DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

THE LEXINGTON CLUB COMMUNITY ASSOCIATION, INC., and THE 

LEXINGTON CLUB VILLAS CONDOMINIUM ASSOCIATION, INC.,

Appellants,

v.

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

Appellee.

No. 4D17-1843

[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.

MAY, J.

A post-Hurricane Wilma roof repair led to negligence and unjust 

enrichment claims by two condominium associations (“associations”) 

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 associations, for less than the amount claimed, the 

associations 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 

associations hired a general contractor and roofing company to re-roof all 

of the buildings and perform other repairs to the property. The contract 

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

13.1.1 The Contractor shall execute and deliver to the 

Owner a Payment 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 attorney 

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 written 

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 substituted 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 was 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 associations paid the premium directly to the agent via wire 

transfer. The agent retained a 10% commission and forwarded the 

remainder to Strategy. When the associations received the bond, they

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

raised a concern. It was determined that Strategy was not licensed to do 

business 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 

associations entered into a settlement agreement with the contractor. 

This left pending their claim against the agent. The fourth amended 

complaint against the agent included counts for: (1) negligent 

procurement of insurance; (2) a declaration that the bond was invalid and 
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unenforceable; and (3) unjust enrichment.

At trial, the jury found the agent’s negligence was NOT a legal cause of 

damages to the associations. But, it awarded $32,000 (10% of the 

premium) to the associations 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 invalid and unenforceable.”

From this judgment and declaration, the associations now appeal.

The Jury Instruction on Damages

The associations 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 associations 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. Because the associations suffered no loss, 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 covered had the insurance 

been properly obtained.” The associations’ 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 been 
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properly obtained. 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 have 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 an 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 associations argue this statute and our case law are inapplicable 

because they only address situations where the insured suffers a loss that 

would otherwise have been covered had the proper insurance been 

obtained. Here, there was no claim or loss. Rather, the associations 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 defective 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.
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Simpson v. M-P Enters., Inc., 252 So. 2d 202, 207 (Miss. 1971) (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 Appeal 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, 1365 (La. App. 3 

Cir. 1993).

In Florida a negligent procurement 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 such 

to cover any losses that were not covered by the policy. See §§ 626.901(3),

627.418(1), Fla. Stat. (2017). Thus, while the associations’ policy was 

issued by an unauthorized insurer, the insurer would still be held 

responsible. Here, however, the associations suffered no monetary loss 

during the construction.

The Legislature 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 Legislature expressly made 

the unauthorized insurer’s policies enforceable in a negligent procurement 

action.

The associations suggest that section 626.901 is inapplicable because

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

under a general negligence standard, the associations 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 

Legislature 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 associations next argue the trial court abused its discretion in not 

admitting a consent order and the agent’s admission of its principal’s 

license suspension. They argue the suspension was predicated on the 
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principal’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 agreement between the principal 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 for 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).

During discovery, the agent responded to the associations’ request for 

admissions. The agent admitted that

1) its principal did not know that Strategy was unlicensed 

when he procured the bond for the project;

2) its principal did no investigation into whether Strategy was 

unlicensed;

3) it received a commission on the bond;

4) its principal 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 associations attempted to admit the State’s Consent Order 

and Settlement Stipulation, the trial court excluded the evidence based on 

section 90.408 relating to offers to compromise. The trial court however 

indicated that if the principal denied wrongdoing or knowing that Strategy 

was unauthorized to issue insurance, then it would open the door to 

discussion of his discipline.

Section 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 liability for the claim or its 

value.”

The associations 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 that 
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it was an offer because the State sent the principal a letter offering that he 

receive a suspension of his insurance license and complete continuing 

education courses in lieu of a formal administrative complaint being filed. 

The principal agreed to these terms.

We disagree with the agent that Jordan v. City of Coral Gables, 191 So. 

2d 38 (Fla. 1966), supports its position. There, our supreme court stated

“that it was prejudicial error to allow the submission of evidence of 

settlement by defendant of the claim of a third party in the same accident

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

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

lawsuit. And, section 8 of the consent order specifically provided: “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 other admissions 

as none of them fall within the purview of section 90.408. Nevertheless, 

these errors were harmless. 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) the jury found no loss during the 

construction that would have entitled the associations to damages in their

negligent procurement action.

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

researching the insurer. He admitted 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 problem.

In short, the agent’s principal admitted his negligence. And yet, the 

jury found no loss due to the agent’s negligence. It did however award the 

associations $32,000, the premium paid to the agent, on the unjust 

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

the DPBR.

For the foregoing reasons, we affirm.

Affirmed.

WARNER and FORST, JJ., concur.

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