Sullivan's Administrative Managers II, LLC v. Guarantee Insurance Company

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-17022
Non-Argument Calendar
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D.C. Docket No. 4:12-cv-00212-LGW-GRS
SULLIVAN’S ADMINISTRATIVE MANAGERS II, LLC,
Plaintiff-Appellant,
versus
GUARANTEE INSURANCE COMPANY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Georgia
________________________
(October 27, 2017)
Before TJOFLAT, WILSON, and WILLIAM PRYOR, Circuit Judges.
PER CURIAM:
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Sullivan’s Administrative Managers II, LLC (SAM II) appeals from
the district court’s final judgment against SAM II and in favor of Guarantee
Insurance Company (Guarantee) in the amount of $1,376,537.35, plus interest.1
On appeal, SAM II argues that the district court should not have granted
Guarantee’s motion for summary judgment on SAM II’s claims and Guarantee’s
counterclaims on res judicata and collateral estoppel grounds because the district
court applied Florida state law, instead of Georgia state law. After careful review
of the record and the parties’ briefs, we affirm.
I. Procedural History
In July 2012, SAM II filed a complaint in Georgia state court against
Guarantee, Ullico Casualty Company (Ullico), and Patriot National Insurance
Group, Inc. (Patriot), alleging that Guarantee misreported and overbilled SAM II
for claims and expenses related to workers’ compensation and employers liability
insurance policies issued by Guarantee. Specifically, SAM II alleged claims for
negligent misrepresentation, breach of contract, fraud, conversion, and
racketeering, in violation of Georgia’s RICO statute, O.C.G.A. § 16-14-4.
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On May 19, 2017 we remanded this case to the district court to determine all matters related to
the form and substance of the final judgment, and granted Guarantee’s motion for leave to amend
its counterclaim pleadings on appeal. Because the district court entered its final judgment, and
Guarantee sufficiently amended its counterclaim pleadings to establish the district court’s
diversity jurisdiction over the case at the time the action was removed to federal court, we have
jurisdiction to hear the appeal. See Fed. R. App. P. 4(a); 28 U.S.C. §§ 1291, 1332(a)(1), 1653.
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In August 2012, the defendants removed the case to federal court in the
Southern District of Georgia, invoking the district court’s diversity-based subject
matter jurisdiction under 28 U.S.C. § 1332. With regard to the citizenships of the
parties, the defendants alleged that: (1) SAM II was a Georgia limited liability
company whose sole member, Martin Sullivan, was a resident of Georgia; (2)
Guarantee was a Florida corporation with its principal place of business in Florida;
(3) Patriot was a Florida corporation with its principal place of business in Florida;
and (4) Ullico was a Delaware corporation with its principal place of business in
Washington, D.C.. In the attached complaint, SAM II made the same citizenship
allegations, except it identified Martin Sullivan as its CEO, instead of its sole
member, and alleged that Patriot was a Delaware corporation, instead of a Florida
corporation. The defendants filed an answer, in which they admitted the
citizenship allegations in the complaint, including that Patriot was a Delaware
corporation with its principal place of business in Florida.
Guarantee brought four counterclaims for breach of contract against SAM II,
alleging that SAM II failed to pay deductible premiums owed under the terms of
four workers’ compensation insurance policies. In December 2012, upon a joint
stipulation by the parties, the district court dismissed SAM II’s RICO claim
without prejudice. SAM II moved for partial summary judgment, Guarantee,
Ullico, and Patriot moved for summary judgment on SAM II’s claims against
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them, and Guarantee moved for summary judgment on its counterclaims. Prior to
addressing these motions, and again upon a joint stipulation by the parties, the
district court dismissed SAM II’s claims against Ullico without prejudice.
On August 23, 2013, the district court entered an order (1) denying SAM II’s
motion for partial summary judgment; (2) granting Patriot’s motion for summary
judgment on SAM II’s claims; (3) denying Guarantee’s motion for summary
judgment on SAM II’s claims; and (4) denying Guarantee’s motion for summary
judgment on its counterclaims. The court noted that SAM II and Guarantee
disputed several critical facts, including the parties to the workers’ compensation
policies and the express and incorporated terms of the policies. In particular, the
parties disputed who the policies named as the principal insured, as Guarantee
contended that the policies were issued to SAM I, while SAM II contended that the
policies were issued to SAM II.
In January 2014, Guarantee filed a second motion for summary judgment on
both SAM II’s claims and Guarantee’s counterclaims under the doctrines of res
judicata and collateral estoppel, in light of a December 2013 Florida state court
judgment entered against SAM I and in favor of Guarantee. Guarantee explained
that, in February 2012, it had sued SAM I in Florida state court, alleging breach-of-
contract claims based on SAM I’s failure to pay the deductible premiums due
under the four workers’ compensation insurance policies.
