Dadeland Depot v. St. Paul Fire and Marine Ins., (11th Cir. 2007)

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[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

F O R THE ELEVENTH CIRCUIT FILEDU.S. COURT OF APPEALS

ELEVENTH CIRCUIT

APRIL 12, 2007

N o . 03-13540

THOMAS K. KAHN

CLERK

D . C. Docket No. 01-08287-CV-DTKH

D A D E L A N D DEPOT, INC.,

DADELAND STATION ASSOCIATES, LTD.,

Plaintiffs-Appellants,

versus

ST. PAUL FIRE AND MARINE INSURANCE CO.,

AMERICAN HOME ASSURANCE COMPANY,

Defendants-Appellees.

A p p e al from the United States District Court

fo r the Southern District of Florida

O N PETITION FOR REHEARING

(A p ril 12, 2007)

B e fo r e BIRCH and WILSON, Circuit Judges, and DOWD,* District Judge.

B I R C H , Circuit Judge: U p o n review of the defendants' timely petition for rehearing, requesting that w e reconsider that portion of our opinion granting the plaintiffs' attorneys' fees in c id e n t to this appeal, we agree that Dadeland is not yet entitled to attorneys' fees u n d er the applicable Florida statute. Accordingly, we vacate that portion of our o p in io n , see No. 03-13540,F.3d(11th Cir. Feb. 27, 2007), and substitute th e following revised opinion in its place.

T h is case returns to us for disposition from the Supreme Court of Florida, to w h ic h we certified five questions of Florida state law. See Dadeland Depot, Inc. v. S t. Paul Fire and Marine Ins. Co., 383 F. 3d 1273 (11th Cir. 2004). Based on the F lo rid a Supreme Court's responses to those questions, see Dadeland Depot Inc. v. S t. Paul Fire and Marine Ins. Co., No. SC04-1828 (Fla. December 21, 2006), we n o w conclude that the district court erred in its disposition of the defendants' s u m m a ry judgment motion and of the plaintiffs' motion for partial summary ju d g m en t. Accordingly, we REVERSE the grant of summary judgment in favor of th e defendants, GRANT the plaintiffs' motion for partial summary judgment, and R E M A N D this case for further proceedings consistent with this opinion. We also G R A N T the plaintiffs' motion for attorneys' fees on appeal, conditioned, however, o n appellant's ultimate recovery in the trial court. See McDonald v. Southeastern F id . Ins. Co., 373 So.2d 94 (Fla. Dist. Ct. App. 1979). I. BACKGROUND T h e procedural history, facts, and issues of this case are summarized in our p rev io u s opinion, published at 383 F.3d 1273 (11th Cir. 2004). For purposes of b a c k g r o u n d , this appeal arises out of a lengthy and complicated dispute between D ad elan d Station Associates, Ltd. and Dadeland Depot., Inc. (collectively, "D ad elan d "), a lessor and manager of commercial properties, and St. Paul Fire and M arin e Insurance Co. and American Home Assurance Co. (collectively, "St.

P au l"), who acted as the sureties on a performance bond issued in connection with a shopping center that Dadeland was developing.

A number of structural and design defects were subsequently discovered w ith the development, and the parties­Dadeland, St. Paul, and the general co n tracto r, Walbridge Contracting, Inc. ("Walbridge")­entered into an arbitration p ro ceed in g to resolve the disputes over the construction. At the conclusion of the p ro ceed in g , Dadeland obtained an award in the amount of $1,417,842 for the c o n tr ac to r 's defective workmanship. St. Paul, as surety, was bound to that award to the extent that the principal, Walbridge, was bound. Walbridge timely paid the aw ard .

D a d e la n d then brought this action in the Fifteenth Judicial Circuit of Florida, alleg in g that St. Paul, as sureties, had acted with bad faith and had failed to p e r fo r m its duties under the performance bond. Specifically, Dadeland alleged that S t. Paul had intentionally attempted to avoid and delay the arbitration as it had b een unfolding; that St. Paul had effectively ignored its obligations under the bond b y repeatedly failing to address Dadeland's complaints concerning the defects with th e development; and that St. Paul had done so without ever conducting any in d ep en d en t investigation into Dadeland's complaints. Dadeland asserted claims ag ain st St. Paul for bad-faith refusal-to-settle, Fla. Stat. § 624.155 (1)(b)(1), and u n f air insurance practices, Fla. Stat. § 624.155 (1)(a)(1).1 A fter removing this case to federal court, St. Paul filed a motion for su m m ary judgment or for judgment on the pleadings. Dadeland filed a separate m o tio n for partial summary judgment on the narrow question of whether St. Paul w a s collaterally estopped from raising defenses that had been raised and disposed o f in the earlier arbitration proceeding. The district court granted summary ju d g m e n t in favor of St. Paul on all counts of Dadeland's complaint, and denied D a d e la n d 's motion for partial summary judgment. The district court then entered fin al judgment in favor of St. Paul. This appeal followed. II. DISCUSSION D ad elan d argues that the district court erred in granting summary judgment in favor of St. Paul and in denying its motion for partial summary judgment. We rev iew a district court's grant of summary judgment de novo, applying the same le g a l standard used by the district court. Johnson v. Bd. of Regents, 263 F.3d 1 2 3 4 , 1242 (11th Cir. 2001). Under that standard, summary judgment is ap p ro p riate where "there is no genuine issue as to any material fact and the moving p arty is entitled to judgment as a matter of law." Id. (citing Fed. R. Civ. P. 56(c)).

In reviewing the motion, we view the evidence and all factual inferences in a light m o st favorable to the non-moving party, and all reasonable doubts about the facts a re resolved in favor of the non-movant. Id. at 1243 (citation and internal q u o tatio n s omitted).

"The plain language of Rule 56(c) mandates the entry of summary judgment .

. . against a party who fails to make a showing sufficient to establish the existence o f an element essential to that party's case, and on which that party will bear the b u rd en of proof at trial.'" Johnson, 263 F.3d at 1243 (quoting Celotex Corp. v. C atrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552-53 (1986)). That is, "[i]f the n o n -m o v in g party fails to make a sufficient showing on an essential element of [his] c as e with respect to which [he] has the burden of proof, then the court must enter su m m ary judgment for the moving party." Gonzalez v. Lee County Hous. Auth., 1 6 1 F.3d 1290, 1294 (11th Cir. 1998) (quoting Celotex, 477 U.S. at 323, 106 S. Ct. at 2552) .

