In Life Changing Ministries, Inc. v. Canopius US Ins., Inc., No. 5:15-cv-59-Oc-30PRL, 2016 WL 6947341 (M.D. Fla. November 28, 2016) the facts involved a sinkhole claim that the carrier initially denied, the policyholder filed suit, and then the carrier paid. The upshot was that statutory attorney's fees were mandated under Fla. Stat. § 626.9373.
So the District Court awarded attorney's fees under the statute providing that where a policyholder prevails on an insurance claim against a surplus lines carrier in Florida, that policyholder is entitled to its reasonable attorney's fees.
Reluctantly, because the carrier initially denied coverage based on what the District Judge called a "thorough investigation." The carrier's investigation included an engineering report prepared in accordance with prevailing engineering practices, the policyholder's own experts said. The carrier paid the claim after the policyholder's lawyer sent it a report prepared by an engineer retained by the policyholder. Unfortunately for the carrier's exposure to attorney's fees in this case, the carrier paid the policyholder's claim after the policyholder filed a lawsuit.
It seems kind of sneaky on the face of it, you have to agree, that the policyholder's attorney sent the report to the carrier after the 30-day "safe harbor" period had come and gone, even though the report had been prepared long before the safe harbor period began. This meant of course that the carrier had no opportunity to "cure" -- at least no opportunity based on the competing engineer's report, although of course it had 30 days to "cure" for any reason it might choose.
The Federal District Court seemed to think that the policyholder's request for statutory attorney's fees, and that the Court's own award of statutory attorney's fees in this case, was the moral equivalent if you will of consequential "bad faith" damages. Not so, Your Honor.
The award of statutory attorney's fees was mandated by the Florida Statute because this policyholder prevailed against a surplus lines carrier. Period. The policyholder did not request attorney's fees as consequential damages. As you pointed out, Your Honor, the policyholder in this case "sued for breach of contract in state court[.]" That means that the whole lawsuit was about a breach of contract which, once the policyholder's insurance claim was denied and if the policyholder prevailed on the claim that the insurance contract was breached, then under Florida case law the carrier effectively 'confessed judgment' that the contract was breached when it paid the policyholder's claim after the policyholder filed a lawsuit.
For that matter, although the policyholder served a Civil Remedy Notice of Insurer Violation (CRN) of Florida's so-called bad faith statute, nothing in your opinion reflects that this policyholder ever sued for bad faith in this case.
But as you pointed out, Your Honor, when you reach the point of actually calculating how much of an award is warranted under the evidence in this case, "[t]he Court, of course, can take this into account when determining the reasonableness of [the policyholder's] attorneys' fees." Life Changing Ministries, Inc. v. Canopius US Ins., Inc., No. 5:15-cv-59-Oc-30PRL, 2016 WL 6947341, at *5 (M.D. Fla. November 28, 2016).
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