FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

OCT 9, 2008

THOMAS K. KAHN

CLERK

 [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 06-10925

________________________

D. C. Docket No. 02-00688-CV-T-23-EAJ

PAMELA PERERA, as Personal Representative of the

Estate of Mitchell Kenneth Perera deceased, and

as assignee of Estes Express Lines Corporation,

Plaintiff-Appellant,

versus

UNITED STATES FIDELITY AND

GUARANTY COMPANY, a foreign corporation,

Defendant-Appellee.

________________________

Appeal from the United States District Court

for the Middle District of Florida

_________________________

(October 9, 2008)

Before ANDERSON and MARCUS, Circuit Judges, and ALTONAGA,* District

Judge.

_______________

* Honorable Cecilia M. Altonaga, United States District Judge for the Southern District of

Florida, sitting by designation.
ANDERSON, Circuit Judge:

In our previous decision in this case, this panel determined that a potentially

controlling issue in the case was whether an insured or its assignee can maintain a

bad faith cause of action against an insurer when the insurer’s actions never

resulted in increased exposure on the part of the insured to excess liability or an

excess judgment. Recognizing that issue as one of Florida law, and in light of the

lack of clarity in the Florida cases, we concluded that appropriate resolution of the

legal issue would likely call for certification to the Florida Supreme Court. 

However, we expressed reluctance to certify unless it was clear that the certified

issue would control the case. We realized that a threshold factual issue held the

potential to moot the legal issue, and we recognized that we should certify only

pure legal issues. Therefore, our prior opinion reserved the legal issue we

proposed to certify, and we remanded to the district court with directions to resolve

an alternative issue – i.e., the factual issue of whether the insurer’s conduct

otherwise amounted to bad faith. Had resolution of that factual issue resulted in a

finding of no bad faith, the above legal issue would have been rendered moot.

However, this case has returned to this Court after the limited remand in

which a jury determined that the conduct of appellee United States Fidelity and

Guaranty Company (“USF&G”) in the underlying dispute did rise to the level of 

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bad faith. Having resolved any factual issues in the case, we are left with

controlling issues of Florida law which are appropriate to certify to the Florida

Supreme Court – whether a cause of action for bad faith against an insurer can be

maintained when there is not an excess judgment against the insured, and whether,

even if an excess judgment is not always required, a cause of action for bad faith

against an insurer can be maintained when the insurer’s actions never resulted in

the insured’s increased exposure to liability in excess of the policy limits of the

insured’s policies. Because it is unclear under Florida law whether a plaintiff can

maintain a cause of action for bad faith against an insurer when, as here, the

insurer’s actions never resulted in increased exposure on the part of the insured to

excess liability, or an excess judgment, we certify the questions set out below to the

Florida Supreme Court. “Where there is doubt in the interpretation of state law, a

federal court may certify the question to the state supreme court to avoid making

unnecessary Erie guesses and to offer the state court the opportunity to interpret or

change existing law.” Tobin v. Mich. Mut. Ins. Co., 398 F.3d 1267, 1274 (11th

Cir. 2005). 

I. FACTS AND PROCEDURAL HISTORY

This case stems from a tragic workplace incident at Estes Express Lines

Corporation (“Estes”), in which Estes employee Mitchell Perera was crushed to

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death by a piece of equipment. As the personal representative of his estate,

Mitchell Perera’s wife, appellant Pamela Perera (“Perera”), filed a wrongful death

suit against Estes and certain Estes employees. Estes maintained three liability

insurance policies: a workers’ compensation/employer liability policy (insuring

only Estes) issued by USF&G with a limit of $1 million after Estes’ self-insured

retention of $350,000; a commercial liability policy (insuring only employees of

Estes) issued by Cigna Property and Casualty Insurance Company with a limit of

$1 million and a $500,000 deductible; and an excess liability policy issued by the

Chubb Group of Insurance Companies with limits of $25 million. All three

policies required Estes to provide its own defense, thus imposing on the several

insurance companies no duty to defend.

