Claims and Bad Faith Law Blog

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CHANGES IN LATITUDE, 2023 CHANGES ATTITUDE: FLORIDA LEGISLATURE & BAD FAITH

After leaving Florida's Bad Faith Statute alone in 2022, the Florida Legislature attacked it with a vengeance in 2023.

          The Florida Legislature apparently introduced different concepts of third-party insurance bad faith in 2023.  The effective date of amendments to Florida's Bad Faith Statute, Section 624.155, is unclear as a general matter, but it is probable that a court of competent jurisdiction will hold, or a new constitutionally permissible revision will be enacted by the Florida Legislature to provide, that the effective date of these amendments to Section 624.155 is March 24, 2023.[1]

          The special conditions attached to Section 624.155 by the 2023 Florida Legislature include conditions which affect the exposure of liability insurance companies to damages for bad faith.[2]  In basic terms, no "action for bad faith involving a liability insurance claim," including an action at common law,  will lie against a liability insurer if the insurer tenders the lesser of (1) its policy limits or (2) "the amount demanded by the claimant" within a specified 90-day period.[3]  The specified 90-day period for this immunity from liability for bad faith raises questions.

To be continued ....

[1] The session law in which this new provision was enacted is  2023 Fla. Sess. Law Serv. Ch. 2023-15, § 4 (C.S.C.S.H.B. 837) (West).  This session law has two savings clauses which seem potentially pertinent here.  One addresses rights under an insurance contract, which seems perhaps most pertinent here, id. § 29  (savings clause as to "right[s] under an insurance contract," stated not to be construed to "impair" any such rights in effect on or before March 24, 2023,  the effective date of this act and the date this act became a law; act stated applicable respecting such rights "under an insurance contract … issued or renewed after the effective date of this act.").  A second savings clause addresses the filing date of "causes of action," providing in full  that "[e]xcept as otherwise expressly provided in this act, this act shall apply to causes of action filed after the effective date of this act."  Id. § 30.  Absent constitutional adjustment by the Florida Legislature, courts, counsel and clients in future cases will have to address these issues, which are open at the time of this writing.

[2] Fla. Stat. Ann. § 624.155(4)(a) (West; Westlaw current with laws, joint and concurrent resolutions and memorials through April 18, 2023, in effect from the 2023 Special B Session and the 2023 first regular session), enacted by 2023 Fla. Sess. Law Serv. Ch. 2023-15, § 4 (C.S.C.S.H.B. 837 (West).

[3] Section 624.155(4)(a).

 

The changes made by the Florida Legislature in 2023 to Insurer Bad Faith Laws are discussed in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:28 Legal Bases of Liability in Settlement -- Statutory (West Publishing Company 3d Edition, 2023 Supplements in process).

FLORIDA STATUTES AND all INSURANCE CARRIERS.

This article continues the reporting in this space on how and what the Florida Legislature has done toward denying policyholders their attorney's fees and immunizing insurance carriers in 2022 and 2023 -- so far.

Effective December 16, 2022, an insured's right to recover attorney's fees as the prevailing party in an action against its, her, or his insurance carrier was amended with deadly precision, eliminating that right with respect to property insurance carriers.  Section 627.428 – the Florida statute which broadly provides for the recovery of attorney's fees by insureds prevailing in lawsuits with their insurance companies – was amended to eliminate the recovery of attorney's fees against property insurers with the addition of a new subsection (4), which reads in full as follows:

In a suit arising under a residential or commercial property insurance policy, there is no right to attorney fees under this section.^[1]

    In 2023, as noted in the footnote, Section 627.428 was repealed entirely, as to all insurance carriers in Florida.

    Similarly, identical language was added to the Florida statute governing recovery of a prevailing insured's attorney's fees from a property insurance surplus lines carrier:

In a suit arising under a residential or commercial property insurance policy, there is no right to attorney fees under this section.[2]

As was noted in the above footnote, Section 626.9373, too, has been repealed by the 2023 Florida Legislature.

Related developments in Florida and in Bad Faith Laws across the United States are explored in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 13:14 Attorney's Fees--Prosecution of Action Against the Insurer (3d Edition West Publishing Company, 2023 Supplements in process).

