                                                         [DO NOT PUBLISH]


             IN THE UNITED STATES COURT OF APPEALS
                                                                 FILED
                    FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                      ________________________ ELEVENTH CIRCUIT
                                                          NOVEMBER 23, 2007
                             No. 06-16333                  THOMAS K. KAHN
                         Non-Argument Calendar                 CLERK
                       ________________________

                   D. C. Docket No. 06-22180-CV-PCH

HERITAGE CORPORATION OF SOUTH FLORIDA,


                                                    Plaintiff-Appellant,

                                  versus

NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURG, PA.,
AMERICAN INTERNATIONAL GROUP, INC.,


                                                    Defendants-Appellees.


                       ________________________

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

                           (November 23, 2007)

Before BIRCH, DUBINA and CARNES, Circuit Judges.

PER CURIAM:
      In this diversity jurisdiction case arising out of an insurance coverage

dispute, the plaintiff, Heritage Corporation of South Florida, appeals the district

court’s dismissal of its statutory bad faith claims against the defendants, National

Union Fire Insurance Company of Pittsburgh, P.A. and American International

Group, Inc. Heritage alleged that the defendants had acted in violation of Fla. Stat.

§§ 624.155(1)(a)–(b) and 626.9541(1)(i) by failing to properly investigate and pay

earlier claims filed by Heritage.

      In July 2001, after filing a Civil Remedy Notice of Insurer Violation with

the Department of Insurance, Heritage sued National Union in Florida state court,

alleging that under three errors-and-omissions policies and four fidelity bonds

purchased by Heritage, National Union was required to cover a $3.8 million loss

caused by employee dishonesty and fraud at Heritage between 1996 and 2000. The

case was removed to federal court, and the district court granted summary

judgment for National Union on all of the policies except one—a 1998 fidelity

bond, which provided $1 million in coverage. In June 2002, National Union made

an offer of judgment to Heritage under Fla. Stat. § 768.79(1), where it agreed to

settle all of Heritage’s claims for $250,001. Heritage rejected the offer by not

responding to it.

      Heritage then went to trial under the 1998 fidelity bond, and the jury found



                                           2
that Heritage had suffered a covered loss of $80,310. The bond provided for a

deductible of $25,000, and therefore the $80,310 verdict was reduced to $55,310.

In accordance with the jury’s verdict, the district court entered a judgment for

Heritage in the amount of $55,310, plus $17,903.92 in pre-judgment interest.

However, the court retained jurisdiction to consider the parties’ claims for costs

and attorneys’ fees. Because Heritage’s recovery was at least twenty-five percent

lower than National Union’s $250,001 offer of judgment, the district court

determined that under Fla. Stat. § 768.79(1), National Union was entitled to

recover its attorneys’ fees from Heritage. Accordingly, the district court entered a

final judgment ordering Heritage to pay National Union $352,415.56 in attorneys’

fees.

        Heritage then filed this bad faith suit against National Union and its parent

corporation, American International Group, for not attempting in good faith to

investigate and settle with Heritage for its claims under the bonds. The district

court dismissed Heritage’s statutory bad faith claims for failure to state a claim

under Fed. R. Civ. P. 12(b)(6) because, according to the court, Heritage could not

prove any set of facts demonstrating that its underlying insurance coverage case

against National Union was resolved in its favor. Heritage argues on appeal that

the district court erred in concluding that Heritage had failed to state a claim for



                                            3
statutory bad faith.

       We review de novo the district court’s grant of a motion to dismiss for

failure to state a claim, accepting all factual allegations in the complaint as true and

construing them in the light most favorable to the plaintiff. Hill v. White, 321 F.3d

1334, 1335 (11th Cir. 2003).

       While a complaint attacked by a Rule 12(b)(6) motion to dismiss does
       not need detailed factual allegations, a plaintiff’s obligation to provide
       the “grounds” of his “entitle[ment] to relief” requires more than labels
       and conclusions, and a formulaic recitation of the elements of a cause
       of action will not do. Factual allegations must be enough to raise a
       right to relief above the speculative level, on the assumption that all
       the allegations in the complaint are true (even if doubtful in fact).

Bell Atl. Corp. v. Twombly, ___U.S.___, ___, 127 S. Ct. 1955, 1964–65 (2007)

(alteration in original, internal citations omitted).

       Heritage contends that the district court erred by granting the defendants’

motions to dismiss because, according to Heritage, it alleged all of the elements

necessary to assert a cause of action for statutory bad faith.1 Heritage argues that

all that is necessary for a bad faith claim is an allegation in the complaint that there

has been a determination of the existence of liability on the part of the insurer and a

determination of the damages. According to Heritage, it properly alleged those


       1
         Heritage also argues that the district court erred by applying an incorrect legal standard
under Fed. R. Civ. P. 12(b)(6) when determining whether to grant the defendants’ motions to
dismiss. However, we need not address this argument because, as discussed above, our review
of a motion to dismiss for failure to state a claim is de novo. Hill, 321 F.3d at 1335.

                                                 4
elements in its complaint by reciting the facts of the earlier insurance coverage case

and stating that the jury had returned a verdict for Heritage against National Union

in the amount of $80,310.2

       The defendants respond that Heritage cannot state a claim for statutory bad

faith because in order to do so, it must show that the underlying insurance coverage

case was resolved in its favor. According to the defendants, Heritage cannot

demonstrate that the insurance coverage case was resolved in its favor because: (1)

Heritage was required to pay National Union $352,415.56 in attorneys’ fees as a

result of its failure to accept National Union’s $250,001 offer of judgment; and (2)

Heritage’s damages of $55,310 represented only 1.5 percent of the $3.8 million

loss Heritage alleged was covered by National Union.