After learning of Perera’s lawsuit, USF&G issued a reservation of rights

letter, believing that the intentional acts exclusion contained in the USF&G policy

precluded coverage of Perera’s claim against Estes. In March 2001, Perera, Estes,

and the three insurance companies met to mediate the case. Cigna tendered its

policy limits in order to effect a settlement of the claim against the employees. 

When USF&G insisted on its coverage defense and refused to tender an amount

deemed reasonable by the other parties, they asked USF&G to leave the mediation. 

 Some months later, Perera, Estes, Chubb and Cigna reached a settlement of

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Perera’s claims. The parties agreed to a settlement of $10 million, which was

divided as follows: $500,000 from Cigna (representing the policy limits of $1

million minus Estes’ $500,000 deductible), $750,000 from Estes, and $3.75 million

from Chubb. The remaining $5 million was to come from a bad faith lawsuit

against USF&G which Estes agreed to bring itself or assign to Perera. Perera

executed a release of any further claims against Chubb and agreed to accept the

proceeds of the lawsuit against USF&G as a complete satisfaction of her judgment,

even if the suit did not result in any additional proceeds. The provision requiring

Perera to accept the proceeds of the USF&G suit as full satisfaction of her

judgment also served to protect Estes and the employees from any additional

liability to Perera. However, neither Estes nor its employees released Chubb from

further liability. 

Perera brought suit as Estes’ assignee against USF&G for breach of contract

and bad faith. The district court granted summary judgment to Perera on the

coverage obligation, which required USF&G to pay its policy limit of $1 million. 

USF&G has not challenged that ruling on appeal. The district court granted

summary judgment to USF&G on the bad faith claim, holding that without an

excess judgment against the insured, there can be no cause of action for bad faith. 

Perera appealed that decision to this Court. 

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After the remand to the district court noted above, and having eliminated

alternative resolutions of this case and resolved any factual issues, we now turn to

the two issues of Florida law which we propose to certify.1

As a threshold matter, we find that the magistrate judge did not err in denying 1

USF&G’s motions for judgment as a matter of law and for a new trial. After the jury returned its

verdict, USF&G filed a renewed motion for judgment as a matter of law and a motion for a new

trial. The magistrate judge denied both of these motions. After careful review of the postremand letter briefs of the parties, and of the relevant parts of the record on remand, we hold that

the magistrate judge did not err in denying USF&G’s post-trial motions.

This Court reviews the denial of a motion for judgment as a matter of law de novo, and

“will reverse only if the facts and inferences point overwhelmingly in favor of one party, such

that reasonable people could not arrive at a contrary verdict.” Action Marine, Inc. v. Cont’l

Carbon, Inc., 481 F.3d 1302, 1309 (11th Cir. 2007) (internal quotation marks omitted). USF&G

argues that it is entitled to judgment as a matter of law because the Laforet factors for evaluating

bad faith all weigh in favor of USF&G. We disagree. The evidence presented at trial indicated

that, while at the time of the coverage dispute there was not a case on point requiring USF&G to

provide coverage to Estes, there were a number of Florida cases that imposed a coverage

obligation in similar situations. Thus, the weight of authority did not support USF&G’s position. 

Therefore, even if USF&G is correct that the weight of authority factor is a legal question which

should have been governed by jury instructions (instead of submitting the issue to the jury), there

was no prejudice to USF&G. Additionally, the jury could have found that USF&G’s efforts at

settlement in the face of the coverage dispute were an indication of bad faith. We hold that, in

light of all the evidence, reasonable people could disagree on the verdict, making judgment as a

matter of law for USF&G inappropriate. 

