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Vesta Fire Ins. Corp. v. Florida

United States Court of Appeals for the Eleventh Circuit

May 22, 1998, Decided

Nos. 96-3657, 97-2041.

Opinion

 [*1429]  EDMONDSON, Circuit Judge:

Plaintiffs appeal the district court's grant of summary judgment in favor of Defendants. In evaluating cross-motions for summary judgment, the district court decided that no genuine issues of material fact existed and that judgment could be granted to Defendants as a matter of law on Plaintiffs' claims that recent [**2]  Florida insurance legislation violated the Due Process, Taking, and Contract Clauses of the United States Constitution. Because we conclude that the district court erred in granting summary judgment about whether a regulatory taking occurred, we vacate the grant of summary judgment on that issue and remand for further proceedings consistent with this opinion. We affirm on all other issues. 1

Background

After Hurricane Andrew hit Florida in 1992, insurance companies began to lessen their potential exposure to policies likely to result in hurricane damage liability: residential line policies in Florida. To prevent the total withdrawal of insurance companies and the subsequent unavailability of insurance if companies left the Florida market, the Florida legislature passed several statutes.

The first of these [**3]  statutes was a "Moratorium Statute," which prohibited the nonrenewal and cancellation of residential line insurance policies for reasons related to the risk of hurricane damage. See 1993 Fla. Laws ch. 93-401 § 1. The Moratorium Statute was passed as temporary legislation.

The Florida legislature then passed ] the "Moratorium Phaseout Statute," which allowed limited cancellation and nonrenewal of residential policies. See Fla. Stat. § 627.7013; 2 [**4]  see also 1993 Fla. Laws ch. 93-410 § 19; 1993 Fla. Laws ch. 93-411 § 1. The Moratorium Phaseout Statute provided that, in a twelve-month period, no insurer could cancel or nonrenew more than 5% of its residential policies in Florida or more than 10% of its residential policies in a single Florida county. See Fla. Stat. § 627.7013. This phaseout plan was interpreted by Department of Insurance (DOI) rules--despite a Florida statute permitting the total withdrawal of insurance companies upon 45-days notice, see Fla. Stat. § 627.4133(2)--as generally prohibiting an insurer's total withdrawal from doing business in the State of Florida. 3

In addition, legislation was passed requiring insurers to pay annual premiums to the Florida Hurricane Catastrophe Fund. This fund is intended to provide reinsurance to insurance companies doing business in Florida. The reinsurance provides protection to companies which, following a hurricane, are unable to pay fully on their policies.

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141 F.3d 1427 *; 1998 U.S. App. LEXIS 10247 **; 11 Fla. L. Weekly Fed. C 1413

VESTA FIRE INSURANCE CORPORATION, Vesta Insurance Corp., Sheffield Insurance Corporation, an Alabama Corporation, Plaintiffs-Appellants, v. STATE OF FLORIDA, Tom Gallagher, in his capacity as Insurance Commissioner, State Board of Administration, Ash Williams, Jr., in his capacity as Executive Director, Defendants-Appellees.

Prior History:  [**1]  Appeals from the United States District Court for the Northern District of Florida. (No. 95-40138-WS), William Stafford, Judge.

Disposition: AFFIRMED in part; VACATED and REMANDED in part.

CORE TERMS

Moratorium, regulation, summary judgment, district court, Phaseout, insurance company, economic impact, expectations, withdrawal, policies, investment-backed, contracts, moratorium statute, material fact, do business, residential, impairment, Hurricane, insurance contract, regulatory taking, rate increase, insureds, genuine, cancel

Insurance Law, Types of Insurance, Reinsurance, Cancellation & Nonrenewal, Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Appeals, Summary Judgment Review, General Overview, Standards of Review, Genuine Disputes, Materiality of Facts, Constitutional Law, Bill of Rights, Fundamental Rights, Eminent Domain & Takings, Industry Practices, Congressional Duties & Powers, Contracts Clause, Scope, Governments, Police Powers, Real Property Law, Financing, Construction Loans