          DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                             FOURTH DISTRICT

 THE LEXINGTON CLUB COMMUNITY ASSOCIATION, INC., and THE
  LEXINGTON CLUB VILLAS CONDOMINIUM ASSOCIATION, INC.,
                       Appellants,

                                    v.

          LOVE MADISON, INC. d/b/a ALEXANDER INSURANCE,
                              Appellee.

                             No. 4D17-1843

                            [August 15, 2018]

  Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach  County;    Edward     L.   Artau,    Judge;   L.T.    Case    No.
502007CA018961XXXXMB-AF.

  Douglas J. Roberts, Michael E. Stearns and Mark D. Nichols of Stearns,
Roberts & Guttentag, LLC, Deerfield Beach, for appellants.

   Allison C. Heim, Gina E. Romanik and Marcel M. Flemming of Mintzer
Sarowitz Zeris Ledva & Meyers LLP, Miami, for appellee.

MAY, J.

    A post-Hurricane Wilma roof repair led to negligence and unjust
enrichment claims by two condominium associations (“associations”)
against an insurance agent that failed to procure a contractually required
“Payment and Performance Bond” on behalf of the contractor. From a
judgment for the associations, for less than the amount claimed, the
associations appeal. They argue the trial court erred in its damages
instruction to the jury and in excluding certain evidence. We disagree
there was error in the damages instruction given, and while the trial court
erred in excluding certain evidence, that error was harmless. We therefore
affirm.

    Hurricane Wilma caused significant damage to the associations’
condominium and townhome buildings.            After the hurricane, the
associations hired a general contractor and roofing company to re-roof all
of the buildings and perform other repairs to the property. The contract
was in excess of $6,000,000.
   The contract provided:

      13.1.1 The Contractor shall execute and deliver to the
      Owner a Payment and Performance Bond in the amount of
      100% of the Contract Sum. The attorney-in-fact or other
      Officer who signs a Payment and Performance Bond for a
      surety company must file with such Payment and
      Performance Bond a certified copy of his power of attorney
      authorizing him to do so. The surety’s resident Florida agent
      must countersign the contract Payment and Performance
      Bond. The form of Payment and Performance Bond shall be
      as furnished by the Owner.

      13.1.2 The Payment and Performance Bond must be written
      through surety insurers authorized to do business in the State
      of Florida as surety, with a rating of B-IX according to the
      latest edition of Best’s Insurance Guide, published by A. M.
      Best Company, Oldwick, New Jersey. The Owner will not
      accept substituted securities for Payment and Performance
      Bond. Failure to timely provide the Payment and Performance
      Bond will be cause for forfeiture of the bid bond.

The contractor approached the defendant insurance agent to procure the
bond. When the agent was unable to do so, the contractor suggested a
company named Strategy Insurance Limited. The agent’s principal
submitted an application to Strategy, which agreed to issue the bond for a
premium of $327,915.

   The associations paid the premium directly to the agent via wire
transfer. The agent retained a 10% commission and forwarded the
remainder to Strategy. When the associations received the bond, they
noticed that it listed Strategy’s address in Barbados, West Indies. This
raised a concern. It was determined that Strategy was not licensed to do
business as an insurer in Florida, a contractual requirement.

   And while the associations did not have cause to rely on the bond, they
sued Strategy, the contractor, and the agent. They obtained a default
judgment against Strategy, which is no longer in business.             The
associations entered into a settlement agreement with the contractor.

   This left pending their claim against the agent. The fourth amended
complaint against the agent included counts for:           (1) negligent
procurement of insurance; (2) a declaration that the bond was invalid and

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unenforceable; and (3) unjust enrichment.

   At trial, the jury found the agent’s negligence was NOT a legal cause of
damages to the associations. But, it awarded $32,000 (10% of the
premium) to the associations on the unjust enrichment claim. The trial
court entered a final judgment in accord with the jury’s verdict, and
declared that “the payment and performance bonds issued by [Strategy]
were invalid and unenforceable.”

   From this judgment and declaration, the associations now appeal.

   The Jury Instruction on Damages

   The associations argue the trial court improperly instructed the jury on
damages for their claim for negligent procurement of insurance. They
argue that, while normally the measure of damages is the amount of the
loss that would have been covered had insurance been properly obtained,
the associations were due a refund of the $327,915 premium paid for the
useless bond.