We also reject USF&G’s argument that judgment as a matter of law was warranted

because the settlement agreement does not apportion liability among Estes and the employees,

but rather makes them jointly and severally liable. USF&G has not identified a Florida case in

which an insurer was permitted to pay only a portion of the entire judgment against tortfeasors

who were jointly and severally liable. Rather, as Florida law makes clear, the appropriate remedy

when one joint tortfeasor has paid more than his or her share is to seek contribution. Fla. Stat.

Ann. §768.31(2) (West 2000). Accordingly, USF&G is not entitled to judgment as a matter of

law because the settlement agreement failed to apportion liability among joint tortfeasors. 

USF&G also filed a motion for a new trial, alleging error in the magistrate’s evidentiary

decisions. This Court reviews rulings on the admissibility of evidence for an abuse of discretion,

and we will not overturn an evidentiary ruling unless the moving party establishes a substantial

prejudicial effect. Goldsmith v. Bagby Elevator Co., 513 F.3d 1261, 1276 (11th Cir. 2008). We

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II. DISCUSSION

A. Can a Cause of Action for Bad Faith Against an Insurer be Maintained

When There is Not an Excess Judgment Against the Insured?

In this case, as the magistrate judge held, there is no excess judgment against

the insured, Estes. Viewed as of the time the settlement agreement was negotiated,

Estes had $25 million in insurance coverage – $1 million from the Cigna policy; $1

million from the USF&G policy; and $25 million from the Chubb policy, in excess

of the other two policies. To constitute an excess judgment, there would have to

have been a judgment in excess of $25 million. The judgment agreed upon in

settlement – $10 million – is obviously far less than the extant coverage. Estes

therefore faces no liability above its existing policy limits. 

Under Florida law, an insurer owes a duty of good faith to its insured. 

cannot conclude that the magistrate judge’s evidentiary rulings constitute reversible error. The

admission of evidence pertaining to USF&G’s decision not to file a declaratory judgment was not

reversible error. Even if there was at the time some doubt as to whether a court would entertain

such an action, it was clearly in the interest of the insured to whom USF&G owed duties to have

the coverage issue resolved promptly, and it is not likely that any of the interested parties would

have objected to a declaratory judgment seeking an early resolution of the coverage issue. 

USF&G’s argument regarding admission of the Hicks letter is also misplaced. The magistrate

judge did not commit reversible error in refusing to exclude it. Similarly, there was no

reversible error in the exclusion of certain testimony of two USF&G witnesses. 

Accordingly, we cannot conclude that the magistrate judge committed reversible error in

denying USF&G’s motions for judgment as a matter of law and for a new trial. Therefore, we

accept the jury’s verdict that USF&G’s failure to promptly resolve the coverage issue, its

insistence upon its coverage position, and its failure to contribute more substantially to the

settlement fund rose to the level of bad faith.

7
Berges v. Infinity Ins. Co., 896 So. 2d 665, 672 (Fla. 2004). This duty of good

faith encompasses the obligation to protect the insured from a judgment above the

insured’s policy limits. Id. Accordingly, if the insurer fails to consider a

reasonable settlement offer, and the insured is subsequently exposed to an excess

judgment, the insured may have a claim for bad faith against the insurer. Rosen v.

Fla. Ins. Guar. Ass’n, 802 So. 2d 291, 294 (Fla. 2001) (citing Fid. & Cas. Co. v.

Cope, 462 So.2d 459, 460 (Fla. 1985)). 

However, it is not clear to us that the Florida Supreme Court would hold that

an excess judgment is a necessary part of a claim for bad faith. The Court has

acknowledged that “the essence of a bad-faith cause of action is to remedy a

situation in which an insured is exposed to an excess judgment because of the

insurer’s failure to properly or promptly defend the claim.” Rosen, 802 So. 2d at

294. The Court has also posited, in the context of deciding whether a trial court

had jurisdiction over a bad faith claim in the absence of an excess judgment, that

“even if a complaint were filed asserting a bad-faith claim against a liability

insurance company without alleging the existence of a judgment against the insured

in excess of the policy limits, the most that could be said would be that the

complaint failed to state a cause of action.” Cunningham v. Standard Guar. Ins.

