                                                       [DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                  FOR THE ELEVENTH CIRCUIT            FILED
                    ________________________ U.S. COURT OF APPEALS
                                                       ELEVENTH CIRCUIT
                           No. 07-12706                  AUGUST 18, 2008
                     ________________________           THOMAS K. KAHN
                                                            CLERK
             D. C. Docket No. 06-00324-CV-ORL-31-UAM

CNL HOTELS & RESORTS, INC.,
a Maryland Corporation,

                                                           Plaintiff-Counter
                                                       Defendant-Appellant,

                                versus

TWIN CITY FIRE INSURANCE COMPANY,
a Connecticut Corporation,

                                                         Defendant-Counter
                                                         Claimant-Appellee.
HOUSTON CASUALTY COMPANY,
a Texas Corporation,
LANDMARK AMERICAN INSURANCE COMPANY,
an Oklahoma Corporation,


                                                      Defendants-Appellees.
                     ________________________

              Appeal from the United States District Court
                  for the Middle District of Florida
                   _________________________

                          (August 18, 2008)
Before BIRCH, PRYOR and KRAVITCH, Circuit Judges.

PER CURIAM:

      CNL Hotels and Resorts appeals two summary judgments in favor of

Houston Casualty Company and Landmark American Insurance Company. CNL

argues that the district court erred when it concluded that various payments CNL

made were not covered under the insurance policies issued by Houston and

Landmark. We affirm in part and reverse and remand in part.

                                 I. BACKGROUND

      CNL was incorporated in 1996 and was managed by CNL Hospitality

Corporation. CNL raised 3.1 billion dollars in capital between 1996 and 2004 by

selling shares directly to the public at a split-adjusted cost of $20 a share. CNL

was a public corporation subject to federal securities laws, but it was not listed on a

national stock exchange. Under the terms of its corporate charter, CNL either had

to list its shares on a national stock exchange or liquidate its assets and distribute

the proceeds to its shareholders by December 31, 2007.

      On April 30, 2004, CNL announced that it would be beneficial to become

self-advised. CNL obtained shareholder approval through a proxy statement dated

June 21, 2004, of a merger between Hospitality and a wholly-owned subsidiary of

CNL. Under the terms of the merger, CNL, through its subsidiary, would pay 308



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million dollars for all of the outstanding shares of Hospitality. On July 30, 2004,

Green Street Advisors issued a report that suggested that CNL was worth

approximately $12 a share.

      After the Green Street report, consolidated lawsuits involving two classes of

plaintiffs were filed against CNL. The Purchaser Class, composed of shareholders

of CNL, sought a refund of $8 to compensate them for the difference between the

price that they paid for the stock and the price at which Green Street valued the

stock. The Purchaser Class relied on section 11 of the Securities Act of 1933. 15

U.S.C. §77k. The Proxy Class, composed of shareholders of CNL that relied on

the proxy statement to approve the merger, alleged that the proxy statement was

misleading and the 308 million dollar purchase price of Hospitality was excessive.

      CNL reached a settlement with both classes. CNL agreed to pay 35 million

dollars to the Purchaser Class to settle their complaint. CNL settled with the Proxy

Class by restructuring the merger between CNL and Hospitality. The restructuring

lowered the fees owed by CNL to Hospitality and CNL paid the counsel for the

Proxy Class 5.5 million dollars.

      CNL sought reimbursement for its expenses related to this litigation from its

several insurance carriers based on policies of CNL that covered directors’ and

officers’ liability. Twin City Fire Insurance Company issued the primary policy of



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CNL, which was limited to 10 million dollars and included a self-insured retention

of $500,000. Houston issued a policy with a limit of 10 million dollars that

provided coverage after the Twin City policy was exhausted. Landmark issued

another policy with a limit of 10 million dollars that provided coverage after both

the Twin City and Houston policies were exhausted. The policies issued by

Houston and Landmark were “follow-form” policies and provided coverage

identical to the Twin City policy.

         CNL filed this action against Twin City, Houston, and Landmark after Twin

City reserved its right to deny coverage of both the payment of 35 million dollars

to the Purchaser Class and the payment of 5.5 million dollars to the counsel for the

Proxy Class. Twin City and CNL settled their dispute for 9.5 million dollars. The

settlement agreement allocated 3.3 million dollars for the defense costs of CNL;

$700,000 for reimbursement of the payment to the Purchaser Class; and 5.5 million

dollars for the payment of the counsel for the Proxy Class. CNL continued to

prosecute this action against Houston and Landmark for reimbursement for the

balance of the payment of the Purchaser Class and 5.5 million dollars in defense

costs.

