### D ISTRICT 

### C OURT 

### O F 

### A PPEAL 

### O F 

### T HE 

### S TATE 

### O F 

### F LORIDA

F OURTH D ISTRICT

THE LEXINGTON CLUB COMMUNITY ASSOCIATION, INC., and THE LEXINGTON CLUB VILLAS CONDOMINIUM ASSOCIATION, INC.
, Appellant s ,

v.

LOVE MADISON, INC. d/b/a ALEXANDER INSURANCE
, Appellee

.

No. 4D 17

- 1843

[ August 15, 2018 ]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County ; Edward L. Artau , Judge; L.T. Case No.

502007CA018961XXXXMB

- AF

.

Douglas J. Roberts, Michael E. Stearns and Mark D. Nichols of Stearns,

Roberts & Guttentag, LLC, Deerfield Beach, for appellants.

Allison C. Heim, Gina E. Romanik and Marcel M. Flemming of Mintzer

Sarowitz Zeris Ledva & Meyers LLP, Miami, for appellee.

M A Y
, J.

A post

- Hurricane Wilma roof repair led to n egligence and unjust

enrichm ent claims by two condominium association s (“association s ”) against an insurance agent that failed to procure a contractually required

“ Payment and Performance Bond ” on behalf of the contractor . From a judgment for the a ssociation s , for less than the amount claimed, the

association s appeal. They argue the trial court erred in its damages instruction to the jury and in excluding certain evidence. We disagree there was error in the damages instruction given, and while the trial court erred in excluding certain evidence, that error was harmless. We therefore

affirm.

Hurricane Wilma caused significant damage to the associations ’ condominium and townhome buildings. After the hurricane, the

association s hired a general contractor and roofing company to re

- roof all of the buildings and p erform other repairs to the property. The contract

was in excess of $6,000,000.2 The contract provided:

13.1.1 The Contractor shall execute and deliver to the Owner a Pay ment and Performance Bond in the amount of 100% of the Contract Sum. The attorney

- in

- fact or other Officer who signs a Payment and Performance Bond for a surety company must file with such Payment and Performance Bond a certified copy of his power of atto rney authorizing him to do so. The surety’s resident Florida agent must countersign the contract Payment and Performance Bond. The form of Payment and Performance Bond shall be as furnished by the Owner.

13.1.2 The Payment and Performance Bond must be w ritten through surety insurers authorized to do business in the State of Florida as surety, with a rating of B

- IX according to the latest edition of Best’s Insurance Guide, published by A. M. Best Company, Oldwick, New Jersey. The Owner will not
accept su bstituted securities for Payment and Performance Bond. Failure to timely provide the Payment and Performance

Bond will be cause for forfeiture of the bid bond.

The contractor approached the defendant insurance agent to procure the bond. When the agent w as unable to do so , the contractor suggested a company named Strategy Insurance Limited . The agent’s principal submitted an application to Strategy , which agreed to issue the bond for a premium of $327,915.

The association s paid the premium directly to t he agent via wire

transfer. The agent retained a 10% commission and forwarded the remainder to Strategy. When the association s received the bond, they

noticed that it listed Strategy’s address in Barbados, West Indies. This

raised a concern . I t was det ermined that Strategy was not licensed to do

busi ness as an insurer in Florida, a contractual requirement.

And while the associations did not have cause to rely on the bond, they

sued Strategy, the contractor , and the agent

. They obtained a default judgment against Strategy, which is no longer in business . The

association s entered into a settlement agreement with the contractor

.

This left pending their claim against the agent. The f ourth amended complaint against the agent in cluded counts for: (1) negligent procurement of insurance ; (2) a declaration that the bond was invalid and3 unenforceable; and (3) unjust enrichment.

At trial, the jury found the agent’s negligence was NOT a legal cause of damages to the association s . Bu t, it awarded $32,000 (10% of the premium) to the association s on the unjust enrichment claim. The trial court entered a final judgment in accord with the jury’s verdict, and

declared that “the payment and performance bonds issued by [Strategy]

were inval id and unenforceable.”

From this judgment and declaration, the association s now appeal.

The Jury Instruction on Damages

The association s argue the trial court improperly instructed the jury on damages for their claim for negligent procurement of insurance

. They argue that, while normally the measure of damages is the amount of the loss that would have been covered had insurance been properly obtained,

the association s were due a refund of the $327,915 premium paid for the

useless bond.

