143, 54 S.Ct. 634, 78 L.Ed. 1178, 92 A.L.R. 928.

The Supreme Court reversed this Court's decision. Clay v. Sun Insurance Office, Limited, 363 U.S. 207, 80 S.Ct. 1222, 4 L.Ed.2d 1170. The Supreme Court concluded that the Dick and Delta & Pine cases were not conclusive on the constitutional issue. Therefore, said the Court, a decision should have been first made as to whether, under Florida law, the Florida statute is applicable and whether the losses resulting from the wife's conduct were within the policy coverage, since the disposition of one or both of these questions might avoid the constitutional question. The Supreme Court, in closing its opinion, commented upon the observation of this Court as to the difficulties of making "a confident guess" as to how the Florida Supreme Court would construe the Florida statute. Following that comment and in concluding its opinion, the Supreme Court said:

"The Florida Legislature, with rare foresight, has dealt with the problem of authoritatively determining unresolved state law involved in federal litigation by a statute which permits a federal court to certify such a doubtful question of state law to the Supreme Court of Florida for its decision. Fla.Stat.Ann., 1957, § 25.031. Even without such a facilitating statute we have frequently deemed it appropriate, where a federal constitutional question might be mooted thereby, to secure an authoritative state court\'s determination of an unresolved question of its local law. See Allegheny County v. Mashuda Co., 360 U.S. 185, 189 79 S.Ct. 1060, 3 L.Ed.2d 1163, and cases cited; see also Meredith v. Winter Haven, 320 U.S. 228, 336 64 S.Ct. 7, 88 L.Ed. 9." 363 U.S. 207, 212, 80 S.Ct. 1222, 1226, 4 L.Ed.2d 1170.

On August 12, 1960, this Court, "pursuant to the opinion and mandate¹ of the Supreme Court," certified the two questions² to the Supreme Court of Florida. On March 1, 1961, the Supreme Court of Florida adopted a rule relating to Certified Questions from Federal Courts. In re Florida Appellate Rules, Fla., 127 So. 2d 444. On October 18, 1961, the Supreme Court of Florida rendered an opinion. Sun Insurance Office, Limited v. Clay, Fla., 133 So.2d 735.

We have a doubt as to the effect to be given to the recital in the Supreme Court's Clay-Sun Insurance Office opinion that the Florida Legislature "has dealt with the problem of authoritatively determining unresolved state law involved in federal litigation." The citation to Allegheny County v. Mashuda Co., 360 U.S. 185, 189, 79 S.Ct. 1060, 3 L.Ed. 2d 1163, would permit an inference that a use of the Florida certification statute was an invocation of abstention or the equivalent of it. But abstention, as we understand the doctrine, is a remitting of the parties in a pending federal court action to a state court for a decision of a question of state law with a determination of the other issues by the federal court; or, upon the election of the party remitted to the state court, for a complete and final adjudication by that court of the entire controversy. National Association for the Advancement of Colored People v. Button, 371 U.S. 415, 427, 83 S.Ct. 328, 9 L.Ed.2d 405.

We do not think the Supreme Court intended, by the recital to which we have referred, to treat the opinion of the Florida court as constituting a binding determination which became the law of the case and res judicata such as would, we believe, have been true if the parties had been remitted to the state court and it had made an adjudication in litigation inter parties during a federal court abstention. The Florida certification statute does not require nor, we think, does it contemplate that the parties in the federal litigation shall submit themselves to the jurisdiction of the state court. The rule of the Florida Supreme Court purports to require briefs and permits oral argument. The power of the federal court to make a determination of the litigable issues between the parties to the pending cause was neither transferred to nor shared with the state court. The Supreme Court of Florida has, it seems, original jurisdiction only in the issuance of extraordinary writs. Fla.Const. Art. V, Sec. 4(2), F.S.A.; City of Dunedin v. Bense, Fla., 90 So.2d 300.

We need not determine whether the opinion of the Florida Supreme Court, given in answer to the questions certified to it by this Court, is merely advisory and entitled, like dicta, to be given persuasive but not binding effect as a precedent,³ or is to be credited under Erie-Tompkins⁴ doctrine and the rule of stare decisis as though it were the ratio decidendi of a decision made in adversary litigation before the court. A Florida District Court of Appeal has followed⁵ the opinion of the Supreme Court of Florida. This Court, being "in effect, only another court of the State"⁶ in a diversity action, is required to follow the opinion in its statements as to Florida law. As to the law of the United States, and particularly with respect to constitutional issues, the Florida court's views are without binding effect.

After a recital of the rule that insurance contracts are to be liberally construed in favor of the insured, the Florida court stated that the husband was covered against the willful destruction of property by his wife. The parties, on oral argument, have conceded that this is a correct statement of the law of Florida. We accept it as such.

We find the Florida court's pronouncements on the other submitted question more troublesome. In rendering an answer to the question as to whether the Florida statute is applicable to the suit clause of the policy under the facts recited, the Florida court, at the outset, expressed agreement with the contention of the insurer that it would be absurd to impute to the Florida Legislature any intention of asserting an interest in a contract executed in another state by residents of other states involving property in another state. Thus, it seems to have been recognized that there might be circumstances under which Florida courts would give effect to a suit clause in an insurance contract. But, said the Florida court, it is clear "that the Legislature intended the act to apply to `any contract whatever' — foreign or domestic — when Florida's contact therewith, existing at the time of its execution or occurring thereafter, is sufficient to give a court of this state jurisdiction of a suit thereon." 133 So.2d 735, 738. The Florida court concluded that Florida's contact with the contract and the parties was sufficient to give a Florida court jurisdiction of a suit thereon. "Accordingly", said the Florida court, "the first question certified to this court, supra, must be answered in the affirmative."

If, as the Florida court says, the application of the statute to invalidate the suit clause depends upon whether the Florida court would have jurisdiction of a suit on the policy, then of course the affirmative answer was required. It is a general principle that an action on an insurance policy seeking a money judgment is a transitory action which may be brought wherever service of process can be had on the defendant. Confederation of Canada Life Insurance Company v. Vega Y Arminan, Fla.App., 135 So.2d 867, cert. den. Fla., 144 So.2d 805. If, as the Florida court has...