         The district court resolved several motions for summary judgment in favor

of Houston and Landmark. The district court granted summary judgment to both



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Houston and Landmark regarding liability for the payment to the Purchaser Class,

and the district court granted summary judgment to Houston regarding the 5.5

million dollars in defense costs paid by CNL.

                           II. STANDARD OF REVIEW

      We review a summary judgment de novo. Shuford v. Fid. Nat’l Prop. &

Cas. Ins. Co., 508 F.3d 1337, 1341 (11th Cir. 2007).

                                III. DISCUSSION

      We evaluate the arguments of CNL in two parts. First, we consider whether

the payment to the Purchaser Class was covered by the Twin City policy. Second,

we consider whether the payment to the counsel for the Proxy Class was covered

by the Twin City policy.

 A. The Payment to the Purchaser Class Was Not a Loss Covered By the Twin City
                                    Policy.

      CNL argues that the payment to the Purchaser Class was a loss covered by

the Twin City policy instead of the return of money wrongly-acquired by CNL.

CNL argues that the record does not support the conclusion that the money was

wrongly-acquired, section 11 of the Securities Act of 1933 does not provide for

restitutionary damages, and the settlement agreement between the Purchaser Class

and CNL explicitly stated that the payment was not restitutionary. These

arguments fail.

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       We agree with the district court that the payment to the Purchaser Class is

not covered by the Twin City policy. The policy covers a “loss” that the insured is

obligated to pay. “The interpretive principle . . . that a ‘loss’ within the meaning of

an insurance contract does not include the restoration of ill-gotten gains—is clearly

right.” Level 3 Commc’ns, Inc. v. Fed. Ins. Co., 272 F.3d 908, 910 (7th Cir. 2001).

Because we conclude that the payment to the Purchaser Class was restitutionary in

nature, the payment was not a loss covered by the Twin City policy. Houston and

Landmark are not liable for that payment.

       The argument of CNL that there is “no basis in the record of the [action

between CNL and the Purchaser Class] to support the notion that the plaintiffs’

claims were for the return of ill-gotten gains” is based on the premise that the

Purchaser Class did not attempt to prove and Section 11 does not require proof of

fraud. CNL contends that, without a finding of fraud, it is impossible to conclude

that the money was wrongly-acquired. This argument misunderstands the idea of

restitution.

       The return of money received through a violation of law, even if the actions

of the recipient were innocent, constitutes a restitutionary payment, not a “loss.” It

is immaterial whether CNL committed fraud. CNL received money directly from

the Purchaser Class through the sale of shares, and CNL returned some of the



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money after the Purchaser Class alleged that the sale of shares by CNL violated the

law.

       The record supports the conclusion that the payment to the Purchaser Class

was the return of money that CNL acquired in violation of law. CNL does not

dispute that the Purchaser Class alleged that it purchased shares from CNL for $20

a share when the shares were actually worth only $12 a share. CNL benefitted

directly from this alleged violation of section 11 and returned some of this benefit

to the Purchaser Class through a settlement. CNL instead argues that, under

section 11, damages can never be restitutionary.

       CNL argues that damages under section 11 cannot be restitutionary because

the amount of damages permitted by statute focuses on the loss suffered by the

plaintiff instead of the gain of the defendant. Section 11 provides for an award of

damages when a registration statement contains an “untrue statement of material

fact or omitted to state a material fact required to be stated.” 15 U.S.C. § 77k(a).

Damages are measured under section 11 by the difference between the price the

plaintiff paid for the security and the value of the security when the suit was

brought. 15 U.S.C. §77k(e).

       The argument of CNL fails. CNL is correct that the measure of damages

under section 11 is concerned with the loss to the plaintiff, but in this appeal the



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loss to the plaintiff is equal to the gain of the defendant. Section 11 does not

preclude restitutionary relief.

      CNL also contends that the payment to the Purchaser Class was not

restitutionary because the settlement agreement states that the payment was not

“restitution or disgorgement.” The agreement between CNL and the Purchaser

Class is not binding on any third party or this Court. The policy, not the settlement

agreement, governs our resolution of this appeal. We agree with the district court

that this argument is “too lacking in merit to warrant discussion.”

  B. The Payment to the Counsel for the Proxy Class May Be Covered Under the
                               Twin City Policy.

