TJOFLAT, Circuit Judge.
In this § 1292(b) interlocutory appeal, we consider a narrow issue concerning claims against uninsured/underinsured motorist ("UM") insurance
During the pendency of this appeal—but prior to oral argument—the Florida Supreme Court held that the determination of damages in a UM contract case is binding in a subsequent bad-faith case. Fridman v. Safeco Ins. Co. of Ill., 185 So.3d 1214, 1216 (Fla. 2016). Critical to this appeal, however, Fridman contained a caveat that the parties have a right to appellate review of the statutory-damages determination before it becomes binding in the subsequent bad-faith case. Id. at 1226. We conclude that the defendant, GEICO, did not receive appellate review of the statutory-damages determination in the parties' underlying breach-of-contract case. Therefore, that damages determination does not bind the parties in this bad-faith case. We thus reverse the District Court's order granting partial summary judgment on the binding effect of the verdict in the Circuit Court's breach-of-contract case, and hold that the parties must again litigate statutory damages.
This case began tragically. On March 3, 2007 at around 12:10 AM, Gerard Bottini was traveling on I-75 in Hillsborough County, Florida. A car ahead of him caught fire and began emitting smoke, obscuring his view of the road. As a result, he lost control of his vehicle, which left the roadway, rolled over, and ejected him. He died later that day from his injuries.
The vehicle Mr. Bottini was driving was insured by a GEICO policy that provided $50,000 of UM coverage. The car that caught fire was underinsured for purposes of Fla. Stat. § 627.727. After Mr. Bottini's death, Mary Bottini, his wife, became the personal representative of Mr. Bottini's estate. In the months following the crash, Ms. Bottini's lawyer sent two letters to GEICO demanding payment of the policy maximum because Mr. Bottini was not at fault, and GEICO had possession of crash reports supporting that conclusion. GEICO denied the requests, stating that it was still conducting its own investigation to determine whether Mr. Bottini was at fault for the accident, which would render the coverage inapplicable.
On August 8, 2007, 104 days after Ms. Bottini's lawyer sent her first letter to GEICO and 158 days after the crash, she filed a Civil Remedy Notice of Insurer Violation ("CRN") with the Florida Department of Financial Services. Filing the CRN is a statutory prerequisite to filing a bad-faith claim against an insurer. Fla. Stat. § 624.155(3). As required by § 624.155(3)(b)(1), Ms. Botini's CRN listed the statutory provisions that she alleged GEICO was violating by failing to honor her claim.
In April 2008, Ms. Bottini sued GEICO in the Circuit Court for Hillsborough County, Florida seeking benefits under the UM policy. GEICO defended on the basis that Mr. Bottini was negligent in driving his vehicle and such negligence was either the sole or contributing cause of the accident. Ms. Bottini countered that the vehicle that caught fire ahead of Mr. Bottini was maintained and operated negligently, and that negligence caused the crash, not any breach of duty committed by Mr. Bottini.
The case was tried to a jury, and the jury found for Ms. Bottini. It decided that Mr. Bottini was not negligent, that both the operator and owner of the smoking vehicle were negligent, and that GEICO was therefore liable. The jury also decided the full extent of damages arising from the accident—$103,552 to the estate; $14,522,478 to Ms. Bottini for loss of support, services, companionship, and pain and suffering; and around $5,400,000 to each of Mr. Bottini's three children for loss of support and services, parental companionship, instruction and guidance, and pain and suffering. In total, the jury found damages amounting to $30,872,266.
Following the verdict, GEICO filed motions for new trial and remittitur, but those were denied. It then filed a motion in the Circuit Court to limit the judgment to the $50,000 policy maximum, and that motion was granted. Thus, after reciting the jury's $30,872,266 damages verdict and assessing setoffs,
GEICO appealed the judgment to the Second District Court of Appeal. It sought a new trial on several grounds, three of which were pertinent to the computation of damages. It argued that Ms. Bottini's counsel impermissibly attacked the character of the driver of the vehicle that caught fire, that Ms. Bottini's counsel made a highly inflammatory closing argument, and that $30,000,000 in damages was excessive and against the "manifest weight of the evidence." GEICO also contended that the judgment clearly reflected a "punitive component" as a result of "prejudicial and improperly admitted evidence and argument."
The Second District affirmed the judgment in a short per curiam opinion that reads in its entirety as follows:
Geico Gen. Ins. Co. v. Bottini, 93 So.3d 476, 477 (Fla. Dist. Ct. App. 2012).
Judge Altenbernd wrote separately to address the elephant in the room—the effect of the jury's calculation of damages in the UM suit on the inevitable, forthcoming bad-faith lawsuit:
Id. at 478 (Altenbernd, J., concurring) (footnote omitted). GEICO did not seek discretionary postjudgment review in the Second District or in the Supreme Court of Florida.
