Case Title: David Boland, Inc. v. Trans Coastal Roofing Co.

Citation: 

Docket Number: SC02-2210

State: florida

Court: Florida Supreme Court

Date: 2003-07-11T00:00:00Z

Document:
Supreme Court of Florida
_____________
No. SC02-2210
_____________
DAVID BOLAND, INCORPORATED,
Appellant,
vs.
TRANS COASTAL ROOFING COMPANY, et al.,
Appellees.
[July 11, 2003]
PER CURIAM.
We have for review a question of Florida law certified by the United States
Court of Appeals for the Eleventh Circuit that is 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.  Specifically, the Eleventh Circuit
asks:
DOES FLORIDA STATUTE § 627.428 AUTHORIZE RECOVERY
OF ATTORNEYS’ FEES IN EXCESS OF A PERFORMANCE
BOND’S FACE AMOUNT FROM A SUBCONTRACTOR’S
SURETY, WHEN THE FEES CLAIMANT HAS NOT SHOWN
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INDEPENDENT MISCONDUCT ON THE PART OF THE
SURETY?
Trans Coastal Roofing Co. v. David Boland, Inc., 309 F.3d 758, 761 (11th Cir.
2002).
BACKGROUND
The relevant facts of this case are summarized in the Eleventh Circuit's
decision certifying its question to this Court:
[David Boland, Inc. (Boland)] was the prime contractor on a
training facility construction project for the United States Navy in Key
West, Florida.  In April 1993 Boland and [Trans Coastal Roofing
Company (Trans Coastal)] executed a subcontract under which Trans
Coastal was to install roofing on certain structures erected by Boland. 
Pursuant to the subcontract, Trans Coastal provided a performance
bond in the amount of $167,800, naming Boland as its obligee and
[Intercargo Insurance Company (Intercargo)] as its surety.
A dispute emerged between Boland and Trans Coastal over the
roofing work, and litigation ensued in the Southern District of Florida. 
Both Trans Coastal and Boland claimed damages.  After the district
court dismissed Trans Coastal's claims without prejudice, Boland won
a jury verdict against Trans Coastal, but not Intercargo, in the amount
of $23,451.38.  Boland prevailed on a motion for a new trial and in
October 1998 a second jury awarded it a verdict against both Trans
Coastal and Intercargo, jointly and severally, in the amount of
$31,654.42.  Boland thereafter moved the court for attorneys' fees of
$357,121.52.  The court awarded it $276,950.33, but determined
Intercargo's liability to be limited to $167,800, the amount of the
performance bond it issued.
Id. at 760.  In limiting Intercargo's liability for attorneys’ fees, the Southern District
“rel[ied] on the logic set forth in [Nichols v. Preferred National Insurance Co., 704
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So. 2d 1371 (Fla. 1997)]” to conclude that “[i]n order to expand the surety's
liability, some misconduct must be alleged and proven on the part of the
surety—separate and apart from the misconduct of the principal that the sum of the
bond covers.”  United States v. David Boland, Inc., Case No. 94-10062-CIV-
PAINE, order at 6 (S.D. Fla. order filed Oct. 17, 2001).  The court concluded that
“because a [surety's] liability is coextensive with its principal, misconduct in
addition to breach of the performance bond (such as unreasonable delay in
payment) must be demonstrated in order to justify an expansion of the scope of the
surety's liability.”  Id.
Boland appealed the Southern District's decision to limit its recovery of
attorneys’ fees from Intercargo.  Because the case presents an issue of Florida law,
the Eleventh Circuit deferred its decision pending certification of the above
question to this Court.
DISCUSSION
The certified question raises an issue of first impression:  whether a
contractor who prevails against a subcontractor, on the basis of a contractual
breach, and the subcontractor's surety, on the basis of a performance bond, must
prove that the surety engaged in misconduct independent of the subcontractor's
contractual breach before an award of attorneys' fees under section 627.428,
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Florida Statutes (2002), against the surety may exceed the amount of the
performance bond.
Boland argues that the Southern District erroneously limited Intercargo's
liability for attorneys' fees because section 627.428 unambiguously mandates that a
surety pay its obligee's attorneys' fees upon the rendition of a judgment against it. 
Boland asserts that there is a fundamental distinction between a surety's liability for
damages, which is limited by the penal sum of its performance bond, and its
statutory liability for attorneys' fees, which is not so limited.  Further, Boland
argues that the Southern District should not have relied upon the Nichols decision
because it addressed liability for fees under a guardianship bond, which was
subject to a statutory cap not applicable to performance bonds.  In response,
