Houston Specialty Insurance Company v. Enoch Vaughn

• Court: Court of Appeals for the Eleventh Circuit
• Decided: February 28, 2019
• Docket: 17-14526
• Status: Unpublished

Opinion

Case: 17-14526 Date Filed: 02/28/2019 Page: 1 of 5

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 17-14526 ________________________

D.C. Docket No. 8:15-cv-02165-EAK-AAS

HOUSTON SPECIALTY INSURANCE COMPANY,

Plaintiff - Appellant,

versus

ENOCH VAUGHN, individually, and as parent and natural guardian of M.V., a minor, ALL FLORIDA WEATHERPROOFING & CONSTRUCTION, INC., RICHARD FULFORD, ROBERT MENDENHALL,

Defendants - Appellees.

________________________

Appeal from the United States District Court for the Middle District of Florida ________________________

(February 28, 2019) Case: 17-14526 Date Filed: 02/28/2019 Page: 2 of 5

Before TJOFLAT and JORDAN, Circuit Judges, and HINKLE, * District Judge.

PER CURIAM:

Houston Specialty Insurance Company filed this declaratory judgment

action against its insureds—All Florida Weatherproofing, Richard Fulford, and

Robert Mendenhall—alleging that they materially breached the cooperation

provision of their policy by failing to assist and by entering into a settlement

agreement without its consent. The district court, for a number of reasons,

ultimately ruled that HSIC could not assert its breach claims against the insureds

because it failed to comply with Florida’s Claims Administration Statute, Fla. Stat.

§ 627.426. HSIC appeals from the district court’s judgment in favor of the

insureds.

Following a review of the record, and with the benefit of oral argument, we

affirm the orders and judgment of the district court. Because we write for the

parties, we set out only the issues that merit analysis. As to all other issues, we

affirm without discussion.

HSIC concedes that it did not comply with § 627.426(2)(b). See Br. for

HSIC at 41. But it argues that the district court should have concluded that it is a

surplus lines insurer and, as such, did not have to comply with the CAS. See Fla.

Stat. § 626.913(4) (“[T]he provisions of [C]hapter 627 do not apply to surplus lines

* Honorable Robert L. Hinkle, United States District Judge for the Northern District of Florida, sitting by designation. 2 Case: 17-14526 Date Filed: 02/28/2019 Page: 3 of 5

insurance. . . .”). Reviewing for abuse of discretion, see Lodge v. Kondaur Capital

Corp., 750 F.3d 1263, 1273 (11th Cir. 2014), we disagree.

Although HSIC asked the district court to take judicial notice that it is a

surplus lines insurer, that matter is not an appropriate one for judicial notice given

the requirements for the authorization of surplus lines insurance set forth in Fla.

Stat. § 626.915. See Fed. R. Evid. 201(b); Shahar v. Bowers, 120 F.3d 211, 214

(11th Cir. 1997) (en banc). In addition, even if the matter could be judicially

noticed, the unauthenticated 2016 website printout from the Florida Office of

Insurance Regulation provided by HSIC does not conclusively establish its status

in 2012, when the policy was issued. Indeed, the printout itself states that the

Office of Insurance Regulation “does not warrant or represent that this information

is current, complete, and accurate.”

The main argument advanced by HSIC is that the district court erred in

ruling that, due to the untimely disclosure of the policy with the statutorily required

surplus line language, it could not use that policy at trial. Again reviewing for

abuse of discretion, see Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d

1292, 1313 (11th Cir. 2011), we conclude that there is no reversible error.

First, there is no question that HSIC did not timely disclose the policy with

the surplus lines language, and that the sanction imposed by the district court was

expressly authorized by Federal Rule of Civil Procedure 37(c)(1) (“If a party fails

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to provide information . . . the party is not allowed to use that information to

supply evidence on a motion, at a hearing, or at a trial, unless the failure was

substantially justified or is harmless.”). See, e.g., Bearint ex rel. Bearint v. Dorell

Juvenile Group, Inc., 389 F.3d 1339, 1348–49 (11th Cir. 2004) (affirming the

exclusion of an untimely expert report). Second, as the district court noted, HSIC

had asserted for several years and throughout a couple of lawsuits (including one

that went to trial in the district court) that the policy without the surplus lines

language (including one labeled a “certified” copy) was the operative policy.

Third, HSIC’s late production of the policy with the surplus lines language

surprised the insureds, affected their litigation posture and strategy (e.g., by

affecting their ability to make informed decisions), and caused them prejudice.

Fourth, there was no substantial justification for the late disclosure. If HSIC—the

plaintiff in this case—was issuing surplus lines policies, it knew (or should have

known) that those policies needed to have certain surplus lines language in order to

satisfy Florida law. So once it received a policy from a broker/agent or third party

that did not contain the required surplus lines language, it should have taken steps

to obtain a copy of the policy with the necessary language. As far as we can tell,

there is nothing in the record that demonstrates that HSIC asked the broker/agent

or third party early on to locate the policy (or pages) with the surplus lines

language.

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The arguments made by HSIC—e.g., that the insureds had a copy of the

policy with the surplus lines language, and that the short discovery period between

the time that the insureds filed their affirmative defenses and the close of discovery

excuses the late disclosure—do not mandate reversal. The insureds may have had

a copy of the policy with the surplus lines language, but it was reasonable for them

not to look for it given that HSIC affirmatively represented on many occasions that

the operative policy was the one without the surplus lines language. And although

HSIC represents that it asked for the operative policy from the insureds in

discovery, it does not quote its request for production demanding the policy. As

for the short discovery period, HSIC has a point, but it also waited three months

after it filed its motion for judicial notice to provide a copy of the policy with the

surplus lines language.

We might have struck the balance differently, or imposed a lesser sanction,

but the question is not what we would have done in the first instance. The question

instead is whether the district court abused its discretion in imposing a strong

sanction. Cf. Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456

U.S. 694, 707–09 (1982) (affirming sanction of regarding certain facts as

established for failure to comply with discovery orders related to the attempt to

establish those facts).

AFFIRMED.