                                                      [DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                  FOR THE ELEVENTH CIRCUIT
                                                        FILED
                  ____________________________ U.S. COURT OF APPEALS
                                                 ELEVENTH CIRCUIT
                                                     MAY 22, 2006
                          No. 04-14258
                                                  THOMAS K. KAHN
                      Non-Argument Calendar
                                                       CLERK
                  ____________________________

             D.C. Docket No. 02-00924 CV-ORL-28-KRS

PHILADELPHIA INDEMNITY INSURANCE COMPANY,
a Pennsylvania insurance company,
                                      Plaintiff-Appellee,
                                      Cross-Appellant,

                                versus

MARGARET KOHNE,

                                                   Defendant-Appellant,
                                                   Cross-Appellee,

SEGUN AMUCHIENWA,

                                                   Defendant-Cross-
                                                   Appellee.

                    _________________________

             Appeals from the United States District Court
                 for the Middle District of Florida
                  __________________________

                           (May 22, 2006)
Before EDMONDSON, Chief Judge, ANDERSON and FAY, Circuit Judges.

PER CURIAM:

      Segun Amuchienwa struck and severely injured Plaintiff Margaret Kohne

while driving a rented car. A $1,000,000 supplemental liability insurance policy,

underwritten by Defendant Philadelphia Indemnity Insurance Company (“PIIC”),

was purchased along with the vehicle’s rental. The district court concluded that

PIIC was not liable under the policy because Amuchienwa breached the policy’s

coverage conditions. And despite a jury determination that PIIC was liable for

fraud and negligent misrepresentation, the court awarded Plaintiff $0 in damages

because of Amuchienwa’s breach. We now affirm the district court in part,

reverse in part, and remand for further proceedings.



                                  I. Background



      Twenty-three year old Segun Amuchienwa and his friend, Oshioma

Okomilo, rented cars from Budget-Rent-A-Car while visiting Orlando. The renter

of Amuchienwa’s car -- presumably Amuchienwa -- also purchased an optional

$1,000,000 supplemental liability insurance policy underwritten by PIIC. The




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policy purported to cover only authorized drivers.1 The rental agreement for

Amuchienwa’s car did not list Amuchienwa as an authorized driver; instead, the

agreement bears the name and signature of Angela Panks, Okomilo’s mother. But

the agreement does list Amuchienwa’s date of birth, address, and driver’s license

number. Some evidence indicates that Panks could not have signed the agreement

because she was not in Orlando at the time of the transaction.

       On 31 December 1999, Amuchienwa was driving the rented vehicle when

he struck and severely injured Plaintiff while she was loading the trunk of her van.

About one month later, PIIC received a notice of loss describing the accident and

Plaintiff’s injuries and requesting coverage. PIIC determined that Amuchienwa

was not an authorized driver and denied coverage under the supplemental policy.2

Later, Plaintiff’s counsel continued to assert that Amuchienwa was covered under

the policy because his personal information appeared on the rental contract; but

PIIC again denied coverage for “any claims” resulting from the accident.3

   1
     The policy defines an “authorized driver” as either: “a. A driver whose name is listed on the
original ‘rental agreement’; b. A driver designated by description, if any, in the ‘rental agreement’;
or c. A driver designated by description, if any, in item 6 of the Declarations.”
   2
    In a letter dated 8 May 2000, PIIC wrote to Amuchienwa: “The rental vehicle was operated by
you, an unauthorized driver, who violated the rental agreement. As an unauthorized driver, you are
not covered under the [supplemental] policy. As such, . . . coverage will not be afforded. . . . [Y]ou
may wish to contact personal counsel, at your own expense, to insure your interests are protected.”
  3
    In a letter to Plaintiff’s counsel dated 3 May 2001, PIIC wrote: “Based on our [previous] denial
of coverage, we must continue to deny any claims presented on behalf of your client, Ms. Kohne.”

                                                  3
      After these coverage denials, Plaintiff sued Amuchienwa in Florida state

court. Plaintiff and Amuchienwa entered into a settlement agreement through

which Amuchienwa agreed to $4,000,000 in liability and assigned his rights under

the supplemental policy to Plaintiff. Plaintiff agreed not to execute the judgment

against Amuchienwa if he assisted her in pursuing an action against PIIC. The

state court entered a consent judgment reflecting these terms.

