Florida Federal District Court: Florida Law Governs Property Insurance Disputes Involving Florida Real Property Owned by Florida Citizens

October 13, 2022

Bucking a general consensus that had emerged over the last decade, a South Florida federal district court ruled recently that Florida law would govern a property insurance dispute involving Florida real property, even though the insurance contract at issue wasn’t formed in Florida.  See Commodore Plaza Condo. Ass’n, Inc. v. Evanston Ins. Co., No. 21-CV-24328, 2022 WL 3139106, at *6 (S.D. Fla. Aug. 5, 2022).

In Commodore, a Florida condo association owned a residential community located in Aventura, Florida.  Id. at *1.  The condo association obtained a property insurance policy from an Illinois insurer.  Id.  The condo association’s agent and the insurer’s agent were both located in Georgia.  Id.  After the parties negotiated the terms of the insurance contract, the insurer’s agent delivered the insurance policy binder to the condo association’s agent in Georgia.  Id.

The condo association’s property was subsequently damaged during Hurricane Irma, and the association submitted a claim to the insurer.  Id.  The insurer disagreed with the extent of the damage claimed.  Id.  The association demanded appraisal under the terms of the policy and then filed a federal action against the insurer, seeking to compel appraisal.  Id. at *2.

An initial question was which state law governed the case.  See Id. at *1.  The insurer maintained that Georgia law applied, based on where the insurance contract was made.  See id. at *1, *3.  The condo association argued that Florida law applied, based on the location of the insured property.  See Id.

The federal district court acknowledged that Florida generally follows the doctrine of lex loci contractus in resolving choice-of-law issues in contract cases.  Id. *2.  Under that doctrine, a contract, such as an insurance policy, is interpreted according to the law of the state where the contract was made.  Id.  A contract is made where the last act necessary to make a binding agreement takes place, and typically, an offeree’s communication of acceptance to the offeror is the last act necessary.  Id. at *2.  In this case, the insurance policy binder ultimately was delivered to the condo association’s agent in Georgia.  Id. at *3.  “Thus,” the district court found, “if the Court were to apply the traditional lex loci contractus rule, Georgia law would govern the interpretation of the insurance policy.”¹ Id.

“However,” the court continued, “in this real-property insurance damage case, lex loci contractus does not apply because the real property is located in Florida.”  Id.

The district court reviewed precedent from the Florida Supreme Court and the Eleventh Circuit Court of Appeals, ultimately concluding that “if the Florida Supreme Court faced the instant case, it would apply Florida law.  That is because logic, reason, and good ol’ common sense clearly mandate application of Florida law where the insurance dispute concerns a Florida citizen’s Florida real property damaged in Florida.  This is especially true when, as here, Georgia’s relationship is negligible, at best.”  Id. at *6 (citing Wilson v. Fed. Ins. Co., No. 5:19CV371-RH/MJF, 2020 WL 6122549, at *2 (N.D. Fla. Apr. 8, 2020)).  The district court also found that, even if lex loci contractus did apply, Florida’s “public policy” exception to that rule would mandate application of Florida law to the case.  Id. at *7.

The Commodore ruling departs from a number of Florida federal decisions that have continued to follow lex loci contractus even in the context of real-property insurance claims.  See, e.g., Zurich Am. Ins. Co. v. Tavistock Restaurants Grp., LLC, No. 6:20-CV-1295-PGB-EJK, 2021 WL 1536648, at *5 (M.D. Fla. Mar. 4, 2021) (“Although this question remains unsettled by the Florida Supreme Court, most district courts apply lex loci contractus to real property insurance contracts . . . .”); accord Riverside Apartments of Cocoa, LLC v. Landmark Am. Ins. Co., 505 F. Supp. 3d 1293, 1302 (M.D. Fla. 2020); Pierce v. Prop. & Cas. Ins. Co. of Hartford, 303 F. Supp. 3d 1302, 1305 (M.D. Fla. 2017); Liberty Mut. Ins. Co. v. Festival Fun Parks, LLC, No. 12-62212-CIV, 2013 WL 4496511, at *5 (S.D. Fla. Aug. 22, 2013).

¹ Other cases hold that determining the place in which the “last act” occurred requires conducting a fact-intensive analysis of the underwriting file.  Courts that conduct a fact-intensive analysis typically conclude that the “last act” is the issuance of the insurance binder by the insurer, and not delivery of the binder to the insured.  Sun Capital Partners, Inc. v. Twin City Fire Ins. Co., Inc., No. 12-CV-81397-KAM, 2015 WL 4648617, at *4 (S.D. Fla. Aug. 5, 2015).

For any further questions, please contact Adam Topel.