Conch House Builders, LLC v. Landmark American Insurance Company

UNITED STATES DISTRICT COURT |

MIDDLE DISTRICT OF FLORIDA

JACKSONVILLE DIVISION

CONCH HOUSE BUILDERS, LLC,

a Florida limited liability company,

Plaintiff,

Vv. Case No. 3:20-cv-13837-BJD-PDB

LANDMARK AMERICAN

INSURANCE COMPANY, a

foreign corporation, ARCH

SPECIALTY INSURANCE

COMPANY, a foreign corporation,

and BROWN & BROWN OF

FLORIDA, INC., a Florida

corporation,

Defendants.

/

ORDER

THIS CAUSE is before the Court on Defendants’ Landmark American

Insurance Company and Arch Specialty Insurance Company Notice of

Removal (Doc. 1) and Plaintiffs Brief on Subject Matter Jurisdiction (Doc. 16;

Response).

On November 24, 2020, Arch and Landmark removed this case to

federal court based on the Court’s diversity jurisdiction. Notice of Removal at

2-4, Arch and Landmark acknowledged that Defendant Brown and Brown of

Florida, Incorporated, destroys complete diversity. Id. at 3-4. They argue

Plaintiff fraudulently joined Brown and Brown to the case to prevent

removal. Id. at 4. In light of the Court’s obligation to ensure that it has

subject matter jurisdiction over a case and because it was not obvious to the

Court whether Brown and Brown was fraudulently joined, the Court ordered

Plaintiff to respond to Arch and Landmark’s assertions. (Doc. 6 (citing

Kirkland v. Midland Mortgage Co., 243 F.3d 1277, 1279-80 (11th Cir. 2001))).

The Court also allowed Arch and Landmark to reply to Plaintiffs response.

Id. at 3. Arch and Landmark did not avail themselves of that opportunity and

the Court is left to consider the Notice of Removal and Plaintiff's Response.

“(Diversity jurisdiction is determined at the time of filing the

complaint or, if the case has been removed, at the time of removal.”

Thermoset Corp. v. Bldg. Materials Corp. of Am., 849 F.3d 1313, 1317 (11th

Cir. 2017) (internal quotations omitted). At the time of removal, the

Complaint (Doc. 7) was still Plaintiffs operative pleading.! Plaintiff owns the

Conch House Marina and Resort (the “Marina”), which consists of a marina,

resort, eatery, and lounge. Complaint { 2. Plaintiff utilized “Brown and

Brown as its insurance broker to obtain insurance coverage for the Marina ..

1 Following removal, Plaintiff filed its Amended Complaint (Doc. 29). Even if

the Court considered the Amended Complaint in its analysis, the outcome is

unaltered.

_oO.

Id. § 6. Brown and Brown arranged for Arch and Landmark to provide

insurance coverage for the Marina. Id.

In 2016 and 2017, Hurricanes Matthew and Irma damaged the Marina.

Id. (12, 138. Arch and Landmark provided some coverage for that damage

but less than what Plaintiff believes is owed. Id. 15. Plaintiff brought this

suit primarily against Arch and Landmark for wrongful denial of insurance

coverage, and, alternatively, against Brown and Brown for negligence in

obtaining insufficient insurance coverage for the Marina. Id. at 9-14.

Arch and Landmark argue that Plaintiff joined Brown and Brown only to

defeat diversity among the parties. Notice of Removal at 4.

“Fraudulent joinder is a judicially created doctrine that provides an

exception to the requirement of complete diversity.” Triggs v. John Crump

Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). To establish fraudulent

joinder, “the removing party has the burden of proving [by clear and

convincing evidence] that either: (1) there is no possibility the plaintiff can

establish a cause of action against the resident defendant; or (2) the plaintiff

has fraudulently pled jurisdictional facts to bring the resident defendant into

state court.” Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1332 (11th Cir.

2011) (quoting Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997)).

“This burden is a heavy one.” Id. (internal quotations omitted).

Arch and Landmark’s fraudulent joinder argument is based on their

claim that Plaintiff has no possibility of stating a claim against Brown and

Brown. In Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061, 1065 (Fla. 2001),

the Florida Supreme Court held that “a negligence/malpractice cause of

action accrues when the client incurs damages at the conclusion of the

related or underlying judicial proceedings or, if there are no related or

underlying judicial proceedings, when the client’s right to sue in the related

or underlying proceeding expires.” In other words, an insured cannot sue his

insurance broker for negligence in obtaining coverage until it is certain the

insured cannot recover from the insurer. Blumberg’s holding is fatal to

Plaintiffs claim against Brown and Brown because there has been no

resolution to his claim for insurance coverage against Arch and Landmark.

Indeed, Plaintiff appears to concede as much in his Response. Response at 7.

The Court’s analysis might end there if it were not for the Florida

Supreme Court requiring abatement of a premature action against an

insurance broker as opposed to dismissal. Blumberg, 790 So. 2d at 1065 n.2

(“The proper remedy for premature litigation is an abatement or stay of the

claim for the period necessary for its maturation under the law.”) (internal

quotations omitted). Florida’s preference for the abatement of an unripe

claim does not control once a case is in federal court, which has no

A.

jurisdiction over a claim that is not ripe.? See Digital Properties, Inc. v. City

of Plantation, 121 F.3d 586, 589 (11th Cir. 1997) (“Article III of the United

States Constitution limits the jurisdiction of the federal courts to cases and

controversies of sufficient concreteness to evidence a ripeness for review.”);

see also Toburen v. State Farm Mut. Auto. Ins. Co., No. 3:17-CV-955-J-

34JRK, 2017 WL 9935025, at *1 (M.D. Fla. Oct. 13, 2017) (“Although the

Supreme Court of Florida favors abatement of unripe bad faith claims over

dismissal, Florida courts do not have the same jurisdictional requirements as

federal courts.”) (Howard, J.) (internal citation omitted).