Intercargo urges this Court to rely upon Nichols v. Preferred National Insurance
Co., 704 So. 2d 1371 (Fla. 1997), as the Southern District did, in order to reconcile
statutory awards of attorneys' fees with the realities of suretyship law.  Intercargo
asserts that the bond itself limits Intercargo's total exposure, including attorneys'
fees, and that breach of a performance bond alone is not adequate justification to
extend a surety's scope of liability beyond that limit.
We begin our analysis by examining the basis of an award of attorneys' fees
in this case.  Section 627.428(1), Florida Statutes (2002), provides:
1.  In Nichols, we recognized that the term “insurer” is clearly defined under
the Florida Insurance Code to include a “surety.”  See 704 So. 2d at 1373; §
624.03, Fla. Stat. (2002).
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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 . . . 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.
Intercargo does not contest that section 627.428 is applicable to this suit.1  As
Intercargo has noted, section 627.428 is primarily directed toward claimants'
entitlement to attorneys' fees and does not address the appropriate amount to be
awarded, except to say that it should be “a reasonable sum.”  The plain language of
that statute fails to address the effect, if any, of penal sums under bonds and is
silent regarding whether proof of independent misconduct is necessary for an
award to exceed such penal sums.  Thus, if a limit exists to the amount that may be
awarded under this statute, it must be found within another statute.
We find no other statute that limits the attorneys' fees liability of sureties
under a performance bond.  Thus, we conclude that this case is distinguishable
from the Nichols decision.  In Nichols, this Court found that although attorneys'
fees could be awarded against a surety on a guardianship bond under section
627.428, the provision of section 744.357, Florida Statutes (1995), that “[n]o surety
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for a guardian shall be charged beyond the property of the ward,” limits total
recovery from a guardianship surety to the face amount of the guardianship bond. 
Nichols, 704 So. 2d at 1374.  However, relying on the principle that the penal
amount of the bond covers the misconduct of the principal, this Court also
concluded that while an award of attorneys' fees and costs based solely on the
negligence of a principal was limited by the amount of the guardianship bond, an
award of attorneys' fees and costs incurred because the surety unreasonably
delayed the payment of a claim was “not protected by section 744.357.”  Id.  We,
therefore, held that awards of attorneys' fees in such cases were limited by the
mandate of section 744.357 unless the fees claimant establishes that the surety
failed to act diligently and unreasonably delayed the payment of a claim.  Id.  Even
though the question certified to this Court addresses a performance bond to which
section 744.357 does not apply, Intercargo urges that the logic of Nichols should
be applied here.  The Nichols decision, however, rests entirely on section 744.357's
limit to total recovery under guardianship bonds.  Therefore, we answer the
Eleventh Circuit's certified question in the affirmative.
It is so ordered.
ANSTEAD, C.J., and WELLS, PARIENTE, LEWIS, QUINCE, CANTERO, and
BELL, JJ., concur.
WELLS, J., concurs with an opinion, in which ANSTEAD, C.J., and PARIENTE,
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CANTERO, and BELL, JJ., concur.
WELLS, J., concurring.
I concur with the answer to the certified question in view of the plain wording
of the statute.  However, I believe that the Legislature should examine whether
construction contract sureties should come within the provisions of section
627.428.  It is my view that the role of such a contract surety is sufficiently distinct
from the role of insurers that issue insurance policies so that the attorney fee liability
of a construction contract surety needs to be covered by a separate statute.  See
American Home Assurance Co. v. Larkin General Hospital, Ltd., 593 So. 2d 195
(Fla. 1992), in which Justice McDonald discusses the role of a construction
contract surety.
ANSTEAD, C.J., and PARIENTE, CANTERO, and BELL, JJ., concur.
Certified Question of Law from the United States Court of Appeals for the
Eleventh Circuit - Case No. 01-17246
Denis L. Durkin and Edgar E. Stanton of Baker & Hostetler LLP, Orlando, Florida,
for Appellant
James O. Murphy, Jr. of Byrd and Murphy, Fort Lauderdale, Florida; and Hala A.
Sandridge of Fowler White Boggs Banker, P.A., Tampa, Florida
for Appellees
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Brett D. Divers of Mills Paskert Divers, P.A., Tampa, Florida,
for The Surety Association of America, Amicus Curiae