PEARSON

v.

SCOTTSDALE INSURANCE COMPANY

After Tropical Storm Eta damaged Rachel Pearson’s home, Pearson and her insurer, Scottsdale Insurance Company, disputed whether Pearson’s roof leaked from wind damage, which the policy covers, or from “expansion and contraction,” which the policy excludes. Despite invoking her contractual right to appraisal, Pearson sued Scottsdale in state court before the appraisal concluded and without complying with a recently enacted pre-suit notice requirement. Scottsdale promptly removed the action to federal court and moved to dismiss for failure to comply with the pre-suit notice requirement. Before Pearson responded to the motion to dismiss, Scottsdale and Pearson stipulated to abate this action pending conclusion of the appraisal, which awarded Pearson $123,545.92 and included an itemized award for the disputed damage to the roof. Scottsdale promptly paid the appraisal award. Pearson contends (Doc. 29) that Scottsdale’s payment constitutes a “confession of judgment” entitling Pearson to an attorney’s fee. Scottsdale moves (Doc. 31) for “summary judgment” on Pearson’s claim for an attorney’s fee and renews the motion to dismiss for failure to comply with the pre-suit notice requirement. Each party responds (Docs. 32, 33) in opposition to the adversary’s motion. Principally, the parties dispute whether the recently enacted pre-suit notice requirement applies

“retroactively,” which, as the parties use the term, means whether the requirement applies to a policy issued before the requirement became effective. Enacted June 11, 2021, and effective July¹, 2021, Section 627.70152, Florida Statutes, among other things, requires pre-suit notice before suing “under a residential or commercial property insurance policy[.]” Specifically, subsection (3)(a) re-

quires “as a condition precedent to filing a suit under a property insurance policy” that “a claimant must provide the [Florida Department of Financial Services] with written notice of intent to initiate litigation . . . .” The notice “must be given at least 10 business days before filing suit under the policy, but may not be given before the insurer has made a determination of coverage . . . .” If the insurer fails within ten business days to respond by accepting coverage, denying coverage, or asserting a right of inspection or appraisal, subsection (4) authorizes the insured to sue. Subsection (4)(b), however, tolls the response deadline for a maximum of ninety days pending appraisal. If an insured sues without pre-suit notice, subsection (5) requires dismissal without prejudice and subsection (8)(b), prohibits the award of an attorney’s fee for services rendered before the dismissal.¹ The parties’ papers recognize Menendez v. Progressive Express Insurance Co., 35 So. 3d 873 (Fla. 2010), as the leading authority on the “retroactivity” of a pre-suit no-

tice requirement in insurance litigation. In Menendez, the insurer moved to dismiss after the insured failed to comply with the pre-suit notice requirement under Florida’s Motor Vehicle No-Fault Law, which requires a motor vehicle policy to cover bodily injury “without regard to fault” and guarantees a “swift and virtually automatic recovery” for the insured. Although the insurer issued the personal injury pol-

icy before the pre-suit notice requirement became effective, the insured sued without pre-suit notice after the requirement became effective. Menendez, 35 So. 3d at 875. Under Menendez, a pre-suit notice requirement applies “retroactively” if and only if (1) the statute reveals a legislative intent for the requirement to apply “retroactively” and (2) “retroactive” application is “procedural” rather than “substantive.”

Menendez, 35 So. 3d at 877–78. After summarily concluding that the legislature intended the pre-suit notice requirement to apply “retroactively,” Menendez holds that

tively” to a property insurance policy issued before the statute’s effective date. In response, Scottsdale marshals decisions of Florida trial courts and a federal district court, Art Deco 1924 Inc. v. Scottsdale Ins. Co., 2022 WL 706708 (S.D. Fla. 2022) (Moreno, J.), which distinguish Menendez by reasoning that “retroactive” application Section 627.70152(3)(a) impairs no “substantive” right under a property insurance policy. After the parties’ briefing, Cole v. Universal Property & Casualty Insurance Co., --- So. 3d ----, 2023 WL 3214643 (Fla. 4th DCA 2023) (Levine, J.) (petition for rehearing en banc pending), became the first decision of a Florida district court of appeal to analyze the “retroactivity” of Section 627.70152(3)(a).³ Although acknowledging that Menendez prohibits the “retroactive” application of the pre-suit notice requirement under Florida’s no-fault law, Cole recognizes that the no-fault law’s pre-suit notice requirement also “impose[s] a penalty,” “implicate[s] attorney’s fees,” “grant[s] an insurer additional time to pay benefits,” “delay[s] the insured’s right to institute a cause of action,” and impedes the no-fault statute’s “swift and virtually automatic” recovery. Cole, --- So. 3d ----, 2023 WL 3214643, at * 4. Cole reasons that, because