      Amuchienwa never informed PIIC of Plaintiff’s suit nor of the settlement

agreement. The supplemental policy contains a cooperation condition which

requires the insured to (1) “immediately” notify PIIC “[w]henever it appears that

an ‘accident’ is likely to involve [the] policy,” (2) cooperate “in the investigation,

settlement or defense of the claim or suit,” and (3) assume no obligation without

PIIC’s consent.

      Plaintiff presented the consent judgment to PIIC and demanded payment.

PIIC denied her claim and sought a declaratory judgment in federal district court

that Amuchienwa was not covered under the policy and that PIIC was not bound

by the settlement agreement. Plaintiff filed a three-count counterclaim in which

she alleged breach of contract, fraud, and negligent misrepresentation.




(Emphasis added.)

                                           4
      The district court granted summary judgment for PIIC on its complaint and

on Plaintiff’s breach of contract claim. Without reaching the question of whether

Amuchienwa was an “authorized driver” under the policy, the court concluded

PIIC’s performance was excused by Amuchienwa’s breach of the policy’s

cooperation condition. The district court further declared that PIIC was not bound

by the settlement agreement.

      Plaintiff’s other claims were tried before a jury. The jury found that PIIC --

through its agent, Budget -- fraudulently induced Amuchienwa to purchase the

supplemental insurance by misrepresenting that he would be covered under the

policy. But because the district court found that Amuchienwa breached his duty to

cooperate, the court concluded he would have received no benefit from his

bargain. The court therefore awarded Plaintiff -- standing in Amuchienwa’s shoes

-- $0 in damages. The court further denied Plaintiff’s claim for punitive damages.



                             II. STANDARD OF REVIEW



      We review de novo the district court’s grant of summary judgment. Gibson

v. Resolution Trust Corp., 51 F.3d 1016, 1020 (11th Cir. 1995). We review de

novo the district court’s ruling that Plaintiff was entitled to no damages. National

                                          5
R.R. Passenger Corp. v. Rountree Transp. & Rigging, Inc., 286 F.3d 1233, 1244

(11th Cir. 2002). We also review de novo the district court’s order granting

judgment as a matter of law to PIIC on Plaintiff’s claim for punitive damages.

Snapp v. Unlimited Concepts, Inc., 208 F.3d 928, 932 (11th Cir. 2000).



                                         III. DISCUSSION



       Despite a jury determination that PIIC was liable to Plaintiff for committing

fraud and negligent misrepresentation, the district court awarded $0 in damages on

account of Amuchienwa’s purported breach of the cooperation condition. We

conclude that Amuchienwa, as a matter of Florida law, did not violate the

cooperation condition. Because Amuchienwa did not breach the cooperation

condition, Plaintiff is accordingly entitled to damages as a result of the jury’s

verdict.4 We also conclude the district court correctly dismissed Plaintiff’s claim

for punitive damages.



   4
     PIIC asserts on appeal that Plaintiff lacked standing to sue because the settlement agreement
through which she gained Amuchienwa’s position could not be authenticated. We disagree. As the
district court noted in admitting the agreement, both parties relied on its authenticity in their
pleadings and at trial. In the “admitted facts” of the parties’ Joint Pretrial Statement, both parties
stipulated that “[Plaintiff] is the assignee of any rights that Amuchienwa may have had against
[PIIC].”

                                                  6
A. Cooperation Condition



      Critical to the district court’s disposition was its conclusion that

Amuchienwa breached the policy’s cooperation condition by not alerting PIIC of

Plaintiff’s suit or the settlement agreement. Amuchienwa, according to the district

court, breached the condition by not giving PIIC an opportunity to defend

Plaintiff’s suit. The district court concluded that “[b]ecause [PIIC] only denied

coverage, but did not refuse to defend, Amuchienwa’s breach of the duty of

cooperation remains unexcused.”

      Under Florida law, for Amuchienwa’s failure to cooperate to excuse PIIC

from its obligations under the policy, PIIC must prove that: (1) Amuchienwa failed

to cooperate; (2) the lack of cooperation was material; (3) PIIC suffered

substantial prejudice as a result of Amuchienwa’s failure to cooperate; and (4)

PIIC exercised diligence and good faith in trying to bring about Amuchienwa’s

cooperation. Ramos v. Northwestern Mut. Ins. Co., 336 So. 2d 71, 75 (Fla. 1976).

Despite PIIC’s repeated denial of coverage, the district court concluded that PIIC

satisfied the Ramos requirements as a matter of law. We disagree. Even accepting

as true that Amuchienwa materially failed to cooperate, PIIC has not shown

substantial prejudice or diligence sufficient for PIIC to prevail as a matter of law.

