Thomas Barbato v. State Farm Florida Insurance Company

• Court: Court of Appeals for the Eleventh Circuit
• Decided: January 16, 2025
• Docket: 23-11645
• Status: Unpublished

Opinion

USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 1 of 12

[DO NOT PUBLISH] In the United States Court of Appeals For the Eleventh Circuit

____________________

No. 23-11645 Non-Argument Calendar ____________________

SANDRA SAFONT, individually and on behalf of all others similarly situated, Plaintiff, THOMAS BARBATO, YVONNE BARBATO, Plaintiffs-Appellants, versus STATE FARM FLORIDA INSURANCE COMPANY,

Defendant-Appellee.

____________________ USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 2 of 12

2 Opinion of the Court 23-11645

Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:22-cv-22891-KMM ____________________

Before ROSENBAUM, GRANT, and LAGOA, Circuit Judges. PER CURIAM: Thomas and Yvonne Barbato sued their insurer, State Farm Florida Insurance Company, for breach-of-contract after State Farm paid a claim under the Barbatos’ insurance policy but refused to pay interest on the claim. The district court dismissed the com- plaint with prejudice because it found that suits for the recovery of unpaid interest alone are barred by the limitation against private causes of action in Florida Statute § 627.70131(5)(a). 1 During this appeal, Florida’s Fifth District Court of Appeal issued its decision in Taylor v. State Farm Fla. Ins. Co., 388 So. 3d 307 (Fla. 5th Dist. Ct. App. 2024), holding that an insurance policy that contains a standalone, independent obligation to pay interest can form the sole basis for a private cause of action that is not precluded by § 627.70131(5)(a). The policy at issue here is identical to the one in Taylor, the only Florida appellate decision addressing this issue. In

1 The Statute was amended in 2021. The relevant interest provision was un- changed, but now appears in a different subsection. See Fla. Stat. § 627.70131(7)(a) (2022). The Parties agree that the amendment had no substan- tive effect on the statute or its applicability to this case. Like the district court below, we refer to the applicable statutory section as (5)(a), even though it is now codified at (7)(a). USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 3 of 12

23-11645 Opinion of the Court 3

light of Taylor, the district court’s basis for dismissing the complaint in the instant case was incorrect since, under Florida law, the Bar- batos’ breach of contract claim is a viable, independent cause of action that is not precluded by the limitation in §(5)(a). Because we are bound to follow any changes in a state's decisional law that oc- cur during an appeal, see McMahan v. Toto, 311 F.3d 1077, 1080 (11th Cir. 2002), we vacate the district court’s order dismissing the Bar- batos’ claim. We also deny State Farm’s motion to stay the appeal or issue a limited remand. I. BACKGROUND In 2018, the Barbatos’ home was damaged by Hurricane Irma. At the time, the home was covered by a homeowner’s insur- ance policy (the “Policy”) that was issued by State Farm. An ap- praisal resulted in an award of $125,456.02 to the Barbatos in Au- gust 2022. After State Farm paid the claim, the Barbatos sued State Farm for breach of contract because the amount that State Farm paid did not include interest. 2 As the Amended Complaint points out, the Policy contained a Loss Payment provision in which State

2 The Barbatos filed their Amended Complaint on November 8, 2022. They alleged that, in breach of the Policy, State Farm “failed to pay the principal amount owed to Plaintiffs pursuant to the Appraisal Award within 15 days” of its issuance, and that Defendant thereafter “fail[ed] to included [sic] in its pay- ments to Plaintiffs any interest . . . from the date [it] received notice of Plain- tiffs’ claim.” Thus, the Barbatos claim they “were entitled to payment of in- terest as required by the Policy’s Loss Payment provision and [Section 627.70131(5)(a)],” but did not receive that interest when Defendants paid the Award. USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 4 of 12