suit notice. Cole, --- So. 3d ----, 2023 WL 3214643, at *3 (citing Haven Fed. Sav. & Loan Ass'n v. Kirian, 579 So. 2d 730, 732 (Fla. 1991) (observing that procedure “encompass[es] the course, form, manner, means, method, mode, order, process or steps by which a party enforces substantive rights or obtains redress for their invasion.”)). Although concluding that subsection (3) is “procedural,” Cole remarks that subsection (8), which precludes an attorney’s fee in the absence of pre-suit notice, impairs a “substantive” right and under Menendez and likely cannot apply retroactively. Cole, --- So. 3d ----, 2023 WL 3214643, at *4. But because the trial court in Cole dismissed the action before the insured could claim entitlement to a fee, Cole reasons that “changes to the attorney’s fees provision are not an issue in this case, and as such, not relevant to our determination.” Cole, --- So. 3d ----, 2023 WL 3214643, at *3. Relying on Leapai v. Milton, 595 So. 2d 12, 15 (Fla. 1992), Cole concludes that “[o]ne provision that is substantive in scope does not act as a bar to enforcement of another provision that is able to be applied retroactively.” Cole, --- So. 3d ----, 2023

WL 3214643, at *4. Accordingly, Cole affirms the dismissal of the insured’s action. A federal court exercising diversity jurisdiction applies the substantive law of the forum state. Salve Regina College v. Russell, 499 U.S. 225, 226 (1991). “Absent a decision by the highest state court or persuasive indication that it would decide the issue differently, federal courts follow decisions of intermediate appellate courts in applying state law.” Galindo v. ARI Mut. Ins. Co., 203 F. 3d 771, 775 (11th Cir. 2000). Under Pardo v. State, 596 So. 2d 665, 666 (Fla. 1992), however, “‘[t]he decisions of the district courts of appeal represent the law of Florida unless and until they are overruled by this Court.’ Thus, in the absence of interdistrict conflict, district court decisions bind all Florida trial courts.” Because Cole “represent[s] the law of Florida” and no district court of appeal conflicts with Cole, Section 627.70152(3)(a) applies in a federal district court and requires dismissal of a property-insurance action filed without pre-suit notice.⁴ Thus, Pearson’s action, filed without pre-suit notice,

warrants dismissal. One wrinkle remains. In Cole, the trial court granted the insurer’s motion to dismiss after the insured failed to afford pre-suit notice. Because the trial court dismissed the action before assessing the insured’s entitlement to an attorney’s fee, subsection (8), which prohibits the award of an attorney’s fee in the absence of pre-suit notice, “w[as] not an issue.” Cole, --- So. 3d ----, 2023 WL 3214643, at *4. In this action, the parties promptly moved to abate the action before Pearson responded to the

ney’s fee — Scottsdale’s post-suit payment. This order must determine whether Pearson is entitled to an attorney’s fee even though Pearson’s action is subject to dismissal without prejudice. Section 627.428, Florida Statutes, awards an attorney’s fee to a prevailing insured. Specifically, subsection (1) states, “upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any . . . insured, the trial court . . . shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation . . . .” By its terms, Section 627.428(1) conditions the award of an attorney’s fee “upon the rendition of a judgment or decree . . . against the insurer.”⁵