[1] Fla. Stat. § 627.428(4), newly added by 2022 Fla. Sess. Law Serv. Ch. 2022-271, § 13 (S.B. 2-A) (WEST), effective December 16, 2022.  Section 627.428 has since been repealed.  2023 Fla. Sess. Law Serv. Ch. 2023-15, § 11 (C.S.C.S.H.B. 837) (West).  It is uncertain when this repeal took effect or will be construed to take effect.  See id., § 29 (savings clause as to "right[s] under an insurance contract," stated not to be construed to "impair" any such rights in effect on or before March 24, 2023,  the effective date of this act and the date this act became a law; act stated applicable respecting such rights "under an insurance contract … issued or renewed after the effective date of this act.").

[2] Fla. Stat. § 626.9373(3), amended by 2022 Fla. Sess. Law Serv. Ch. 2022-271, § 6 (S.B. 2-A) (WEST), effective December 16, 2022.  Section 626.9373, too, has since been repealed.  2023 Fla. Sess. Law Serv. Ch. 2023-15, § 10 (C.S.C.S.H.B. 837) (West).  It is uncertain when this repeal took effect or will be construed to take effect.  See id., § 29 (savings clause as to "right[s] under an insurance contract," stated not to be construed to "impair" any such rights in effect on or before March 24, 2023,  the effective date of this act and the date this act became a law; act stated applicable respecting such rights "under an insurance contract … issued or renewed after the effective date of this act.").

To be continued .... Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

 

CONFESSION OF JUDGMENT, FLORIDA INSURER LAWS, AND BAD FAITH.

This article once again continues the report of changes to Florida insurers' laws in 2022, and again in 2023.

Beyond restricting first-party bad faith actions against property insurers in Florida, the 2022 Florida Legislature also restricted many other claims for relief against property insurers.  Before the provision commented on and republished here yesterday was enacted by the Florida Legislature, for example, the Florida courts had consistently applied the "confession of judgment doctrine" to hold insurance carriers of all kinds liable for their insureds' attorney's fees when:

1. The carrier denied its insured benefits to which the insured was entitled under the policy at issue;
2. The carrier's denial has forced the insured to file suit against the carrier, and
3. The carrier changes position and pays the claim before a judgment has been entered in the insured's favor.[1]

             It was carefully pointed out by a Florida appellate court when its decision was published on November 9, 2022 that "[n]othing in section 627.428(1) or anywhere in the insurance code prevents the entry of a confessed judgment."^[2]  Now it does.

            The barrier to a confessed judgment, or to application of the confession of judgment doctrine if you will, is clear from the quoted change that the Legislature made to Section 624.1551 with regard to property insurers in December of that same year.   From and after the amendment's effective date of December 16, 2022, "any claim for extracontractual damages under s. 624.155(1)(b)," i.e., under the main provisions of the Florida Bad Faith Statute, would depend on proof of "an adverse adjudication by a court of law," among other things, in order to file the action against "the property insurer[.]"[3] 

           In sum to this point, the Florida Legislature enacted changes to Florida's law of bad faith which are likely to be repeated in other jurisdictions.  One is that property insurers have been singled out for a "carveout" from bad faith liability.  In Florida in 2022, the carveout was made by the Legislature in the Florida Statutes.  There does not at first blush appear to be any reason to limit similar restrictions to statutory bad faith actions.  Such restrictions would seem to be readily adaptable to common law bad faith actions.

          Another change enacted by the Florida Legislature in 2022 that is  likely to be replicated and changed again, is the idea of limiting the carveout to just property insurers.  Other insurance carriers, liability carriers and other first-party carriers among the rest, may insist on their own special exemptions from exposure to extracontractual damages of any and all kinds, arguing that such carveouts from liability should not be limited to property insurers alone.  "Beyond the borders of Florida, the appeal of these sorts of statutory changes may be irresistible to property insurers in other jurisdictions.  Beyond geography, the appeal of changes like those made for property insurers by the 2022 Florida Legislature may be irresistible to many other insurers which issue other lines of insurance."[4]

The Confession of Judgment Doctrine and the changes made by the 2022 and 2023 Florida Legislatures to the Law of Insurer Bad Faith, are all discussed in detail in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:17, Fairly or Reasonably Debatable Claims (West Publishing Co., 3d Edition with 2023 Supplements in process).