Co., 630 So. 2d 179, 181-82 (Fla. 1994). In Cope, the Court held that a third party

8
cannot maintain a bad faith action against the insurer when the excess judgment has

already been satisfied and no assignment of the claim was executed prior to

satisfaction. 462 So. 2d at 461. Similarly, the Court has found that a third party

may not sue an insurer under the bad faith insurance statute when the judgment was

within the policy limits. State Farm Fire & Cas. Co. v. Zebrowski, 706 So. 2d 275,

277 (Fla. 1997). 

Although these cases suggest that Florida law may not recognize a bad faith

action without an excess judgment, at least one intermediate court has held that an

excess judgment is not an essential part of a bad faith claim. See N. Am. Van Lines

v. Lexington Ins., 678 So. 2d 1325, 1333 (Fla. Dist. Ct. App. 1996) (“[T]he bad

faith action is essentially one for breach of contract, which includes, under the case

law, an implied good faith obligation. No excess judgment is required, because the

insured has paid an obligation for which the insurers should have been liable, had

they not breached the contract.”). In addition, another appellate court has held that

an insured’s bad faith damages against his insurer are not necessarily limited to the

amount of the excess judgment. See Swamy v. Caduceus Self Ins. Fund, Inc., 648

So. 2d 758, 759 (Fla. Dist. Ct. App. 1994). 

Given the lack of clarity regarding the necessity of an excess judgment to a

bad faith cause of action under Florida law, we seek the guidance of the Florida

9
Supreme Court. Accordingly, we respectfully certify the following question to the

Florida Supreme Court:

1. CAN A CAUSE OF ACTION FOR BAD FAITH AGAINST

AN INSURER BE MAINTAINED WHEN THERE IS NOT AN

EXCESS JUDGMENT AGAINST THE INSURED?

B. Even if an Excess Judgment is Not Always Required, Can a Cause of

Action for Bad Faith Against an Insurer be Maintained When the

Insurer’s Actions Never Resulted in Increased Exposure on the Part of

the Insured to Liability in Excess of the Policy Limits of the Insured’s

Policies?

In addition to its argument that Perera’s bad faith claim is barred in the

instant case because of the absence of an excess judgment, USF&G also makes an

alternative argument. USF&G argues that, even if an excess judgment is not

required, Perera’s bad faith claim is barred because USF&G’s insured, Estes, was

never exposed to liability in excess of the limits of liability in its several policies. 

As a factual matter, we agree with USF&G that Estes was never exposed to

liability in excess of the limits of its several policies, because any exposure above

USF&G’s limits was covered by the Chubb coverage with limits of $25 million. 

2

Perera’s only argument challenging the absence of excess exposure on the part of

We note that Chubb, the excess carrier, has not asserted a bad faith claim against 2

USF&G, nor assigned any claim it may have to Perera. Thus, whether or not Chubb might have

had such a claim is not before us. Moreover, Perera has not argued that she is entitled to assert

any rights of Chubb, by virtue of subrogation or otherwise; accordingly, any such argument is

deemed abandoned. 

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Estes is that Chubb’s liability coverage was triggered only after payment of the

limits of the two underlying policies. Thus, Perera argues that Estes was required

to advance sums, for which it would not otherwise have been liable, in order to

persuade Chubb to contribute to the settlement even though the USF&G limit of $1

million had not been paid. For several reasons, we reject Perera’s argument. First,

even if Estes had come to up with the full $1 million limit, that would impose upon

Estes only an exposure to the extent of $1 million, the amount of the USF&G

policy itself, and not an amount in excess thereof. Also, the record evidence is

clear that, at the relevant times, Chubb was committed to settling the case and was

not delaying settlement negotiations with the plaintiff’s attorney and was not

refusing to make the necessary coverage available to settle the case, awaiting the

payment of USF&G’s $1 million. On the contrary, Chubb was contributing

substantial funding for the offers being made to plaintiff’s attorney, as well as the

necessary funding for the final settlement. 