The agent responds that the trial court properly instructed the jury that the measure of damages in a negligent procurement of insurance claim is the loss that would have been covered had the insurance been properly

obtained. B ecause the association s suffered no l oss , they were limited to criminal and/or administrative penalties against the agent

.

We review a trial court’s decision on whether to give a jury instruction

for an abuse of discretion. Stokes v. Wynn , 219 So. 3d 891, 894 (Fla. 4th DCA 2017)

.

The parties offered competing jury instructions on the proper measure of damages for the negligent procurement claim. The agent ’s instruction provided: “In an action for negligent procurement of insurance, the measure of damages is what would have been c overed had the insurance been properly obtained.” The association s ’ proposed instruction provided:

Compensatory damage is that amount of money which will put [the Insured] in a position nearly equivalent to what would have existed, had [the Insurer] not breached its duty owed to [the Insured], thereby causing injury.

Further, in an action for negligent procurement of insurance, the measure of damages where there is a loss is what would have been covered by insurance, had the insurance been4 properly obtai ned. When no loss has occurred that would have been covered, if the insurance had been properly obtained, the measure of damages is the amount paid for the premium.

The trial court gave the agent’s proposed instruction

.

Where the parties enter into an agreement to procure insurance and there is a negligent failure to do so, an insurance broker may be liable for damages. Gelsomino v. ACE Am. Ins. Co. , 207 So. 3d 288, 292 (Fla. 4th DCA 2016)

. Florida case law provides that “‘ [t] he measure of damages in a negligent procurement of insurance case is what would hav e been covered had the insurance been properly obtained. ’ ” Id. ( quoting Mondesir

v. Delva , 851 So. 2d 187, 189 (Fla. 3d DCA 2003) ).

A negligent procurement of insurance claim arises from section 626.901, Florida Statutes (2017) , which provides:

(2) If a n unauthorized insurer fails to pay in full or in part any claim or loss within the provisions of any insurance contract which is entered into in violation of this section, any person who knew or reasonably should have known that such

contract was entered into in violation of this section and who solicited, negotiated, took application for, or effectuated such

insurance contract is liable to the insured for the full amount of the claim or loss not paid

.

(Emphasis added).

The association s argue this statute and our case law are inapplicable

because they only address situation s where the insured suffer s a loss that

would otherwise have been covered had the proper insurance been

obtained . Here, there was no claim or loss . Rather , the association s are seeking full reimbursement of their premium payment.

Florida has not yet addressed this issue , but other jurisdictions have.

[W] here no loss occurs the measure of damages has been stated to be the amount paid as the premium. If the policy procured is d efective because of the terms and coverage provided therein, the measure of damages has been held to be

the amount for which the insurer would have been liable had proper insurance been effected.5 Simpson v. M

- P Enters., Inc. , 252 So. 2d 202, 207 (Miss. 19 71) (emphasis added) (citations omitted) . The Virginia Supreme Court has applied the same measure of damages

. Autumn Ridge, L.P. v. Acordia of Va. Ins. Agency, Inc. , 613 S.E.2d 435, 437 (Va. 2005) ( “We conclude

. . . that when

no loss has occurred

. . . , the measure of damages for failure to procure insurance is the amount paid by the intended insured as the premium.” ).

In a very similar case, the Louisiana Court of App eal held that “[c] ompensating [the subcontractor] by awarding it the amount it paid for

the defective bonds

. . . is a proper award of damages. ” Gulf Coast Bldg. Sys., Inc. v. United Am. Sur. Co., Ltd. , 614 So. 2d 1360, 136 5 (La. App. 3

Cir. 1993)

.

I n Florida a negligent pr ocurement of insurance action is statutorily

authorized where there is a loss during the time the insured holds the policy

. § 626.901 , Fla. Stat

. In a negligent procurement action, an unauthorized insurer’s policy is still enforceable and is applied as s uch to cover any losses that were not covered by the policy. See § § 626.901 (3)

, 627.418(1), Fla. Stat. (2017) . Thus, while the association s ’ policy was issued by an unauthorized insurer, the insurer would still be held responsible

. Here, however, the as sociation s suffered no moneta ry loss during the construction

.

Th e L egislature provided that “[n]o insurance contract entered into in

violation of this section shall be deemed to have been rendered invalid thereby.” § 626.901 (3) , Fla. Stat

. As such, the L egislature expressly made

the unauthorized insurer ’s policies enforceable in a negligent procurement

action.