                                          7
       When an insurer unequivocally denies coverage, Florida law provides that

the insurer cannot later also fall back on breach of the cooperation condition to

deny coverage. See Paz v. Allstate Ins. Co., 478 So. 2d 849, 849 (Fla. Dist. Ct.

App. 1985) (“Having breached the contract [by denying coverage, the insurer]

cannot attempt to avoid liability by relying on a provision prohibiting the insured

from settling with the tortfeasor without its consent.”); Infante v. Preferred Risk

Mut. Ins. Co., 364 So. 2d 874, 875 (Fla. Dist. Ct. App. 1978) (“[W]here an insurer

has denied coverage which actually exists, the insurer has breached the contract

and therefore cannot be allowed to rely upon a contractual provision prohibiting

the insured from settlement of the claim with a responsible party in order to relieve

itself from liability.”).

       PIIC twice flatly denied coverage under the policy -- once in response to

Amuchienwa’s initial claim and the second time in response to Plaintiff’s inquiry

before she filed suit against Amuchienwa. In each denial, PIIC clearly renounced

coverage for injuries stemming from the accident. PIIC’s first denial went so far

as to suggest that Amuchienwa “contact personal counsel, at [his] own expense” to

protect his interests.

       In granting summary judgment for PIIC, the district court relied on First

American Title Ins. Co. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 695 So.

                                          8
2d 475, 477 (Fla. Dist. Ct. App. 1997), in which the Florida appeals court

concluded that an insured’s failure to notify its insurer of suit constituted a breach

of the policy’s cooperation conditions and excused the insurer’s performance. The

First American court did not discuss the Ramos requirements in reaching its

conclusion. But unlike the present case it was clear that the insurer in First

American exercised diligence in trying to bring about its insured’s cooperation.

Seemingly critical to the First American court’s decision was that in its initial

letter denying coverage the insurer specifically instructed the insured to notify it of

any lawsuit filed in the matter so that the insurer could determine if it owed a duty

to defend the suit. Id. at 476. PIIC made no similar statement in the present case.

      We do not interpret Florida law to say that an insurer must include some

magic words when denying coverage to preserve its rights under a cooperation

condition. But unequivocal denials of coverage such as those PIIC made here

forfeit an insurer’s right to invoke cooperation conditions against its insured. Had

PIIC made some effort to ensure that Amuchienwa knew he was still bound by the

policy’s conditions, then a question of fact might remain about whether PIIC’s

efforts were sufficiently diligent. But because PIIC made no effort whatsoever,

we conclude that Amuchienwa did not breach the cooperation condition.




                                           9
       Given the posture of this case, we do not need to decide whether

Amuchienwa was covered under the PIIC policy as an authorized driver. A jury

has determined that Plaintiff stands in the shoes of a rightful policyholder by

virtue of the fraud and misrepresentation attributed to PIIC. The district court,

however, awarded Plaintiff $0 in damages because it concluded Amuchienwa

breached the cooperation condition. Because we conclude that Amuchienwa did

not breach the cooperation condition, the remaining issue for us to determine is the

measure of damages to which Plaintiff is entitled.5



B. Jury Verdict and Damages



       Plaintiff -- standing in Amuchienwa’s shoes -- prevailed in her suit against

PIIC for fraudulently inducing Amuchienwa to purchase the policy, and the jury

determined that Plaintiff was entitled to damages as a result of Amuchienwa’s



   5
     We agree with the district court that PIIC was not entitled to a directed verdict on Plaintiff’s
fraud claim. We may reverse the denial of a directed verdict only if the evidence, when viewed in
the light most favorable to Plaintiff, is such that reasonable jurors could not have arrived at a
contrary verdict. Stuckey v. Northern Propane Gas Co., 874 F.2d 1563, 1567 (11th Cir. 1989). Even
without Amuchienwa’s testimony, Plaintiff presented sufficient evidence to support the jury’s
verdict; specifically, testimony from Okomilo and the Budget rental agent. Perhaps the most
important fact supporting the jury’s verdict is that Amuchienwa purchased the optional supplemental
insurance policy. From this a jury could reasonably conclude Amuchienwa justifiably relied on
representations he would be covered under the policy.