In this case, the district court granted summary judgment for St. Paul as a m atter of law. More specifically, the district court's decision hinged on three points o f Florida law.2 First, the district court concluded that Dadeland was not entitled to b rin g an action for a bad-faith refusal-to-settle an insurance claim under Fla. Stat. § 6 2 4 .1 5 5 (1 )(b )(1 ) because it had not established the validity of the underlying claim, w h ich is a condition precedent to bringing such an action under Florida law.

Second, the district court concluded that the earlier arbitration proceeding would h av e a res judicata effect on Dadeland's current claim for damages against St. Paul, an d that, consequently, Dadeland was now barred from "com[ing] to this court to assert the same claim against [St. Paul]." R3-137 at 23. Finally, the district court c o n c lu d e d that Dadeland had failed to allege a general business practice on the part o f St. Paul, which the district court believed was a pre-requisite to bringing a claim u n d er Fla. Stat. § 624.155 (1)(a)(1). Id. at 28. Based on those determinations, it g ran ted summary judgment in favor of St. Paul. A s to Dadeland's separate motion for partial summary judgment on the issue o f whether the earlier arbitration proceeding would collaterally estop St. Paul from r ais in g the same affirmative defenses in the current case, the district court co n clu d ed that the issue was moot in light of its prior finding that Dadeland's c la im s were barred by res judicata. Accordingly, the district court denied D a d e la n d 's motion for partial summary judgment on that issue.

O n appeal, Dadeland contends that the district court's conclusions were leg ally erroneous, and that therefore summary judgment was improperly granted to S t. Paul. In addition, Dadeland argues that the disposition of the arbitration p ro ceed in g collaterally estops St. Paul from raising the same defenses in the current p r o c e e d in g , and that therefore it was entitled to partial summary judgment on that issu e. We address each of these contentions in turn, guided by the unambiguous resp o n ses of the Florida Supreme Court to the questions that we certified.

A. D istrict Court's Grant of Summary Judgment In Favor of St. Paul 1 . Standing A s a preliminary issue, we address the question of Dadeland's standing to b rin g an action for bad-faith refusal-to-settle an insurance claim under Fla. Stat. § 6 2 4 .1 5 5 ( 1 ) ( b ) ( 1 ) . Under the language of Florida's insurance code, any person may b rin g a civil action against an insurer when the insurer does not attempt "in good faith to settle claims when, under all the circumstances, it could and should have d o n e so, had it acted fairly and honestly toward its insured and with due regard for h er or his interests." Fla. Stat. § 624.155(1)(b)(1). The district court began its su m m ary judgment order by querying whether an owner-obligee of a surety bond c o n s titu te d an "insured" for purposes of the statute. The court also questioned w h eth er the contractual obligations imposed in a surety relationship could properly b e construed as insurance "claims" so as to give rise to a cause of action under Fla.

S ta t. § 624.155(1)(b)(1). Noting the differences between a traditional insurance r ela tio n s h ip and a suretyship, the district court expressed doubt as to "whether an o b lig e e may sue a surety under the bad faith insurer provision for its alleged refusal to perform its contractual duties." R3-137 at 17. The district court assumed, for p u rp o ses of its disposition, that an owner-obligee was an "insured" who could bring a n action against a surety under § 624.155(1)(b)(1).

A lth o u g h the district court did not rule on the issue, we found that, as a th resh o ld matter, the question of Dadeland's standing to bring a § 624.155(1)(b)(1) w as important enough that it warranted clarification by the Florida Supreme Court.

Therefore, we certified the following question to the Florida Supreme Court: IS THE OBLIGEE OF A SURETY CONTRACT CONSIDERED AN "IN S U R E D " SUCH THAT THE OBLIGEE HAS THE RIGHT TO SUE T H E SURETY FOR BAD-FAITH REFUSAL TO SETTLE CLAIMS U N D E R § 624.155(1)(b)(1)? D ad elan d , 383 F.3d at 1276.

The Florida Supreme Court answered that question in the affirmative. In its resp o n se, the court considered a number of factors, including its prior case law; the fact that a surety is defined elsewhere in the Florida insurance code as an "insurer," see Fla. Stat. § 624.03; the plain language of § 624.155(1)(b)(1); other jurisdictions' tr ea tm e n t of the question; and the legislative history of § 624.155(1)(b)(1). After a d etailed analysis, the court unambiguously held that an obligee in a surety relatio n sh ip does indeed constitute an "insured" for purposes of § 624.155(1)(b)(1).

In light of that response, it is clear, as a preliminary matter, that Dadeland, as o b lig e e , has standing to pursue this action against St. Paul, its surety, for its alleged b ad -faith refusal-to-settle. We now turn to the district court's disposition of D ad elan d 's claim.

2 . Whether Dadeland Satisfied the Condition Precedent Under § 6 2 4 .1 5 5 ( 1 ) ( b ) ( 1 ) In its summary judgment order, the district court observed that, in order to b rin g a bad-faith refusal-to-settle claim under § 624.155(1)(b)(1), a plaintiff had to e sta b lis h that he was entitled to a payment of the claim, either via a judicial a d ju d ic atio n of damages in the plaintiff's favor or via a settlement agreement.3 In D a d e la n d 's case, the arbitration panel imposed liability on Dadeland's contractor, W alb rid g e, in the amount of $1,417,842, and then stated in its decision that "[t]he su rety is bound to this award to the extent that its principal is obligated under the a w a rd and its defenses are denied." R2-71, Exh. 23 at 5. The district court co n clu d ed , however, that the arbitration panel's decision was not sufficient to e sta b lis h that Dadeland was entitled to payment of its claim under the performance b o n d with St. Paul. In the absence of some judicial determination that St. Paul had b reach ed an obligation under the performance bond and was liable for a "sum certain ," the court concluded that Dadeland had failed to satisfy the condition p reced en t necessary for an action for the bad-faith refusal-to-settle a claim, and that, th erefo re, its action failed as a matter of law. R3-137 at 20. Accordingly, the d istrict court granted summary judgment in favor of St. Paul.

