Insurance Claims and Bad Faith Law Blog

Florida Appellate Court Changes Handling of Premature Bad Faith Claims.

   In a rarely granted Rehearing by the entire Court, Florida's Third District Court of Appeal has receded from all of its previous decisions to grant discretionary review of prematurely filed Insurance Bad Faith Claims.  From now on, there will not be discretionary review either of (1) "an order merely permitting amendment to add an allegedly-premature bad faith claim" or (2) "a trial court order denying a motion to dismiss an allegedly-premature bad faith claim," at least in Statutory First-Party Bad Faith actions in the Third District.  Download State Farm Fla. Ins. Co. v. Seville Place Condo. Assn (Fla. 3d DCA Case No. 3D08.2538, Rehearing En Banc Opinion Filed July 20, 2011) PUBLIC ACCESS, also published as 2011 WL 2905642 *3 (Fla. 3d DCA Rehearing En Banc Opinion Filed July 20, 2011)(STATED "SUBJECT TO REVISION OR WITHDRAWAL"; authorized password required to access Westlaw).

   In this decision by the whole Court, the Third District also shared this collective view:

   It is well settled that a statutory first-party bad faith action is premature until two conditions have been satisfied:  (1) the insurer raises no defense which would defeat coverage (an issue for the judicial process rather than the appraisal process), or any such defense has been adjudicated adversely to the insurer; and, (2) the actual extent of the insured's loss must have been determined.

State Farm Florida Insurance Co. v. Seville Place Condominium Ass'n, 2011 WL 2905642 at *3.

 The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  As a result, the ACI will offer you a large  discount if you choose to register for the Conference.  In order to register and receive this discount from the ACI, contact Amanda Waltmon, Esquire, Legal Analyst and Program Director at the ACI and the deadline most recently announced by the ACI for requesting this discount is August 31, 2011.  Ms. Waltmon's direct dial is 212.352.3220, ext. 5231 or send Ms. Waltmon an EMail at a.waltmon@americanconference.com.  Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or anyone you know would like to attend.

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Coverage, if any, Before Appraisal; Evidence Sometimes Required First.

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   Policyholders' alleged breach of Proof of Loss requirements in their Homeowner's Insurance Policy resulted in reversal of an Order to Appraise their Hurricane Wilma Damage Claims, until the Coverage Issue of Proof of Loss compliance was determined, in Download Sunshine State Insurance Co. v. Corridori (Fla. 4th DCA Case No. 4D09.2502, Opinion Filed February 3, 2010), attached Official Slipsheet Opinion at 1, also reported as Sunshine State Insurance Co. v. Corridori, 2010 WL 366599 *1 (Fla. 4th DCA February 3, 2010)(subscription required to access Westlaw).  

   The Policyholders in that case had previously presented a Hurricane Wilma Damage Claim under their same Homeowner's Insurance Policy, which the Homeowner's Insurance Company paid and resolved.  "Two years later," they filed what was denominated "a supplemental claim" for additional Damages.  In response to the supplemental claim, the Homeowner's Insurance Company requested a Proof of Loss as required by the Policy and also requested Examinations Under Oath.  The Policyholders returned an allegedly "incomplete and inaccurate" Proof of Loss after the time for doing so had passed, and apparently their EUOs were not scheduled although this is not clear from the Court's opinion.

   The Homeowner's Insurance Company denied the supplemental claim.  The Policyholders filed a petition to compel Appraisal of their supplemental claim.  The Trial Court ordered Appraisal, concluding "[w]ithout taking any evidence," that the original claim and the supplemental claim were different and that the Policyholders had not breached their Homeowner's Policy.  Download Sunshine State Insurance Co. v. Corridori (Fla. 4th DCA Case No. 4D09.2502, Opinion Filed February 3, 2010), at 1; Sunshine State Insurance Co. v. Corridori, 2010 WL 366599 *1 (Fla. 4th DCA February 3, 2010).

   The Florida Appellate Court reversed.  In Florida as in most if not all jurisdictions, it is generally held that Insurance Coverage issues must be resolved before there can be an Appraisal of the amount of a loss.  Insurance Coverage issues, moreover, must be determined by a Court in Florida, not by a panel of Appraisers.  Since the Policyholders argued that they complied with Policy conditions including for Proof of Loss and that their breach, if any, of the Insurance Policy was not material, the case presented a Question of Fact as to the degree of the Policyholders' compliance with the Policy requirements.  "The trial court, without taking any evidence, did not resolve this dispute of fact with competent evidence to support its determination of coverage."  Download Sunshine State Insurance Co. v. Corridori (Fla. 4th DCA Case No. 4D09.2502, Opinion Filed February 3, 2010), at 1-2; Sunshine State Insurance Co. v. Corridori, 2010 WL 366599 *1-*2 (Fla. 4th DCA February 3, 2010).

Various Cases dealing with Appraisals under First-Party Policies, as in Corridori, are examined in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 11:2 (Second Edition, Shepard's/McGraw-Hill; 2009 Supplement West Publishing Company).  Examinations Under Oath are the subject of discussion in id. § 11:8, and Proofs of Loss are mainly addressed in id. § 11:9, among other Sections.

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"Confession of Judgment Rule" Penalizes Post-Suit Additional Policy Payment ...

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      ... By Allowing Recovery of Attorney's Fees for WRONGFULLY Causing Its Insured to Resort to Litigation, says the Court, following established Florida Insurance Case Law, in Download Clifton v. United Casualty Insurance Co. (Fla. 2d DCA Opinion Filed February 12, 2010), attached Official Slipsheet Opinion at 6-7; also published as Clifton v. United Casualty Insurance Co., 2010 WL 476660 *3 (Fla. 2d DCA February 12, 2010)(subscription required to access Westlaw).

   At the heart of these Cases is the idea that the Confession of Judgment Rule allows Policyholders-Insureds to recover Attorney's Fees in their action against their Insurance Company because as a matter of Law they prevailed.  However, the Confession of Judgment Rule is not absolute; rather, it can involve Questions of Fact which preclude Summary Judgment, as in the Clifton Case:

   What can be gleaned from these cases is that an insurer that is aware of a dispute with its insured cannot simply ignore that dispute, wait until the insured files suit to demand appraisal, pay any subsequent appraisal award, and then maintain that the payment does not constitute a confession of judgment as a matter of law.  On the other hand, if an insurer is not on notice that the claim or payment is disputed, the insured generally will be unable to show that he or she was "forced" to file suit, and a subsequent post-suit payment by the insurer may not constitute a confession of judgment.  While this does not mean that the insured is required to invoke the appraisal clause prior to suit, it does mean that the insured must, at a minimum, clearly notify his or her insurer in a timely fashion of his or her dissatisfaction with the amounts paid.

   In light of this controlling case law, it is clear that summary judgment in favor of United Casualty was inappropriate.

Download Clifton v. United Casualty Insurance Co. (Fla. 2d DCA Opinion Filed February 12, 2010), at 9;  Clifton v. United Casualty Insurance Co., 2010 WL 476660 *5 (Fla. 2d DCA February 12, 2010).  [Emphasis by the Court.]

The assessment and recovery of Attorney's Fees in Insurance Cases is discussed by Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" in §§ 13:12-13:14 (Second Edition, Shepard's/McGraw-Hill; 2009 Supplement, West Publishing Company).

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