3

Perera makes no other argument explaining how the actions of USF&G

Moreover, the facts as to the funding of the settlement demonstrate that Estes did 3

not advance the $1 million limit of the USF&G policy. Rather, Estes advanced $500,000 which

it was obligated in all events to pay as the deductible under the Cigna policy. In addition, Estes

advanced $250,000, which it may or may not have been obligated to pay in any event. Estes

had a $350,000 obligation pursuant to its self-insured retention under the USF&G policy. There

was a dispute as to how much of that had been eroded (e.g., defense costs allocable to the defense

of Estes could erode it). 

11
imposed upon Estes any exposure to liability in excess of its policy limits. Having

rejected Perera’s sole argument, we conclude that Estes was not exposed to liability

in excess of the limits of its several policies.

4

Our statement that Perera makes no other such argument requires explanation. In

4

reviewing relevant portions of the record on remand (as part of our review of the magistrate

judge’s denial of USF&G’s motions for judgment as a matter of law and for a new trial on the

remanded issue), we were alerted to a potential factual issue which could cast doubt upon

whether the actions of USF&G imposed on Estes any exposure to liability in excess of its

insurance coverage. This “new” factual issue relates to the fact that none of the three Estes

insurance policies provides coverage for punitive damages. Thus, an argument could have been

made that USF&G’s bad faith conduct delayed the settlement and caused Estes to be exposed to

punitive damage liability for which it would not have been liable in the absence of USF&G’s bad

faith conduct. As noted above, we were alerted to this new potential argument only during our

review of the record following the return of the case to us after remand. In other words, neither

Perera’s initial brief to this panel nor her reply brief, nor even her letter briefs following remand,

was sufficiently precise to alert this panel to the argument. 

In addition, Perera was questioned intensely at oral argument about how an insured’s bad

faith claim could be viable when it was obvious to all parties at all times that there was no

possibility of any judgment against Estes, or any liability on its part, in excess of the $25 million

of insurance coverage. In other words, Perera was pressed at oral argument as to how there could

be a viable bad faith claim by the insured when the insured was never exposed to liability in

excess of its policy limits. Notwithstanding such intense questioning, Perera never suggested

that USF&G’s actions may have exposed Estes to liability for punitive damages, which was not

covered under any of the policies. In addition, it should have been apparent to Perera from our

discussion at oral argument about remanding to the district court that our effort was to resolve

any pending factual issues, in order to permit the certification to the Florida Supreme Court of

pure legal issues. But Perera failed at oral argument to alert us to this argument. 

Of even greater concern, our short opinion remanding the bad faith factual issue to the

district court expressly articulated the legal issues to be certified: “The legal issue in this case is

whether an insured or its assignee may maintain a bad faith cause of action against an insurer

when an insurer’s actions never resulted in increased exposure on the part of the insured to

excess liability or an excess judgment.” It should have been apparent to Perera that she should

have immediately alerted us that she wanted to rely upon an additional factual issue which might

cast doubt upon the obvious premise of the legal issue we proposed to certify – i.e., that “the

insurer’s actions never resulted in increased exposure on the part of the insured to excess

liability.” If Perera intended to rely upon USF&G’s having caused such increased exposure, then

Perera should certainly have alerted this panel so that the additional factual issue could have been

12
Thus, the question arises whether, under Florida law, a bad faith claim

against an insurer can be maintained when the insurer’s actions never resulted in

increased exposure on the part of the insured to liability in excess of the policy

limits of the insured’s policies. USF&G argues that there can be no bad faith claim

under such circumstances. USF&G argues that the $4 million allocation in the

settlement agreement was merely a “manufactured bad faith claim,” bearing no

relationship to any actual increased exposure to Estes.

