INTERVEST CONSTRUCTION OF JAX, INC., A FLORIDA CORPORATION, ICI HOMES, INC., A FLORIDA CORPORATION, PLAINTIFFS-COUNTER DEFENDANTS-APPELLANTS,

v.

GENERAL FIDELITY INSURANCE COMPANY, DEFENDANT-COUNTER CLAIMANT-APPELLEE

PER CURIAM: CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA PURSUANT TO FLORIDA CONSTITUTION ARTICLE V, § 3(b)(6).

TO THE SUPREME COURT OF FLORIDA AND ITS HONORABLE JUSTICES: This case involves unanswered questions of Florida law that are central to this appeal.

Because these questions are determinative of the cause in this case and there are no controlling precedents from the Supreme Court of Florida, we respectfully certify these questions for resolution. I.

This controversy exists between the insureds, Intervest Construction of Jax, Inc. and ICI Homes, Inc. (collectively “ICI”), and their insurer, General Fidelity Insurance Company, over whether General Fidelity breached its obligations under a commercial general liability insurance policy, number BAG0002112-00 (the “General Fidelity Policy”), that ICI had with General Fidelity at the time of the accident.

The coverage dispute arose out of a personal injury lawsuit filed against ICI by an injured homeowner. In 2000, ICI contracted with Custom Cutting, Inc. for Custom Cutting to provide trim work, including installation of attic stairs in a residence that ICI was in the process of building.

The contract between Custom Cutting and ICI contained an indemnification provision requiring Custom Cutting to indemnify ICI for any damages resulting from Custom Cutting’s negligence.

In April 2007, Katherine Ferrin, the owner of a residence constructed by ICI, fell while using the attic stairs installed by Custom Cutting.

This fall resulted in serious injuries.

Ferrin then filed suit against ICI for her injuries; she did not file suit against Custom Cutting.

In turn, ICI sought indemnification from Custom Cutting under the terms of the subcontract.

At the time of the accident, Custom Cutting maintained a commercial general liability insurance policy with North Pointe Insurance Company.

ICI was not an additional insured under Custom Cutting’s policy with North Pointe.

ICI, meanwhile, held the General Fidelity Policy at the time of the accident.

Contained in the General Fidelity Policy was a Self-Insured Retention endorsement (the “SIR endorsement”) in the amount of $1 million.

ICI, Custom Cutting, North Pointe, General Fidelity, and Ferrin participated in a mediation of Ferrin’s suit.

At the mediation, the parties agreed to a $1.6 million settlement of Ferrin’s claim.

As part of the settlement, North Pointe agreed to pay ICI $1 million to settle ICI’s indemnification claim against Custom Cutting.

ICI, in turn, would pay that $1 million to Ferrin.

The instant dispute then arose as to whether ICI or General Fidelity was responsible for paying Ferrin the other $600,000.

Because of General Fidelity and ICI’s disagreement over coverage, North Pointe paid the $1 million into the trust account of ICI’s counsel; each party reserved all rights and claims against the other. Approximately one month later, both ICI and Custom Cutting paid $300,000 each to Ferrin, in addition to the $1 million from North Point, in order to settle her suit for the full $1.6 million.

ICI filed suit in the Circuit Court of the Fourth Judicial Circuit of Florida for breach of contract and a declaratory judgment regarding ICI’s rights under the General Fidelity Policy.

General Fidelity then removed the case to the United States District Court for the Middle District of Florida.

II. A.

The parties disagree about which provisions of the General Fidelity Policy are relevant; however, the crux of the dispute focuses on the SIR endorsement and the transfer of rights clause.

The SIR endorsement states that General Fidelity will provide coverage only after the insured has exhausted the $1 million SIR. The parties dispute the effect of the language in the SIR endorsement as applied to these facts.

The transfer of rights clause, on the other hand, grants the insurer some subrogation rights, the extent of which are also disputed.

ICI alleged in its complaint that General Fidelity failed to perform its obligation under the General Fidelity Policy by refusing to pay $600,000 of the $1.6 million settlement.

In taking this position, ICI essentially maintained that North Pointe’s contribution of $1 million to settle ICI’s indemnification claim, which was then passed on to Ferrin, satisfied the SIR obligation in the General Fidelity Policy, and that General Fidelity was required to pay the remaining $600,000.

General Fidelity argued that North Pointe’s $1 million payment to settle the indemnity claim did not reduce the SIR because that payment originated from Custom Cutting, not ICI.