D ad elan d appeals that decision, arguing that the arbitration panel's award, an d its finding that St. Paul was bound by it to the extent that Walbridge was unable to pay it, was sufficient to establish the condition precedent necessary to bringing a § 624.155(1)(b)(1) claim under Florida law. Because we were unclear as to the effect of the arbitration panel's earlier decision on Dadeland's bad-faith action, we certified the following question to the Florida Supreme Court: IS THE ARBITRATOR'S FINDING THAT A SURETY'S P R IN C IP A L HAS BREACHED ITS DUTY TO THE OBLIGEE, AND T H A T THE SURETY IS BOUND TO THE ARBITRATION AWARD TO T H E EXTENT THAT ITS PRINCIPAL IS BOUND, SUFFICIENT TO S A T IS F Y THE CONDITION PRECEDENT TO A LATER BAD-FAITH R E F U S A L -T O -S E T T L E CLAIM THAT THERE BE A PRIOR A D JU D IC A T IO N THAT THE PLAINTIFFS WERE ENTITLED TO A P A Y M E N T OF A CLAIM FROM THE SURETIES? D ad elan d , 383 F.3d at 1278.

T h e Florida Supreme Court answered this question in the affirmative. The co u rt observed that a plaintiff bringing a § 624.155(1)(b)(1) action for an insurer's b ad -faith refusal-to-settle a claim only needs to establish the validity of the u n d erlyin g claim. The court held that this threshold would be satisfied by alleging th at "a determination has been made with regard to `the existence of liability on the p a r t of [an uninsured principal]' and `the extent of the plaintiff's damages.'" Dadeland, No. SC04-1828, slip. op. at 37 (citation omitted).

In the context of Dadeland's case, the court concluded that an arbitration p an el's award of damages against an uninsured principal was a sufficient d eterm in atio n of liability so as to show the validity of the insured's underlying claim against the insurer. The court observed that the arbitration panel had made clear that the principal (Walbridge) had breached a duty to the obligee, Dadeland, an d that St. Paul, as the surety on the bond, was bound to the extent of Walbridge's liab ility. It found that this evidence was sufficient to establish the validity of D a d e la n d 's underlying claim against St. Paul, and that therefore Dadeland had satisfied the condition precedent necessary to bringing a § 624.155(1)(b)(1) action.

Thus, under Florida law, Dadeland was entitled to proceed with its claim against St.

P a u l.

In light of the Florida Supreme Court's response to this question, we co n clu d e that the district court erred in concluding that Dadeland had failed to satisfy the condition precedent necessary to bringing a § 624.155(1)(b)(1) action an d in granting summary judgment for St. Paul on that basis.

3 . Applicability of Res Judicata on Dadeland's Action T h e district court further concluded that Dadeland's claim against St. Paul w as barred by the doctrine of res judicata. The court suggested that Dadeland's claim against St. Paul was more properly construed as a breach of contract claim for its refusal to perform under the terms of the bond. Finding that Dadeland could h av e and should have brought that claim in its earlier arbitration proceeding, the co u rt stated that res judicata would bar Dadeland from bringing its current action ag ain st St. Paul.4 D ad elan d appeals that decision, arguing that its present action is a separate co u n t against St. Paul for its bad-faith refusal-to-settle­not a standard breach of co n tract claim­and that Dadeland could not have possibly asserted that count ag ain st St. Paul in the arbitration proceeding, because at the time of the arbitration it h a d not yet established the validity of its underlying claim. Because we were u n c le ar as to the effect of the earlier arbitration on Dadeland's action, we certified th e following question to the Florida Supreme Court: IS [THE] ARBITRATOR'S DECISION RES JUDICATA, THUS B A R R IN G DADELAND'S LATER CLAIM AGAINST THE SURETIES F O R BAD-FAITH REFUSAL TO SETTLE? D ad elan d , 383 F.3d at 1278.

T h e Florida Supreme Court answered that question in the negative. It agreed w ith Dadeland that its current claim was separate and independent from any breach o f contract claim that Dadeland might have asserted in the arbitration proceeding.

In addition, the court agreed that Dadeland's § 624.155(1)(b)(1) action had not yet a cc ru e d at the time of the arbitration proceeding, as Dadeland had not yet identity of the persons and parties to the actions, and 4) identity of the quality or capacity of the person for or against whom the claim is made." ICC Chem. Corp. v. Freeman, 640 So. 2d 92, 93 (Fla. Dist. Ct. App. 1994) (per curiam) (citation omitted). Res judicata applies both to claims actually raised and determined in the prior action, and to claims that could have been raised and determined in the prior action. See State v. McBride, 848 So. 2d 287, 290 (Fla. 2003). The district court found that "the relief sought by Dadeland in this case could have been granted in the earlier arbitration proceeding, the facts necessary to the maintenance of the two actions are identical, and Dadeland and the sureties were parties to the prior action. All conditions required for a finding of res judicata are present." R3-137 at 23. e sta b lis h e d a breach on the part of Walbridge or an entitlement to payment under th e performance bond. Because Dadeland's § 624.155(1)(b)(1) action had not yet accru ed at the time of the arbitration, the court concluded that res judicata would n o t bar Dadeland from bringing its § 624.155(1)(b)(1) claim in the present action.

In light of the Florida Supreme Court's response, it is clear that res judicata d o es not bar Dadeland from pursuing the current § 624.155(1)(b)(1) action against S t. Paul. The district court erred in concluding otherwise, and in granting summary ju d g m en t to St. Paul on that basis.

