28 Fla. L. Weekly Supp. 303a
Online Reference: FLWSUPP 2804PACE
Insurance — Homeowners — Venue — Forum selection clause — Mandatory forum selection clause in assignment of benefits from insured to assignee does not govern venue for breach of contract action brought by assignee against insurer — Where there is no forum selection clause in insurance policy, venue is proper in county in which cause of action accrued, property is located, and insurer has business office — Motion to transfer venue is denied
GSD CONSTRUCTION SERVICES, LLC, a/a/o Vergie Pace, Plaintiff, v. STATE FARM FLORIDA INSURANCE COMPANY, Defendant. Circuit Court, 2nd Judicial Circuit in and for Gadsden County. Case No. 19-1133-CA. May 26, 2020. David Frank, Judge. Counsel: Scott Mager, Mager Paruas, LLC, Hollywood, for Plaintiff. Robert Kingsford, Alfano Kingsford, P.A., Maitland, for Defendant.
AMENDED ORDER DENYING DEFENDANT’SMOTION TO DISMISS FOR IMPROPER VENUE
This cause came before the Court for hearing on Defendant’s, STATE FARM FLORIDA INSURANCE COMPANY (State Farm”) Motion to Dismiss Plaintiff’s, GSD CONSTRUCTION SERVICES, LLC (“GSD”), Complaint for Improper Venue, and the Court having reviewed the motion, the response, and all submissions in support of or opposition to the motion, heard argument of counsel, and being otherwise fully advised in the premises, finds Procedural History.
In October 2018, Hurricane Michael caused damage to the property of Vergie Pace in Gadsden County. Ms. Pace had homeowner’s insurance with State Farm. Ms. Pace contends that she was not fully and/or properly compensated for the damage pursuant to the operative insurance policy she purchased from State Farm. Ms. Pace assigned her right to recover — her benefits under the policy — to GSD. GSD filed the present lawsuit in Gadsden County on November 11, 2019.
State Farm moved for the dismissal of this case on the ground that Gadsden County is an improper venue.
Despite concerns about privity, the Court initially granted the motion and dismissed this case at a hearing on May 6, 2020. The only rulings or opinions presented at that hearing that explained their rationale and that were on point were two trial court orders from the same trial judge submitted by State Farm. Those orders support State Farm’s position. Since then, the Court became aware of a Second District appellate opinion, a Second Circuit trial court order, and some trial court orders from the Fourteenth Circuit that support GSD’s position.
Prior to issuing a written order, the Court sua sponte noticed a hearing on reconsideration of the matter for May 20, 2020, for which it reviewed additional submissions, and at which it heard further argument of counsel.
First, there appears to be some confusion over the nature of a motion to “reconsider” versus a motion to “rehear.” They are not the same. A motion for rehearing addresses a final judgment that has ended the judicial labor on a case. An order granting a motion to dismiss is not a final judgment for rehearing purposes. Thompson v. Admiral Manufacturing Housing Community, 282 So.3d 923, 924 (Fla. 1st DCA 2019) [44 Fla. L. Weekly D2374b], review dismissed, No. SC19-2056, 2019 WL 6736910 (Fla. Dec. 11, 2019).
“In contrast to final judgments, interlocutory orders are subject to judges’ reconsideration sua sponte, even to the point of withdrawing them completely or reversing the initial ruling.” Campos v. Campos 230 So.3d 553, 556 (Fla. 1st DCA 2017) [42 Fla. L. Weekly D2257a].
Generally, a plaintiff is the master of his or her complaint. “If, therefore, venue is proper in more than one place, a plaintiff has the privilege of selecting which venue is most favorable to it for any reason and that selection will not be disturbed absent evidence that the chosen venue is either not proper in the place selected or substantially inconvenient to the witnesses or parties. R.J. Reynolds Tobacco Co. v. Mooney, 147 So.3d 42, 46 (Fla. 3d DCA 2014) [39 Fla. L. Weekly D1386a], citing Barry Cook Ford, Inc. v. Ford Motor Co., 571 So.2d 61, 61 (Fla. 1st DCA 1990) (other citations omitted).
