Trafalgar v. Zurich

January 07, 2010

Trafalgar v. Zurich

Initial Appellate Brief

In this brief to the Fourth District Court of Appeals the Plaintiff is seeking the reversal of a lower court decision denying him attorney’s fees in a breach of contract insurance claim.  The Plaintiff was successful in making a recovery in the underlying breach of contract claim.

IN THE DISTRICT COURT OF APPEAL FOR THE FOURTH DISTRICT STATE OF FLORIDA

CASE NO:  4D10-3580

TRAFALGAR AT GREENACRES, LTD.,

Appellant / Plaintiff, vs. ZURICH AMERICAN INSURANCE COMPANY, Appellee / Defendant.

APPELLANT’S INITIAL BRIEF

MICHAEL A. WINKLEMAN
LIPCON, MARGULIES, ALSINA & WINKLEMAN P.A.
Attorneys for Plaintiff/Appellant
One Biscayne Tower, Suite 1776
2 South Biscayne Boulevard
Miami, Florida  33131
Telephone:  (305)  373-3016

By: _______________________

MICHAEL A. WINKLEMAN

FLORIDA BAR NO 36719

TABLE OF CONTENTS

TABLE OF AUTHORITIES………………………………………………..3

INTRODUCTION……………………………………………………………4

STATEMENT OF THE CASE AND FACTS…………………….….……..4

SUMMARY………………………………………………………………….6

STANDARD OF REVIEW…………………………………………..…….8

ARGUMENT……………………………………………………………….9

I.THE FACTS HEREIN FALL SQUARELY WITHIN THE UNIFORM, CONTROLLING PRECEDENT WHICH HOLDS THAT TRAFALGAR IS ENTITLED TO ATTORNEY’S FEES….9

II.THE TRIAL COURT’S ORDER SHOULD BE REVERSED BECAUSE IT IS CONTRARY TO CONTROLLING PRECEDENT AND UNSUPPORTED BY THE FACTS HEREIN……………….13

A.Controlling precedent makes clear that the entry of summary judgment on the breach of contract claim in favor of Zurich is irrelevant to the instant analysis…………………………………….13

B.There are no facts to support the trial court’s finding that Trafalgar was not forced to file suit……………………………………………16

CONCLUSION…………………………………………………………….19

CERTIFICATE OF SERVICE & COMPLIANCE………………………..20

 

TABLE OF AUTHORITIES

CASESPAGE NO. 

 

B.Y. v. Dep’t of Children & Families, 7887 So.2d 1253, 1255 (Fla. 2004)

Cincinnati Insurance Co. v. Palmer,       7, 10, 12297 So.2d 96 (Fla. 4th DCA 1974)

First Floridian Auto & Home Ins. Co. v. Myrick, 10969 So.2d 1121 (Fla. 2d DCA 2007)

Goff v. State Farm Fla. Ins. Co., 10999 So.2d 684 (Fla. 2d DCA 2008)

Jerkins v. USF & G Specialty Ins. Co.,10982 So.2d 15 (Fla. 5th DCA 2008)

Lewis v. Universal Prop. And Casualty Ins. Co., 1013 So.3d 1079 (Fla. 4th DCA 2009)

Progressive Express Ins. Co. v. Schultz,14948 So. 2d 1027, 1029-30 (Fla. 5th DCA 2007)

Tristar Lodging Inc. v. Arch Specialty Ins. Co., 11434 F. Supp. 2d 1286 (M.D. Fla. 2006),

 

INTRODUCTION

This is a case about an insurance company that set a reserve of $1,500,000 just days after Hurricane Wilma, but it took two years, a lawsuit, and an appraisal award to get them to pay it.  This is the type of conduct that Florida Statute sect;627.428 was enacted to prevent, but the trial court improperly denied the insured’s motion for attorney’s fees pursuant to §627.428.

