Sands on the Ocean v. QBE Insurance Corp.
Filing
89
OPINION AND ORDER granting in part and denying in part 84 Motion for Confirmation of Appraisal Award; granting in part and denying in part 84 Motion for Judgment; granting in part and denying in part 84 Motion for Attorney Fees Signed by Judge Kenneth A. Marra on 12/13/2012. (yha) Modified text on 12/14/2012 (yha).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 05-14362-CIV-MARRA
SANDS ON THE OCEAN
CONDOMINIUM ASSOCIATION, INC.,
Plaintiff,
vs.
QBE INSURANCE CORPORATION,
Defendant.
____________________________________/
OPINION AND ORDER1
This cause is before the Court upon Plaintiff’s Brief on Issues Remaining to be
Adjudicated by the Court, Renewed Motion for Confirmation of Appraisal Award, Motion for
Entry of Final Judgment, Motion to Determine Entitlement to an Award of Attorney’s Fees,
Costs and Prejudgment Interest (DE 84). Defendant has filed a response to the motion (DE 86).
No reply memorandum was filed. The Court has carefully considered the motion and response
and is otherwise fully advised in the premises.
I. Background
Plaintiff, a condominium association, sustained damage due to Hurricane Frances on
September 4, 2004. (Compl. ¶ ¶ 3, 7, DE 1.) After the hurricane, Defendant inspected the
property and advanced approximately $650,000.00, although Plaintiff sought 2.7 million dollars.
(Compl. ¶ 8; June 14, 2006 Order granting motion to compel appraisal, DE 32 at 1 n.1.) In July
of 2005, Defendant’s independent adjuster concluded that Plaintiff’s claim was excessive. (Id. at
1
The Court presumes familiarity with its prior Orders.
2.) Plaintiff submitted a revised claim package in September of 2005, after Hurricane Katrina
and prior to Hurricane Wilma. (Id.) Defendant’s independent adjuster advised Plaintiff that it
was difficult to review and evaluate the revised claim in light of the 2005 hurricanes. (Id.)
On December 8, 2005, Plaintiff filed a Complaint for declaratory judgment, breach of contract
and breach of implied warranty of good faith and fair dealing. (Compl. ¶ ¶ 11-36.)
On April 13, 2006, Defendant filed a motion to compel appraisal of loss and motion to
dismiss or abate action. (DE 15.) In response, Plaintiff submitted evidence that Defendant made
no efforts to investigate or adjust its insurance claim since September of 2005. (DE 32 at 2.) The
Court entered an Order granting the motion to compel appraisal, granting the motion to abate,
and staying the case pending the conclusion of the appraisal process. (DE 32.) The appraisal
resulted in an award for Plaintiff in the total amount of $1,937,989.53. However, the amount of
the appraisal award did reflect the amount of the deductible that needed to be paid by Plaintiff,
prior payments made by Defendant under the policy and the terms of the policy that might
otherwise reduce the amount of the damages to which Plaintiff was entitled. Plaintiff
subsequently moved to lift the stay and confirm the appraisal award. (DE 43.) Thereafter,
Defendant paid Plaintiff $931,596.53. This amount stemmed from a reduction of the appraisal
award by: 1) $253,543.00 for the hurricane deductible; 2) advance payments previously made to
Plaintiff under the policy and 3) the additional costs for the fire alarm system beyond the
ordinance and code provision of the policy. (DE 51.) The Court held that confirmation of the
appraisal was appropriate and that Defendant was entitled to reduce the award for the “Fire
Alarm System (Simplex)” to $10,000.00. In addition, the Court noted it could not rule on
whether the hurricane deductible failed to comply with Florida Statutes § 627.701 until the
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Florida Supreme Court issued a ruling in Chalfonte Condominium Apartment Assoc., Inc. v.
QBE Ins. Corp..2 As a result, the Court denied, without prejudice, Plaintiff’s motion for
confirmation until the Florida Supreme Court issued its ruling. (DE 63.)