[1]The confession of judgment doctrine applied by the Florida courts is well-summarized by the Court in Allstate Fire & Cas. Co. v. Castro, 351 So. 3d 127, 132 (Fla. 1st DCA 2022).   The Castro case involved a claim for uninsured (UM) motorist policy limits.

          In another case, a different appellate court held that it was the legal equivalent of a confession of judgment when a homeowner's insurer paid an appraisal award.  Therefore, the court held in that case, the homeowner's carrier's insureds were entitled to attorney's fees under Section 627.428; they prevailed in an action against their insurance carrier, even though the carrier paid the award before judgment could be entered in favor of the insured.  Bryant v. GeoVera Spec. Ins. Co., 271 So. 3d 1013, 1018-20 (Fla. 4th DCA 2019).  As can be seen from the quotation of Section 624.1551 in the text, it would appear that from and after December 16, 2022,  "the payment of an appraisal award does not constitute an adverse adjudication under this section."

[2] Allstate Fire & Casualty v. Castro, 351 So. 3d at 133.

[3] Fla. Stat. § 624.1551, as amended by 2022 Fla. Sess. Law Serv. Ch. 2022-271, § 2 (S.B. 2-A) (West), effective December 16, 2022.

[4] Wall, Consumers Had No Voice, 45 Ins. Litig. Rptr. at 90.  "The resulting situations are foreseeable, perhaps, but they have not yet taken place.  If and when they do, this article will serve as advance notice, and as a warning."  Id.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

BAD FAITH EXPOSURE, PROPERTY INSURERS, AND FLORIDA.

This article continues the report of changes to Florida insurers' laws in 2022, and again in 2023.

The original version of Section 624.1551 was effective May 26, 2022.  It put limitations on Florida's Bad Faith Statute whenever property insurers are involved:

Notwithstanding any provision of s. 624.155, a claimant must establish that the property insurer breached the insurance contract to prevail in a claim for extracontractual damages under s. 624.155(1)(b).^[1]

            Until Section 624.1551 was enacted in May, 2022, there was never any requirement in Florida law that any insurance carrier could only be liable for alleged bad faith conduct if a court adjudicated that it also breached its insurance contract, in this case, a property insurance contract.  It will also be recalled that in Florida, first-party bad faith is never actionable except under the Bad Faith Statute, Section 624.155.[2]  Without the benefit of an action under Section 624.155, there is no room for bad-faith actions or any other claims for extracontractual damages against property insurers in Florida.[3]

          In December, 2022, the Florida Legislature amended the recently enacted Section 624.1551 in Special Session, in pertinent part as follows:

Notwithstanding any provision of s. 624.155 to the contrary, in any claim for extracontractual damages under s. 624.155(1)(b), no action shall lie until a named or omnibus insured or a named beneficiary has established through an adverse adjudication by a court of law that the property insurer breached the insurance contract and a final judgment or decree has been rendered against the insurer.  Acceptance of an offer of judgment under s. 768.79 or the payment of an appraisal award does not constitute an adverse adjudication under this section.^[4] 

To be continued ....   All these changes to Bad Faith Law are reported and analyzed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:17, Fairly or Reasonably Debatable Claims (West Publishing Company, 3d Edition, 2023 Supplements in process).

[1]  Fla. Stat. § 624.1551, as amended by 2022 Fla. Sess. Law Serv. Ch. 2022-268, § 6 (S.B. 2) (West).

[2] See, e.g.,  § 9:14, supra.  "There was no such thing as first-party bad faith in Florida until Section 624.155 was enacted."  Dennis J. Wall, Consumers Had No Voice:  Changes to Property Insurers' Laws in Florida, 45 Ins. Litig. Rptr. 73, 77 (March 3, 2023).

[3] E.g., State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So. 2d 55, 62 (Fla. 1995) ("Florida differs, however, from most jurisdictions given that first-party bad faith actions are actionable only under section 624.155 and not the common law."); Utd. Prop.& Cas. Ins. Co. v. Chernick, 94 So. 3d 646, 647 (Fla. 4th DCA 2012); Gen. Star Indem. Co. v. Atl. Hospitality of Fla., LLC, 93 So. 3d 501, 503 (Fla. 3d DCA 2012).

[4] Fla. Stat. § 624.1551 (emphasis supplied), as amended by 2022 Fla. Sess. Law Serv. Ch. 2022-271, § 2 (S.B. 2-A) (West), effective December 16, 2022.