4 . Requirement of a General Business Practice to Pursue an Unfair Trade C laim in connection with a § 624.155 Action T h e district court also concluded that Dadeland did not present evidence to estab lish that St. Paul's alleged conduct constituted a general business practice. The c o u r t stated that in order for a plaintiff to bring a § 626.9541(1)(i) action against an in su rer­ th ro u g h the conduit of § 624.155­a plaintiff was required to provide ev id en ce that the unfair settlement practice complained of was a "general business p ractice." R3-137 at 27. Because Dadeland had failed to allege a general business p ractice on the part of St. Paul, the court construed Dadeland's § 626.9541(1)(i) claim as being waived.5 B ecau se the Florida Supreme Court had not addressed whether § 624.155 elim in ated the need for proof of a general business practice, we certified the fo llo w in g question to the Florida Supreme Court: D O E S THE LANGUAGE IN § 624.155(1)(B)(3) ELIMINATE § 6 2 6 .9 5 4 1 's REQUIREMENT OF PROOF OF A GENERAL BUSINESS P R A C T I C E WHEN THE PLAINTIFF IS PURSUING [AN UNFAIR T R A D E ] CLAIM THROUGH THE RIGHT OF ACTION PROVIDED IN § 6 2 4 .1 5 5 ? D a d e la n d , 383 F.3d at 1277 (emphasis omitted). The Florida Supreme Court a n s w e re d that question in the affirmative, holding that the plain language of § 6 2 4 .1 5 5 (1 )(b )(3 ) made clear that a plaintiff suing under § 624.155 does not need to alleg e a general business practice. The court construed the exceptional language of § 624.155(1)(b)(3) as applying to § 624.155 in its entirety, and, accordingly, c o n c lu d e d that the need for a general business practice was eliminated when an u n fair trade count was sought pursuant to § 624.155. In light of the answer of the Florida Supreme Court, is clear that Dadeland w a s not obligated to allege a general business practice in order to assert a § 6 2 6 .9 5 4 1 claim through the cause of action provided in § 624.155. The district c o u r t erred in concluding otherwise, and in treating Dadeland's § 626.9541 claim as b e in g waived. The response of the Florida Supreme Court makes clear that it was im p ro p er to grant summary judgment for St. Paul on that basis.

5. Genuine Issues of Fact D esp ite the fact that the district court committed the foregoing errors of F lo rid a law in granting summary judgment for St. Paul, we might nevertheless a ff ir m the district court's grant of summary judgment for St. Paul if we found there w ere no genuine issues of material fact remaining in the dispute between St. Paul an d Dadeland. Rule 56 makes clear that "[w]hen a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon th e mere allegations or denials of the adverse party's pleading, but . . . must set fo rth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P.

5 6 (e). "A dispute about a material fact is `genuine' if the `evidence is such that a reaso n ab le jury could return a verdict for the non-moving party.'" Jeffery v. S araso ta White Sox, Inc., 64 F.3d 590, 594 (11th Cir. 1995) (per curiam) (quoting A n d erso n v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510 (1986)). "T h e inquiry is whether the evidence presents a sufficient disagreement to require su b m issio n to a jury or whether it is so one-sided that one party must prevail as a m a tte r of law." Id. (quoting Anderson, 477 U.S. at 251-52, 106 S. Ct. at 2512).

T h e $26.5 million performance bond that was issued in connection with D ad elan d 's construction project set forth St. Paul's obligations as surety on the b o n d . Its relevant provisions state that St. Paul's obligations shall arise after D ad elan d "has declared a Contractor Default and [has] formally terminated the C o n tr ac to r 's right to complete the contract . . . ." R2-71, Exh. A at 2. When that co n d itio n is met, the bond states that St. Paul "shall promptly and at [St. Paul]'s ex p en se take one of the following actions:" 4 .1 A rran g e for the Contractor, with the consent of [Dadeland], to p erfo rm and complete the Construction Contract; or 4 .2 U n d e rta k e to perform and complete the Construction Contract itself . . . ; or 4 .3 Obtain bids and negotiated proposals from qualified contractors accep tab le to [Dadeland] for a contract performance and completion of th e Construction Contract . . . ; or 4 .4 Waive its right to [take those steps] and with reasonable p ro m p tn ess under the circumstances: .1 After investigation, determine the amount for which it may be lia b le to [Dadeland], and, as soon as practicable after the a m o u n t is determined, tender payment therefor to [Dadeland]; or .2 Deny liability in whole or in part and notify [Dadeland] citing rea so n s therefor.

R 2 - 7 1 , Exh. A at 2 (emphasis added). Thus, under the terms of the bond, once D ad elan d had declared a "Contractor Default" on the part of Walbridge, St. Paul w as legally obligated either to arrange for the contractor to complete the project, to o b tain a satisfactory substitute contractor to complete the project, or, "with reaso n ab le promptness," to investigate the matter and determine the extent of its lia b ility to Dadeland, or to "[d]eny liability in whole or in part and notify [D ad elan d ], citing reasons therefor." Id. The outstanding issue of fact pertains to w h eth er, and to what extent, St. Paul acted reasonably and in good faith in light of th ese obligations.

The evidence in the record suggests that Dadeland discovered structural and d esig n defects in connection with the project as early as 1997; Dadeland also d isco v ered that the project, as completed, was in violation of a number of p ro v isio n s of the South Florida Building Code. Although the facts show that St.

P au l was made aware of these problems­and the dispute between Dadeland and the c o n tr ac to r as far as who bore responsibility for them­as early as 1997, the district c o u r t found, properly, we believe, that Dadeland did not formally declare a C o n tr ac to r Default until 14 December 1998. Thus it was not until 14 December th at St. Paul's obligations to act under the bond were officially triggered.

In its letter, dated 14 December 1998, Dadeland wrote to St. Paul, declaring th at Walbridge had failed to perform the construction contract satisfactorily, and statin g that Dadeland was "hereby declar[ing] a Contractor Default and [was] fo rm ally terminat[ing] the Contractor's right to complete the contract and/or p erfo rm corrective work on the project." R2-71, Exh. 17. In that letter Dadeland d em an d ed that St. Paul "immediately take action in accordance with paragraph 4 of th e Bond." Id. The letter also stated: "if the Sureties [did] not take action within fiv e (5) business days of this letter, the Sureties' failure to take action shall be co n sid ered a failure to perform `with reasonable promptness'. . . ." Id. (quotations added).

S t. Paul responded to Dadeland on 18 December 1998, and indicated that it w as "in the process of conducting an investigation" into Dadeland's allegations.

R2-71, Exh. 18. The letter assured Dadeland that St. Paul would follow up with D ad elan d on 21 December 1998, but there is no evidence that it did so. Thus, the f o llo w in g day, 22 December 1998, Dadeland again wrote to St. Paul, indicating that S t. Paul "[had] not taken action [nor] advised of the action they intend[ed] to take" w ith respect to Walbridge's default on the project. R2-71, Exh. 19. In addition to d em an d in g that St. Paul take action in accordance with paragraph 4 of the bond, the letter stated that if St. Paul failed to take steps to honor its obligations under the b o n d within fifteen (15) days of its letter, St. Paul would be deemed in default on th e bond, pursuant to paragraph 5.6 It is clear from the facts that St. Paul did not resp o n d within fifteen days; in fact, its next correspondence with Dadeland did not arriv e until 18 January 1999.