As a result, General Fidelity maintained that the terms of the General Fidelity Policy required ICI to pay the additional $600,000 to settle Ferrin’s claim.

To more narrowly frame this dispute, there can be no disagreement that had ICI borrowed the $1 million from a bank, deposited those funds, and then used those funds toward the settlement, that money would be credited toward the SIR. A more difficult question would be whether a separate insurance policy previously obtained by ICI to cover the retained amount could reduce the SIR. General Fidelity cites several cases to establish that money derived from additional insurance policies cannot be used to satisfy the SIR, and argues to this court that these decisions should be highly persuasive to this issue before us, just as they persuaded the district court.

We are not completely convinced, however, that these cases are persuasive to the interpretation of the General Fidelity Policy before us today.

The particular language at issue in the General Fidelity Policy is different from the language in the policies at issue in the California cases cited by General Fidelity.

These distinctions are potentially significant.

Specifically, the policies in those cases are materially different for two reasons: (1) the General Fidelity Policy, unlike those policies examined by other courts, does not contain an explicit provision addressing the precise issue in question, and (2) the language of the General Fidelity Policy is arguably less restrictive than the language of the policies at issue in those cases.

Requiring that a payment be made from one’s “own account” is not necessarily the same as requiring that the retained limit be paid “by you.”

Indeed, a strong argument could be made that ICI exhausted its SIR because it paid for the protection afforded in the indemnification clause; to wit, ICI paid for that indemnity protection in the purchase price of the Custom Cutting subcontract and therefore hedged its retained risk, just as it could have paid for a loan or paid a premium on an insurance policy.

Thus, we are not fully convinced of the district court’s analysis as to this issue of Florida law.

In sum, without the language found in the cases cited supra, ICI’s indemnification clause appears on its face to be more permissive.

The dispute here is, in the absence of any other provision requiring payments directly from the insured’s own account or expressly prohibiting the use of indemnification payments to satisfy the SIR, can a bargained-and paid-for right to indemnification serve to satisfy the SIR?

Both parties agree that this is an unsettled issue. B.

Additionally, there is a related dispute between the parties as to whether the “made whole doctrine” applies or whether the parties contracted around that doctrine given the language of the transfer of rights provision.

Assuming that ICI could apply the funds it received to satisfy its SIR, the issue then becomes whether the transfer of rights provision in the General Fidelity Policy gave ICI or General Fidelity the priority to recover. The transfer of rights provision found in the General Fidelity Policy reads as follows: If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us.

The insured must do nothing after loss to impair them.

At our request, the insured will bring “suit” or transfer those rights to us and help us enforce them.

The language of this provision on its face is clear — the insurer has subrogation rights.

Given that both ICI and General Fidelity have some rights, the language is still completely silent as to who has priority to recover when the indemnity amount is insufficient to “make whole” both parties.

ICI’s argument is essentially twofold: first, General Fidelity is not entitled to recover under the subrogation agreement because the plain language of the transfer of rights provision allows General Fidelity to recover only for payments “we have made,” and, at the time it received the indemnification payment from Custom Cutting, General Fidelity had not yet made any payment; second, even if the court disregards the tense of the language, the General Fidelity Policy did not abrogate the “made whole doctrine” and thus ICI has priority to receive any indemnification before General Fidelity.

ICI, therefore, provides two different avenues that the court could take to rule in its favor as to this second issue.

General Fidelity argues that the court cannot place excessive emphasis on the tense of the language, and further that the transfer of rights provision in the General Fidelity Policy abrogated the common law rule of the “made whole doctrine” by writing into the General Fidelity Policy priority rights for General Fidelity.

ICI cites a case from the State of Washington, Bordeaux, Inc. v. Am.

Safety Ins.

Co., 186 P. 3d 1188 (Wash. Ct. App.2008), for the proposition that the specific language of the transfer of rights provision found in the General Fidelity Policy does not write out the “made whole doctrine,” thereby preserving ICI’s right of priority.

Id. at 1192-93 (holding that “[t]he trial court properly ruled that [the insureds] were entitled to be made whole before any third-party recovery funds are paid to the insurers.” (citing Polygon Nw.

Co. v. Am.

Nat’l Fire Ins.

Co., 189 P. 3d 777 (Wash. Ct. App.2008))).

ICI further highlights that the Bordeaux court relied upon two Florida cases in crafting its analysis.