Plaintiff now seeks to confirm the appraisal award, enter final judgment, obtain an award
of attorney’s fees pursuant to Florida Statute § 627.428, costs pursuant to 28 U.S.C. § 1920, and
prejudgment interest from the date of the loss. In response, Defendant claims that it timely paid
the award and therefore confirmation of the appraisal award and entry of final judgment should
not be used for the purpose of awarding attorney’s fees. In addition, Defendant claims that the
chronology of the events and the insurer’s pre-suit conduct does not entitle Plaintiff to attorney’s
fees. Moreover, Defendant contends that because the policy allowed Defendant to pay the
appraisal award within 30 days and Defendant did so, Plaintiff is not entitled to prejudgment
interest. Lastly, Defendant claims that Plaintiff has no entitlement to costs under the policy.
II. Discussion
First, the Court rejects Defendant’s request that it not confirm the appraisal award.
Defendant is essentially seeking reconsideration of the Court’s March 24, 2009 Order (DE 63),
which held that confirmation of the appraisal award is appropriate. Significantly, Defendant
waited over three years to challenge the Court’s Order and it has failed to set forth any grounds
for doing so. See Lussier v. Dugger, 904 F.2d 661, 667 (11th Cir. 1990) (denial of a motion for
reconsideration is "especially soundly exercised when the party has failed to articulate any reason
for the failure to raise an issue at an earlier stage in the litigation").
2
Based on the ruling by the Florida Supreme Court, the hurricane deductible in the
insurance contract is not void under Florida law. See Chalfonte Condominium Apt. Assoc., Inc.
v. QBE Insur. Co., 695 F.3d 1215, 1218 (11th Cir. 2012).
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Because confirmation of the award is appropriate, it is equally appropriate to enter final
judgment for Plaintiff. See Wilson v. Federated Nat. Ins. Co., 969 So. 2d 1133, 1134 (Fla. Dist.
Ct. App. 2007); Muckenfuss v. Hanover Ins. Co., No. 5:05-cv-261-Oc-10GRJ, 2007 WL
1174098, at * 4 (M.D. Fla. Apr. 18, 2007). Upon entry of final judgment, Florida Statute
§ 627.428 provides for attorney’s fees “to place the insured . . . in the place she would have been
if the carrier had seasonably paid the claim or benefits without causing the payee to engage
counsel and incur obligations for attorney’s fees.” Lewis v. Universal Prop. and Cas. Ins. Co., 13
So. 3d 1079, 1081 (Fla. Dist. Ct. App. 2009) (quoting Travelers Indem. Ins. Co. of Ill. v.
Meadows MRI, LLP, 900 So.2d 676, 679 (Fla. Dist. Ct. App. 2005)).3 “[A] trial court has no
discretion to deny reasonable attorney's fee to the prevailing plaintiff where the insurance
company first disputes the claim and then settles the case after a lawsuit is filed.” Amador v.
Latin American Property and Casualty Insurance Company, 552 So. 2d 1132, 1133 (Fla. Dist. Ct.
App. 1989); Losicco v. Aetna Casualty & Surety Company, 588 So. 2d 681, 682 (Fla. Dist. Ct.
App. 1991). Courts, however, have refused to award attorney’s fees when the insured
immediately files a lawsuit, instead of permitting the appraisal process to determine the outcome
of the dispute. See Travelers of Fl. v. Stormont, 43 So. 3d 941 (Fla. Dist. Ct. App. 2010)
(denying attorney’s fees when the insurer demanded appraisal and insured refused to respond to
3
Notably, Florida law also allows an award of attorney’s fees, even if there is no entry of
final judgment or confirmation, when the insurer makes a payment after a lawsuit was filed
because the payment operates as a confession of judgment. See Ivey v. Allstate Ins. Co., 774 So.