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While that Florida state court action was pending, SAM II filed the instant
lawsuit in Georgia state court, claiming that, rather than premiums being owed to
Guarantee, Guarantee had overbilled premiums and misreported claims and
expenses under the same policies. In the Florida action, Guarantee moved for
summary judgment on its breach-of-contract claims, which the Florida court
granted, entering a final judgment against SAM I and in favor of Guarantee in the
amount of $1,376,537.35, plus interest on December 11, 2013. Guarantee
contended that the Florida court’s December 2013 judgment precluded SAM II
from litigating its claims and defenses in the instant action, as the pending claims
and issues here were essentially connected to those resolved by the Florida court,
and SAM II was identical to, or in privity with, SAM I.
In July 2014, the district court, recognizing that SAM I had appealed the
December 2013 Florida judgment, stayed Guarantee’s motion for summary
judgment until the appeal in the Florida action had been decided and
administratively closed the case until such time. In December 2015, Guarantee
notified the district court that the Florida appellate court had affirmed the
December 2013 judgment.
On October 11, 2016, the district court granted Guarantee’s motion for
summary judgment, concluding that the instant action was barred by res judicata
and collateral estoppel because the Florida state court proceedings involved the
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same parties and causes of action as the instant action and resulted in a judgment
on the merits.
On October 21, 2016, pursuant to the district court’s October 11, 2016 order
granting Guarantee’s summary-judgment motion, Guarantee moved for entry of a
final judgment on its counterclaims in its favor and against SAM II in the amount
of $1,376,537.35, plus interest. On November 4, 2016, SAM II filed a notice of
appeal from the court’s October 11, 2016 order.
On appeal, we issued two jurisdictional questions to the parties, one
concerning the district court’s diversity-based jurisdiction to hear the case, and the
other concerning whether the district court’s October 11, 2016 order was final in
light of the pending motion for entry of judgment. The parties responded to the
jurisdictional questions, and in its response Guarantee moved for leave to amend
its counterclaim, pursuant to 28 U.S.C. § 1653. On May 19, 2017, we granted
Guarantee’s motion to amend its counterclaim, deemed the amended pleading
sufficient to establish the district court’s diversity-based subject matter jurisdiction
over the action at the time it was removed, and remanded the case to the district
court for entry of judgment. On May 26, 2017, the district court entered final
judgment against SAM II in the amount of $1,376,537.35, plus interest.
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II. Standard of Review
We review de novo the district court’s grant of summary judgment.
Goodman v. Kimbrough, 718 F.3d 1325, 1331 (11th Cir. 2013). In our review, we
view the facts and draw all reasonable inferences in the light most favorable to the
party against whom the summary-judgment motion is brought. Id. “Where the
record taken as a whole could not lead a rational trier of fact to find for the non-
moving party, there is no genuine issue for trial” and we therefore must affirm the
district court’s grant of summary judgment. In re Optical Techs., Inc., 246 F.3d
1332, 1334 (11th Cir. 2001) (internal quotation marks omitted).
Whether res judicata applies is a question of law that we review de novo.
Maldonado v. U.S. Att’y Gen., 664 F.3d 1369, 1375 (11th Cir. 2011). When
“asked to give res judicata effect to a state court judgment, [we] must apply the res
judicata principles of the law of the state whose decision is set up as a bar to
further litigation.” Kizzire v. Baptist Health Sys., Inc., 441 F.3d 1306, 1308 (11th
Cir. 2006) (alteration in original) (internal quotation marks omitted). We review
the district court’s factual determinations that underlie its res judicata conclusion
for clear error. Richardson v. Ala. State Bd. of Educ., 935 F.2d 1240, 1244 (11th
Cir. 1991).
Whether collateral estoppel is available is a question of law that we review
de novo. CSX Transportation, Inc. v. Gen. Mills, Inc., 846 F.3d 1333, 1336–37
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(11th Cir. 2017). We apply the law of collateral estoppel that the state court
applied in reaching its judgment when considering whether to give the judgment
preclusive effect. Vazquez v. Metro. Dade Cty., 968 F.2d 1101, 1106 (11th Cir.
1992). Our review of what claims were actually litigated in the district court is for
clear error. Precision Air Parts, Inc. v. Avco Corp., 736 F.2d 1499, 1501-02 (11th
Cir. 1984).