State Farm does not assert that plaintiff GSD’s venue selection is substantially inconvenient. Rather, State Farm only challenges GSD’s choice as improper as a matter of law based on language in the assignment of benefits contract (“AOB”).
Specifically, State Farm argues that a mandatory venue clause in the AOB, which was signed and entered into by Ms. Pace and GSD, calls for venue in Orange County. The venue clause states: “Florida law will govern this assignment. The sole and exclusive venue for any lawsuit arising out of or relating to same shall be the state courts (not federal) of orange county, Florida.” (Emphasis added).
The parties spent time covering matters and legal principles that really are not in dispute or central to the issue at hand. There is no real dispute whether the subject venue selection language is “mandatory.” It is. There is no dispute whether the insured can assign her benefits. She can.
The crux of this matter is State Farm’s attempt to transport the venue language of the AOB into the case itself. To do this, State Farm argues two creative applications of known legal tenants. It asserts that Florida law on “incorporation” incorporates the AOB into the cause of action itself and is binding on the parties to the lawsuit. Alternatively, State Farm argues that established exceptions to Florida law on privity apply here and, therefore, it has acquired the privity needed to enforce the AOB. State Farm misapplies both concepts.
There Is No Incorporation
State Farm’s first argument is that the venue clause is “incorporated” into the lawsuit because it is attached to and mentioned in the complaint.
The current lawsuit centers on the method of assessing damage and the calculation of monies owed to repair damage under the subject insurance policy. The insurance policy is attached as exhibit A to the complaint. The dispute is not regarding the nature of benefits Ms. Pace conferred on GSD, or any other aspect of the AOB. State Farm itself acknowledged this in the first paragraph of its motion to dismiss where it states, “Plaintiff purports to assert a breach of contract action for damages arising out of Hurricane Michael at the home of STATE FARM’s insured, VERGIE PACE.”
Motion to Dismiss at 1.
The claims in this lawsuit do not “arise out of the AOB.1 The operative contract on which this lawsuit is based is attached as Exhibit 1 to the complaint. It is the subject insurance policy. That’s where the terms and conditions that govern the method of assessing damage and the calculation of monies owed are found.
The AOB attached to the complaint is not incorporated into the cause of action, it is to show standing only. This is like a foreclosure action for which a plaintiff would attach a copy of the note, but also a copy of an assignment to enforce the note, if the plaintiff is not the original contracting party. In that scenario, the contract sued upon is the note, not the assignment, the assignment is attached simply to establish standing. Ham v. Nationstar Mortgage, LLC, 164 So.3d 714 (Fla. 1st DCA 2015) [40 Fla. L. Weekly D1112a]; see also Progressive Express Insurance Co. v. McGrath Community Chiropractic, 913 So.2d 1281 (Fla. 2d DCA 2005) [30 Fla. L. Weekly D2622b].
In addition, State Farm seems to be mixing the concepts of “exhibit to a complaint” incorporation with standard contract “incorporation.” Standard contract incorporation is where one contract clearly expresses the intention of the contracting parties to include and be bound by the terms and conditions outlined in another document in a way that makes the terms and conditions of both documents the controlling agreement. The main problem applying that idea to the present case is that the complaint is not a “contract” entered into by State Farm and GSD and into which the terms and conditions of another document could be incorporated. It is a lawsuit.
State Farm’s own primary authority for its incorporation argument makes this clear, “A document may be incorporated by reference in a contract if the contract specifically describes the document and expresses the parties’ intent to be bound by its terms. The contract must contain more than a mere reference to the collateral document. . . .” Management Computer Controls, Inc. v. Charles Perry Construction, Inc., 743 So.2d 627 (Fla. 1st DCA1999) [24 Fla. L. Weekly D2458c] (emphasis added).2 The defendant in Management Computer Controls was a party to the contract that contained the venue clause. Moreover, even if being sued could somehow turn State Farm into a “contracting party,” the complaint does not express a clear desire to adopt the terms and conditions of another document, the AOB. Indeed, it states that Gadsden County is the proper venue.
