         Case: 13-12932   Date Filed: 06/19/2014    Page: 1 of 9




                                                        [DO NOT PUBLISH]



          IN THE UNITED STATES COURT OF APPEALS

                  FOR THE ELEVENTH CIRCUIT
                    ________________________

                          No. 13-12932
                    ________________________

                D.C. Docket No. 1:12-cv-21758-FAM



WESTCHESTER FIRE INSURANCE
COMPANY,
a foreign corporation,

                                             Plaintiff - Appellee
                                             Cross Appellant,

versus

MID-CONTINENT CASUALTY COMPANY,
a foreign corporation,

                                             Defendant - Appellant
                                             Cross Appellee.

                    ________________________

             Appeals from the United States District Court
                 for the Southern District of Florida
                    ________________________

                           (June 19, 2014)
                 Case: 13-12932        Date Filed: 06/19/2014       Page: 2 of 9


Before HULL, COX and FARRIS,∗ Circuit Judges.

PER CURIAM:

       In    this    insurance     dispute,    Westchester       Fire    Insurance      Company

(“Westchester”) sued Mid-Continent Casualty Company (“Mid-Continent”)

asserting a bad-faith claim under Florida law. According to Westchester, Mid-

Continent (as primary insurer) acted in bad faith towards Westchester (the excess

insurer) by failing to settle a case. 1 After a bench trial, the district court found that

Mid-Continent had acted in bad faith and entered a $390,173 judgment. Mid-

Continent appeals raising several issues and Westchester cross-appeals.                        We

reverse.




       ∗
         Honorable Jerome Farris, United States Circuit Judge for the Ninth Circuit, sitting by
designation.
       1
         As explained by the Supreme Court of Florida:

                    A fourth recognized [bad-faith claim] involves a claim not of the
            insured or the third-party claimant, but of the excess carrier, which may bring
            a bad-faith claim against a primary insurer by virtue of equitable subrogation
            under certain circumstances where the primary insurer has not acted in good
            faith. Under the doctrine of equitable subrogation, an excess insurer has the
            right to “maintain a cause of action . . . for damages resulting from the
            primary carrier’s bad faith refusal to settle the claim against their common
            insured.” U.S. Fire Ins. Co. v. Morrison Assurance Co., 600 So. 2d 1147,
            1151 (Fla. 1st DCA 1992) (citing Ranger Ins. Co. v. Traveler’s Indem. Co.,
            389 So. 2d 272 (Fla. 1st DCA 1980)). The reasoning of the equitable
            subrogation cases is that the primary insurer is “held responsible to the excess
            insurer for improper failure to settle, since the position of the latter is
            analogous to that of the insured when only one insurer is involved.” Id.

       Perera v. U.S. Fidelity & Guar. Co., 35 So. 3d 893, 900 (Fla. 2010).
                                                 2
                 Case: 13-12932       Date Filed: 06/19/2014        Page: 3 of 9


                             I. Facts and Procedural History

       This appeal and cross-appeal derive from an underlying products liability

suit in state court.2      Both insurers in this case issued policies to Continental

Manufacturing, Inc. (“Continental”). Mid-Continent issued a $1 million dollar

primary insurance policy. And, Westchester issued a $5 million dollar excess

policy.

       Continental was sued for products liability in Florida state court.                     The

Plaintiff in the state court suit, Jesus Pillado, claimed he suffered several injuries—

including brain damage and fractured vertebrae—while operating one of

Continental’s concrete mixer trucks.              Pillado alleged damages exceeding $1

million.

       Continental tendered the suit to its insurers and Mid-Continent provided a

defense. From an early point in the litigation, Westchester demanded that Mid-

Continent settle the case.          Throughout the litigation, Mid-Continent and the

defense counsel made several attempts to settle, but no settlement was reached.

Pillado’s lowest settlement offer of $1,000,000 was still far above Mid-Continent’s

settlement range of $150,000-$350,000. Following a trial, the jury returned a

verdict in favor of Pillado awarding him $1,705,173 in damages.


       2
         We relate the facts briefly. A more detailed recitation of the facts of the underlying suit
may be found in the district court’s opinion. See Weschester Fire Ins. Co. v. Mid-Continent Cas.
Co., 954 F. Supp. 2d 1374 (S.D. Fla. 2013).
                                                 3
              Case: 13-12932     Date Filed: 06/19/2014   Page: 4 of 9


      Despite this verdict, the defense counsel believed that the net award in the

case would not exceed $1.6 million due to a setoff from a worker’s compensation

lien that Mid-Continent had purchased. About two weeks after the verdict, Pillado

offered to settle the case for $1.6 million dollars. Mid-Continent did not inform

Westchester of this offer, but asked the defense counsel to decline the settlement

the next day, stating that it was “no deal for us.” Ultimately, the state court chose

not to permit a setoff for the worker’s compensation lien and awarded Pillado

$285,000 in costs. The total judgment in the case was $1,990,173, consisting of

the $1,705,173 verdict and $285,000 in costs. Because the costs were the primary

carrier’s obligation, Westchester incurred an excess exposure of $705,173.

      Following the state court litigation, Westchester brought this suit against

Mid-Continent alleging that Mid-Continent acted in bad faith by refusing to settle

Pillado’s claim.    The district court conducted a two day bench trial on

Westchester’s claim. After the trial, the court stated in its findings and conclusions

that Mid-Continent’s pre-verdict activities did not constitute bad faith. However,

the district court held that Mid-Continent acted in bad faith by failing to notify

Westchester of the post-verdict settlement offer. After the verdict, it was clear that

any result in the case could include exposure exceeding $1 million. Yet, Mid-

Continent did not inform or confer with Westchester before rejecting the post-

verdict settlement offer. Accordingly, the district court found that Mid-Continent

                                          4
               Case: 13-12932     Date Filed: 06/19/2014   Page: 5 of 9


acted in bad faith and awarded Westchester damages representing the difference

between what Westchester would have paid under the $1.6 million dollar

settlement and the final judgment. The district court entered a $390,173 judgment

in favor of Westchester. Mid-Continent appeals and Westchester cross-appeals.

