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Pepper's Steel & Alloys6/12/2003
We review a question of Florida law that the United States Court of Appeals for the Eleventh Circuit certified as determinative of a cause pending in that court for which there appears to be no controlling precedent. The Eleventh Circuit certified the following question:
UNDER SECTION 627.428 OF THE FLORIDA STATUTES, IS AN INSURED ENTITLED TO AN AWARD OF ATTORNEYS' FEES INCURRED IN ENFORCING A SETTLEMENT AGREEMENT AGAINST AN INSURER?
United States v. Pepper's Steel & Alloys, Inc., 289 F.3d 741, 744 (11th Cir. 2002). We have jurisdiction. See art. V, ยง 3(b)(6), Fla. Const. At the Eleventh Circuit's invitation, we rephrase the question slightly to conform to the particular circumstances of this case, as follows:
IS AN INSURED ENTITLED TO ATTORNEYS' FEES UNDER SECTION 627.428, FLORIDA STATUTES, FOR LITIGATING, DURING A LAWSUIT TO DETERMINE COVERAGE UNDER AN INSURANCE POLICY, WHETHER THE INSURED AND THE INSURER SETTLED THE COVERAGE ISSUE?
As explained below, we answer the rephrased certified question in the affirmative.
I.
The Eleventh Circuit's opinion explains the relevant facts. After the United States sued to recover remediation costs arising from an allegedly polluted site, Pepper's Steel and Alloys, Inc. (Pepper's Steel) demanded coverage from United States Fidelity and Guaranty Company (USF&G;, which had issued an insurance policy covering the site. United States v. Pepper's Steel & Alloys, Inc., 289 F.3d 741, 742 (11th Cir. 2002). In 1991, USF&G;orally offered to settle for $2 million. In October 1993, after a decision of this Court drastically reduced USF&G;s exposure, Pepper's Steel accepted the offer. USF&G;claimed that its offer had been rejected or had lapsed. The district court held that the settlement agreement was valid. Under the district court's order, each party had to bear its own costs and attorneys' fees. Id.
USF&G;appealed and Pepper's Steel cross-appealed, seeking attorneys' fees. 289 F.3d at 742. The Eleventh Circuit affirmed the district court's finding of a binding settlement agreement, but remanded for consideration of Pepper's Steel's claim for attorneys' fees under section 627.428, Florida Statutes (1993). Although the Eleventh Circuit noted that the settlement agreement foreclosed any claim for fees incurred before October 22, 1993, the court stated that if Pepper's Steel was "seeking an award of fees incurred after October 22, 1993, in connection with motion to enforce the agreement, then may have a viable claim. Since these fees were incurred post-agreement, we cannot assume the parties compromised them in their settlement." Pepper's Steel & Alloys, 289 F.3d at 742 (quoting United States v. Pepper's Steel & Alloys, Inc., 87 F.3d 1329 (table) (No. 94-5187, 11th Cir. May 31, 1996)).
On remand, the district court concluded that section 627.428 did not permit Pepper's Steel to recover attorneys' fees. 289 F.3d at 742. Although the court acknowledged that Florida law permits an insured to recover fees incurred in reaching a settlement, the court held that Florida law does not permit Pepper's Steel to recover fees incurred in enforcing the settlement agreement. Id.
Pepper's Steel appealed. Unable to reconcile conflicting language in Travelers Indemnity Co. of America v. Morris, 390 So. 2d 464 (Fla. 3d DCA 1980), and Bankers Security Insurance Co. v. Brady, 765 So. 2d 870 (Fla. 5th DCA 2000), the Eleventh Circuit asks us to determine whether section 627.428, Florida Statutes, allows an award of attorneys' fees to an insured who successfully argues that the insurer agreed to settle the coverage issue in that litigation.
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