4 Opinion of the Court 23-11645

Farm agreed that “interest will be paid in accordance with Section 627.70131(5) of the Florida Insurance Code. State Farm moved to dismiss the Amended Complaint. The district court granted State Farm’s motion and dismissed with prejudice the Barbatos’ claim because it found that a cause of action was precluded under Florida Statute § 627.70131(5)(a). The Barbatos then timely appealed. II. STANDARDS OF REVIEW We review de novo a Federal Rule of Civil Procedure 12(b)(6) dismissal for failure to state a claim, “accepting the allega- tions in the complaint as true and construing them in the light most favorable to the plaintiff.” Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir. 2009). We also review a district court’s interpreta- tion of a statute de novo. Id. III. ANALYSIS On appeal, the Barbatos argue that the district court erred in dismissing their contractual claim based on the statutory limitation in § 627.70131(5)(a). The parties also dispute whether State Farm breached the contract because State Farm argues that it timely paid the claim, such that it did not owe interest in the first place. The district court, however, based its holding exclusively on the finding that the cause of action was barred by §(5)(a)’s limitation. 3 Thus,

3 The district court’s order did not address whether there was a breach of con-

tract, which would have required it to determine the effect that the appraisal process had on the timeliness of State Farm’s payment of the claim. The dis- trict court also noted that resolving whether State Farm complied with its USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 5 of 12

23-11645 Opinion of the Court 5

the only issue before us is whether the district court erred when it determined that, under Florida law, no cause of action existed in this case. Florida Statute § 627.70131(5)(a) reads in relevant part: Any payment of an initial or supplemental claim … made 90 days after the insurer receives notice of the claim, or made more than 15 days after there are no longer factors beyond the control of the insurer which reasonably prevented such payment, which- ever is later, bears interest at the rate set forth in s.55.03. Interest begins to accrue from the date the in- surer receives notice of the claim. The provisions of this subsection may not be waived, voided, nullified by the terms of the insurance policy … However, fail- ure to comply with this subsection does not form the sole basis for a private cause of action. Id. (emphasis added). Pointing to the emphasized language, the district court de- termined that merely couching a claim as a contract breach does not save it because “Florida courts routinely dismiss similarly styled lawsuits on the subsection’s last sentence.” The district court relied on the decision of a state trial court that dismissed a claim that was nearly identical to the one here. See Taylor v. State Farm Fla. Ins. Co., No. 16-2020-CA-004553, 2022 WL 3702075 (Fla.

obligation to timely pay would involve the “thornier issue of statutory (and contractual interpretation),” but chose not to reach this issue because it found that §(5)(a) was dispositive. USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 6 of 12

6 Opinion of the Court 23-11645

Cir. Ct. Aug. 11, 2022) (dismissing claims), rev’d, 388 So. 3d 307 (Fla. 5th Dist. Ct. App. 2024). During this appeal, Florida’s Fifth District Court of Appeal (“DCA”) reversed that trial court’s decision and rejected its inter- pretation of §(5)(a). See Taylor, 388 So. 3d at 311. The Fifth DCA phrased the question on appeal as “whether the prohibition on a standalone statutory cause of action contained in section 5(a) is broad enough … to also bar a claim based on a breach of the insur- ance policy.” Id. at 309. The appellate court answered the question in the negative, holding that an insurance policy containing “a standalone, independent obligation to pay interest can form the sole basis for a private cause of action that is not precluded by the statutory limitation on action.” Id. at 311 (emphasis added). Here, we are dealing with an identical policy provision and an analogous cause of action based on an alleged breach of that provision. State Farm acknowledges that the Loss Payment lan- guage of the policy in Taylor is materially identical to the Barbatos’ Policy. And in their Amended Complaint, the Barbatos alleged a breach of contract based on State Farm’s violation of that Loss Pay- ment provision. As in Taylor, the policy here includes “a separate and independent loss payment provision that, like the statute, pro- vided for the payment of interest.” Id. at 310. And “[t]he only ref- erence to section 5(a) in the loss payment provision simply deals with the manner in which interest will be paid.” Id. In other words, the Policy makes a promise to pay interest, and the cause of action here is for a breach of that promise. While the Policy states that USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 7 of 12

23-11645 Opinion of the Court 7

interest will be paid “in accordance with” § (5)(a), under the Fifth DCA’s reasoning, that is merely a reference to the manner in which the contractual promise will be performed. It does not, however, serve to nullify State Farm’s independent contractual promise to pay interest. See id. at 311 (stating that the § (5)(a) limitation “does not limit an insured’s ability to bring an action for a failure to per- form an express contractual promise to pay interest.”). Because we are confronted with facts that are directly analogous to Taylor, we are bound by that decision.4