STATEMENT OF THE CASE AND FACTS

This is a first party insurance cause of action based on property damage sustained to a shopping mall owned by Trafalgar during Hurricane Wilma on October 24, 2005.  In the months following Hurricane Wilma, Zurich made a series of payments to Trafalgar which totaled $641,730.32.  Nearly a year after the hurricane, Zurich had paid Trafalgar less than half of what was ultimately determined to have been owed on this claim.  Thus, on September 15, 2006, after eleven months of delays, denials and coverage disputes, Trafalgar was forced to file suit for breach of the insurance contract. R. 1.[1]  After suit was filed, Zurich demanded appraisal, and on September 11, 2007, nearly another year later (and nearly two years after the Hurricane), an appraisal award was entered in favor of Trafalgar in the amount of $1,504,663.16.  This amount was more than double what Zurich paid prior to filing suit.  And remarkably, it was almost the exact amount Zurich’s had set as the reserve for the claim just days after the Hurricane. Accordingly, it took nearly two years for Zurich to pay what was due and owed on this Hurricane Wilma claim.

On March 4, 2008, after the appraisal award was paid by Zurich two years after the Hurricane (and after suit was filed by Trafalgar), the trial court granted Zurich’s Motion for Summary Judgment on the breach of contract claim, and in the same order the trial court granted Trafalgar’s Motion to Amend its Complaint.  And on that same date, Trafalgar’s Amended Complaint, stating an action for statutory bad faith and attorney’s fees pursuant to Florida Statute 624.155 was deemed filed.[2] R. 546.

On June 12, 2009, Plaintiff filed a Motion to Determine Entitlement to Attorney’s fees based on the appraisal award in favor of Trafalgar and against Zurich, pursuant to Florida Statute §627.428 and Motion Thereafter to Conduct an Evidentiary Hearing to Determine a Reasonable Attorney’s Fee.  R. 1067-1074.  The matter was fully briefed and argued by the parties.  On August 3, 2010, the trial court submitted its order denying Trafalgar’s motion for Fees.  R. 1382-1385.  This appeal follows.

SUMMARY OF THE ARGUMENT

This appeal is about extensive property damage caused by Hurricane Wilma in October 2005 to a shopping mall in Palm Beach.  Just days after the Hurricane, Zurich American Insurance Company (“Zurich”) set the reserves of the damage at $1,500,000.  Over the next eleven (11) months, Zurich engaged in a pattern of delay and denial and sent out an army of experts, all in an attempt to pay as little as possible of what Zurich knew was owed on the claim ($1,500,000).  The end result of Zurich’s improper conduct was that nearly a year after the hurricane; Zurich had paid Trafalgar less than half ($641,730.32) of what was ultimately determined to have been owed on this claim.

On September 15, 2006, after this eleven month series of delays, denials, experts and disputes, Trafalgar was forced to file suit for breach of the insurance contract.  After suit was filed, Zurich demanded appraisal, and on September 11, 2007, nearly another year later, an appraisal award was entered in favor of Trafalgar in the amount of $1,504,663.16.  This amount was more than double what Zurich previously paid, and virtually identical to the reserve amount established by Zurich just days after Hurricane Wilma.

This fact pattern fits squarely under the uniform, controlling case law that holds that an insured is entitled to attorney’s fees for this type of conduct pursuant to Florida Statute §627.428.  And yet herein, the trial court denied Trafalgar’s Motion for Attorney’s fees.

The trial court court’s order denying Trafalgar’s motion for attorney’s fees has two critical reversible errors.  First and foremost, the trial court denied the motion because summary judgment on the breach of contract claim was entered in Zurich’s favor. This was error because controlling precedent, repeatedly brought to the attention of the trial court, holds that fees should still be awarded “even though technically no judgment for the loss claimed is thereafter entered favorable to the insured or beneficiary due to the insurer voluntarily paying the loss before such judgment can be rendered.” Cincinnati Insurance Co. v. Palmer, 297 So. 2d 96, 99 (Fla. 4th DCA 1974). Put simply, that is the whole point of the confession of judgment theory; as the em>Palmer Court held: “after all, such voluntary payment by the insurer is the equivalent of a confession of judgment against it.”  Id.    In other words, the only reason summary judgment on the breach of contract claim was entered in Zurich’s favor was because Zurich voluntarily paid the appraisal award (Zurich could have moved to set aside the appraisal award).  And controlling precedent establishes that an insured is entitled to attorney’s fees in that circumstance.  This was also error because Trafalgar was the prevailing party in the breach of contract claim as it obtained more than double what had been paid to date on the claim by Zurich.  Thus, Trafalgar did not lose.