In that 18 January 1999 letter, St. Paul took the position that "Walbridge [ h a d ] performed as required by the contract documents." R2-71, Exh. 20. In ad d itio n , St. Paul stated: "[a]s to any defective work for which Walbridge and the su b co n tracto rs may have responsibility, Walbridge has either had the appropriate su b co n tracto rs correct the work, or remains willing to have them do so." Id. The letter also stated that Walbridge bore no responsibility for the design defects at the d e v e lo p m e n t. Id. Finally, St. Paul stated that it was "not in a position to take over fo r Walbridge," and thus recommended that Dadeland "cooperate with Walbridge to bring this matter to a final resolution." Id.

A month later, in February 1999, Dadeland filed notice of an insurer violation w ith the Florida Department of Insurance, alleging that its general contractor had f aile d to perform the construction contract, that Dadeland had "repeatedly notified [S t. Paul] of the problems and declared a contractor default," but that St. Paul, 6 Paragraph 5 of the bond states: I]f the Surety does not proceed as provided in Paragraph 4 with reasonable promptness, the Surety shall be deemed to be in default on this Bond fifteen days after receipt of an additional written notice from [Dadeland] to the Surety demanding that the Surety perform its obligations under this Bond, and [Dadeland] shall be entitled to enforce any remedy available to [it].

R2-71, Exh. A at 2.

"w ith o u t any investigation, refused to perform any of [its] obligations under the B o n d ." R2-71, Exh. 21. Subsequent correspondence ensued between Dadeland and S t. Paul. In July 1999 Dadeland advised that "Walbridge [had] made only a token effo rt at completing the work under the permit that was issued to them." R2-67, E x h . B at 1. Dadeland's letter again stated that St. Paul had failed to honor its o b lig atio n s under the bond, and that as a result it was in danger of losing the co n stru ctio n project. The letter listed a panoply of defects contained at the d ev elo p m en t, and it emphatically demanded St. Paul take steps to address these p ro b lem s. In response to this letter, St. Paul indicated that the issue of liability for th e defects remained an open question, that Walbridge continued to deny resp o n sib ility for the defects, and that these issues were being adequately and th o ro u g h addressed via the arbitration proceeding between the parties.

Dadeland wrote to St. Paul again in September 1999, stating that its position th at it was both irresponsible and inappropriate for St. Paul to rely solely on in fo rm atio n obtained from the contractor, Walbridge, thereby intimating that St.

P au l was duty-bound to undertake an independent investigation into the defects c o n ta in e d in the development. The letter also made clear that, in light of the fact th at Walbridge had allegedly violated both state and county regulations in building th e development, at a minimum it was entitled to "at least a portion of [its] claims d irectly from [St. Paul] at this time." R2-67, Exh. F. In St. Paul's response, the su rety indicated that it "strongly disagreed with [Dadeland]'s continued assertions reg ard in g lack of investigation in this matter by [St. Paul]." R2-67, Exh. G. St.

P au l stated that had "conduct[ed] a good and proper investigation of [Dadeland]'s alleg atio n s," which St. Paul believed were subject to the arbitration.

In a final missive, sent 14 February 2000, Dadeland observed that the c o n tr ac to r had been conclusively found by the Miami-Dade County Board of Rules an d Appeals to be in violation of applicable building codes, and that, meanwhile, St.

P a u l "[had] not provided 1¢ as reimbursement toward the millions of dollars that h av e been spent correcting clearly deficient work performed by Walbridge." R26 7 , Exh. J. The letter accused St. Paul of "sit[ting] idly by and [] ignor[ing] [its] o b lig atio n s under the performance bond, for which [Dadeland] paid [an] a p p r o x im a te ly $150,000 premium." Id. Over a year after this correspondence, D ad elan d , having in the interim obtained a favorable judgment from the arbitration p an el for Walbridge's defective construction, brought the present action against St.

P au l, alleging that it acted in bad faith both in delaying the arbitration proceeding a n d in "totally ignor[ing] their duties under the terms of the performance bond." R2-71, Exh.1 at 4.

In its motion for summary judgment, St. Paul contended that there was no e v id e n c e that it breached its obligations under the performance bond, and that th erefo re it was entitled to summary judgment on Dadeland's bad-faith claim.

Specifically, St. Paul argued that paragraph 4 of the performance bond did not o b lig ate St. Paul to correct the construction deficiencies, if, in lieu of doing so, it "[d en ied ] liability in whole or in part" and, "with reasonable promptness under the circu m stan ces," notified Dadeland, "citing reasons therefor." R2-71, Exh. A at 2.

St. Paul contended that it had done so, with its response of 18 January 1 9 9 9 ­ w h erein it stated that "Walbridge [had] performed as required by the [ co n s tr u c tio n ] contract documents," R2-71, Exh. 20­and that therefore there was n o outstanding factual issue as to whether it had acted with bad faith. The district c o u r t apparently agreed with this characterization, although it did not make an ex p ress finding on the point. In its summary judgment order, the court stated its v iew that "the sureties performed all that they were required to do under the bond," R 3 -1 3 7 at 25, thereby implying that there were no remaining issues of fact as to w h eth er St. Paul acted with bad faith.

W e disagree. Florida's bad-faith statute obligates an insurer7 to act "in good f aith and with due regard for the interests of the insured." Farinas v. Fla. Farm B u reau Gen. Ins. Co., 850 So. 2d 555, 559 (Fla. Dist. Ct. App. 2003), pet. for rev iew denied, 871 So. 2d 872 (Fla. 2004) (citation and internal quotations o m itted ). See also Fla. Stat. § 624.155(1)(b)(1) (requiring an insurer to act "fairly an d honestly toward its insured," and "with due regard for her or his interests").