There is another aspect to the ruling in Management Computer Controls that works against State Farm’s argument. Although the court held that the venue clause in the second contract was legally incorporated into the first and, thus, binding on the parties, it did not conclude the same regarding the FUDPTA claim. Id. The reason — the FUDPTA claim did not “arise from the contract.” Id. The court explained:
Because [all the claims other than FUDPTA] arose out of the contract, they are governed by the parties’ agreement concerning venue. We conclude, however, that the venue clause cannot be applied to [the FUDPTA claim]. The unfair trade claim is an independent statutory claim that is severable from all the remaining claims. It does not arise out of the contract, nor does it exist solely for the benefit of the parties to the contract. Our conclusion that the unfair trade practices claim is beyond the scope of the venue clause is supported by the analogous decision of the [Third District].
Management Computer Controls at 632; see also Gordon v. Sandals Resorts International, Ltd., 418 F. Supp. 3d 1132 (S.D. Fla. 2019), citing Management Computer Controls.
The First District later clarified that the rule in Management Computer Controls is based on language that dictates venue for causes of action arising out of the contract containing the language. SAI Insurance Agency, Inc. v. Applied Systems, Inc., 858 So. 2d 401 (Fla. 1st DCA 2003) [28 Fla. L. Weekly D2543a]. It distinguished cases in which the contracting parties agreed to a specific venue, “for any action or claim between the parties.” Id.
In the present case, venue applies to actions arising or relating to the assignment of benefits, not to anything at all between the parties. This means that, even if State Farm were a contracting party to the AOB, the mandatory venue selection likely would not be triggered based on the nature of the present lawsuit and the scope of the clause.
The Basic Doctrine of Privity Prevents State Farm from Enforcing the AOB
Florida law is unassailable when it comes to the concept of privity. A person who is not a party to a contract may not enforce its terms because they are not “in privity” with those who formed the contract. Esposito v. True Color Enterprises Const., Inc., 45 So.3d 554 (Fla. 4th DCA 2010) [35 Fla. L. Weekly D2297b]. There is no (valid) dispute regarding the identity of the parties to the AOB. They are Ms. Pace and GSD. State Farm is not a party, does not have “privity,” and cannot enforce any of its terms.
Therefore, even if the AOB contained language that would trigger the mandatory venue clause based on the nature of the lawsuit, State Farm is not in a position to invoke or enforce it.
Most importantly, this core principle was addressed by at least one appellate court in Florida. The Second District addressed a lack of privity in a similar scenario involving the same defendant:
The agreements between the homeowners and [a repair company assignee] appear to be mandatory. But State Farm is not a party to those agreements. . . . The assignments did not alter the fact that the homeowners reside in Palm Beach County where the damage occurred and where the critical witnesses are located.
RJG Environmental, Inc. v. State Farm Florida Insurance Co., 62 So.3d 678, 680 (Fla. 2d DCA 2011) [36 Fla. L. Weekly D1077a].
State Farm argues that there is authority for the opposite conclusion. Its argument centers on the rule applied in Antoniazzi v. Wardak, 259 So.3d 206 (Fla. 3d DCA 2018) [43 Fla. L. Weekly D2348a] where a “non-signatory” enforced a mandatory venue clause in a contract.
The appellants in Antoniazzi filed a motion to dismiss the complaint for lack of jurisdiction, “. . .alleging that the forum selection clause contained in the agreement was mandatory and unambiguous, and that the exclusive forum for this action was Brazil.” Id. The appellees countered that the forum selection clause was permissive, not mandatory, and that the ambiguous wording of the agreement permitted the filing of the lawsuit in Miami. Id. Although two parties were not “signatories” to the agreement, they had close commercial relationships with a signatory (a strategic trading partner of the bank and the financial adviser to the bank) based on the very agreement at issue. Id.