Second, the trial court’s order was also erroneous where it held that Trafalgar was not forced to file suit.  There is simply no evidence to support the finding that Trafalgar was not forced to file suit.  As the Amended Complaint sets forth, Zurich engaged in a year long pattern of delay and denial, which forced Trafalgar to file suit.  And the trial court’s finding otherwise is not supported by any record evidence.

STANDARD OF REVIEW

The decision to grant or deny Trafalgar’s motion for attorney’s fees based on Fla. Stat. § 627.428 and the confession of judgment doctrine involve questions of law and statutory interpretation that are reviewed de novo. B.Y. v. Dep’t of Children & Families, 887 So.2d 1253, 1255 (Fla. 2004) (“The standard of appellate review on issues involving the interpretation of statutes is de novo.”); D’Angelo v. Fitzmaurice, 863 So.2d 311, 314 (Fla.2003) (stating that standard of review for pure questions of law is de novo).

ARGUMENT

I.THE FACTS HEREIN FALL SQUARELY WITHIN THE UNIFORM, CONTROLLING PRECEDENT WHICH HOLDS THAT TRAFALGAR IS ENTITLED TO ATTORNEY’S FEES. 

As set forth below, the case law is uniform and clear that where there is a dispute as to the amount owed by the insurer, the insured files suit and, thereafter, the insurer invokes its right to an appraisal, and as a consequence of the appraisal, the insured recovers substantial additional sums, the insured is entitled to attorney’s fees pursuant to Florida Statute §627.428.  A brief review of the salient facts shows that Trafalgar should be entitled to attorney’s fees.

This first party insurance cause of action is based on property damage sustained to a shopping mall owned by Trafalgar during Hurricane Wilma on October 24, 2005.  In the months following Hurricane Wilma, Zurich made a series of payments to Trafalgar which totaled $641,730.32.  Nearly a year after the hurricane, after a series of delays, denials and coverage disputes, Zurich had paid Trafalgar less than half of what was determined to have been owed on this claim ($1,504,663.16).  Thus, on September 15, 2006, Trafalgar was forced to file suit for breach of the insurance contract.  After suit was filed, Zurich demanded appraisal, and on September 11, 2007, nearly another year later, an appraisal award was entered in favor of Trafalgar in the amount of $1,504,663.16.  This amount was more than double what Zurich previously paid.

Uniform, controlling case law holds that this set of facts entitles Trafalgar to reasonable attorney’s fees for prosecuting the underlying coverage suit.  Florida Statute § 627.428(1) (2008) provides:

Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.

Controlling Fourth District Court of Appeal precedent follows Florida’s uniform position that a §627.428 attorney’s fee award is appropriate where, following some dispute as to the amount owed by the insurer, the insured files suit and, thereafter, the insurer invokes its right to an appraisal and, as a consequence of the appraisal, the insured recovers substantial additional sums. See, e.g. Lewis v. Universal Prop. And Casualty Ins. Co., 2009 Fla. App. LEXIS 6902 (Fla. 4th DCA 2009); Goff v. State Farm Fla. Ins. Co., 999 So. 2d 684 (Fla. 2d DCA 2008); Jerkins v. USF&G Specialty Ins. Co., 982 So. 2d 15 (Fla. 5th DCA 2008); First Floridian Auto & Home Ins. Co. v. Myrick, 969 So. 2d 1121 (Fla. 2d DCA 2007), review denied, 980 So. 2d 489 (Fla. 2008); Ajmechet v. United Auto. Ins. Co., 790 So. 2d 575 (Fla. 3d DCA 2001).

In Cincinnati Insurance Co. v. Palmer, 297 So. 2d 96 (Fla. 4th DCA 1974), the Fourth District explained:

[I]t is neither reasonable nor just that an insurer can avoid liability for statutory attorney’s fees by the simple expedient of paying the insurance proceeds to the insured or the beneficiary at some point after suit is filed but before final judgment is entered, thereby making unnecessary the entry of a judgment. . . . We think the statute must be construed to authorize the award of an attorney’s fee to an insured or beneficiary under a policy or contract of insurance who brings suit against the insurer after the loss is payable even though technically no judgment for the loss claimed is thereafter entered favorable to the insured or beneficiary due to the insurer voluntarily paying the loss before such judgment can be rendered.  After all, such voluntary payment by the insurer is the equivalent of a confession of judgment against it.