Although the parties have resolved the dispute and thus a judgment on the merits is unavailable, a plaintiff is nonetheless entitled to judgment if by resolving the dispute the defendant has confessed to judgment. A “confession of judgment,” known at common law as a “confession relicta verificatione,” occurs if “after pleading and before trial, the defendant abandoned his plea or other allegations; whereupon

the functional equivalent of a confession of judgment or a verdict in favor of the insured.” Wollard v. Lloyd’s and Cos. of Lloyd’s, 439 So. 2d 217, 218 (Fla. 1983). Thus, a plaintiff is entitled to a confession of judgment “where the insurer has denied benefits the insured was entitled to, forcing the insured to file suit, resulting in the insurer’s change of heart and payment before judgment.” Echo v. MGA Ins. Co., Inc., 157 So. 3d 507, 512 (Fla. 1st DCA 2015). A confession of judgment, however, “is the substitute for verdict” and “is not the judgment of the court.” Castro, 351 So. 3d at 131 (quoting Whitley v. S. Wholesale Corp., 164 S.E. 903, 903 (Ga. 1932)). Accordingly, a confession becomes a judgment only upon entry of judgment by the court. Castro, 351 So. 3d at 131. For example, in Garrido v. SafePoint Insurance Co., 347 So. 3d 108, 109–10 (Fla. 3rd DCA 2022), the insurer filed a “confession of judgment” and the insured moved for an attorney’s fee. However, because the insured moved more than thirty days after the insurer’s confession filing, the trial court denied the motion under Rule 1.525, Florida Rules of Civil

Procedure, which requires a party to move for an attorney’s fee within thirty days after judgment. On appeal, Garrido reasons that the announcement of a “confession of judgment” is not the “functional equivalent of a judgment” and thus fails to trigger the thirty-day deadline. Garrido, 347 So. 3d at 111. Garrido concludes that, in the absence of either an order by the trial court directing entry of judgment by confession or a stipulation of dismissal by the parties, a filing of confession of judgment neither “conclude[s] the action” nor triggers entitlement to an attorney’s fee. Garrido, 347 So. 3d at 112.

In this action, Pearson moves for an order finding that Scottsdale’s post-suit payment constitutes a confession of judgment. But neither Scottsdale’s payment nor Pearson’s motion constitutes the functional equivalent of a judgment. Garrido, 347 So. 3d at 111. Accordingly, Pearson’s entitlement to an attorney’s fee requires an order entering judgment for Pearson. But because Scottsdale timely moved to dismiss for failure to comply with the pre-suit notice requirement and timely renewed the motion after the appraisal concluded, this action is subject to dismissal without prejudice. In the absence of a pending action, no jurisdiction remains to direct entry of a confessed judgment for Pearson. Wilhelm v. Locklar, 35 So. 6, 580–81 (Fla. 1903) (observing that no jurisdiction remains to enter a confessed judgment in the absence of a pending action). To attempt to evade this consequence, Pearson might argue (but has not argued) that dismissing the action has the effect of retroactively applying subsection (8) (the rule forfeiting an attorney’s fee in the absence of pre-suit notice) despite Cole’s recognition that subsection (8) is “substantive” and cannot apply retroactively. Not so. Because Pearson failed to comply with the pre-suit notice requirement, the action is subject to dismissal. Because the action is subject to dismissal, no jurisdiction remains to order entry of judgment, whether by confession or on the merits or otherwise. Because no jurisdiction remains to enter judgment, Pearson can obtain no “rendition of a judgment or decree” tn this action. And because Pearson can obtain no “rendition of a judgment or decree,” Section 627.428(1) authorizes no attorney’s fee. That a party’s failure to comply with a procedural requirement might have a “substantive” consequence should not surprise an informed observer. Because the action is subject to dismissal, ‘‘[the] attorney’s fees provision are not an issue in this case, and as such, not relevant to [this] determination.” Cole, --- So. 3d ----, 2023 WL 3214643, at *3.° Scottsdale’s motion for dismissal under 12(b)(6), renewed in Scottsdale’s motion (Doc. 31) for summary judgment, is GRANTED. This action is DISMISSED WITHOUT PREJUDICE. Pearson’s motion (Doc. 29) for entry of a confessed judgment and an attorney’s fee is DENIED AS MOOT. The clerk must enter judgment of dismissal without prejudice and close the case. ORDERED in Tampa, Florida, on July 10, 2023.

STEVEN D. MERRYDAY

UNITED STATES DISTRICT JUDGE

° Tn any event, Scottsdale contends persuasively that, because Pearson sued before conclusion of the appraisal, which Pearson invoked before suing, Scottsdale’s payment of the appraisal award amounts to no “confession of judgment.” See People’s Trust Ins. Co. v. Farinato, 315 So. 3d 724 (Fla. 3rd DCA 2021).

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