Bordeaux first cited Zinke-Smith, Inc. v. Fla. Ins.

Guar. Assn., 304 So. 2d 507, 509 (Fla. 4th Dist.Ct.App.1974), cert. denied, 315 So. 2d 469 (1975), to explain the distinction between self-insurance and primary insurance.

See Bordeaux, 186 P. 3d at 1192 n. 12 (citing Zinke-Smith, 304 So. 2d at 509).

Bordeaux then cites Young v. Progressive Se.

Ins.

Co., 753 So. 2d 80, 85-86 (Fla.2000), to reinforce its reasoning that self-insurance and primary insurance are distinct concepts.

See id. at 1192 n. 17 (citing Young, 753 So. 2d at 85-86).

General Fidelity argues that Bordeaux is not on point, or, in any event, is not persuasive as to the ultimate issue.

Instead, General Fidelity argues that the language of the transfer of rights provision is sufficient to give General Fidelity priority to receive indemnity for the amounts it may have paid.

The parties do agree, however, that the Supreme Court of Florida has also not yet decided the precise issue as to whether the language found in the General Fidelity Policy displaces the background rule of the “made whole doctrine” under Florida law. C.

After hearing arguments, the district court found in favor of General Fidelity, and ICI appealed to this court.

Relying on the express language of the General Fidelity Policy, the district court emphasized that the General Fidelity Policy required that the payments be made “by you [the insured]” and in other clauses required payments “by the insured.”

See Order at 6, Intervest Constr. of Jax Inc., v. Gen. Fid.

Ins.

Co., No. 3:09-cv-00894-HES-JRK (M.D.Fla. Apr. 22, 2010) (citing several California cases as persuasive authority, despite acknowledging that none of the cases it relies upon have the same policy language).

The district court then concluded that, because the payments did not originate from ICI, Custom Cutting’s contribution to the settlement did not count against ICI’s self-insured retention.

Id. at 8.

III.

Resolution of the contrasting interpretations of the policy language raised by the parties is determinative of the cause in this case.

In light of the absence of controlling precedent from the Supreme Court of Florida, we decline to predict how these policy provisions would be construed under Florida law.

Instead, we respectfully certify the following questions for resolution: 1.

DOES THE GENERAL FIDELITY POLICY ALLOW THE INSURED TO APPLY INDEMNIFICATION PAYMENTS RECEIVED FROM A THIRD-PARTY TOWARDS SATISFACTION OF ITS $1 MILLION SELF-INSURED RETENTION? 2.

ASSUMING THAT FUNDS RECEIVED THROUGH AN INDEMNIFICATION CLAUSE CAN BE USED TO OFFSET THE SELF-INSURED RETENTION, DOES THE TRANSFER OF RIGHTS PROVISION FOUND IN THE GENERAL FIDELITY POLICY GRANT SUPERIOR RIGHTS TO BE MADE WHOLE TO THE INSURED OR TO THE INSURER?

We do not intend the phrasing of these questions to limit the court in its consideration of the problem posed by the case.

As we have previously noted: [T]he particular phrasing used in the certified question is not to restrict the Supreme Court’s consideration of the problems involved and the issues as the Supreme Court perceives them to be in its analysis of the record certified in this case.

This latitude extends to the Supreme Court’s restatement of the issue or issues and the manner in which the answers are given, whether as a comprehensive whole or in subordinate or even contingent parts.

Swire Pac.

Holdings v. Zurich Ins.

Co., 284 F. 3d 1228, 1234 (11th Cir.2002) (alteration in original) (quoting Martinez v. Rodriquez, 394 F. 2d 156, 159 n.6 (5th Cir. 1968)).

In order to assist the court’s consideration of the case, the entire record, along with the briefs of the parties, shall be transmitted to the court.

QUESTION CERTIFIED.

EXHIBIT A THIS ENDORSEMENT CHANGES THE POLICY.

PLEASE READ IT CAREFULLY SELF-INSURED RETENTION Per Occurrence Self-Insured Retention: $1,000,000 Per Occurrence Including Loss Adjustment Expense In consideration of the premium charged, it is agreed the insurance afforded by the policy to which this endorsement is attached is subject to the following additional terms, conditions and provisions.

In the event of a conflict between any of the terms, conditions or provisions of the policy and this endorsement, this endorsement will control the application of insurance to which the policy applies.

Unless otherwise specified, all terms used in this endorsement have the meaning set forth in the policy.