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

FAILURE TO PROVIDE TIMELY PROOF OR NOTICE OF LOSS.

           The Florida Legislature has tried to add "a condition precedent to filing a suit under a property insurance policy" that would require "a claimant" to provide the Department of Financial Services "with written notice of intent to initiate litigation on a form provided by the department."[1]  The Legislature prescribed times and text for this notice of intent to initiate litigation.[2]

          This statute has been held unconstitutional, however, if applied to policies of insurance that "went into effect before the statute went into effect," as the policyholders successfully  argued in Dozois v. Hartford Insurance Co. of the Midwest.[3]  The Court declined to grant the homeowners carrier's motion to dismiss accordingly.[4]

           The Florida Statute and the Dozois decision are discussed along with many other statutes and cases in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:9, Conduct of Insured:  Failure to Provide Timely and Accurate Proof of Loss, or Notice (West Publishing Co. 3d Edition, 2023 Supplements in process).

[1] Fla. Stat. Ann. § 627.70152(3) (West; Westlaw current with laws, joint and concurrent resolutions and memorials through April 18, 2023, in effect from the 2023 Special B Session and the 2023 first regular session).

[2] Subsection (3)(a) 1-5.

[3] Dozois v. Hartford Ins. Co. of Midw., 595 F. Supp. 3d 1204, 1206 (M.D. Fla. 2022).

[4] Dozois, 595 F. Supp. 3d at 1207-08.

 

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

PROPERTY INSURERS REMOVED FROM REACH OF FLORIDA'S BAD FAITH STATUTE.

    Since the December 2022 amendments to Florida Statute Section 624.1551 became effective on December 16, 2022, so many limitations and restrictions have been added onto actions for extracontractual damages against property insurers, that property insurers have for most intents and purposes been removed from the reach of Florida's Bad Faith Statute.[1]

 

[1] See Fla. Stat. § 624.1551, as amended by 2022 Fla. Sess. Law Serv. Ch. 2022-271, § 2 (S.B. 2-A) (West), effective December 16, 2022.  The original enactment of this statute in 2022, and subsequent amendments to it made in the same year, are all discussed at length in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH §§ 9:14 & § 11:17.50 (3d Edition West Publishing Co., 2023 Supplements in process).

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

HOW THE FLORIDA LEGISLATURE PRACTICALLY ENDED ACTIONS AGAINST INSURANCE COMPANIES.

I wrote when I left off this subject here,  that I hoped that I could do justice to changes made by the Florida Legislature in 2022 and again in 2023 to Florida bad faith law.  They also made many changes to all kinds of actions against insurance companies.  Here we go.

           In 2022, the Florida Legislature immunized property insurers from the reach of Florida's Bad Faith Statute, Section 624.155.^[1]  There were no changes to Section 624.155 in 2022.  Rather, during its Regular Session in 2022, the Florida Legislature enacted an entirely new statute^[2] which became Section 624.1551, titled Civil remedy actions against property insurers.^[3]

          This original version of Section 624.1551 was effective May 26, 2022.  It imposed a brand-new requirement that regardless of anything that past Florida Legislatures wrote in the Bad Faith Statute, "a claimant must establish that the property insurer breached the insurance contract to prevail in a claim for extracontractual damages under s. 624.155(1)(b)."^[4]

          In Florida, first-party bad faith is never actionable except under the Bad Faith Statute, Section 624.155.^[5] 

          In December, 2022, the Florida Legislature amended the recently enacted Section 624.1551 in Special Session, and added further limitations on the separate Bad Faith Statute, Section 624.155:

    Notwithstanding any provision of s. 624.155 to the contrary, in any claim for extracontractual damages under s. 624.155(1)(b), no action shall lie until a named or omnibus insured or a named beneficiary has established through an adverse adjudication by a court of law that the property insurer breached the insurance contract and a final judgment or decree has been rendered against the insurer.  Acceptance of an offer of judgment under s. 768.79 or the payment of an appraisal award does not constitute an adverse adjudication under this section.^[6] 

           These changes are too complicated to summarize in a single article.  It is enough to begin for now by putting them all on display.  They will be addressed in detail in future articles to be posted here.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

 

[1] Fla. Stat. § 624.155, titled Civil remedy (West, Westlaw current with laws and joint resolutions in effect from the 2022 second reg. sess. and spec. A, C and D sess's of the Twenty-Seventh Legis.).