The statutory provision is grounded in the common law obligation of good faith that w as traditionally imposed on insurers, which obligated insurers to "refrain from a ctin g solely on the basis of their own interests" rather than those of the insured p arty. Farinas, 850 So. 2d 558 (citation and internal quotations omitted). The F lo r id a Supreme Court has held that, at its essence, the duty of good faith requires a n insurer to "use the same degree of care and diligence as a person of ordinary care an d prudence should exercise in the management of his own business." Boston Old C o lo n y Ins. Co. v. Gutierrez, 386 So. 2d 783, 785 (Fla. 1980). Although the typical b ad -faith insurance case hinges on an allegation that the insurer breached its co n tractu al duties, the Florida Supreme Court has also stated that "[b]ecause the d u ty of good faith involves diligence and care in the investigation and evaluation of th e claim . . . negligence is relevant to the question of good faith." Id. at 785 (citatio n omitted).

In Dadeland's case, we find that there remain questions of material fact as to w h eth er St. Paul acted in good faith and with due regard for the interests of its in s u r e d , Dadeland, including: (1) whether St. Paul adequately investigated D ad elan d 's complaints of a default on the part of the contractor; and (2) whether St.

P au l adhered to its obligations under the terms of the performance bond. These o u tstan d in g fact questions are sufficient for Dadeland to withstand a motion for su m m ary judgment.

As to the first issue, in construing the insurer's duty of good faith in other co n tex ts, the Florida Supreme Court has stated that an insurer has a duty to use "d ilig en ce and care in the investigation and evaluation" of an insured's case.

Boston Old Colony, 386 So. 2d at 785. See also Farinas, 850 So. 2d at 559 (stating th at the insurer "must investigate the facts" underlying a claim in the interests of r ea ch in g a final settlement). Here, this duty to investigate the insured's case arises n o t necessarily by virtue of a contractual provision, but rather by virtue of the in su rer's duty of good faith and fair dealing.

W e find that there remain issues of material fact as to whether St. Paul co n d u cted a sufficient investigation in response to Dadeland's formal declaration of a default on the part of Walbridge. Dadeland has proffered evidence that St. Paul n e ith e r had any direct conversations with Dadeland in response to its Default letter, n o r did it hire any consultants, engineers, or experts to determine the resp o n sib ilities of the parties with respect to the deficiencies. See R2-67 at 16, 19. A lth o u g h Dadeland repeatedly protested that St. Paul's denials of liability were b ased on the self-serving reliances of the contractor­rather than any independent in v estig atio n on the part of St. Paul­in response St. Paul stated only that it "strongly d isag reed with [Dadeland]'s continued assertions regarding lack of investigation in th is matter by [St. Paul]." R2-67, Exh. G. St. Paul never elaborated in the parties' co rresp o n d en ce as to what investigation (if any) it was conducting in connection w ith the dispute.

In light of this evidence, we agree that factual issues remain as to whether St.

P au l acted with good or bad faith, or whether its conduct was reasonable under all o f the circumstances. Although the terms of the performance bond may not, by its ex p ress terms, have necessarily required St. Paul to conduct an investigation into th e defects at the construction site, Dadeland's proffered evidence­which suggests a failu re on the part of St. Paul to conduct a thorough investigation into the co n tracto r's default­ is sufficient to give rise to fact questions as to whether St. Paul acted reasonably, with due care, and with regard to the interests of its insured, D a d e la n d .

Second, the evidence raises questions of fact as to whether St. Paul did in fact ad h ere to its obligations under the bond. Specifically, the evidence suggests that St.

P a u l failed to act in a timely manner with respect to Dadeland's allegation of a C o n tr ac to r Default, as it was required to do. Under the terms of the bond, after b ein g initially advised of Walbridge's default, St. Paul was obligated either to co m m en ce rectifying the matter, or, with "reasonable promptness," to: (1) d eterm in e the amount for which it was liable; or (2) "[d]eny liability in whole or in p art" and notify Dadeland of same. R2-71, Exh. A at 2. After being advised of W alb rid g e's default on 14 December 1998­and being asked to honor its obligations u n d er the bond within five (5) days­St. Paul failed to take any of these steps.

Rather, on 18 December 1998 it responded and stated only that it was "in the p ro cess of conducting an investigation" into the dispute. R2-71, Exh. 18. Its f o r m a l denial of liability pursuant to paragraph 4.4 did not come until a month later, o n 18 January 1999­thereby raising a jury question as to whether St. Paul acted w ith "reasonable promptness," 8 as it was required to do.

A d d itio n ally, the evidence suggests that St. Paul did not adhere to paragraph 5 of the bond, which obligated St. Paul to act within fifteen days of receiving an ad d itio n al written demand from Dadeland, or to be deemed in default of its c o m m itm e n ts . The record established that St. Paul failed to do so; Dadeland served its additional written letter on St. Paul on 22 December 1998, demanding that St.

P au l honor its obligations under the bond, but St. Paul's response (in which it fin ally invoked its right to deny liability under paragraph 4.4) did not arrive until 18 Jan u ary 1999­plainly beyond the fifteen-day period required by the bond's terms.9 N o t only does this evidence suggest that St. Paul's belated response arguably placed it in default of its commitments under the bond, but, viewed in context with all of th e factual circumstances, it creates triable issues of material fact as to whether St.

P au l acted in a timely manner and with reasonable care towards its insured, D ad elan d , or whether it engaged in a concerted attempt to avoid its commitments u n d er the bond by engaging in bad-faith dilatory tactics.

