RMI Holdings v. Aspen American Insurance Company

• Court: Court of Appeals for the Eleventh Circuit
• Decided: July 15, 2021
• Docket: 20-14525
• Status: Unpublished

Opinion

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[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 20-14525 Non-Argument Calendar ________________________

D.C. Docket No. 5:19-cv-00153-TKW-MJF

RMI HOLDINGS,

Plaintiff - Appellee,

versus

ASPEN AMERICAN INSURANCE COMPANY,

Defendant - Appellant. ________________________

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

(July 15, 2021)

Before MARTIN, LAGOA, and BRASHER, Circuit Judges.

PER CURIAM:

Aspen American Insurance Company appeals the district court’s

determination that Florida law applies to RMI Holdings’ maritime insurance contract USCA11 Case: 20-14525 Date Filed: 07/15/2021 Page: 2 of 12

claims against it and its application of Florida law entitling RMI to attorneys’ fees.

Aspen argues that the district court misapplied the Restatement (Second) of the

Conflicts of Law’s “most significant relationship” test in determining that Florida,

not Georgia, law governs this issue. Aspen also argues that, even applying Florida

law, the award of attorneys’ fees was in error. After careful review, we disagree and

affirm.

I.

RMI Holdings, a Georgia corporation, insured its boat, the Leelanau, with

Aspen American Insurance Company, a Texas insurer headquartered in Connecticut,

under maritime insurance policies. Offshore Risk Management, a Florida limited

liability company with an office in Florida, represented RMI as a wholesale broker

in securing those policies.

At issue here is a renewal policy, the application for which ORM transmitted

to USI Insurance Services, LLC, a limited liability company with its principal place

of business in New York and an office in Miami, Florida. USI served as RMI’s agent

for the renewal of the insurance policy. USI then sent ORM the completed

application materials, and ORM submitted them to Yachtinsure, Ltd., Aspen’s

underwriting and claims handling agent. The renewal application included RMI’s

address in Ocilla, Georgia, and that the Leelanau was kept in Port St. Joe, Florida.

Because RMI’s Georgia address was included in the application, Yachtinsure

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included a Georgia amendatory endorsement to comply with Georgia law. The

policy also limited navigation of the Leelanau to the “Waters of Gulf of Mexico,

Florida and Bahamas (Excluding Cuba) not exceeding 250 miles offshore.” And it

contained a forum selection clause limiting the courts where RMI could file suit

against Aspen to the United States District Courts for the Southern District of New

York, Southern District of Florida, Eastern District of Louisiana, and the Southern

District of Texas. Yachtinsure sent the policy to ORM via email, ORM emailed the

policy to USI, and USI emailed it to RMI.

While moored in Port St. Joe, the Leelanau suffered substantial damage from

Hurricane Michael. RMI then filed a claim under the policy for that damage, and

Aspen denied coverage. So RMI filed suit in the Northern District of Florida against

Aspen for breach of the insurance policy, ORM for negligence, and USI for

negligence and breach of fiduciary duty. No party timely objected to venue despite

the fact that the Northern District of Florida was not designated in the forum

selection clause. In its answer, Aspen asserted a counterclaim against RMI seeking

a declaration that the policy did not provide coverage for damages to the Leelanau

from Hurricane Michael.

All parties except for USI filed motions for summary judgment. Before ruling

on the merits of those motions, the district court had to determine a threshold issue:

what law applies to each claim? As relevant to this appeal, the district court applied

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the Second Restatement’s most significant relationship test and determined that

Florida law applies to both RMI’s contract claim against Aspen and Aspen’s

counterclaim. As part of that determination, the court found, first, that even though

the policy was delivered to ORM in Florida, “ORM was merely the conduit for

delivery of the policy (through USI) to [RMI] in Georgia.” Second, the court

determined that the policy was negotiated in Florida but did not give that factor much

weight since the negotiations occurred over email. Third, any proceeds from the

policy would be paid out in Georgia. Fourth, the Leelanau was moored in Florida

“and the policy specifically contemplated that it would be used in Florida waters”

and did not contemplate its use in Georgia. And fifth, the parties to the policy are a

Georgia corporation and Texas corporation with a principal place of business in

Connecticut. Weighing those five factors, the court concluded that the two factors

favoring Florida law outweighed the three factors favoring Georgia law. The district

court then granted RMI’s motion for summary judgment against Aspen.

Afterward, the court ordered the parties to submit briefs addressing whether

RMI was entitled to attorneys’ fees. Aspen filed a motion for reconsideration of the

court’s order on the motions for summary judgment, which the court denied. In its

order denying reconsideration, the district court rejected Aspen’s argument that the

policy at issue was delivered in Georgia, not Florida, for purposes of Florida law.