      The district court granted Houston summary judgment on the ground that the

5.5 million dollars in legal fees paid to the counsel for the Proxy Class was not

covered under the Twin City policy. The policy issued by Houston covers only a

“loss” not paid by Twin City because of the exhaustion of the limits of the

underlying policy:

      This Policy does not provide coverage for any Loss not covered by the
      Underlying Policies except and to the extent that such Loss is not paid
      under the Underlying Policies solely by reason of the reduction or
      exhaustion of the Underlying Limit(s) of Liability through actual
      payments of Loss thereunder.

The district court interpreted the underlying policy as not covering the loss. The

district court relied on Endorsement 17 of the Twin City policy, which exempts

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from the definition of “loss” payments to the counsel for plaintiffs in a lawsuit

about the price paid for corporate ownership:

      In the event of a Claim alleging that the price or consideration paid or
      proposed to be paid in any transaction involving all or substantially all
      the ownership interest in or assets of an entity is inadequate or
      excessive, Loss with respect to such Claim shall not include . . . any
      plaintiff’s counsel fees and costs arising out of such Claim; provided,
      however, that this paragraph shall not apply to Claims Expenses
      incurred in the defense or appeal of such Claim.

Because the payment of 5.5 million dollars to the counsel for the Proxy Class was

not a covered loss and CNL had not exhausted the limit of 10 million dollars of the

Twin City policy, the district court concluded that Houston was not liable for any

other loss.

      CNL presents two arguments that the district court erred when it concluded

that Endorsement 17 removed the payment to the counsel for the Proxy Class from

the definition of loss in the Twin City policy. CNL argues that the payment was a

covered loss under the Twin City policy because the settlement agreement between

CNL and Twin City allocated 5.5 million dollars for the payment. CNL argues

that, even if the payment is not a “loss” under Endorsement 17, the endorsement is

void because neither Houston nor Twin City complied with Florida insurance law.

We reject the first argument of CNL, but conclude that the second argument may

have merit.



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      CNL argues that, because the settlement agreement allocated 5.5 million

dollars to the payment to the counsel for the Proxy Class, that payment is a covered

loss under the Twin City policy. We disagree. The agreement between CNL and

Twin City is not binding on a third party or this Court. Whether the payment to the

counsel for the Proxy Class is a covered “loss” under the Twin City policy depends

on the language of the policy, not the settlement agreement. The language of

Endorsement 17 clearly removes the payment from the definition of “loss” under

the Twin City policy.

      Although Endorsement 17 would remove the payment from the definition of

“loss,” that endorsement may be void. Florida law requires the filling with and

approval of certain forms by the Office of Insurance Regulation before the forms

can be used in insurance policies in Florida. Fla. Stat. § 627.410(1). If a form is

not filed with the Office, the form is void. Am. Mut. Fire Ins. Co. v. Illingworth,

213 So. 2d 747, 749 (Fla. Dist. Ct. App. 1968).

      The district court declined to resolve factual questions regarding whether

Endorsement 17 was filed with the Office of Insurance Regulation because the

court concluded that Endorsement 17 was exempt from filing. The court

interpreted section 627.021(2)(e) of the Florida statutes, which states that “[t]his

chapter does not apply to: . . . (e) Surplus lines insurance,” Fla. Stat. § 627.021(2),



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as exempting surplus lines insurance from the filing requirements of section

627.410(1). The Supreme Court of Florida recently rejected that interpretation.

Essex Ins. Co. v. Zota, No. SC06-2031, slip op. 1 (Fla. June 26, 2008).

      The exemptions of section 627.021 only apply to part 1 of chapter 627.

Essex, No. SC06-2031, at 7. In Essex, the Supreme Court of Florida answered a

question certified by this Court regarding the applicability of section 627.428 to

surplus lines insurance. Essex Ins. Co. v. Zota, 466 F.3d 981, 988–90 (11th Cir.

2006). The Supreme Court of Florida stated that it had “previously held that-under

a full statutory analysis-section 627.021(2) applies exclusively to part I of chapter

627.” Essex, No. SC06-2031, at 7 (citing Nat’l Corp. Venezolana v. M/V Manaure

V., 511 So. 2d 968, 970–71 (Fla. 1987)). The decision of the Supreme Court of

Florida compels our conclusion that section 627.410(1), which is in part II of

chapter 627, applies to surplus lines insurance. The district court erred, and a

remand is necessary to determine whether Endorsement 17 is void.

                                IV. CONCLUSION

      We AFFIRM the summary judgment in favor of Houston and Landmark

concerning the payment to the Purchaser Class. We REVERSE the summary

judgment in favor of Houston concerning the payment to the counsel for the Proxy

Class, and we REMAND for further proceedings.

      AFFIRMED in part, REVERSED in part, and REMANDED.

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