The issue in Antoniazzi was contract construction — whether the venue selection clause was mandatory and what forums were included. That is not the controlling issue here. The present parties agree that the language of the subject venue clause is mandatory and there is no ambiguity over multiple locations.
The Antoniazzi court did, however, address State Farm’s contention that a mandatory venue clause could be enforced by someone other than “signatories to the contract.” The court stated in a footnote: “[T]his Court has previously held that the mandatory nature of a forum selection clause ‘equally applies to the non-signatory defendants due to the fact that the claims arise directly from the agreement, as well as due to the nature of the commercial relationship of the parties as it relates to the agreement itself.’ ” Id. (citations omitted).
At first glance, this footnote dicta seems very supportive of State Farm’s position. But a second glance tells us this exception to the privity rule does not apply to the facts of this case. The key to triggering the exception is twofold. First, the claims must arise from the subject agreement. And second, there must be a close commercial relationship between the non-signatories and the signatories. Later in the footnote the court notes, “Here, the actions asserted in the complaint arise directly out of the Banking Agreement, and the only commercial relationship between the parties is the banking relationship governed and established by the Banking Agreement.” Id.
This is not the situation with the present case. First, the claims for property damage arose from a hurricane and compliance with an insurance policy contract, not some dispute over how benefits were assigned, see discussion above. Second, the signatories and non-signatories don’t have the required close commercial relationship. State Farm has no such relationship with GSD and the only relationship it has with Ms. Pace is the insured — insurer relationship that springs from the insurance policy, not the AOB.
Venue is Determined by Florida Statute 47.051
GSD stands in the shoes of its assignor, Ms. Pace. United Water Restoration Grp., Inc. v. State Farm Fla. Ins. Co., 173 So. 3d 1025, 1027 (Fla. 1st DCA 2015) [40 Fla. L. Weekly D1569a]. To determine venue for this case then, we look to the alternatives available to an insured when suing an insurer for breach of an insurance contract.
Venue arises from either a contract clause (that applies), or if there is no controlling contract clause, the venue statutes. As discussed above, the controlling contract here is the subject insurance policy and State Farm acknowledges that it does not contain a venue selection clause. We, therefore, must look to the venue statutes.
Section 47.051, Florida Statutes (2019), provides: “Actions against domestic corporations shall be brought only in the county where such corporation has, or usually keeps, an office for transaction of its customary business, where the cause of action accrued, or where the property in litigation is located. Actions against foreign corporations doing business in this state shall be brought in a county where such corporation has an agent or other representative, where the cause of action accrued, or where the property in litigation is located.”
Gadsden County qualifies as a proper venue under the Section 47.051 criteria. It likely is where the cause of action accrued.3 It is where the property in litigation is located. And State Farm “has, or usually keeps, an office for transaction of its customary business” there.4
Accordingly, it is
ORDERED and ADJUDGED that defendant’s motion is DENIED. Defendant shall answer the complaint within 20 days from the date of this order.
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1The Court is aware of the appellate case law that gives the phrase “relates to” a slightly more inclusive effect than that given to the phrase “arises out of.” Nonetheless, even if the presence of the words “relates to” could stretch far enough to connect the AOB to the alleged insurance policy breach here, State Farm’s motion would still fail because of the lack of privity.
2The contention that State Farm somehow acquires privity to enforce the AOB because the words “insured,” “insurance,” and “insurance policy” and the claim number appear in the AOB is wholly without merit.
3A thorough discussion of determining where a cause of action accrues for purposes of venue when an insured sues an insurer for property damage is beyond the scope of this ruling.
4The allegations of the complaint indicate that State Farm (Florida) is a domestic corporation with a business office in Gadsden County.
