CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA, PURSUANT TO ARTICLE 5, SECTION 3(B)(6) OF THE FLORIDA CONSTITUTION, FLORIDA STATUTES SEC. 25.031, AND RULE 9.150, FLORIDA RULES OF APPELLATE PROCEDURE.

TO THE SUPREME COURT OF FLORIDA AND THE HONORABLE JUSTICES THEREOF:

This diversity uninsured motorist insurance case concerns the question of whether the measure of damages in a first-party (insured against insurer), "bad faith" action, brought pursuant to Fla.Stat. Sec. 624.155(1)(b)1., may properly include an award of punitive damages against an insurer. We have determined that this issue of law is dispositive of the case, and that there appear to be no clear, controlling precedents in the decisions of the Supreme Court of Florida. We therefore certify the following question of law to the Supreme Court of Florida, in accordance with Rule 9.150, Florida Rules of Appellate Procedure:

I. Style of the Case.

The style of the case in which this certificate is made is WILLIAM ADAMS and DOROTHY ADAMS, his wife, and THOMAS SHELTON and ELIZABETH SHELTON, his wife, Plaintiffs-Appellants, versus THE FIDELITY AND CASUALTY COMPANY OF NEW YORK, a New Hampshire corporation, Defendant-Appellee, Case No. 90-5229, United States Court of Appeals for the Eleventh Circuit, on appeal from the United States District Court for the Southern District of Florida.

II. Statement of Facts.

On January 23, 1982, plaintiffs-appellants Thomas and Elizabeth Shelton, along with plaintiffs-appellants William and Dorothy Adams, were traveling in Broward County, Florida in an automobile owned and operated by Thomas Shelton. Plaintiffs' vehicle was struck by another vehicle owned and operated by Sylvia Brannan, an allegedly intoxicated motorist who failed to stop at a red light.

The Sheltons were named insureds under a policy purchased in their home state of North Carolina from defendant-appellee Fidelity and Casualty Company of New York ("Fidelity"). The policy included $200,000 in uninsured motorist coverage. Plaintiffs William and Dorothy Adams, as passengers in the Sheltons' vehicle, were additional insureds under the uninsured motorist provision. Sylvia Brannan had no automobile liability insurance.

As a result of the accident, plaintiff William Adams received physical injuries, and his wife Dorothy suffered a corresponding loss of consortium. In addition to the claims for physical injuries, each of the plaintiffs asserted claims for punitive damages based on Ms. Brannan's egregious conduct.

Plaintiffs notified Fidelity of their uninsured motorist claims shortly after the accident. By letter dated June 8, 1983, they offered to settle all claims within the policy limits for the sum of $175,000. Defendant Fidelity rejected the offer. Despite repeated requests by plaintiffs between June, 1983 and May, 1985, Fidelity allegedly refused to negotiate and settle plaintiffs' claims.

Under their policy, plaintiffs could elect either to arbitrate their uninsured motorist claims, or to bring an action in circuit court. Plaintiffs chose the latter option, which permitted them to join the uninsured motorist, Sylvia Brannan, as a party. Accordingly, plaintiffs sued Fidelity and Brannan in the Eleventh Circuit Court in and for Dade County, Florida. Brannan did not appear at trial, and plaintiffs took a default judgment against her on liability. The jury returned a verdict for $70,000 in compensatory damages,1 as well as $750,000 in punitive damages against Brannan, based upon her egregious conduct in causing the accident.

Fidelity then moved to limit its liability under the uninsured motorist provision of the policy to the $70,000 in recoverable compensatory damages. Fidelity maintained that it was only liable for this amount because Florida law prohibits the recovery of punitive damages from an insurance carrier. The trial court agreed, and entered judgment for plaintiffs in the amount of $70,000.

On appeal, the Third District Court of Appeal for Florida reversed and remanded, applying the general rule that substantive questions concerning insurance coverage are to be determined by the law of the state in which the parties reach their agreement, where the policy is issued, and where the premiums are paid. Adams, 500 So. 2d at 238.2 The court found that North Carolina would permit recovery of punitive damages from an uninsured motorist carrier. Id. Hence, on remand, the trial court entered an order in accordance with the state appellate court's opinion, which (1) vacated the first order; (2) ordered that plaintiffs could recover $750,000 in punitive damages from Brannan; (3) ordered that plaintiffs could recover $70,000 in compensatory damages from Fidelity; and (4) ordered that plaintiffs could recover $130,000 in punitive damages (the remaining amount of the $200,000 coverage) from Fidelity. Fidelity subsequently satisfied $200,000 of the $820,000 judgment.

Plaintiffs then filed a first-party "bad faith" action against Fidelity, pursuant to Fla.Stat. Sec. 624.155(1)(b)1.,3 for allegedly failing to settle their insurance claims in good faith. The case was removed to federal court. Fidelity moved for summary judgment on two grounds: (1) that an excess judgment was not a recoverable element of damages under Section 624.155, and (2) that Florida does not allow punitive damages assessed for the conduct of an uninsured motorist to be recovered against an insurer. While acknowledging that other courts have determined excess judgments to be recoverable under section 624.155,4 the district court held that the excess judgment in this case was not recoverable because it would not have been covered by an uninsured motorist policy under Florida law.5III. Question to be certified to the Supreme Court of

Florida.

Assuming that Fla.Stat. Section 624.155(1)(b)1. provides for a first-party bad faith claim in an uninsured motorist case,6 and assuming that damages exceeding the limits of the insurance policy may be collected against an uninsured motorist insurance carrier,7 can the measure of damages properly include an award of punitive damages against the insurer?

The phrasing of the question is not intended to limit the Supreme Court of Florida's consideration of the various problems encountered by parties litigating section 624.155(1)(b)1. claims. The entire record and the briefs of the parties shall be transmitted to the Supreme Court of Florida for assistance in considering this question.