T he association s suggest that section 626.901 is in applicable because

their claim against the agent falls within general negligence. But even

u n der a general negligence standard, the association s are required to prove damages

. They simply cannot meet this burden because they sustained no loss during the construction.

We decline to adopt the damages law of foreign states where our

L egislature has provided statutory remedies. We find no error in the trial court’s damages instruction to the jury and affirm on this issue.

The Evidentiary Issue

The association s next argue the trial court abused its discretion in not admitting a consent order and th e agent ’s admission of its p rincipal’s license suspension. They argue the suspension was predicated on the6 p rincipal’s violation of a statute that bars aiding and abetting unlicensed

insurers and should have been admitted as evidence of negligence. The agent responds that the suspension was properly excluded as part of a

settlement a greement between the p rincipal and the Florida Department

of Financial Services

, pursuant to section 90.408, Florida Statutes (2017)

.

We review a trial court’s ruling on the admissibility of evidence f or an abuse of discretion, limited by the rules of evidence. Yang v. Sebastian Lakes Condo. Ass’n, Inc. , 123 So. 3d 617, 620 (Fla. 4th DCA 2013)

.

D uring discovery, the agent responded to the associa tion s ’ request for admissions. The agent admitted that

1) its p rincipal did not know that Strategy was unlicensed when he procured the bond for the project;

2) its p rincipal did no investigation into whether Strategy was unlicensed;

3) it received a co mmission on the bond;

4) its p rincipal had no intent to commit fraud or a criminal act in procuring the bond; and

5) its principal was disciplined and had his license suspended by the Florida Department of Business and Professional Regulation (“DBPR”) for his conduct in procuring the bond.

When the association s attempted to admit the State ’s Consent Order and Settlement Stipulation, the trial court excluded the evidence based o n section 90.408 relating to offers to compromise. The trial court however

indicated that if the p rincipal denied wrongdoing or knowing that Strategy was unauthorized to issue insurance, then it would open the door to discussion of his discipline.

Sectio n 90.408 provides: “Evidence of an offer to compromise a claim which was disputed as to validity or amount, as well as any relevant conduct or statements made in negotiations concerning a compromise, is inadmissible to prove liability or absence of liabil ity for the claim or its

value.”

The association s argue this section does not apply because the consent order is not an “offer,” and the State ’s administrative proceeding, resulting in the consent order, is not the “claim” at issue. The agent responds th at7 it was an offer because the State sent the p rincipal a letter offering that he receive a suspension of his insurance license and complete continuing

education courses in lieu of a formal administrative complaint be ing filed

. The p rincipal agre ed to the se terms.

We disagree with the agent that Jordan v. City of Coral Gables , 191 So. 2d 38 (Fla. 1966)

, supports its position

. There, our s upreme c ourt stated

“ that it was prejudicial error to allow the submission of evidence of settlement by defendant of t he claim of a third party in the same accident

. . . .” Id. at 38. This case is unlike Jordan . H ere , there was a settlement

in a prior administrative proceeding involving the State, unrelated to the

lawsuit

. And, section 8 of the consent order specifically provide d : “This document is a public record and contains information which is routinely published by the Department.”

The court erred in excluding the consent order and o ther admissions as none of them fall within the purview of section 90.408. N evertheless,

these errors were har mless. See Special v. West Boca Med. Ctr. , 160 So. 3d 1251, 1265 (Fla. 2014)

. Had the trial court admitted this evidence, it likely would have had no effect on the verdict because (1) there was already proof of the agent’s negligence, and (2) th e jury fo und no loss during the

construction that would have entitled the association s to damages in their negligent procurement action.

The agent’s principal testified that he did not do his due diligence in

research ing the insur er . He a dmitted the agency had no policies and procedures in place to check whether insurers were authorized to do

business in Florida. He testified that he did not know whether Strategy

was authorized to do business in Florida. He admitted he could have done more to prevent the probl em

.

In short, the agent’s principal admit ted his negligence. And yet, the jury found no loss due to the agent’s negligence. It did however award the

association s $ 32,000 , the premium paid to the agent, on the unjust

enrichment claim. It also appears th e agent’s principal was sanctioned by

the DPBR.

For the foregoing reasons, we affirm.

Affirmed.

W ARNER and F ORST

, JJ., concur.

* * *8 Not final until disposition of timely filed motion for rehearing.