4 State Farm notes that, in Taylor, the Fifth DCA considered the dismissal order

at issue in this appeal and distinguished the facts here from those in Taylor. While accurate, the Taylor court appears to have assumed that there was no standalone Loss Payment provision in the Barbatos’ Policy. See Taylor, 388 So. 3d at 310. But unlike the court in Taylor who did not review the policy at issue in this case, the Fifth DCA was misguided in distinguishing them, which State Farm concedes. See Appellee’s Brief at 16 (conceding that the Taylor court was incorrect in distinguishing the policies). Indeed, the Barbatos’ Policy includes an identical “Loss Payment” provision that states that “interest will be paid in accordance with Section 627.70131(5) of the Florida Insurance Code.” See Plaintiff’s Ex. 1; DE 15-1 at 5. Since the policies are identical, the Policy here like the policy in Taylor has an adequate standalone provision. The error by the Taylor court can be attributed to the Taylor court’s reliance on the district court’s framing of the Barbatos’ cause-of-action. The district court below de- scribed the Barbatos’ complaint as alleging a “breach of Section 627.70131(5)(a), Fla. Stat., which is explicitly incorporated into the Policy.” In other words, the district court below characterized the Barbatos’ claim as one based on a breach of the statute, rather than a breach of their contract. But this framing is belied by a review of the Amended Complaint at issue here. As in Taylor, the plaintiffs here alleged a breach of contract based on State Farm’s violation of the Policy’s Loss Payment provision, which merely referenced §(5)(a). See Amended Complaint ¶¶ 38–42. USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 8 of 12

8 Opinion of the Court 23-11645

On appeal, State Farm acknowledges that Taylor departs from the precedent that the district court below based its dismissal order on. But State Farm attempts to evade Taylor’s grip in several ways. First, in its initial brief, State Farm argued that Taylor should not apply here because, at the time, it was “not final” and State Farm was “planning to seek rehearing in Taylor and to point out certain errors in that decision.” But State Farm was granted a re- hearing in Taylor, and it fared no better. 5 Second, after the Fifth DCA reheard and issued the mandate in Taylor, State Farm moved to stay the instant appeal, pursuant to Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976), pending resolution of the Taylor litigation that has been remanded back to the Florida trial court. Alternatively, State Farm asks us to remand this case back to the district court for the limited purpose of addressing the motion to stay. We decline State Farm’s invitation to stay the appeal or issue a limited remand.

5 The initial Fifth DCA opinion was Taylor v. State Farm Florida Insurance Co.,

No. 5D-23-0243, 2024 WL 387714 (Fla. 5th Dist. Ct. App. Feb. 2, 2024). At the time of briefing in this appeal, the parties agreed that Taylor was not final be- cause State Farm sought rehearing. The Fifth DCA subsequently granted the motion for rehearing, withdrew that opinion, and substituted a new opinion in its place: Taylor v. State Farm Florida Insurance Co., 388 So. 3d 307 (Fla. 5th Dist. Ct. App. 2024). The superseding opinion is what is referenced through- out this opinion. USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 9 of 12

23-11645 Opinion of the Court 9

Colorado River abstention allows us to stay a case only in “limited and exceptional circumstances” where “federal and state proceedings involve substantially the same parties and substan- tially the same issues.” See Taveras v. Bank of America, N.A., 89 F.4th 1279, 1286 (11th Cir. 2024). If there are substantially similar issues and parties, we then weigh six factors to decide whether to abstain. See id. In its motion, State Farm spills most of its ink arguing that the six factors weigh in its favor. We need not analyze the six fac- tors, however, because Taylor does not involve substantially similar parties as to the instant case. State Farm is the defendant in both cases. As to the plaintiffs, though, State Farm’s only argument for substantial similarity is that the proposed class in Taylor would cover the Barbatos. And the only case that State Farm cites in support of the parties being sub- stantially similar is Taveras. 89 F.4th at 1286. In Taveras, all of the parties in the federal case were, at one time, also parties in a con- current state action involving the same issues. See id. But the Bar- batos are not, and never have been, parties in the Taylor litigation because no class has been certified in Taylor. See In re Checking Acct. Overdraft Litig., 780 F.3d 1031, 1037 (11th Cir. 2015) (“Certification of a class is the critical act which reifies the unnamed class members and, critically, renders them subject to the court's power.”). State Farm cites no authority to support the proposition that a yet-to-be- certified class renders all putative members to be parties to the liti- gation. We therefore refrain from exercising the “extraordinary and narrow exception” of abstention here. See Taveras, 89 F.4th at 1286. USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 10 of 12