                                II. Issues on Appeal

      Mid-Contintent raises three issues on appeal. First, Mid-Continent contends

the district court erred by allowing Westchester to amend the pleadings to conform

to evidence of post-verdict bad faith presented at trial. Second, Mid-Continent

contends that the district court erred by finding that Mid-Continent acted in bad

faith post-verdict. Third, Mid-Continent contends that the district court erred by

awarding damages without finding causation. On cross-appeal, Westchester raises

one issue: that the district court erred by finding that Mid-Continent did not act in

bad faith before and during the trial.

                              III. Standards of Review

      We review the district court’s decision to grant leave to amend the pleadings

to conform to the evidence for an abuse of discretion. Diaz v. Jaguar Restaurant

Group, LLC, 627 F.3d 1212, 1214 (11th Cir. 2010). We review a district court’s

factual findings for clear error. Fischer v. S/Y Neraida, 508 F.3d 586, 592 (11th

Cir. 2007). We review de novo the legal issue of whether damages can be awarded




                                          5
              Case: 13-12932     Date Filed: 06/19/2014    Page: 6 of 9


without a finding of causation. Mitchell v. Hillsborough Cnty., 468 F.3d 1276,

1282 (11th Cir. 2006).

                                   IV. Discussion

A. The district court did not clearly err by finding that Mid-Continent did not
act in bad faith before and during trial.

      On cross-appeal, Westchester contends that the district court erred by

finding that Mid-Continent did not act in bad faith before or during trial. Because

Westchester challenges the district court’s factual finding that Mid-Continent did

not act with bad faith before or during trial, we review for clear error. See Fischer,

508 F.3d at 592.

      Westchester’s main contention is that Mid-Continent should have offered

more money in settlement and at an earlier time in the proceedings. The district

court considered this argument and the evidence presented and found that Mid-

Continent did not act in bad faith. The court noted that Mid-Continent reasonably

calculated and offered settlement amounts based on the results of two mock trials

and the defense counsel’s estimation of the case. Westchester argues that the

district court’s conclusion that Mid-Continent did not act in bad faith was in error.

However, Westchester presents no reason why the district court’s fact finding is

clearly erroneous. We hold the district court did not clearly err by finding that

Mid-Continent did not act in bad faith prior to and during the trial.



                                          6
                Case: 13-12932    Date Filed: 06/19/2014   Page: 7 of 9


B. The district court erred by awarding damages without any proof of
causation.

         Based on its finding of bad faith, the district court awarded Westchester

$390,173 in damages. This is the amount Westchester would have saved if Mid-

Continent and Westchester had accepted Pillado’s post-verdict settlement offer.

On appeal, Mid-Continent contends that the district court erred by awarding

damages without finding that Mid-Continent caused any injury to Westchester.

Furthermore, Mid-Continent contends that no evidence proves that Westchester

would have accepted the settlement even if it had been properly informed of the

offer.

         We have previously certified a question to the Supreme Court of Florida

asking whether damages can be awarded in a bad faith claim without a finding of

causation. In response, the Supreme Court of Florida held that a valid bad faith

claim must show “a causal connection between the damages claimed and the

insurer’s bad faith.” Perera v. U.S. Fid. & Guar. Co., 35 So. 3d 893, 903–04 (Fla.

2010).     The court emphasized that the existence of a causal connection is a

prerequisite to a valid claim—in other words, “the claimed damages must be

caused by the bad faith.” Id. at 901.

         In this case, the district court never found that Mid-Continent’s failure to

communicate the settlement offer caused any damage to Westchester.

Furthermore, Westchester is unable to identify any evidence in the record showing
                                           7
              Case: 13-12932     Date Filed: 06/19/2014   Page: 8 of 9


it has incurred an obligation that it should not have been required to pay, absent the

primary insurer’s bad faith. See Vigilant Ins. Co. v. Cont’l Cas. Co., 33 So. 3d

734, 738 (Fla. 4th DCA 2010). Westchester claimed at oral argument that its

previous pre-verdict requests for settlement are sufficient proof that it would have

accepted the post-verdict settlement. We are not convinced. Many of these pre-

verdict demands were nothing more than pro forma demands for Mid-Continent to

settle within its policy limits.    And, even though Westchester did offer to

contribute to a settlement pre-verdict, this is a vastly different situation than that

post-verdict. In its brief, Westchester does not even contend that it would have

accepted the post-verdict settlement offer. After reviewing the record, we see no

evidence or testimony that Westchester would have accepted the post-verdict

settlement offer.   Accordingly, the district court erred by finding that Mid-

Continent was liable on the bad faith claim without proof that Mid-Continent

caused any injury to Westchester.

      Because we reverse the district court’s judgment on this basis, we need

consider neither Mid-Continent’s contentions that the district court erred by

allowing Westchester to amend the pleadings to conform to the evidence at trial

nor the district court’s holding that Mid-Continent acted in bad faith post-verdict.




                                          8
             Case: 13-12932    Date Filed: 06/19/2014   Page: 9 of 9


                                 V. Conclusion

      The district court did not clearly err by finding that Mid-Continent did not

act in bad faith before and during trial. However, the district court erred by

holding that Westchester had established a valid bad-faith claim and awarding

damages without any proof of causation. Accordingly, we reverse the judgment in

favor of Westchester and remand with instruction that the court enter judgment in

favor of Mid-Continent.

      REVERSED AND REMANDED WITH INSTRUCTION.




                                        9