                                                 10
reliance on the misrepresentations. On the proper measure of damages, Florida

follows the “flexibility theory,” under which a defrauded party is entitled to the

measure of damages that will fully compensate her. Nordyne, Inc. v. Florida

Mobile Home Supply, Inc., 625 So. 2d 1283, 1286 (Fla. Dist. Ct. App. 1993)

(“The ‘flexibility theory’ permits the court to use either the ‘out-of-pocket’ or the

‘benefit-of-the-bargain’ rule, depending opon which is more likely fully to

compensate the injured party.”). The district court correctly concluded that

Plaintiff was entitled to the benefit of her bargain. Damages under the “benefit-of-

the-bargain” rule are calculated by taking the difference between the actual value

of the policy and its value had the contested facts -- here, that Amuchienwa was an

authorized driver and covered under the policy -- been true. Martin v. Brown, 566

So. 2d 890, 891 (Fla. Dist. Ct. App. 1990).

        Amuchienwa bargained for $1,000,000 in supplemental insurance

coverage.6 The purpose of compensatory damages in tort cases such as this one is

to restore the injured party to the position she would have occupied had the wrong

not been committed. Glades Oil Co., Inc. v. R.A.I. Mgmt., Inc., 510 So. 2d 1193,


    6
      In an alternative argument, Plaintiff contends that an “out-of-pocket” damages calculation
entitles her to the amount of her settlement agreement with Amuchienwa, or $4,000,000. We agree
with the district court that the true value of out-of-pocket damages would likely compensate the
defrauded party for only the amount paid in premiums for the policy, in this case $9.95. Regardless,
we do not think PIIC can be liable for an amount in excess of the policy’s upper limits.

                                                11
1195 (Fla. Dist. Ct. App. 1987). The district court concluded that Amuchienwa’s

position as an authorized driver would have yielded him $0 under the policy

because he breached the cooperation condition. Because we conclude

Amuchienwa did not breach the cooperation condition, it follows that PIIC was

not relieved of its duties to Amuchienwa. Plaintiff is accordingly entitled to the

full value of the policy.

       We remand to the district court for the limited purpose of entering judgment

for Plaintiff with a measure of compensatory damages calculated in an amount

based on the policy limits.7



C. Punitive Damages



       The district court granted PIIC’s motion for directed verdict on Plaintiff’s

request for punitive damages. We review de novo the district court’s order.

Snapp, 208 F.3d at 932.




  7
   We further conclude the district court did not abuse its discretion in dismissing without prejudice
PIIC’s claims against Amuchienwa for failure to prosecute within the time limits specified by local
rule. See Dynes v. Army Air Force Exch. Serv., 720 F.2d 1495, 1499 (11th Cir. 1983) (finding no
abuse of discretion when court dismissed claim without prejudice for party’s failure to timely file
brief).

                                                 12
      The Florida Supreme Court has written that “the justification for a punitive

award is to punish the offender and to deter others from committing similar

wrongs.” Fisher v. City of Miami, 172 So.2d 455, 457 (Fla. 1965). In limited

situations, Florida law provides that a principal may be assessed punitive damages

for the acts of its agent. But such exemplary damages may only be assessed

against the principal when the principal bears some fault. Mercury Motors

Express, Inc. v. Smith, 393 So.2d 545, 549 (Fla. 1981) (concluding that plaintiff

must “prove some fault on the part of the [principal] which foreseeably

contributed to the plaintiff’s injury to make him vicariously liable for punitive

damages”). See also Life Ins. Co. of North America v. Del Aguila, 417 So. 2d

651, 652-53 (Fla. 1982) (reiterating conclusion in Mercury Motors and finding

insufficient proof of principal’s fault).

      The present case presents such a principal/agent arrangement: That the

Budget rental-counter employee was acting as PIIC’s agent when she sold

Amuchienwa the supplemental policy is uncontroverted. PIIC accordingly cannot

be assessed punitive damages unless PIIC exhibited fault. We conclude that

Plaintiff has not presented sufficient evidence to show that PIIC bore fault for the

Budget employee’s acts. The district court therefore correctly dismissed

Plaintiff’s claim for punitive damages.

                                            13
                                IV. CONCLUSION



      For the foregoing reasons we REVERSE the district court’s grant of

summary judgment to PIIC. We conclude that Amuchienwa did not breach the

policy’s cooperation condition. We REMAND to the district court for the limited

purpose of determining the proper measure of damages to be afforded Plaintiff

under the policy. And we AFFIRM the district court’s grant of directed verdict to

PIIC on Plaintiff’s request for punitive damages.



AFFIRMED in part, REVERSED in part, and REMANDED with instructions.




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