USF&G argues that it is a matter of established Florida law that the very

purpose of a bad faith claim is to protect an insured from exposure to a judgment in

resolved on remand along with the bad faith issue. However, Perera failed to move for rehearing,

or otherwise alert us. 

Had we been more astute, we acknowledge that we could have been alerted from a single

sentence at page 31 of Perera’s initial brief to the panel, which sentence mentioned that

USF&G’s insistence on delaying their coverage decision until trial of the underlying case would

expose Estes to a potentially large and uninsured punitive damage award. However, that

sentence was buried under an unlikely heading relating to miscarriage of justice. And Perera

failed to make a straightforward argument – certainly not one under an appropriate heading – 

that USF&G’s actions resulted in Estes being exposed to liability for punitive damages which no

insurance would cover. In light of the sparseness and hidden nature of the brief’s single

sentence, and in light of the numerous above-mentioned failures of Perera to make this argument,

we conclude that Perera failed to make the argument with sufficient precision to warrant our

entertaining it. 

Accordingly, we conclude that the argument is waived, and we determine that the facts

for purposes of this appeal are that Estes was never exposed to liability in excess of the limits of

its several policies. We find additional comfort in our waiver decision from the fact that our

review of the record and the course of the settlement negotiations persuades us that Perera would

not in any event have been able to prove that USF&G’s bad faith conduct caused any increase in

Estees’ exposure. 

13
excess of the policy limits on the insured’s insurance policies. USF&G argues that

the Florida Supreme Court, in Fidelity & Casualty Co. of New York v. Cope, 462

So.2d 459 (Fla. 1985), held:

The essence of a “bad faith” insurance suit (whether it is brought by

the insured or by the injured party standing in his place), is that the

insurer breached its duty to its insured by failing to properly or

promptly defend the claim (which may encompass its failure to make a

good faith offer of settlement within the policy limits) – all of which

results in the insured being exposed to an excess judgment. 

Id. at 460 (quoting Kelly v. Williams, 411 So.2d 902, 904) (Fla. Dist. Ct. App.

1982). See also Cunningham, 630 So.2d at 181 (“In Cope, we acknowledged that

the essence of a third party bad faith cause of action is to remedy a situation in

which an insured is exposed to an excess judgment because of the insurer’s failure

to properly or promptly defend the claim.”); 14 Couch on Insurance §206:46 (3rd

ed. 2008) (“[A]n insured’s right to recover against a liability insurer for failure to

exercise good faith is predicated upon the potential damage to the insured and

being subjected to a judgment in excess of policy limits, and the consequent

subjection of assets to the satisfaction of such judgment.”).

Although it is true that Cope, and other Florida cases, say that the essence of

a bad faith claim is to protect an insured against exposure to liability in excess of

the insured’s policy limits, those cases do not seem to be square holdings on the

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issue that we certify. In light of this lack of clarity, we deem it appropriate to

certify the following question to the Florida Supreme Court:

2. EVEN IF AN EXCESS JUDGMENT IS NOT ALWAYS

REQUIRED, CAN A CAUSE OF ACTION FOR BAD FAITH

AGAINST AN INSURER BE MAINTAINED WHEN THE

INSURER’S ACTIONS NEVER RESULTED IN INCREASED

EXPOSURE ON THE PART OF THE INSURED TO

LIABILITY IN EXCESS OF THE POLICY LIMITS OF

INSURED’S POLICIES?

Our statement of the two questions to be certified is not meant to limit the

scope of inquiry by the Florida Supreme Court. “This latitude extends to the

Supreme Court’s restatement of the issue or issues and the manner in which the

answers are given.” Washburn v. Rabun, 755 F.2d 1404, 1406 (11th Cir. 1985). In

order to assist the court’s consideration of the case, the entire record, along with the

briefs of the parties, shall be transmitted to the Florida Supreme Court.

QUESTIONS CERTIFIED.5

USF&G’s request for oral argument regarding denial of the motions for judgment 5

as a matter of law and new trial is DENIED.

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