10 Opinion of the Court 23-11645

Third, and lastly, State Farm contends that “Florida courts routinely reject” claims like the one here and that we should follow the lead of those courts. Instead of Taylor, State Farm urges us to apply several other decisions, all but one of which are non-state court cases. In diversity cases, however, we do not choose which of the forum state’s cases to apply. We apply the state’s law. When a state’s supreme court has not opined on an issue of state law, we must apply the “decisions of the state’s intermediate appellate courts unless there is some persuasive indication that the highest court of the state would decide the issue differently.” McMahan, 311 F.3d at 1080. “That rule is, if anything, particularly appropriate in Florida” because Florida’s Supreme Court “has held that ‘the de- cisions of the district courts of appeal represent the law of Florida unless and until they are overruled.’” Id. (alterations adopted) (quoting Pardo v. State, 596 So. 2d 665, 666 (Fla. 1992)). And partic- ularly relevant here, “we are bound to follow any changes in a state’s decisional law that occur during the case.” Id. The only Florida appellate decision that the district court’s dismissal order cited is State Farm Florida Insurance Co. v. Silber, 72 So. 3d 286, 289–90 (Fla. 4th Dist. Ct. App. 2011). On appeal, State Farm urges us to apply Silber instead of Taylor. State Farm charac- terizes Silber and Taylor as conflicting cases from Florida’s interme- diate appellate courts, such that Taylor is not dispositive here. As a preliminary matter, if Silber and Taylor did conflict, it would still be inappropriate for us to affirm unless persuasive authority indicated USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 11 of 12

23-11645 Opinion of the Court 11

that the Florida Supreme Court would accept one interpretation over the other. State Farm acknowledges this, suggesting that “if this Court has concerns about potentially conflicting Florida deci- sions (e.g., Silber and Taylor), it can certify a question of Florida law to the Florida Supreme Court.” More importantly, though, Taylor does not conflict with Sil- ber. In fact, in Taylor, the Fifth DCA expressly distinguished the issue from the one decided in Silber. 388 So. 3d at 310. The Taylor court found that Silber “simply held that insureds cannot move for confirmation of an appraisal award that had already been paid in an attempt to recover attorney’s fees.” Id. In contrast to the issue here and in Taylor, the Silber opinion did not discuss “whether the in- sured’s breach of policy claim was an independent standalone claim sufficient to withstand section 5(a)’s ban on causes of action.” Id. The Taylor court also noted that Silber, in its discussion of §(5)(a), stated that insureds could still pursue a claim if a viable independ- ent cause of action existed. Id. (citing Silber, 72 So. 3d at 290). Taylor is the only decision of Florida’s intermediate appellate courts that addresses the issue in this appeal. Namely, whether an alleged breach of a standalone interest-payment provision creates a basis for a claim that can withstand §(5)(a)’s bar on causes of ac- tion. Taylor held that §(5)(a) does not bar a cause of action in that instance, because such a claim does not arise out of §(5)(a), but ra- ther arises from the insurer’s breach of the contract. In other words, there is a viable independent cause of action. Taylor in- volved facts directly analogous to those here, including an identical USCA11 Case: 23-11645 Document: 53-1 Date Filed: 01/16/2025 Page: 12 of 12

12 Opinion of the Court 23-11645

policy provision and a contract claim based on the insurer’s alleged breach of that provision. As things currently stand, the Fifth DCA’s decision in Taylor “represent[s] the law of Florida” and binds us in this case. See McMahan, 311 F.3d at 1080 (quoting Pardo, 596 So. 2d at 666). IV. CONCLUSION For these reasons, we vacate the district court’s order dis- missing the Barbatos’ claim and we remand for further proceedings consistent with this opinion. We also deny State Farm’s motion to stay the appeal or issue a limited remand. VACATED AND REMANDED.