Herein, there was a significant dispute over the amount Zurich owed Trafalgar which continued for nearly a year.  And after an eleventh month series of delays, denials and coverage disputes, Trafalgar was forced to file suit for breach of the insurance contract.  After suit was filed, Zurich invoked its right to appraisal, and as a consequence of the appraisal, Trafalgar recovered substantial additional sums which were more than double what Zurich previously paid.  Accordingly, controlling precedent and uniform Florida case law holds that Trafalgar is entitled to a § 627.428 attorney’s fee award, and thus the trial court’s order denying Trafalgar’s Motion for fees should be reversed and remanded.

Notably, one of the cases cited by Zurich below is actually supportive of Trafalgar’s argument for attorney’s fees.  Below, Zurich cited to Tristar Lodging Inc. v. Arch Specialty Ins. Co., 434 F. Supp. 2d 1286 (M.D. Fla. 2006), where the court held:

“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.” [Internal Citations omitted]. Thus, the law is clear that if Plaintiff was compelled to sue because the insurance company wrongfully caused it to resort to litigation, fees must be awarded if the policy is paid after suit. Id. at 1295 (emphasis added).

This is exactly the case herein as Zurich disputed the claim and then settled the claim via appraisal.  Accordingly, the law is clear: “fees must be awarded.”

II.THE TRIAL COURT’S ORDER SHOULD BE REVERSED BECAUSE IT IS CONTRARY TO CONTROLLING PRECEDENT AND UNSUPPORTED BY THE FACTS HEREIN.   

A.Controlling precedent makes clear that the entry of summary judgment on the breach of contract claim in favor of Zurich is irrelevant to the instant analysis. /p>

The trial court court’s order denying Trafalgar’s motion for attorney’s fees contains two critical reversible errors.  First and foremost, the trial court denied the motion for attorney’s fees because summary judgment on the breach of contract claim was entered in Zurich’s favor.  This point is squarely addressed by the Fourth District Court of Appeal in Cincinnati Insurance Co. v. Palmer, 297 So. 2d 96, 99 (Fla. 4th DCA 1974).  Therein, the Court explained:

[I]t is neither reasonable nor just that an insurer can avoid liability for statutory attorney’s fees by the simple expedient of paying the insurance proceeds to the insured or the beneficiary at some point after suit is filed but before final judgment is entered, thereby making unnecessary the entry of a judgment. . . . We think the statute must be construed to authorize the award of an attorney’s fee to an insured or beneficiary under a policy or contract of insurance who brings suit against the insurer after the loss is payable even though technically no judgment for the loss claimed is thereafter entered favorable to the insured or beneficiary due to the insurer voluntarily paying the loss before such judgment can be rendered.  After all, such voluntary payment by the insurer is the equivalent of a confession of judgment against it.

Accordingly, this Honorable Court has held that attorney’s fees should be awarded under §627.428, regardless of whether a judgment is entered favorable to the insured.  In other words, the entry of summary judgment in favor of Zurich on the breach of contract claim is irrelevant because the voluntary payment by Zurich equals a confession of judgment against it.

It is important to recognize that the singular reason there was a judgment for Zurich on the breach of contract claim was because the court found that Zurich complied with the insurance contract by voluntarily paying the appraisal award.  And it is equally important to recognize what the trial court did not:  that the only reason that Zurich complied with the contract was because a lawsuit was filed.  In other words, the lawsuit compelled Zurich to comply with the contract.  This is the factual scenario which all of the case law holds entitles Trafalgar to an attorney’s fee award, and the trial court’s order flies directly in the face of this controlling precedent.

Further to this point, the trial court held that Trafalgar cannot recover its attorney’s fees “for the simple reason that it lost.” Order, p. 3. This holding fails because Trafalgar was the prevailing party in the breach of contract claim as it obtained more than double what had been paid to date on the claim by Zurich.  Thus, Trafalgar did not lose.

Additionally, there are significant policy issues at stake in this appeal.  The trial court’s denial of Trafalgar’s motion for attorney’s fees is a tacit acceptance of Zurich’s egregious conduct.  Florida Statute