 [2] 2022 Fla. Sess. Law Serv. Ch. 2022-268 § 6 (S.B. 2) (West).

[3] Fla. Stat. § 624.1551 (West, Westlaw current with laws and joint resolutions in effect from the 2022 second reg. sess. and spec. A, C and D sess's of the Twenty-Seventh Legis.). 

[4]  Fla. Stat. § 624.1551, as enacted by 2022 Fla. Sess. Law Serv. Ch. 2022-268, § 6 (S.B. 2) (West).

[5] "There was no such thing as first-party bad faith in Florida until Section 624.155 was enacted."  Dennis J. Wall, Consumers Had No Voice:  Changes to Property Insurers' Laws in Florida, 45 Ins. Litig. Rptr. 73, 77 (March 3, 2023).

[6] Fla. Stat. § 624.1551 (emphasis supplied), as amended by 2022 Fla. Sess. Law Serv. Ch. 2022-271, § 2 (S.B. 2-A) (West), effective December 16, 2022.

WWICD? WHAT WOULD THE INSURANCE COMMISSIONER DO?

A respected federal judge in the Northern District of California has issued an order that seems to have no precedent.  It presents opportunity to courts and counsel to do good things.

    Judges and practitioners facing new and unsettled ideas that they are told are "doctrines" can invite the reasoned expertise of the State Insurance Commissioner.  Nothing exists to prevent it, so far as I know.  For example, the judge in a Northern District of California case invited the California Insurance Commissioner to submit a brief expressing the Commissioner's "view on whether the Commissioner's exclusive authority precludes this suit," in other words, on whether the lawsuit at bar truly represents a challenge to rates approved by the Insurance Commissioner and so would in other jurisdictions be barred by what is called the Filed Rate "Doctrine."

    The case in which the order -- an invitation, really -- was entered is Rejoice! Coffee Co. v. Hartford Fin. Serv's Grp., Inc., Doc. 54, Order Re Inviting Insurance Commissioner to Provide Views, filed April 13, 2021 (N.D. Cal. Case No. 20-cv-06789-EMC).

    What a great opportunity and what a great idea -- ingenious, really.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

CHANGES IN BAD FAITH LATITUDE, CHANGES IN BAD FAITH ATTITUDE.

(Photo by Donna Bruno / ©Dennis J. Wall)

Earlier this year, I published an article about Consumers Had No Choice:  Changes to Property Insurers' Laws in Florida, 45 Insurance Litigation Reporter 73 (March 3, 2023), which addressed the laws enacted and changed by the Florida Legislature in 2022.  Download Consumers Had No Voice. Changes to Property Insurers' Laws in Florida (March 2023).

          This year, the Florida Legislature is outdoing itself.  (It is still in session; be prepared.)  The changes made in 2023 to the Florida laws of insurance bad faith are complicated and convoluted.  I am uncertain whether I can do them justice, but I will try in forthcoming articles to be published here.

This is the time of year when I work on Annual Supplements for my Book on Bad Faith, so I will offer longer, more detailed discussions and analyses there, in LITIGATION AND PREVENTION OF INSURER BAD FAITH (3d Edition West).  I expect to finish the 2023 Annual Supplements by the end of this week or next, and I will be sure to include discussions of the enactments, amendments and repeals made by the Florida Legislature to Florida's Bad Faith Laws not only in 2023, but also in 2022.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

FLORIDA LEGISLATURE'S CHANGES TO BAD FAITH LAW IN 2023.

Florida's so-called "Bad Faith Statute," Section 624.155, was amended by the 2023 Florida Legislature.   (The Florida Legislature has not adjourned as of this writing and a special session is always possible in the future, so be prepared accordingly.)

     At the present time, there is a real question as to the effective dates of amendments to Section 624.155 and of amendments to other statutes and of the enactment of still more Florida statutes. The session law in which all these new provisions were enacted is  2023 Fla. Sess. Law Serv. Ch. 2023-15, § 4 (C.S.C.S.H.B. 837) (West).  [Caution:  This link may not be secure.  You may choose to view the Westlaw version online, or the print version instead.] Two savings clauses in this 2023 Session Law appear significant to the question of when these provisions are supposed to take effect.