The court held that (1) the policy was physically delivered to a broker, ORM, in

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Florida; and (2) the policy was “issued for delivery” in Florida under Fla. Stat. §

627.409(2) because the Leelanau was located in Florida. For those reasons, the court

determined that RMI was entitled to recover attorneys’ fees from Aspen under Fla.

Stat. § 627.428(1). Aspen appealed.1

II.

A. Choice-of-Law

Under Georgia law, an insured may recover attorneys’ fees only if an insurer’s

refusal to pay was in bad faith. O.C.G.A. § 33-4-6. Under Florida law, bad faith is

not required. See Fla. Stat. § 627.428. Accordingly, we must decide which state’s

law governs the attorneys’ fees issue.

We review a district court’s choice-of-law determination de novo. Dresdner

Bank AG v. M/V Olympia Voyager, 446 F.3d 1377, 1380 (11th Cir. 2006). “[S]tatutes

allowing for recovery of attorney’s fees are substantive for Erie purposes.”

McMahan v. Toto, 256 F.3d 1120, 1132 (11th Cir. 2001). Accordingly, we must first

determine whether a federal maritime law exists to preempt the application of state

law. See id.

Typically, we decide cases arising under our maritime jurisdiction according

to federal maritime law. See Misener Marine Const., Inc. v. Norfolk Dredging Co.,

1 We note that Aspen is not appealing the district court’s ruling that the insurance policy affords coverage for RMI’s loss. The only order that Aspen appeals is the district court’s award of attorneys’ fees under Fla. Stat. §627.428(1). 5 USCA11 Case: 20-14525 Date Filed: 07/15/2021 Page: 6 of 12

594 F.3d 832, 839 (11th Cir. 2010). But because this case arises under maritime

insurance law, and no established federal maritime policy exists as to awards of

attorneys’ fees in maritime insurance disputes, state law applies. See Wilburn Boat

Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310, 321 (1955); see also All Underwriters

v. Weisberg, 222 F.3d 1309, 1313 (11th Cir. 2000). To determine which state’s law

applies, we apply the Restatement (Second) Conflict of Law’s “most significant

relationship” test. Dresdner, 446 F.3d at 1381. Specifically, because the issue of

attorneys’ fees arises out a contract dispute, we consider the five factors found in

Section 188. See Am. Family Life Assur. Co. of Columbus v. U.S. Fire Co., 885 F.2d

826, 833 (11th Cir. 1989). Those factors are: “(a) the place of contracting; (b) the

place of negotiation; (c) the place of performance; (d) the locus of the subject matter

of the contract; and (e) the domicile of the parties.” Id. at 1382; See also Restatement

(Second) Conflict of Laws § 188(2) (1971).

The district court weighed those five factors and determined that Florida law

applies. Aspen argues that the district court erred because it failed to give paramount

consideration to the location of the insured at the time the policy was issued, which

it considers to be the dispositive factor in maritime insurance matters. It further

argues that the district court erred by never actually weighing Florida’s interests in

having its law apply against Georgia’s. We disagree.

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As an initial matter, we can dispense with Aspen’s argument that the district

court merely applied the Section 188(2) factors without actually considering which

state had the most significant relationship to the transaction. Section 188(1) states

that “[t]he rights and duties of the parties with respect to an issue in contract are

determined by the local law of the state which, with respect to that issue, has the

most significant relationship to the transaction and the parties under the principles

stated in § 6.” Section 6 lists seven policy goals that guide our application of the five

Section 188(2) factors: (1) “the needs of the interstate and international systems,”

(2) “the relevant policies of the forum,” (3) “the relevant policies of other interested

states and the relative interests of those states in the determination of the particular

issue,” (4) “the protection of justified expectations,” (5) “the basic policies

underlying the particular field of law,” (6) “certainty, predictability and uniformity

of result, and” (7) “ease in the determination and application of the law to be

applied.” The district court considered the five Section 188(2) factors in light of

these policy considerations, determined “their relative importance with respect to

the particular issue,” id., and concluded that Florida law applies.

Next, we consider each of the five Section 188(2) factors. On de novo review,

we conclude that Florida law governs the issue of attorneys’ fees in this case.

First, “the place of contracting is the place where occurred the last act

necessary, under the forum’s rules of offer and acceptance, to give the contract

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binding effect[.]” Restatement (Second) Conflict of Laws, § 188 cmt. e on

Subsection (2) (1971). The common-law presumption in the forum—Florida—is

“that an insurance representative, serving as an independent insurance broker, acts

on behalf of the insured for purposes of procuring insurance coverage.” Essex Ins.

Co. v. Zota, 985 So.2d 1036, 1045 (Fla. 2008), superseded on other grounds by

statute as recognized in Essex Ins. Co. v. Integrated Drainage Sols., Inc., 124 So.3d

947, 951 (Fla. 2d DCA 2013). This means that a contract is formed upon delivery of

an insurance policy to that broker. See id. Accordingly, the “last act necessary . . . to

give the contract binding effect” under Florida’s rules of offer and acceptance

occurred in Florida, where the contract was delivered to ORM. This factor weighs

in favor of applying Florida law.