Viewed in a light most favorable to Dadeland, the nonmoving party, and reso lv in g all reasonable doubts in its favor, see Johnson, 263 F.3d at 1242, we find th ere are outstanding fact issues as to whether St. Paul acted in good faith and in acco rd an ce the terms of bond, or whether its conduct constituted an effort to engage in a pattern of bad-faith delay and denial. Accordingly, the district court's summary ju d g m en t in favor of St. Paul was improper. See, e.g., Berges v. Infinity Ins. Co., 8 9 6 So. 2d 665, 680 (Fla. 2004) ("[W]here material issues of fact which would su p p o rt a jury finding of bad faith remain in dispute, summary judgment is 9 Under paragraph 5 of the bond, and based on the receipt of Dadeland's letter, St. Paul was obligated to respond to Dadeland within fifteen days of 22 December 1998. Taken literally, the language of paragraph 5 obligated St. Paul to respond by 6 January 1999. Even reading paragraph 5 more liberally, as referring only to business days­ and not counting business holidays for Christmas and New Year's Day­ St. Paul would still have been obligated to respond by 14 January 1999. As its response did not arrive until 18 January 1999, under any calculation it seems clear that St. Paul failed to adhere to the requirements of the bond. im p ro p er.").10 Because "[t]he evidence presents a sufficient disagreement" on the q u estio n of St. Paul's conduct and whether it constituted bad faith, and because it is n o t "so one-sided that one party must prevail as a matter of law," Jeffery, 64 F.3d at 5 9 4 (citation and internal quotations omitted), we conclude that it would be in ap p ro p riate to grant summary judgment for St. Paul on the question of whether it acted with good or bad faith in handling the dispute between Dadeland, St. Paul, a n d Walbridge.11 B . District Court's Denial of Partial Summary Judgment to Dadeland D a d e la n d also challenges the district court's denial of partial summary ju d g m e n t on the issue of whether St. Paul should be collaterally estopped from reraisin g the same defenses that it raised in the arbitration action. In the arbitration, S t. Paul raised two relevant defenses: first, that Dadeland failed to comply with the term s of the performance bond, in that it did not give proper notice to St. Paul; and seco n d , that St. Paul was discharged from liability under the bond to the extent D ad elan d had made payments to Walbridge for the work performed. The arb itratio n panel, which awarded Dadeland damages for the construction defects, ex p ressly stated in its decision that St. Paul was "bound to this award" and that "its d e fe n s es [were] denied." R2-71, Exh. 23 at 5 (emphasis added). Dadeland's m o tio n for partial summary judgment argued that, in rejecting St. Paul's defenses, th e arbitration panel had fully disposed of them, and that St. Paul should be co llaterally estopped from re-raising them in the current proceeding. In response to D ad elan d 's collateral estoppel argument, St. Paul argued that Dadeland's bad-faith refu sal-to -settle claim was separate and distinct from the breach of contract claim th at had been at issue in the arbitration, and that therefore collateral estoppel did not a p p ly .

T h e district court was unclear as to whether the arbitration panel's decision­ w h ich the court viewed as akin to a breach of contract dispute­would have the effect of collaterally estopping St. Paul from raising the same defenses in a su b seq u en t bad-faith refusal-to-settle action. The court concluded that the issue w as largely moot, however, based on its earlier determination that res judicata b ar re d Dadeland's action in its entirety. Accordingly, the court denied Dadeland's m o tio n for partial summary judgment.

On appeal, we concluded that it was uncertain whether an arbitrator's d isp o sitio n of a party's defenses in a breach of contract action would subsequently b ar that party from raising them again in a separate bad-faith refusal-to-settle action, b ro u g h t under § 624.155. Thus we certified this question to the Florida Supreme C o u r t: W IL L AN ARBITRATOR'S DENIAL OF THE DEFENDANT'S A F F I R M A T I V E DEFENSES IN A BREACH OF CONTRACT CLAIM C O L L A T E R A L L Y ESTOP THE SAME DEFENDANTS FROM RAISING T H E SAME DEFENSES IN A SUBSEQUENT BAD-FAITH REFUSAL T O -S E T T L E CLAIM AGAINST THE SAME PLAINTIFF? D ad elan d , 383 F.3d at 1279.

T h e Florida Supreme Court's response was two-fold. First, the court co n clu d ed that the merits of St. Paul's two defenses had been fully considered and rejected by the arbitration panel, and that, consequently, it was now precluded from r ea ss er tin g those defenses in its action against Dadeland. Thus, the court agreed w ith Dadeland that collateral estoppel precluded St. Paul from re-raising the same d efen ses that it raised in the arbitration proceeding.

Second, however, the court indicated that St. Paul was not precluded from d e m o n s tr atin g the factual basis for its belief that the defenses it raised in the arb itratio n proceeding were valid. The court observed that St. Paul could seek to d efen d against the current bad faith claim by arguing that it "reasonably and in good faith believed that the previously rejected affirmative defenses were valid" at the tim e it raised them in the arbitration, Dadeland, SC04-1828, slip. op. at 42, and that th e factual basis for that belief, if reasonable, could feasibly assist St. Paul in d efen d in g against Dadeland's current § 624.155(1)(b)(1) action.12 Thus, while St.

P a u l could not re-raise the same defenses in the current action, the court stated that S t. Paul could seek to show a factual basis as to why it believed those defenses were reaso n ab le, so as to undermine Dadeland's contention that it had engaged in a badf aith refusal-to-settle.

H av in g received the response of the Florida Supreme Court, however, it is clear that St. Paul is collaterally estopped from raising against Dadeland the same d efen ses that were raised and rejected in the earlier arbitration proceeding. Because c o lla te ra l estoppel applies to those defenses, the district court should have granted p a r tia l summary judgment for Dadeland on that issue. Its failure to grant partial su m m ary judgment on this question was in error.

C. Dadeland Motion for Attorneys' Fees As a final matter, in connection with this appeal, Dadeland filed a separate m o tio n for attorneys' fees pursuant to Fla. Stat. § 627.428.13 As St. Paul correctly n o tes, an award of attorneys' fees under this statute is permissible only upon the in su red 's obtaining a final judgment or decree in "which [] recovery is had." Id.

See also Duke v. Hoch, 475 F.2d 761 (5th Cir. 1972) (stating that attorney's fees m ay be granted under Fla. Stat. § 627.428 "should the appellant ultimately prevail," an d stating that "prevail[ing] in the statutory sense" includes a "final judgment e n te re d for appellant") (internal citation, alteration, and quotations omitted). Here, alth o u g h Dadeland has prevailed in the instant appeal, it has not yet obtained a reco v ery pursuant to a final judgment in the district court. Therefore, an award of atto rn eys' fees for costs of this appeal would be premature at this juncture.

The Florida Supreme Court conditionally granted Dadeland's motion for 13 That provision 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 the named beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured's or beneficiary's attorney prosecuting the suit in which the recovery is had." Fla. Stat. § 627.428. atto rn eys' fees. We likewise conditionally grant Dadeland's motion for attorneys' fees incident to this appeal, conditioned upon Dadeland's ultimate recovery in the d istrict court. See McDonald, 373 So.2d 94.

III. CONCLUSION D ad elan d appealed the district court's grant of summary judgment in favor of S t. Paul, contending that the district court erred (1) in holding that Dadeland had not satisfied the condition precedent necessary to bring a § 624.155 claim against St.