Ms. Bottini brought this action in the District Court on February 8, 2013, invoking the Court's diversity jurisdiction under 28 U.S.C. § 1332. She alleged that GEICO acted in bad faith, violating several provisions of Fla. Stat. § 624.155. She contended that she was therefore entitled, in accordance with Fla. Stat. § 627.727(10), to the full amount of damages designated by the jury in the UM breach-of-contract lawsuit. Ms. Bottini then moved the District Court for summary judgment on the issue of damages, arguing that the Circuit Court jury verdict fixed the damages at $30,872,266. GEICO countered, arguing that it never received appellate review of that damages verdict; therefore, giving effect to the verdict in the bad-faith lawsuit would violate its right to procedural due process.
The District Court granted Ms. Bottini's motion, holding that the verdict was binding as the measure of damages in the bad-faith suit. GEICO subsequently filed a motion for reconsideration of the District Court's order, or alternatively, to certify the order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b).
In this Part, we explain the mechanics of an insurer-bad-faith suit under Florida law. Part II.A details the history of Florida's bad-faith cause of action. Part II.B explains the requirements for a plaintiff to prevail on a bad-faith claim against a UM insurer, including the Florida Supreme Court's recent clarification in Fridman that the underlying UM breach-of-contract suit determines forward-looking damages.
In 1982, the Florida legislature enacted § 624.155, which imposed on insurers a duty to administer policyholders' claims in good faith and equipped policyholders with a cause of action against insurers that failed to do so. Fla. Stat. § 624.155(1)(b)(1); Fridman, 185 So. 3d at 1220. Accordingly, an insurer that fails to settle a legitimate claim in good faith is subject to liability both for breaching its contract with the policyholder—the insurance policy—and for violating Florida's bad-faith statute.
Before a policyholder can bring a bad-faith claim under § 624.155, he must first give notice to the insurance company. Fla. Stat. § 624.155(3)(a). The policyholder's notice, the CRN, must allege specific statutory violations and detail the facts giving rise to, and the policy language relevant to, the claim.
For several years after the statute was enacted, Florida courts struggled to understand how to calculate damages in UM bad-faith suits. The Florida Supreme Court initially interpreted the statute to allow damages in excess of the UM policy only when the damages were "the natural, proximate, probable, or direct consequence of the insurer's bad faith actions." McLeod v. Cont'l Ins. Co., 591 So.2d 621, 626 (Fla. 1992). In other words, if an insurer's bad-faith conduct amounted to a simple delay in settling a legitimate claim, a policyholder ordinarily could not recover damages beyond the policy maximum and the costs associated with litigation. Fridman, 185 So. 3d at 1221. The legislature rebuked the McLeod interpretation, enacting § 627.627(10), which reads as follows:
Fla. Stat. § 627.627(10) (emphasis added). Florida courts thereafter acknowledged that § 627.727(10) "clearly and unambiguously reflects the legislative intent that the damages in section 624.155 bad faith actions shall include any amount in excess of the policy limits." Fridman, 185 So. 3d at 1221 (emphasis in original).
Before a policyholder may file a bad-faith lawsuit in which she alleges that her UM insurer failed to settle a meritorious claim in good faith, she must first establish that her claim was, indeed, meritorious. Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So.2d 1289, 1291 (Fla. 1991). She does so by obtaining a determination that her insurer is contractually liable under her UM insurance policy. Id; Fridman, 185 So. 3d at 1224. In addition to establishing contractual liability, the policyholder must also obtain a full determination of damages arising out of the event giving rise to the UM claim.
But how is the damages element established in a bad-faith action? Is the initial statutory damages determination binding in the subsequent bad-faith action? Previous courts had reached conflicting conclusions.
185 So. 3d at 1224-25 (citation omitted).
Given the significance of the initial statutory-damages determination, the Court held that parties have a right to appeal it. The Court rejected the argument that appellate courts lack jurisdiction to review damages in excess of the policy maximum and additionally rejected the Second District's reasoning in Bottini that errors in calculating damages are subject to mere harmless-error review:
Id. at 1226-28. Denying the parties a right to appeal the binding damages determination, the Court reasoned, could give rise to procedural due process problems. Id. at 1226. To prevent such problems, the Court concluded that damages determinations in this context are not binding unless both parties are afforded an "opportunity . . . to obtain appellate review of any timely raised claims of error in the determination of damages obtained in the UM trial." Id.
Fridman therefore provides the framework we must apply in determining whether the UM verdict in the case underlying this appeal is binding in the bad-faith action in the District Court.
To determine whether the UM verdict now binds GEICO, we must resolve two questions. First, did GEICO actually receive appellate review of the Circuit Court's determination of statutory damages? Second, if GEICO did not receive appellate review, did its failure to pursue further review of the Second District's decision waive any objection it might have had to using that determination in the bad-faith suit? We address each question in turn.