Second, ORM and Aspen’s underwriter negotiated the policy via email. The

district court determined that those negotiations occurred in Florida, where ORM is

located, and in England, where the underwriter is located. Because no party

advocated for English law to apply, the district court concluded that this factor favors

Florida law but gave it little weight. We agree. Aspen has not argued, nor do we find

any facts to support an argument, that any negotiations occurred in Georgia. This

factor weighs in favor of Florida.

Third, the place of performance is Georgia because that is where payment

would be received by RMI under the policy. The parties dispute how heavily this

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factor should weigh in favor of Georgia law. RMI argues that, because performance

under this contract is a simple matter of payment, Georgia has no significant interest

in having its law govern the attorneys’ fees issue. Aspen argues that this contact is

highly important. We need not ascribe any precise weight to this factor, as we

conclude that Florida law would apply regardless of whether we afford it some or

little weight.

Fourth, the locus of the subject matter of the contract, the Leelanau, was

Florida. The Leelanau was moored in Florida, and the policy contemplated that it

would be used in Florida, the Gulf of Mexico, and the Bahamas. The policy did not

cover the boat’s use in Georgia, despite Georgia having a coastal area where the boat

could be used. The comments to Section 188 state that “[w]hen the contract deals

with a specific physical thing, such as land or a chattel, or affords protection against

a localized risk, such as the dishonesty of an employee in a fixed place of

employment, the location of the thing or of the risk is significant.” Restatement

(Second) Conflict of Laws, cmt. e to Subsection (2) (1971). That is so because “[t]he

state where the thing or risk is located will have a natural interest in transactions

affecting it” and the parties will often expect that the law of that state would apply

“to determine many of the issues arising under the contract.” Id. And we know that

Aspen considered the location of the boat here because it calculated the premium as

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a Florida risk. Under these facts, we give this factor significant weight in our

balancing.

Fifth, we consider the parties’ domiciles. RMI is a Georgia corporation and

Aspen is a Texas corporation with its principal place of business in Connecticut.

This contact is of “greater importance when combined with other contacts, such as

that this state is the place of contracting or of performance or the place where the

other party to the contract is domiciled or does business.” Id. We give this contact

little weight because RMI—the Georgia corporation—is not seeking the benefit of

Georgia law and because the contract was negotiated and finalized in Florida. Aspen

argues that “the overwhelmingly important connection is to Georgia because that

state has expressed an overriding interest in the protection of its own citizens and in

the regulation of marine insurers who issue policies to Georgia citizens.” But that

interest in the protection of Georgia citizens is not triggered here, where Aspen

would have a court potentially deny a fee award to a Georgia citizen by applying a

more restrictive Georgia law. Georgia does not have an interest in reducing its

citizens’ recovery under a contract that was negotiated and delivered in another state.

Factors one, two, and four each favor Florida law. Factors three and five each

favor Georgia law. Weighing those factors in light of the policies set forth in Section

6, we conclude that Florida law applies. Here, the most important contacts are that

the insurance contract was negotiated in Florida, it was finalized by delivery to a

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Florida insurance broker, the parties expected that the Leelanau would be moored in

Florida, and Aspen calculated its rates based on the risk being in Florida. Georgia

has very little interest in applying its law on this issue. Florida, on the other hand,

has an interest in applying its law. Accordingly, the relative interests of the states

and the expectations of the parties are better served by applying Florida law.

B. Application of Florida Law

“The proper standard for an award of attorney’s fees is a question of law that

we review de novo.” Smalbein v. City of Daytona Beach, 353 F.3d 901, 904 (11th

Cir. 2003). But we review the district court’s factual findings relevant to the

application of that standard only for clear error. Id. Finally, we review the district

court’s decision to award attorneys’ fees for abuse of discretion. Id.

The district court properly identified Fla. Stat. § 627.428(1) as the standard

governing whether RMI is entitled to attorneys’ fees. Section 627.401 states that

“[n]o provision of this part of this chapter applies to: . . . (2) Policies or contracts not

issued for delivery in this state nor delivered in this state, except as otherwise

provided in this code.” But, as we have previously explained, delivery of the policy

to ORM—a Florida broker working on behalf of RMI—is delivery under Florida

law. See Essex Ins. Co., 985 So. 2d at 1051. Because the policy was delivered to

ORM in Florida, Section 627.428(1) applies.

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III.

Under the Restatement (Second) of the Conflicts of Law’s “most significant

relationship” test, Florida law applies to the issue of whether RMI may recover

attorneys’ fees from Aspen. Applying Florida law, the policy was delivered to RMI

through its agent in Florida. Accordingly, we affirm the district court’s grant of

summary judgment and supplemental order.

AFFIRMED.