2d 679, 684 (Fla. 2000); but see Tristar Lodging v. Arch Speciality Ins. Co., 434 F. Supp. 2d
1286, 1298 (M.D. Fla. 2006) (“While Florida law does hold that payments are treated as
confessions of judgment where an insurer first disputes the claim and then settles, the existence
of a bona fide dispute and not the mere possibility of a dispute, is a crucial condition precedent to
such a holding.”).
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insurer’s written correspondence and instead filed suit). Based on the foregoing, the Court finds
that Plaintiff, as the prevailing party, is entitled to attorney’s fees.
Defendant, however, contends that Plaintiff is not entitled to recover attorney’s fees. In
support, Defendant points to its own pre-suit conduct as well as Plaintiff’s pursuit of claims for
which it was not a prevailing party. These arguments, however, are best raised when the Court
examines the underlying attorney’s fee record to determine a reasonable fee to award Plaintiff.
See Davis v. Fletcher, 598 F.2d 469, 470 (5th Cir.1979)4 (the determination of what constitutes a
reasonable fee is left to the sound discretion of the district court and will not be reversed absent
abuse of discretion.)
Next, the Court will address whether Plaintiff is entitled to recover prejudgment interest.
Under Florida law, courts must look to the contract of insurance to “determine the date from
which coverage payment is due, as well as when interest is due on the amounts payable.” Ellie’s
50'S Diner, Inc. v. Citizens Prop. Ins. Corp., 54 So. 3d 1081 (Fla. Dist. Ct. App. 2011); see also
Golden Door Jewelry Creations, Inc. v. Lloyds Underwriters Non-Marine Assoc., 117 F.3d 1328,
1341-42 (11th Cir.1997) (holding that prejudgment interest should accrue from date payment
became due under policy, not from the date of loss). According to Defendant, and not disputed
by Plaintiff, the policy at issue here required Defendant to pay the covered loss or damages,
within 30 days after receiving the sworn proof of loss and the filing of the appraisal award.5
4
The decisions of the United States Court of Appeals for the Fifth Circuit, as that court
existed on September 30, 1981, handed down by that court prior to the close of business on that
date, shall be binding as precedent in the Eleventh Circuit, for this court, the district courts, and
the bankruptcy courts in the circuit. Bonner v. Pritchard, 661 F.2d 1206, 1207 (11th Cir. 1981)
(en banc).
5
Defendant does not provide a citation to this provision of the policy.
5
Plaintiff, however, claims that Defendant did not pay the entire amount of the appraisal award
within those thirty days and therefore Plaintiff is entitled to prejudgment interest from the date of
loss. It appears that Plaintiff is claiming that because Defendant deducted the hurricane
deductible, prior payments and the fire alarm code upgrades from the appraisal award, Defendant
failed to pay the entire amount of the appraisal award. The Court disagrees. Indeed, the
appraisal award explicitly stated that it was made “without any consideration of any deductible
amount or prior payments issued to the insured or any terms, conditions, provisions or exclusions
of the . . . policy.” (Appraisal Award, Ex. A, DE 43-1.) Therefore, Defendant paid the entire
amount minus the appropriate deductions.
Plaintiff, however, relies upon a line of cases stemming from Independent Fire Ins. Co. v.
Lugassy, 593 So. 2d 570 (Fla. Dist. Ct. App. 1992), which found an exception to the general rule
that the terms of the policy govern with respect to an award of prejudgment interest.
Specifically, this line of cases has held that prejudgment interest should be calculated from the
date of the loss when the insurer denied liability for loss under the policy. Id. at 572; see also
Underwriters Ins. Co. v. Kirkland, 490 So. 2d 149, 153-54 (Fla. Dist. Ct. App. 1986) (holding
that prejudgment interest should be calculated from date of loss because no sworn proof of loss
needed to be submitted due to the fact that the insured property was completely destroyed by
fire). In other words, this exception permits the insurance company to be liable for prejudgment
interest either from the date the loss occurred or the date the insurance company was put on
notice of the loss. Chalfonte Condominium Apartment Ass’n, Inc. v. QBE Ins. Corp., 526 F.