III. Discussion
SAM II 2 argues that the district court’s error in applying Florida law to this
case barred its ability to litigate all of its claims, and therefore res judicata and
collateral estoppel cannot apply. This argument fails, however, because the district
court was required to give preclusive effect to the Florida state courts’ application
of their state law in the Florida action, see 28 U.S.C. § 1738, and SAM II concedes
in its brief that “the Florida courts correctly applied relevant Florida statutory and
case law.” Nevertheless, we address his arguments for res judicata and for
collateral estoppel in turn.
The Florida law regarding res judicata, or claim preclusion, applies in this
case because the Florida state courts’ application of Florida law in the Florida
action is the bar that has prevented SAM II from future litigation. See Kizzire, 441
2
SAM II does not dispute that it litigated the Florida action against Guarantee, although SAM II
used “SAM I” in that litigation. Therefore, for the sake of clarity, we will only refer to SAM II
throughout the rest of this opinion.
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F.3d at 1308. Res judicata applies under Florida law when there is “(1) identity of
the thing sued for; (2) identity of the cause of action; (3) identity of the persons and
parties to the action; [and] (4) identity of the quality [or capacity] of the persons for
or against whom the claim is made.” Lozman v. City of Riviera Beach, Fla., 713
F.3d 1066, 1074 (11th Cir. 2013) (second alteration in original). The prior
litigation must also have resulted in a merits-based determination of the original
claim. Id.
Here, SAM II only disputes that the causes of action were different in the
Florida action and the district court, but SAM II makes the same arguments in
regards to the workers’ compensation policies at issue in both courts, and therefore
res judicata applies, even if he did not raise the same defenses. See Florida Real
Estate Comm’n v. Harris, 134 So. 2d 785, 788 (Fla. 1961) (“We neither favor
piecemeal review [nor] the allowing a litigant the right to two appeals. We have
held many times that a judgment is conclusive as to defenses which have or might
have been set up.” (citations omitted)); see also Davila v. Delta Air Lines, Inc., 326
F.3d 1183, 1187 (11th Cir. 2003) (stating that res judicata “bar pertains not only to
claims that were raised in the prior action, but also to claims that could have been
raised previously.” (citation omitted))
For the identity of the cause of action element, the question is if both actions
share the same facts or evidence necessary to bring them. Tyson v. Viacom, Inc.,
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890 So. 2d 1205, 1209 (Fla. Dist. Ct. App. 2005). In the district court, SAM II
brought negligent misrepresentation, fraud, breach of contract, and conversion
claims. All of those claims were either brought or could have been brought in the
Florida action. In bringing these claims, SAM II used the same facts and evidence
in its arguments pertaining to the premiums owed under the workers’
compensation policies at issue in the Florida action. Whether or not the Florida
trial and appellate courts were correct is not the issue before this court; rather, it is
whether SAM II has litigated these claims before in a prior proceeding. SAM II
has, and because the res judicata elements are present here, res judicata barred
SAM II’s action in district court. See Jones v. Gann, 703 F.2d 513, 515 (11th Cir.
1983) (“A party may successfully raise [the res judicata] defense in a Rule 56
summary judgment motion by introducing sufficient information into the record to
allow the court to judge the validity of the res judicata defense.”).
Collateral estoppel, or issue preclusion, exists under Florida law if “(1) an
identical issue, (2) has been fully litigated, (3) by the same parties or their privies,
and (4) a final decision has been rendered by a court of competent jurisdiction.”
Quinn v. Monroe Cty., 330 F.3d 1320, 1329 (11th Cir. 2003). Collateral estoppel
keeps parties from “litigating issues that have already been determined in another
proceeding.” Vasquez v. YII Shipping Co., 692 F.3d 1192, 1196 (11th Cir. 2012).
Here, SAM II has previously litigated the questions of whether Florida law applies,
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whether there is evidence of policy delivery to SAM II, how the doctrine of lex loci
contractus applies to this case, and whether Florida statute § 627.291, which
requires an insured to exhaust administrative remedies prior to bringing suit,
should prevent SAM II from bringing defenses and counterclaims. These issues
have been litigated in the Florida state courts, but nonetheless, SAM II brought the
same action in a Georgia district court, again claiming that Georgia law should
apply to this case. The Florida appellate court affirmed the judgment of
$1,375,537.35, plus interest in the Florida trial court and therefore SAM II should
not get a second bite out of the apple or a second appeal in the Georgia district
court. SAM II is collaterally estopped from bringing its claims again in district
court.
IV. Conclusion
SAM II has spent several years bringing claims against Guarantee that it is
foreclosed from bringing because of the res judicata and collateral estoppel
doctrines. The actions brought in Florida state court and in the district court
involve the same parties, claims, issues, and the Florida action had a judgment on
the merits. There are no genuine issues of material fact as to whether res judicata
or collateral estoppel is present here. Accordingly, we must affirm the district
court.
AFFIRMED.
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