Case Title: Petty, et al. v. Florida Ins. Guaranty Assoc.

Citation: 

Docket Number: 

State: florida

Court: Florida Supreme Court

Date: 2012-01-19T00:00:00Z

Document:
Supreme Court of Florida 
 
 
____________ 
 
No. SC10-2097 
____________ 
 
DIANE PETTY, et al.,  
Petitioners, 
 
vs. 
 
FLORIDA INSURANCE GUARANTY ASSOCIATION, 
Respondent. 
 
[January 19, 2012] 
 
POLSTON, J. 
We review the decision of the Second District Court of Appeal in Florida 
Insurance Guaranty Ass‟n v. Petty, 44 So. 3d 1191 (Fla. 2d DCA 2010), which 
certified conflict with the decision of the Third District Court of Appeal in Florida 
Insurance Guaranty Ass‟n v. Soto, 979 So. 2d 964 (Fla. 3d DCA 2008).1  Because 
Petty‟s attorney‟s fee award pursuant to section 627.428(1), Florida Statutes 
(2008), is not within the coverage of her insurance policy, it is not a covered claim 
under section 631.54(3), Florida Statutes (2008), that the Florida Insurance 
                                          
 
 
1.  We have jurisdiction.  See art. V, § 3(b)(4), Fla. Const.  
 
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Guaranty Association (FIGA) must pay.  Therefore, we approve the decision of the 
Second District.  
I. Background 
 
The Second District explained the background of this case as follows: 
 
At the time [Hurricane Charley] damage[d] Petty's home in August 
2004, Florida Preferred Property Insurance Company (Florida 
Preferred) insured the home.  After Petty received partial payment for 
some of the damages sustained, she demanded an appraisal to resolve 
the dispute concerning the value of the covered loss.  Florida 
Preferred refused to submit to the appraisal process, and Petty filed 
suit to compel an appraisal.  An appraisal was eventually completed, 
and the award filed with the court indicated that Florida Preferred 
owed Petty more money under the policy terms.  Petty filed a motion 
to confirm the award, a motion for entry of a final judgment, and a 
motion for an award of attorney's fees under section 627.428.  Florida 
Preferred paid more insurance benefits but shortly thereafter became 
insolvent, and an automatic stay was entered in the lawsuit. 
On May 30, 2008, Petty filed a motion to lift the stay, reopen 
the case, and substitute [the Florida Insurance Guaranty Association 
(FIGA)] as the defendant.  FIGA was served with the complaint and, 
ultimately, the parties stipulated that the only issue that remained 
unresolved was whether FIGA could be required to pay Petty's 
attorney's fees and costs incurred in the litigation with Florida 
Preferred. . . .  
The trial court determined that Florida Preferred's payment of 
the appraisal award to Petty constituted a confession of judgment by 
the insurer and thus invoked the mandatory attorney's fee provisions 
of section 627.428.  The court recognized that under section 
631.57(1), FIGA was “obligated to the extent of the covered claims” 
that existed before the adjudication of insolvency.  Relying in part 
upon Soto, the trial court determined that the right to fees under 
 
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section 627.428 was a covered claim [that FIGA must pay] in this 
case.   
 
Petty, 44 So. 3d at 1192-93.  
On appeal, the Second District reversed.  Id. at 1195.  Because Petty‟s 
section 627.428(1) fee award was not based upon a coverage provision of Petty‟s 
underlying insurance policy, the Second District held that the fee award was not 
within the coverage of Petty‟s policy and was not a covered claim that FIGA must 
pay under section 631.54(3), Florida Statutes.  Id.  The Second District certified 
conflict with the Third District‟s decision in Soto, 979 So. 2d at 966, which held 
that a section 627.428(1) fee was a covered claim under section 631.54(3) because 
the insurance policy at issue, as a matter of law, was subject to the obligations of 
section 627.428(1). 
II. Analysis 
We agree with the Second District that Petty‟s section 627.428(1) fee award, 
which is not within the coverage of her underlying insurance policy, is not a 
covered claim that FIGA must pay. 
Section 627.428(1) states: 
 
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 
 
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reasonable sum as fees or compensation for the insured‟s or 
beneficiary‟s attorney prosecuting the suit in which the recovery is 
had.  
 