Supp. 2d 1251, 1262 (S.D. Fla. 2007). However, as discussed in the 2007 Chalfonte district
court case, the exception set forth in the Lugassy line of cases “appears to no longer be good law”
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and, as observed by the Eleventh Circuit, Lugassy itself may have been “implicitly overruled” by
the Florida Supreme Court. Id. (citing Golden Door Jewelry Creations, Inc. v. Lloyds
Underwriters Non-Marine Assoc., 117 F.3d 1328, 1341 (11th Cir.1997); Lumbermens Mut. Cas.
Co. v. Percefull, 638 So.2d 1026 (Fla. Dist. Ct. App.1994); Lumbermens Mut. Cas. Co. v.
Percefull, 653 So.2d 389 (Fla.1995); Ocean Harbour South Condominium Assoc. Inc. v. Empire
Indemnity Ins. Co., No. 05-14235-CIV, 2007 WL 1059577, at *1 (S.D. Fla.2007) (discussing the
fact that Lugassy was implicitly overruled by a subsequent line of cases)).
Significantly, a recent case by the Fourth District Court of Appeal of Florida held that
when an insurer “timely paid the claim pursuant to the appraisal process after first having paid
the insured an amount less than what was awarded,” the insured was not entitled to recover
prejudgment interest. Green v. Citizens Prop. Ins. Corp., 59 So. 3d 1227, 1228 (Fla. Dist. Ct.
App. 2011); see American Reliance Ins. Co. v. Devecht, 820 So. 2d 378, 379 (Fla. Dist. Ct. App.
2002) (prejudgment interest may be awarded from the date of the appraisal award unless policy
provisions allow the insurer to pay the award within a certain period, and payment was made
within the allotted time); see also Buckley Tower Condo., Inc. v. QBE Ins. Corp., 395 F. App’x
659, 665 (11th Cir. 2010) (prejudgment interest is governed by the insurance contract and because
none of those conditions were satisfied until final judgment, the insured was not entitled to
prejudgment interest). For these reasons, the Court finds Plaintiff is not entitled to prejudgment
interest.
Lastly, the Court finds that Plaintiff, as a prevailing party, is entitled to costs pursuant to
Rule 54(d)(1) of the Federal Rules of Civil Procedure (“Rule 54), with the amount to be
determined. Fed. R. Civ. P. 54(d)(1); see Gilchrist v. Bolger, 733 F.2d 1551, 1556-57 (11th
7
Cir.1984). The Court rejects Defendant’s argument that because the insurance policy provides
that each party will pay its chosen appraisal and bear the appraisal costs, Plaintiff is not entitled
to a taxation of costs pursuant to Rule 54(d). Should Plaintiff submit documentation for costs of
items not recoverable pursuant to Rule 54(d), Defendant may raise this argument. However, the
governing provision for taxation of costs is not the insurance policy, but Rule 54(d) and 28
U.S.C. § 1920.
III. Conclusion
Accordingly, it is hereby ORDERED AND ADJUDGED as follows:
1)
The Renewed Motion for Confirmation of Appraisal Award, Motion for Entry of
Final Judgment, Motion to Determine Entitlement to An Award of Attorney’s
Fees, Costs and Prejudgment Interest (DE 84) is GRANTED IN PART AND
DENIED IN PART.
2)
The appraisal is confirmed. Plaintiff shall file a proposed judgment within 14
days of the date of entry of this Order. No prejudgment interest shall be
awarded.
3)
Plaintiff is entitled to attorney’s fees and costs. Plaintiff shall file its brief in
support of fees and costs within 14 days of the date of entry of this Order.
4)
The Clerk shall close this case and all pending motions are denied as moot.
DONE AND ORDERED in Chambers at West Palm Beach, Palm Beach County,
Florida, this 13th day of December, 2012.
______________________________________
KENNETH A. MARRA
United States District Judge
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