       In order to bring a claim for bad faith under Fla. Stat. § 624.155, the insured

must first file a written Civil Remedy Notice of Insurer Violation with the

Department of Insurance, as well as with its insurance company. Fla. Stat. §

624.155(3)(a). “The insurer then has sixty days in which to respond and, if

payment is owed on the contract, to cure the claimed bad faith by paying the

benefits owed on the insurance contract.” Vest v. Travelers Ins. Co., 753 So. 2d



       2
         In its complaint, Heritage alleged that the jury returned a verdict in its favor of
$80,310. In its opening brief, however, Heritage recognizes that its damages were reduced by
the $25,000 deductible on the policy to $55,310.

                                               5
1270, 1275 (Fla. 2000); see also Fla. Stat. § 624.155(3)(d).

      According to the Florida Supreme Court, “an insured’s underlying first-party

action for insurance benefits against the insurer necessarily must be resolved

favorably to the insured before the cause of action for bad faith in settlement

negotiations can accrue.” Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So. 2d

1289, 1291 (Fla. 1991). Therefore, in order to state a claim for bad faith under Fla.

Stat. § 624.155, the plaintiff must allege that there has been a determination of the

existence of liability on the part of the insurer and the extent of the plaintiff’s

damages. See id.

      A plaintiff is not required to allege “a specific amount of damages.” Imhof

v. Nationwide Mut. Ins. Co., 643 So. 2d 617, 618 (Fla. 1994), receded from on

other grounds by State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So. 2d 55 (Fla.

1995). Instead, “the purpose of the allegation concerning a determination of

damages [is] to show that ‘[the plaintiff] had a valid claim.’” Vest, 753 So. 2d at

1273 (citations omitted). Accordingly, in Imhof, the Florida Supreme Court stated

that the plaintiff need not allege an award exceeding the policy limits to bring a

claim for statutory bad faith. Imhof, 753 So. 2d at 618. Furthermore, the court

stated that the plaintiff’s recovery of damages through arbitration, which was in an

amount less than the policy limits, was sufficient to demonstrate that the plaintiff



                                            6
had a valid claim and was therefore entitled to bring a bad faith action against the

insurer. See id. at 618 & n.5, 619.

      In its complaint, Heritage alleged: (1) that it had sued National Union to

recover on four fidelity bonds and three errors and omissions policies that the

corporation had purchased from National Union; (2) that the jury in that case had

determined that the policies were paid on a timely basis and that they were in full

force and effect; and (3) that the district court in that case entered a final judgment

incorporating the jury verdict in favor of Heritage in the amount of $80,310

reduced to $55,310 because of the deductible. Therefore, Heritage has alleged that

there has been a determination of liability on the part of National Union and a

determination of the extent of its damages. According to the Florida Supreme

Court, that is all that is necessary to state a claim for bad faith under § 624.155.

See Vest, 753 So. 2d at 1275; Blanchard, 575 So. 2d at 1291.

      The defendants argue—and the district court agreed—that Heritage could

not demonstrate a favorable outcome as required by Blanchard because the final

judgment in the insurance coverage case required Heritage to pay National Union

$352,415.56 in attorneys’ fees. However, this argument confuses attorneys’ fees

with damages. Although Heritage was required to pay the defendants’ attorneys’

fees because of its failure to accept the offer of judgment, that does not change the



                                            7
fact that the jury determined that Heritage had suffered a loss of a specified

amount, which National Union had failed to pay. As discussed above, this is all

that is necessary to state a claim for bad faith under Fla. Stat. § 624.155. See Vest,

753 So. 2d at 1275; Blanchard, 575 So. 2d at 1291.

       The fact that National Union offered Heritage a $250,001 offer of judgment

during the pendency of the underlying insurance coverage case does not change

this result. After Heritage filed its notice of violation, National Union had “sixty

days in which to respond and, if payment [was] owed on the contract, to cure the

claimed bad faith by paying the benefits owed on the insurance contract.” Vest,

753 So. 2d at 1275; see also Fla. Stat. § 624.155(3)(d). National Union did not

make its offer of judgment until nearly a year after Heritage filed its notice of

violation.3

       The defendants next contend that the fact the jury verdict of $55,310 (after

reduction for the $25,000 deductible) was only 1.5 percent of the $3.8 million loss



       3
           We note, however that “the denial of payment does not mean an insurer is guilty of bad
faith as a matter of law.” Vest, 753 So. 2d at 1275. Instead, “[g]ood-faith or bad-faith decisions
depend upon various attendant circumstances and usually are issues of fact to be determined by a
fact-finder.” Id. The Florida Supreme Court has stated that the factors to be considered in a
first-party bad faith action include: (1) “efforts or measures taken by the insurer to resolve the
coverage dispute promptly or in such a way as to limit any potential prejudice to the insureds;”
(2) “the substance of the coverage dispute or the weight of legal authority on the coverage
issue;” and (3) “the insurer’s diligence and thoroughness in investigating the facts specifically
pertinent to coverage.” Laforet, 658 So. 2d at 63 (citation omitted). If, after discovery, there is a
genuine issue of material fact, the ultimate decision about bad faith will be up to a jury.

                                                  8
alleged by Heritage demonstrates that the outcome was not favorable to Heritage.

The Florida Supreme Court, however, does not require that the plaintiff allege any

specific monetary amount. Imhof, 643 So. 2d at 618. Again, according to that

court, all that is required to state a claim for bad faith is that the plaintiff allege that

there was a determination of liability and the extent of the plaintiffs’ damages.

See Vest, 753 So. 2d at 1275; Blanchard, 575 So. 2d at 1291. Heritage has done so

here. Therefore, the district court erred in granting the defendants’ motions to

dismiss for failure to state a claim.

       REVERSED AND REMANDED.




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