 
This statute provides that an insured will be entitled to an attorney‟s fee award 
when coverage is disputed and the insured prevails.  See Pepper‟s Steel & Alloys, 
Inc. v. United States, 850 So. 2d 462, 465 (Fla. 2003).  And, as we have previously 
stated, the purpose of this statute is “to discourage insurance companies from 
contesting valid claims, and to reimburse insureds for their attorney‟s fees incurred 
when they must enforce in court their contract with the insurance company.”  Id. 
(quoting Bell v. U.S.B. Acquisition Co., 734 So. 2d 403, 411 n.10 (Fla. 1999)).   
 
Section 631.57(1)(a), Florida Statutes (2008) (emphasis added), provides 
that FIGA shall “[b]e obligated to the extent of the covered claims existing” prior 
to an insurer‟s adjudication of insolvency.  Section 631.54(3) defines a covered 
claim as: 
 
an unpaid claim, including one of unearned premiums, which arises 
out of, and is within the coverage, and not in excess of, the applicable 
limits of an insurance policy to which this part applies, issued by an 
insurer, if such insurer becomes an insolvent insurer and the claimant 
or insured is a resident of this state at the time of the insured event or 
the property from which the claim arises is permanently located in this 
state. 
 
 
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A plain reading2 of section 631.54(3) indicates that a covered claim must meet two 
distinct requirements:  (1) it must arise, or originate, from an insurance policy and 
(2) it must be within the coverage of, or be included within the risks taken on and 
losses protected against in, an insurance policy.3   
The parties do not contest that Petty‟s section 627.428(1) fee award arose 
from her underlying insurance policy.  In order to recover from FIGA, however, 
Petty‟s claim for fees must also be within the coverage of her underlying insurance 
policy.  See § 631.54(3), Fla. Stat.  Her underlying insurance policy does not 
expressly provide coverage for her section 627.428(1) fee award.   
Petty argues that her fee award is impliedly covered by her underlying 
policy because Florida law subjects every Florida insurance policy to section 
627.428(1).  See State Farm Fire & Cas. Co. v. Palma, 629 So. 2d 830, 832 (Fla. 
1993) (“[T]he terms of section 627.428 are an implicit part of every insurance 
                                          
 
 
2.  As a general rule, statutory construction begins with the plain meaning of 
the statute.  See Fla. Birth-Related Neurological Injury Comp. Ass‟n v. Dep‟t of 
Admin. Hearings, 29 So. 3d 992, 997-98 (Fla. 2010).  Where a statute‟s language 
is plain and unambiguous, its plain meaning will control and further statutory 
construction is not necessary.  Id.   
 
3.  Petty argues that a claim for unearned premiums would not be covered 
unless a policy expressly included a coverage provision guaranteeing that the 
insured could recover any unearned premiums.  However, section 631.54(3) 
expressly includes claims for unearned premiums in the definition of a covered 
claim.  No similar provision is made for attorney‟s fees. 
 
 
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policy issued in Florida.”).  But, as the Second District stated below, “the fact that 
section 627.428 is an implicit part of an insurance policy does not mean that the 
insured‟s claim against the insurer for fees and costs is part of the policy‟s 
„coverage.‟ ”  Petty, 44 So. 3d at 1194.  There is a clear difference between an 
obligation to pay fees that is imposed by operation of law upon a party due to its 
behavior under the insurance contract and an obligation imposed upon a party by 
an express provision for which the party contracted.  Section 627.428(1) imposes 
the obligation to pay a fee award upon an insurer that has wrongfully contested an 
insured‟s valid claim.  It does not alter the coverage provisions of the insurance 
contract itself.4 
III. Conclusion 
                                          
 
 