P au l, in that it had not demonstrated the validity of its underlying claim; (2) in h o ld in g that Dadeland's claims were barred by res judicata; and (3) in holding that D a d e la n d was required to allege a general business practice in order to bring an u n fa ir trade count under § 624.155(1)(a)(1). Because each of the district court's co n clu sio n s was inconsistent with the answers that we received from the Florida S u p r em e Court, we conclude that the district court erred in granting summary ju d g m e n t as a matter of law to St. Paul. Moreover, we conclude that summary ju d g m en t in favor of St. Paul would be inappropriate, given that genuine issues of m a te ria l fact remain outstanding in this case.

I n addition, Dadeland appealed the denial of his motion for partial summary ju d g m en t, contending that St. Paul should be collaterally estopped from re-raising d efen ses that were rejected in the prior arbitration proceeding. The Florida S u p r em e Court has responded to our certified question on this issue by holding that c o lla te ra l estoppel clearly does apply to the defenses St. Paul raised in the earlier a rb itr atio n proceeding. Consequently, the district court erred in denying partial s u m m a ry judgment to Dadeland on this issue.

A c co r d in g ly , we REVERSE the district court's grant of summary judgment in favor of St. Paul, GRANT Dadeland's motion for partial summary judgment, and R E M A N D for further proceedings consistent with this opinion. We conditionally G R A N T Dadeland's motion for attorneys' fees incident to this appeal, conditioned o n its ultimately obtaining a favorable judgment in the district court.

* Honorable David D. Dowd, Jr., U.S. District Judge for the Northern District of Ohio, sitting by designation.

1 As is discussed subsequently, Florida's Insurance Code allows an insured person to bring an unfair trade action against an "insurer" when the insurer engages in unfair claim settlement practices­that is, a violation of Fla. Stat. § 626.9541(1)(i). See Fla. Stat. § 624.155(1)(a)(1).

2 The court did not discuss in depth whether there were genuine issues of material fact that would preclude a grant of summary judgment; its decision was grounded primarily in legal conclusions rather than an assessment of the sufficiency of the evidence.

3 Prior to bringing an action for bad-faith refusal-to-settle an insurance claim against an insurer, Florida law requires that the plaintiff demonstrate "that there has been a determination of the insured's damage." Talat Enters., Inc. v. Aetna Cas. & Sur. Co., 952 F. Supp. 773, 776 (M.D. Fla. 1996), aff'd, 217 F.3d 1318 (11th Cir. 2000). Florida courts have stated that the purpose of this condition precedent is "to show that the insured had a valid claim." Brookins v. Goodson, 640 So. 2d 110, 112 (Fla. Dist. Ct. App. 1994).

4 Under Florida law, in order for res judicata to apply "there must be a concurrence of the following conditions: 1) identity of the thing sued for, 2) identity of the cause of action, 3)

5 In order to understand the district court's decision, some background as to Florida's statutory scheme is necessary. With respect to insurance practices, Florida's unfair trade statute specifically requires proof of a "general business practice" on the part of the insurer to support the plaintiff's cause of action. See Fla Stat. § 626.9541(i)(3). However, Florida's insurance code, Fla. Stat. § 624.155(1)(a)(1), separately permits an insured person to bring an action against an insurer for bad faith settlement practices, if the insured person is "damaged . . . [b]y a violation of . . . section 626.9541(1)(i) . . . ." In other words, the insurance code permits an insured person to allege an unfair insurance practice through the conduit of § 624.155. Section 624.155(1)(b)(3) states that "a person pursuing a remedy under this section need not prove that such act was committed or performed with such frequency as to indicate a general business practice" (emphasis added). The district court, however, held that proof of a general business practice was required to bring a claim under § 624.155, and in so doing, it apparently concluded that the language in § 624.155(1)(b)(3) applied only to subsection (b) of § 624.155­not to subsection (1)(a).

7 As an initial matter, as discussed in section A of this opinion, the Florida Supreme Court has clarified unequivocally that a surety such as St. Paul is an "insurer" and that an obligee of a surety contract such as Dadeland is an "insured" for purposes of Fla. Stat. § 624.155. See Dadeland, SC04-1828, slip. op. at 30.

8 We disagree with the district court's finding that the evidence established that St. Paul acted "with reasonable promptness." R3-137 at 25.

10 Our conclusion is bolstered by the fact that Florida courts have repeatedly held that "[t]he question of failure to act in good faith with due regard for the interests of the insured is for the jury." Boston Old Colony, 386 So. 2d at 785 (citation omitted). See also Berges, 896 So. 2d at 680 ("Each case is determined on its own facts and ordinarily the question of failure to act in good faith with due regard for the interests of the insured is for the jury.") (citation, internal quotations and alterations omitted); Vest, 753 So. 2d at 1275 ("Good-faith or bad-faith decisions depend upon various circumstances and usually are issues of fact to be determined by a factfinder."); Farinas, 850 So. 2d at 559 (stating that "the jury is to decide whether an insurer has given inappropriate primary regard to his own interests over those of the insured"). Moreover, although the Florida Supreme Court did not address the substantive merits of Dadeland's bad-faith claim in its decision, it suggested in dicta its apparent belief that Dadeland had raised genuine issues of material fact and that therefore it ought to be entitled to proceed to trial. See, e.g., Dadeland, SC04-1828, slip. op. at 10 ("[W]hether Dadeland is entitled to an award for bad faith damages resulting from a failure to act in good faith under the bond beyond any contractual amounts owed can only be properly determined as this case proceeds to trial and Dadeland is afforded the opportunity to develop and prove damages, if any, suffered as a result of the alleged bad faith conduct of St. Paul.") (emphasis added); id. at 11 (stating that Dadeland will be precluded from obtaining duplicative damages at trial); id. at 42 (discussing the defenses that St. Paul will be permitted to raise at trial). 11 On appeal, the parties did not argue as to the merits of Dadeland's allegations of unfair trade practices­which it brought in connection with its § 624.155 action­and, therefore, we do not address that issue.

12 The court stated that "it is necessary for a court faced with a section 624.155 action to consider the entirety of the factual scenario underlying the plaintiff's claim when determining whether the defendant-insurer acted in bad faith . . . . In the instant matter, this factual scenario would necessarily include a review of whether St. Paul reasonably believed that its affirmative defenses were valid, thereby excusing it from performing its obligations under the performance bond." Dadeland, No. SC04-1828, slip. op. at 42.

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