    One is concerned with rights under an insurance contract,  id. § 29  (savings clause as to "right[s] under an insurance contract," stated not to be construed to "impair" any such rights in effect on or before March 24, 2023,  the effective date of this act and the date this act became a law; act stated applicable respecting such rights "under an insurance contract … issued or renewed after the effective date of this act.").

      A second savings clause addresses the filing date of "causes of action," providing in full  that "[e]xcept as otherwise expressly provided in this act, this act shall apply to causes of action filed after the effective date of this act."  Id. § 30. 

     These issues are open at this time.  Without  constitutional adjustment by the Florida Legislature, courts, counsel and clients will have to address these issues in future cases.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

IN BAD FAITH CASE, FORMER CLIENT SUBPOENAS FORMER DEFENSE ATTORNEYS.

Gettysburg 2022 (Matt McClain / Washington Post)

In Wiseman v. Progressive Paloverde Ins. Co., No. 8:21-cv-02743-TPB-AAS, 2023 WL 2162374, at *1 (M.D. Fla. Feb. 22, 2023) (Sansone, USMJ),  non-party witnesses contested subpoenas served upon them in a bad faith case by the plaintiff who sued their client in the underlying case.

The subpoenaed nonparties were defense attorneys in the underlying liability case.  They filed motions to quash or modify subpoenas for their depositions and for certain documents including text messages exchanged with the insured they were previously defending.  A U.S. Magistrate Judge held that attorney-client privilege did not apply under Florida law in this instance:

Florida courts have consistently held that the plaintiff in a third-party bad-faith action against an insurance company for failure to settle for policy limits is entitled to the entire litigation file of the insured's counsel from the inception of the lawsuit until the date the judgment was entered in the underlying action.  [Citations omitted.] The courts reasoned that the plaintiff stands in the same posture as the insured and is, therefore, entitled to full discovery. [Citation omitted.]  Therefore, attorney-client privilege does not preclude the requested communications.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

SEX IN CAR IS NOT INSURED USE OF AN AUTO.

(Insurance Clipart showing coverage of a family's home and automobile)

They had sexual relations for years.  At least once during that time, they had intercourse in an automobile.  She caught a sexually transmitted disease from him.

She hired lawyers.  They sent a demand letter to his automobile insurance company.  His automobile carrier refused to pay.  She and he then went to arbitration together.  An arbitrator awarded her $5,200,000.00.

The auto carrier filed an action for declaratory judgment that it had no coverage.  The federal judge granted the carrier's motion for summary judgment and entered a declaratory judgment of no coverage in the carrier's favor.

The case is GEICO Gen. ins. Co. v. Brauner, No. 4:22-cv-00082-CV-W-FJG, 2023 WL 2473313 (W.D. Mo. March 10, 2023).  Parenthetically, the man alleged a bad faith claim which like all his other claims failed because there was no coverage under the defendant's policy.  Brauner, 2023 WL 2473313, at *7.

That leaves at least one question, however:  How on earth could anyone argue with a straight face that fooling around in the back of a car is the use of an automobile covered by an insurance policy?  Welcome to 2023.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

NO EXCEPTION FOR FLORIDA THIRD-PARTY BAD FAITH.

There is no exception for third-party bad faith actions in Florida.  Just like first-party bad faith actions in Florida, TPBF actions in Florida require a showing of damages – and liability, and coverage --- or the TPBF count in a complaint will be dismissed for failure to state a claim upon which relief can be granted.  See Lewis v. Allied World Spec. Ins. Co., No. 20-cv-20677-ALTMAN/Reid,  2023 WL 2770538 (S.D. Fla. April 4, 2023).

It's really as simple as that.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

SETTLING CLAIMS WITHOUT WAITING FOR DEMANDS FROM THE INJURED PARTIES.

(Shepard's/McGraw-Hill brochure, c. 1985)

In 2023, the Kansas Supreme Court said that the old view that a liability insurance company is immune from bad faith in settlement if the injured party has not made a settlement demand, is an inaccurate assessment of Kansas law.  In Granados v. Wilson, ___ Kan. ___, 523 P.3d 501 (2023), the Kansas Supreme Court pointed out what holding to the contrary had failed to see:

Whether the injured party has demanded compensation or filed a claim with the insurer may be a fact relevant to deciding whether the insurer breached its implied contractual duties of reasonable care and good faith. But that inquiry is reserved for the trier of fact.