Because this case was filed in Florida state court, Plaintiff could assert

a claim against Brown and Brown and have that claim abated. It was only

after the case’s removal that Plaintiffs claim against Brown and Brown

required dismissal. The time at which jurisdiction is judged is at removal,

and as the case sat, Plaintiff could and did assert a plausible claim against

Brown and Brown. Thus, Plaintiff could not be said to have sued Brown and

Brown fraudulently.

2 While the parties cite to differing case law as to the propriety of abatement

versus dismissal in the context of premature claims asserted in federal court, the

undersigned has routinely held that federal courts must dismiss claims that are not

ripe. See Witcher v. Garrison Prop. and Cas. Ins. Co., Case No. 3:16-cv-1139-J-39JBT

D.E. 161 (M.D. Fla. Nov. 7, 2019) (explaining that abatement of an unripe claim is

inappropriate in federal court, despite Florida’s endorsement to the contrary).

The Court recognizes that other federal courts have reached the

opposite conclusion. See Witkin Design Grp., Inc. v. Travelers Prop. Cas. Co.

of Am., No. 16-20484-CIV-MORENO, 2016 WL 1572964, at *3 (S.D. Fla. Apr.

18, 2016) (holding that dismissal of an unripe claim against an insurance

agent was consistent with Florida law) (citing Wells Fargo Ins. Servs. USA,

Inc. v. Blackshear, 136 So. 3d 1235, 1239 (Fla. 2d DCA 2014)). Blackshear

concluded that dismissal of a premature claim against an insurance broker is

the appropriate remedy when the case against the insurer is ongoing.

Blackshear, 136 So. 3d at 1239. Blackshear did not discuss the Florida

Supreme Court’s instruction in Blumberg that abatement, as opposed to

dismissal, is the appropriate remedy for premature claims. Instead,

Blackshear cites to Shuck v. Bank of Am.., 862 So. 2d 20, 24-25 (Fla. 2d

DCA 2003) (holding that when “the mere passage of time is not sufficient to

cure the premature element of the action” dismissal is appropriate course)

and Landmark Am. Ins. Co. v. Moulton Properties, Inc., Case No. 3:05 CV

401LAC, 2006 WL 2038554, at *3 (N.D. Fla. July 19, 2006) (citing to Shuck)

for support. Shuck does not cite to Blumberg whatsoever and Landmark does

not mention Blumberg’s direction to trial courts to abate premature causes of

actions.

The Court is also persuaded that any reading of Florida law to prevent

abatement when “the mere passage of time is not sufficient to cure the

-@.-

premature element of the action” is unduly narrow. First, had the Florida

Supreme Court intended for abatement to apply in only those circumstances

it could have said so and it did not. Second, in the context of other premature

claims, the Florida Supreme Court has endorsed abatement despite the fact

the passage of time is not certain to cause a claim to ripen. Fridman v. Safeco

Ins. Co. of Illinois, 185 So. 3d 1214, 1230 (Fla. 2016) (explaining that

abatement of bad faith claim against an insurer was the “appropriate

procedural device” even though it may never ripen).

Having determined that removal was inappropriate, the Court next

turns to the application of 28 U.S.C. § 1447(c), which allows the imposition of

attorney’s fees where a case is remanded to state court after removal and

finding that the removing party lacked an objectively reasonable basis for

seeking removal. See Martin v. Franklin Capital Corp., 546 U.S. 132, 141

(2005) (holding that an award of attorney’s fees should be denied “when an

objectively reasonable basis exists” for removal); Bauknight v. Monroe Cty.,

Fla., 446 F.3d 1327, 13829 (11th Cir. 2006). The award of attorney’s fees is to

compensate the non-removing party. Bldg. Materials Corp. of Am., No. 6:15-

cv-548-ORL22GJK, 2018 WL 1008442, at *3 (M.D. Fla. Feb. 22, 2018). At the

time that Arch and Landmark removed this case, Florida law as to

abatement was well established and Arch and Landmark should have known

_7.

that Florida allows claims like the one Plaintiff asserts against Brown and

Brown to persist, even if it is premature.

Accordingly, after due consideration, it is

ORDERED:

1. The Clerk of the Court is DIRECTED to remand this case to the

Circuit Court for the Seventh Judicial Circuit, in and for St. John’s

County, Florida, and to transmit a certified copy of this Order to the

clerk of that court. The Clerk of the Court shall then close this file

and terminate any remaining motions and deadlines.

2. On or before April 1, 2021, the parties shall meaningfully confer

regarding the imposition of fees and costs for Defendants’ Landmark

American Insurance Company and Arch Specialty Insurance

Company wrongful removal. If the parties are unable to agree as to

the amount to be taxed, Plaintiff shall file a motion for fees and costs

no later than April 15, 2021. th

DONE and ORDERED in Jacksonville, Florida this 5 day of

March, 2021. b ( | )

BRIAN J. DAVIS

United States District Judge

-R2.

2

Copies furnished to:

Counsel of Record .

/p

_Q.