   The agent responds that the trial court properly instructed the jury that
the measure of damages in a negligent procurement of insurance claim is
the loss that would have been covered had the insurance been properly
obtained. Because the associations suffered no loss, they were limited to
criminal and/or administrative penalties against the agent.

    We review a trial court’s decision on whether to give a jury instruction
for an abuse of discretion. Stokes v. Wynn, 219 So. 3d 891, 894 (Fla. 4th
DCA 2017).

   The parties offered competing jury instructions on the proper measure
of damages for the negligent procurement claim. The agent’s instruction
provided: “In an action for negligent procurement of insurance, the
measure of damages is what would have been covered had the insurance
been properly obtained.” The associations’ proposed instruction provided:

      Compensatory damage is that amount of money which will put
      [the Insured] in a position nearly equivalent to what would
      have existed, had [the Insurer] not breached its duty owed to
      [the Insured], thereby causing injury.

      Further, in an action for negligent procurement of insurance,
      the measure of damages where there is a loss is what would
      have been covered by insurance, had the insurance been

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      properly obtained. When no loss has occurred that would
      have been covered, if the insurance had been properly
      obtained, the measure of damages is the amount paid for the
      premium.

The trial court gave the agent’s proposed instruction.

   Where the parties enter into an agreement to procure insurance and
there is a negligent failure to do so, an insurance broker may be liable for
damages. Gelsomino v. ACE Am. Ins. Co., 207 So. 3d 288, 292 (Fla. 4th
DCA 2016). Florida case law provides that “‘[t]he measure of damages in
a negligent procurement of insurance case is what would have been
covered had the insurance been properly obtained.’” Id. (quoting Mondesir
v. Delva, 851 So. 2d 187, 189 (Fla. 3d DCA 2003)).

  A negligent procurement of insurance claim arises from section
626.901, Florida Statutes (2017), which provides:

      (2) If an unauthorized insurer fails to pay in full or in part any
      claim or loss within the provisions of any insurance contract
      which is entered into in violation of this section, any person
      who knew or reasonably should have known that such
      contract was entered into in violation of this section and who
      solicited, negotiated, took application for, or effectuated such
      insurance contract is liable to the insured for the full amount
      of the claim or loss not paid.

(Emphasis added).

   The associations argue this statute and our case law are inapplicable
because they only address situations where the insured suffers a loss that
would otherwise have been covered had the proper insurance been
obtained. Here, there was no claim or loss. Rather, the associations are
seeking full reimbursement of their premium payment.

   Florida has not yet addressed this issue, but other jurisdictions have.

      [W]here no loss occurs the measure of damages has been
      stated to be the amount paid as the premium. If the policy
      procured is defective because of the terms and coverage
      provided therein, the measure of damages has been held to be
      the amount for which the insurer would have been liable had
      proper insurance been effected.


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Simpson v. M-P Enters., Inc., 252 So. 2d 202, 207 (Miss. 1971) (emphasis
added) (citations omitted). The Virginia Supreme Court has applied the
same measure of damages. Autumn Ridge, L.P. v. Acordia of Va. Ins.
Agency, Inc., 613 S.E.2d 435, 437 (Va. 2005) (“We conclude . . . that when
no loss has occurred . . ., the measure of damages for failure to procure
insurance is the amount paid by the intended insured as the premium.”).

    In a very similar case, the Louisiana Court of Appeal held that
“[c]ompensating [the subcontractor] by awarding it the amount it paid for
the defective bonds . . . is a proper award of damages.” Gulf Coast Bldg.
Sys., Inc. v. United Am. Sur. Co., Ltd., 614 So. 2d 1360, 1365 (La. App. 3
Cir. 1993).

    In Florida a negligent procurement of insurance action is statutorily
authorized where there is a loss during the time the insured holds the
policy. § 626.901, Fla. Stat. In a negligent procurement action, an
unauthorized insurer’s policy is still enforceable and is applied as such
to cover any losses that were not covered by the policy. See §§ 626.901(3),
627.418(1), Fla. Stat. (2017). Thus, while the associations’ policy was
issued by an unauthorized insurer, the insurer would still be held
responsible. Here, however, the associations suffered no monetary loss
during the construction.

   The Legislature provided that “[n]o insurance contract entered into in
violation of this section shall be deemed to have been rendered invalid
thereby.” § 626.901(3), Fla. Stat. As such, the Legislature expressly made
the unauthorized insurer’s policies enforceable in a negligent procurement
action.