    Granted, if the duties of reasonable care and good faith do not, under any set of circumstances, require an insurer to explore settlement before a third-party files a claim or demands compensation, then a court could declare that principle as a matter of law. {Citation omitted.]  But we hesitate to conclude that the implied contractual duties of reasonable care and good faith never require such conduct.

Granados, 523 P.3d at 512 (emphasis by the Supreme Court of Kansas).

The view that liability insurance carriers cannot be sued for their alleged bad faith in settlement unless the injured parties have made settlement demands, is explored in § 3:14, Demand From Third Party, in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (Thomson Reuters 3d Edition, 2023 Supplements in process).

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

SHOULD AN INSURANCE CARRIER INITIATE SETTLEMENT NEGOTIATIONS? EVER? NEVER?

 

                                   (Exploration Image by NASA)
In at least one jurisdiction, Kansas, the question of a liability insurer initiating settlement negotiations is not a question of duty but a question of fact under all the circumstances:

    Under this hypothetical, both the insurer and insured know liability is clear and the claim filed by the insured exceeds policy limits, creating a conflict of interest that requires the insurer to exercise reasonable care and to act in good faith. [Citation omitted.]  They also know the claim can be settled within policy limits if they act quickly, even though the third party has not made formal demand. We cannot conclude, as a matter of law, that the insurer could never breach the duties of reasonable care and good faith by failing to explore settlement under these (or any other possible set of) circumstances simply because the third party has not yet made a formal demand. See, e.g., Keeton and Widiss, Insurance Law § 7.8(c), 889-90 (1988) (“In most circumstances the insurer, having reserved to itself the right to control the defense and the decision whether to agree to a settlement, should be obligated to explore the possibility of a settlement even in the absence of actions by the third-party or an express request by the insured.”).[1]

 

[1]Granados v. Wilson, ___ Kan. ___, 523 P.3d 501, 513 (2023) (emphasis added).

The Granados decision is explored along with other cutting-edge decisions which address a Duty to initiate settlement negotiations in 1 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:16 (Thomson Reuters 3d Edition, 2023 Supplements in process).

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

 

SOMETIMES, IT'S WRITTEN FOR YOU.

(Photo by Dennis Wall)

Sometimes, it's written for you.  When you sit down to write, as I did for this article on bad faith, you expect to spend time researching, then crafting sentences and paragraphs to convey the meaning you draw from what you found.

Not this time.

There are instead times when it is written for you.  This was the case of the opening words of a decision by a federal judge in Indiana on St. Patrick's Day 2023.  The judge summarized the entire case in the opening words of the decision.  To be sure, the opinion went on for several pages in the Westlaw version, but the following words written in the judge's decision sum it up completely:

    In 2015, Tampa Bay Buccaneers kicker Lawrence Tynes sued the franchise for an off-the-field injury that ended his decorated career. The Buccaneers believed the franchise had insurance coverage based on representations in a proposal from one broker, American Specialty Insurance & Risk Services, Inc. American Specialty served as underwriter for AXIS Insurance Company. But AXIS called an audible and denied coverage. The Tynes suit never progressed to name American Specialty or AXIS.

    Instead, as the suit proceeded against the Buccaneers, rather than ask American Specialty to defend even a potential claim, AXIS directed American Specialty to stay out of it, and did so for eighteen months. AXIS maintained its position that it wasn't actually liable because the insurance  policy provided no coverage. At mediation, AXIS nevertheless chose to attend and contribute to a Buccaneers settlement in exchange for the franchise's promise not to sue AXIS. AXIS had invited American Specialty to consider a “market solution” at mediation too but never asked for a defense.

    American Specialty's silence [in response to Axis's proposed "market solution"] and lack of contribution at mediation [which American Specialty did not attend, seemingly in accordance with Axis's long-standing instructions not to be involved in any way in the Tynes case] kicked off AXIS's suit based on an indemnity clause in their Program Manager Agreement. This case presents the question whether AXIS paid a loss for which it was not liable or in a manner that rendered its settlement contribution voluntary such as to foreclose a request for indemnity. American Specialty requests summary judgment for this reason. The court grants summary judgment accordingly.