To determine whether GEICO received appellate review of the Circuit Court jury's damages calculation, we must examine the Second District's decision. As noted above, the decision offers little to parse:
Bottini, 93 So. 3d at 477. Though it is short, the opinion reveals that the Second District did not review the errors GEICO alleged to the extent such errors may have impacted damages beyond the $50,000 policy maximum. The Court refused to do so because it believed that "any such errors were harmless." Id. Because the Second District chose not to address GEICO's alleged errors, we hold that it failed to provide the appellate review to which GEICO was entitled under Florida law.
Our interpretation of the Second District's opinion is not shaken by the Court's statement that "none of the issues [raised by GEICO] warrants reversal." Id. As explained above, the Court reached this conclusion not because it found that errors had not tainted the jury's computation of damages, but because it mistakenly believed that the alleged errors, "even if" they had occurred, would not warrant reversal. Nowhere does the Court say that the jury did not commit errors, and to nevertheless interpret its opinion in that way would render superfluous its discussion of harmlessness.
We are not the only Court to interpret the Second District's opinion in this way. In Fridman, the Florida Supreme Court repudiated the Second District's harmless-error approach. 185 So. 3d at 1228. If the Second District had actually reviewed the errors alleged by GEICO, then the Florida Supreme Court would have nothing to repudiate. But the Florida Supreme Court did repudiate because it, like us, read the Second District's opinion as demonstrating the Second District's failure to review for errors due to a mistaken belief that such a review would be inconsequential "in the context of [the] case." Bottini, 93 So. 3d at 477.
Because the Second District did not review the errors alleged by GEICO, we conclude that GEICO has been denied its "right to appellate review of properly preserved claims of error in the determination of damages." Fridman, 185 So. 3d at 1224. We now turn to whether GEICO waived its right to appellate review by failing to take any additional actions after the Second District issued its opinion.
As Ms. Bottini observes, GEICO had several options available to it to seek review of the Second District's decision. It could have sought review in the Second District by moving the Court to clarify or rehear its decision under Fla. R. App. P. 9.330(a); it could have moved the Second District to rehear the case en banc under Fla. R. App. P. 9.331; it could have sought review in the Florida Supreme Court under Fla. R. App. P. 9.330(a) or 9.120; and it could have taken Judge Altenbernd's suggestion to file a writ of mandamus in the Florida Supreme Court. Did its failure to take any of these steps deprive it of the right to object to using the damages verdict in the District Court?
We think not. Had GEICO failed to appeal the verdict to the Second District, the answer may be different. However, the key difference between an appeal to a district court of appeal and all of the alternative procedures listed above is that the alternative procedures are all discretionary. None guarantees that GEICO would have had its argument considered. By contrast, a litigant can appeal to a district court of appeal as a matter of right. Fla. Const. art. V, § 4. When, in Fridman, the Florida Supreme Court characterized appellate review as a right afforded to the parties, we think it must have been referring to appellate review in a district court of appeal, the only court in which the litigants have a right to appellate review. Fridman, 185 So. 3d at 1224. This is why the Second District erred for failing to review GEICO's alleged errors—it did not vindicate that right.
Moreover, it is not self-evident how a waiver rule other than failing to appeal to a district court of appeal would work in this case. Because GEICO had several options available to it, which options would have satisfied a waiver rule? Would GEICO have to exhaust its remedies and pursue all of them? Would it have to pursue only one, and, if so, which one? Perhaps Ms. Bottini might argue that GEICO had to do something. But GEICO did do something: it appealed to the Second District, the only court in which it was guaranteed to have its argument heard. We do not read in to Fridman a mandate to pursue additional discretionary review after a district court of appeal issues its judgment.
True, the Florida Supreme Court in Fridman discussed the District Court's order in this case in which the District Court seems to acknowledge the existence of some form of waiver to appellate review. In doing so the Court does not explicitly disapprove of the District Court's reasoning:
Fridman, 185 So. 3d at 1228. Nevertheless, even if we interpret the Florida Supreme Court as implicitly endorsing some sort of waiver rule by referring to the District Court's statement that "the insurer failed to pursue further relief to review the Second District's decision," such a waiver must jibe with the rest of the opinion, which characterizes appellate review as a "right." Id. at 1224, 1227. We do not think the Florida Supreme Court was referring to a right to file a piece of paper with a court that had no obligation to consider the contents of the paper. Because GEICO did, in fact, raise its objection in the Second District—the only Court required to consider its argument—we do not add a gloss onto Fridman requiring a litigant to pursue further, discretionary review after a district court of appeal renders its decision.
We therefore conclude that the measure of damages determined by the jury in Bottini's underlying UM suit does not bind the parties in the present bad-faith action in the District Court. GEICO is entitled to a new damages determination. Accordingly, we REVERSE the grant of partial summary judgment and REMAND for further proceedings consistent with this opinion.
Section 624.155(1)(b)(1) provides a civil action against an insurer who fails to "attempt in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests."
Fla. Stat. § 624.155(3)(b)(1)-(5).