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Sun Capital Partners, Inc. v. Twin City Fire Ins. Co., Inc., No. 12—CV—81397—KAM, 2015 WL 4648617 (S.D. Fla. Aug. 5, 2015)
A bright-line rule does not always mean that the answer is clear, and Florida’s application of the lex loci contractus rule in insurance policy interpretation cases is an example of this. Lex loci contractus provides that the law of the state where the contract was executed applies. State Farm Mut. Auto Ins. Co. v. Roach, 945 So.2d 1160 (Fla. 2006). The “determination of where a contract was executed is fact-intensive, and requires a determination of where the last act necessary to complete the contract was done.” Prime Ins. Syndicate, Inc. v. B.J. Handley Trucking, Inc., 363 F.3d 1089 (11th Cir. 2004).
There has been disagreement over what, exactly, constitutes this “last act”. Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Beta Const. LLC, 816 F. Supp. 2d 1256, 1260 (M.D. Fla. 2011) (“The case law seems to provide several different factors that can be considered to ascertain where the contract was executed or where the last act necessary for completion occurred.”). Beta Construction lists as potential last acts the delivery of the policy, the issuance for delivery, the issuance and countersigning of the policy by the insurer, and the issuance of the policy binder.
In Sun Capital Partners, Southern District Judge Kenneth A. Marra rejected a rigid rule that delivery of the insurance contract to the insured was the last act. In this case, the insurer argued for application of New York law because the insurer communicated acceptance of the order to bind coverage in New York. The insured, on the other hand, argued that Florida law applied because the policy was delivered to the insured in Florida. The court sided with the insurer, relying on Prime Ins. Syndicate, which held that the insurer’s “communication of the oral binder [to the insured] constituted acceptance of [the insured’s[ offer to purchase insurance and, therefore, was the last act necessary to complete the contract.” The Sun Capital Partners court surveyed other decisions, ultimately affirming “the principle of Florida contract law that ‘a written contract acceptance is effective at the time it is dispatched – not when it is received by the offeror.’”
The court also discussed cases cited by the insured and observed that the cases did not support the insured’s insistence on a “rigid” rule but stood merely for the proposition that delivery of the policy can constitute the last act necessary to execute the contract.
Sun Capital Partners correctly rejected a rule that delivery of the policy to the insured constituted the last act necessary to execute the contract, recognizing that such a rule conflicted with Florida contract law. Instead, courts following this opinion will engage in “fact-intensive” analysis to determine when one party accepted the other’s offer.
In other words, the mere fact that an insured is in Florida doesn’t automatically mean Florida law governs the policy. In practice, application of this principle may depend on the parties, who are generally free to agree on Florida law.