R oger Brown sued Citizens Property Insurance Corporation and claimed various state claims in connection with a settlement agreement. The district court dismissed the action when it found that the company was a state by the state based on the Eleventh Amendment to the U.S. Constitution which provides: “The legal power of the United States shall not be construed to include any lawsuit or equity, initiated or prosecuted by any of the United States by nationals of another state, or by nationals or subjects of any foreign state. Brown appealed.
I Roger Brown v. Citizens Property Insurance Corporation, Unknown employee of Citizens Property Insurance Corporation No. 20-11607, United States Court of Appeal for the Eleventh Circuit (February 4, 2021) Eleventh Circuit was asked to reverse the decision of the district court that found that Citizens Property Insurance Corporation (CPIC) was established by the Florida legislature to provide "affordable property insurance." § 627.351 (6) (a) 1. And the Florida legislature further described the CPIC as "a government entity that is an integral part of the state, and which is not a private insurance company." As a unit of the state of Florida, the district court found that its jurisdiction was prohibited by the eleventh amendment.
In 2011, Brown shared real estate in Clearwater, Florida. The problem was that his property was adjacent to a designated property for the sinkhole. So he filed a claim with his property insurer, CPIC. His claim was questioned, but the subsequent dispute was settled in 2014. In the same year, Brown's property was barred, with the final ruling on exclusion handed down to the Federal National Mortgage Association (FNMA). the settlement amount, which was made jointly to Brown and FNMA. Since Brown had not dealt with FNMA before, he was just trying to get it out in his name. But each time Brown demanded payment, the CPIC continued to issue joint checks. Eventually, in the federal district court, Brown sued the CPIC and "unknown employees" of that company. Brown's amended complaints alleged breach of contract, conversion, unfair enrichment, intentional breach of administrative duty and intentional infliction of serious emotional distress.
The CPIC submitted a successful request for dismissal due to lack of competence, citing immunity from the eleventh amendment.  ANALYSIS
Brown argued that Congress could waive sovereign immunity, that he could still sue because Florida had waived his immunity, and that the CPIC was not a state arm.
The district court noted the state's language. statute, and that "courts regularly recognize [CPIC] their status as a state government entity." It also found that Florida never explicitly waived the CPIC's "immunity from litigation in federal court." has waived the immunity of States. Whether an entity is a state arm is determined by four factors:
- how state law defines the entity,
- the degree of state control over the entity,
- where the entity receives its funds; and
- who is responsible for judgments against the unit.
The Florida legislature defined the CPIC as "a government entity" and specifically noted that it "was not a private insurance company." Fla. Stat. § 627.351 (6) (a) 1. With regard to the second factor, the CPIC operates according to a plan "approved on behalf of the Financial Services Commission", which "is subject to continuous review." Fla. Stat. § 627.351 (6) (a) 2.
Although the CPIC is part of the state, Brown argued that Florida waived the unit's immune system for the eleventh amendment. The test for determining whether a state has waived its sovereign immunity is a strict one. An exception to immunity from the Eleventh Amendment must specifically allow for federal court proceedings. It is true that the Florida statutes expressly state that liability for damages and the cause of action do not cover all circumstances. such exceptions include "intentional liability for damages" and "breach of any contract or insurance contract." Fla. Stat. § 627.351 (6) 1. But without more, it only means that Florida waives immunity for certain complaints in state courts.
The Eleventh Circuit concluded that nothing for which Brown sought discovery would have been relevant to the district court's finding of the eleventh amendment's immunity from CPIC – that the discovery turns out to be dispositive. As a general matter, it is not permissible to request a fictitious party in federal court. Although federal courts have a "limited exception" to the rule when the plaintiff still provides a specific description of the defendant, Brown did not reach that standard.
The USCA expressed sympathy for Brown's obvious problems. But since the CPIC is part of the state, the Eleventh Amendment's immune system prevents him from bringing his claims to federal court. The eleventh amendment, which follows the rights document, is easy to miss, but clearly deprives federal courts of jurisdiction over a judicial review of an individual against a state entity. In this way, it restricts the right to appeal in state courts if the state unit has waived sovereign immunity. Brown could have sued in state court but would probably have encountered the sovereign immunity situation. The court ignores the fact that FNMA as a pledgee is entitled to the income from a claim up to its interest.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance claims handling, fraud and insurance fraud almost equally for insurance companies and insurance companies. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.
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