Gardith S. Lemy v. Direct General Finance Company
559 F. App'x 796
11th Cir.2014Background
- Plaintiffs allege defendants sold surplus lines insurance in Florida that is duplicative of required general automobile coverage and thus worthless.
- Plaintiffs filed as a class action in state court; two out-of-state defendants removed under CAFA.
- District court denied remand under CAFA local controversy exception; plaintiffs appealed.
- On the merits, district court dismissed claims, holding no private right of action under most Florida Insurance Code provisions and no merit to remaining claims.
- Court held that only § 627.8405 provides a private remedy for selling unregulated insurance, and surplus lines regulation does not render policies void.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAFA local controversy exception applies | Lem(y)y seeks relief from local defendant; local remedy is significant. | Relief is primarily sought from foreign defendants; local defendant’s share is not significant. | Local controversy exception does not apply. |
| Whether Florida insurance code provides a private right of action for alleged violations | Code sections create private enforcement rights. | Most sections do not provide private rights of action. | Private right of action exists only for § 627.8405. |
| Whether alleged code violations void the insurance policies | Noncompliance should void or negate the policy. | Absence of private enforcement and no voiding penalty mean policies remain valid. | Violations do not render policies void; private rights limited as stated. |
| Whether the § 627.8405 claim supports private action against selling surplus lines | Surplus lines sale violated private remedy statute. | Surplus lines regulation falls outside the private-action scope except as to § 627.8405. | § 627.8405 claim fails to defeat dismissal; only note is potential private remedy for unregulated product under § 627.8405. |
Key Cases Cited
- Evans v. Walter Industries, Inc., 449 F.3d 1159 (11th Cir. 2006) (local-relief comparison informs CAFA local controversy analysis)
- City of Vestavia Hills v. General Fidelity Co., 676 F.3d 1310 (11th Cir. 2012) (district court factual findings reviewed for clear error)
- QBE Ins. Corp. v. Chalifonte Condo. Apt. Assoc., Inc., 94 So.3d 541 (Fla. 2012) (statutes addressing public safety not civil-liability creators; no private remedy absent explicit provision)
- Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202 (11th Cir. 2008) (standard for reviewing remand and CAFA problems)