   The associations suggest that section 626.901 is inapplicable because
their claim against the agent falls within general negligence. But even
under a general negligence standard, the associations are required to
prove damages. They simply cannot meet this burden because they
sustained no loss during the construction.

   We decline to adopt the damages law of foreign states where our
Legislature has provided statutory remedies. We find no error in the trial
court’s damages instruction to the jury and affirm on this issue.

   The Evidentiary Issue

    The associations next argue the trial court abused its discretion in not
admitting a consent order and the agent’s admission of its principal’s
license suspension. They argue the suspension was predicated on the

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principal’s violation of a statute that bars aiding and abetting unlicensed
insurers and should have been admitted as evidence of negligence. The
agent responds that the suspension was properly excluded as part of a
settlement agreement between the principal and the Florida Department
of Financial Services, pursuant to section 90.408, Florida Statutes (2017).

   We review a trial court’s ruling on the admissibility of evidence for an
abuse of discretion, limited by the rules of evidence. Yang v. Sebastian
Lakes Condo. Ass’n, Inc., 123 So. 3d 617, 620 (Fla. 4th DCA 2013).

  During discovery, the agent responded to the associations’ request for
admissions. The agent admitted that

      1) its principal did not know that Strategy was unlicensed
         when he procured the bond for the project;

      2) its principal did no investigation into whether Strategy was
         unlicensed;

      3) it received a commission on the bond;

      4) its principal had no intent to commit fraud or a criminal
         act in procuring the bond; and

      5) its principal was disciplined and had his license suspended
         by the Florida Department of Business and Professional
         Regulation (“DBPR”) for his conduct in procuring the bond.

   When the associations attempted to admit the State’s Consent Order
and Settlement Stipulation, the trial court excluded the evidence based on
section 90.408 relating to offers to compromise. The trial court however
indicated that if the principal denied wrongdoing or knowing that Strategy
was unauthorized to issue insurance, then it would open the door to
discussion of his discipline.

   Section 90.408 provides: “Evidence of an offer to compromise a claim
which was disputed as to validity or amount, as well as any relevant
conduct or statements made in negotiations concerning a compromise, is
inadmissible to prove liability or absence of liability for the claim or its
value.”

    The associations argue this section does not apply because the consent
order is not an “offer,” and the State’s administrative proceeding, resulting
in the consent order, is not the “claim” at issue. The agent responds that

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it was an offer because the State sent the principal a letter offering that he
receive a suspension of his insurance license and complete continuing
education courses in lieu of a formal administrative complaint being filed.
The principal agreed to these terms.

     We disagree with the agent that Jordan v. City of Coral Gables, 191 So.
2d 38 (Fla. 1966), supports its position. There, our supreme court stated
“that it was prejudicial error to allow the submission of evidence of
settlement by defendant of the claim of a third party in the same accident
. . . .” Id. at 38. This case is unlike Jordan. Here, there was a settlement
in a prior administrative proceeding involving the State, unrelated to the
lawsuit. And, section 8 of the consent order specifically provided: “This
document is a public record and contains information which is routinely
published by the Department.”

    The court erred in excluding the consent order and other admissions
as none of them fall within the purview of section 90.408. Nevertheless,
these errors were harmless. See Special v. West Boca Med. Ctr., 160 So.
3d 1251, 1265 (Fla. 2014). Had the trial court admitted this evidence, it
likely would have had no effect on the verdict because (1) there was already
proof of the agent’s negligence, and (2) the jury found no loss during the
construction that would have entitled the associations to damages in their
negligent procurement action.

   The agent’s principal testified that he did not do his due diligence in
researching the insurer. He admitted the agency had no policies and
procedures in place to check whether insurers were authorized to do
business in Florida. He testified that he did not know whether Strategy
was authorized to do business in Florida. He admitted he could have done
more to prevent the problem.

   In short, the agent’s principal admitted his negligence. And yet, the
jury found no loss due to the agent’s negligence. It did however award the
associations $32,000, the premium paid to the agent, on the unjust
enrichment claim. It also appears the agent’s principal was sanctioned by
the DPBR.

   For the foregoing reasons, we affirm.

   Affirmed.

WARNER and FORST, JJ., concur.

                            *         *         *

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Not final until disposition of timely filed motion for rehearing.




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