4.  In contrast, Florida‟s Workers‟ Compensation Law requires every 
workers‟ compensation insurance policy to include coverage for attorney‟s fees 
entered against the insured employer under section 440.34, Florida Statutes (2008).  
Specifically, section 440.42(1), Florida Statutes (2008), provides that “[e]very 
policy or contract of insurance issued under authority of this chapter shall contain   
. . . [a] provision to carry out the provisions of s. 440.41.”  Section 440.41, Florida 
Statutes (2008), entitled “Substitution of carrier for employer,” explains that the 
insurance carrier is liable for the obligations and duties that chapter 440, Florida 
Statutes (2008), imposes upon the employer.  One such obligation and duty that, 
therefore, must be included in the insurance policy is attorney‟s fees under section 
440.34.  See Fla. Ins. Guar. Ass‟n v. Gustinger, 390 So. 2d 420, 421 (Fla. 3d DCA 
1980) (stating that a section 440.34 attorney‟s fee award was a covered claim 
“[s]ince the workmen‟s compensation policy issued by [the carrier] to [the 
employer] obviously insured against the employer‟s responsibility to pay the 
claimant‟s attorney‟s fees”); Dilme v. SBP Service, Inc., 649 So. 2d 934, 935 (Fla. 
1st DCA 1995) (holding a section 440.34 fee award to be within the coverage of 
the employer‟s workers‟ compensation insurance policy); What An Idea, Inc. v. 
Sitko, 505 So. 2d 497, 504-05 (Fla. 1st DCA 1987) (same). 
 
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Because Petty‟s underlying insurance policy does not expressly provide 
coverage for a section 627.428(1) fee award, it is not a covered claim under section 
631.54(3) that FIGA must pay.  Accordingly, we approve the Second District‟s 
decision in Petty, and disapprove the Third District‟s decision in Soto.   
It is so ordered. 
CANADY, C.J., and PARIENTE, LEWIS, QUINCE, LABARGA, and PERRY, 
JJ., concur. 
 
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND 
IF FILED, DETERMINED. 
 
 
Application for Review of the Decision of the District Court of Appeal - Certified 
Direct Conflict of Decisions 
 
 
Second District - Case No. 2D09-3749 
 
 
(Charlotte County) 
 
Bryan S. Gowdy and Jessie L. Harrell of Creed and Gowdy, P.A., Jacksonville, 
Florida; and Bob G. Freemon and Ron A. Hobgood of Freemon and Miller, P.A., 
Tampa, Florida, 
 
 
for Petitioners 
 
G. William Bissett, Jr. of Kubicki Draper, P.A., Miami, Florida, and Courtney A. 
Umberger of Kubicki Draper, P.A., Tampa, Florida; and Dorothy Benable Difiore 
of Haas, Lewis, Difiore and Amos, Tampa, Florida, 
 
 
for Respondent 
 
Jeffrey M. Liggio, West Palm Beach, Florida, and Perry Tanksley, Sarasota, 
Florida, on behalf of Florida Justice Association; Alan S. Wachs, Chris T. Harris, 
and Michael M. Giel of Volpe, Bajalia, Wickes, Rogerson and Wachs, P.A., 
Jacksonville, Florida, on behalf of William and Annette Sturdivant; Eric S. Scott, 
 
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Tallahassee, Florida, on behalf of Florida Department of Financial Services, 
Division of Rehabilitation and Liquidation; Maria Elena Abate, Fred E. Karlinsky, 
and Adam S. Rubenfield of Colodny, Fass, Talenfeld, Karlinsky and Abate, P.A., 
Fort Lauderdale, Florida, on behalf of Florida Property and Casualty Association 
(FPCA), and N. Hope Keating of Greenberg Traurig, P.A., Tallahassee, Florida 
and James A. Friedman of Godfrey and Kahn, S.C., Madison, Wisconsin, on behalf 
of The National Conference of Insurance Guaranty Funds, 
 
 
as Amici Curiae