Axis Ins. Co. v. Am. Spec. Ins. & Risk Serv's, Inc., No. 1:19-CV-165 DRL, 2023 WL 2560833 (N.D. Ind. March 17, 2023).

The Court noted that Indiana law requires that the party from which indemnity is sought, must have been given notice and an opportunity to defend itself.  On this record, that did not happen for American Specialty.  Indiana law summarized by the Court equates conduct of this kind with bad faith when it is indulged in by a party which later seeks indemnity .  See Axis, 2023 WL 2560833 at *5.  On this record, then, the Court granted American Specialty's motion for summary judgment.

 The only wonder about this case is something the judge did not address, actually could not address:  Why was this lawsuit ever filed?

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved. 

SUNSHINE IN FLORIDA GOVERNMENT? OBSERVATIONS IN SUNSHINE WEEK 2023.

"We share a common mission to promote transparency in government."

American Oversight, in its numerous EMails to the Florida Department of Education, starting on May 4, 2022.

(The Florida Supreme Court / 920 Inside Florida)

American Oversight is a nonprofit group that made more than eight (8) requests for public access to non-exempt public records held by the Florida Department of Education.  They made more requests than that, but they sued the DOE for not complying with respect to those 8 under the Florida Constitution and Florida's Public Records Act.  Here is their complaint:  Download American Oversight v. Florida Dep't of Education Complaint to Enforce Public Records Act filed March 16 2023 (2d Jud. Cir. Leon County Fla.).

American Oversight's public records requests are attached as Exhibits to their Complaint and you can read them for yourself.

They got fed up, apparently, and complained about DOE's business model of "a demonstrated history of delayed responses to American Oversight's public records requests."  Id. at 6 n.7.  So they sued for better access, or in many cases access in the first place, to the public records they requested on May 4, 2022; January 12, 2023, and February 15, 2023.  They sent follow up EMails on their earlier requests on January 25, 2023 and got crickets, nothing, Nada, Radio Silence from the current Florida Department of Education.  Finally, they repeated their public records requests (and may have added some) when they sent their public records request on February 15, 2023.  "To date, DOE has failed to produce a single record that is responsive to any of the eight requests at issue in this Complaint."  Id. at 20, ¶ 5.

Regardless of how the American Oversight v. Fla. Dep't of Education lawsuit turns out, in a decision cited in the Complaint (id. at 20), the Florida Supreme Court previously held:

The only challenge permitted by the Act at the time a request for records is made is the assertion of a statutory exemption pursuant to section 119.07.  The only person with the power to raise such a challenge is the custodian. 

Tribune Co. v. Cannella, 458 So. 2d 1075, 1078-79 (Fla. 1984).  There is of course no statutory exemption pursuant to section 119.07 here, parenthetically, and of course there has been no challenge here, allegedly just delay and silence and incomplete responses.

Further, the law has been clear for nearly 40 years, at least until the 2023 Florida DOE came along, that it is up to the Florida Legislature to exempt records from public disclosure, not the DOE (or anyone else):

The legislature has placed the books on the table; only it has the power to alter that situation.

    We therefore hold that the legislative scheme of the Public Records Act has preempted the law relating to any delay in producing records for inspection. The only delay permitted by the Act is the limited reasonable time allowed the custodian to retrieve the record and delete those portions of the record the custodian asserts are exempt.

Tribune Co., 458 So. 2d at 1079 (emphasis added).

Again, regardless of how the American Oversight v. Fla. Dep't of Education case may be decided, there is a question for Florida's chief law enforcement officer, the Attorney General of the State of Florida:  Is the Florida Supreme Court's decision still the law of Florida?  Or in your judgment, General Ashley Moody, does the Florida DOE -- or anyone else -- now have the power to alter that situation?

On this last day of Sunshine Week, this article will be published both on Claims and Issues Blog and on Claims and Bad Faith Law Blog.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

SUNSHINE LAWS IN FLORIDA (NOT EXACTLY FULL TRANSPARENCY, BUT ...).

This is Sunshine Week!  It's a celebration of transparency laws across the United States.  Here are some of the Sunshine Laws in Florida:

• Florida's Open Meetings Laws, Fla. Stat. §§ 286.011, et seq.
• Florida's Sunshine Laws, Fla. Stat. §§ 119.01, et seq.

    This one is a little misleading if you are not familiar with how Sunshine Laws work, including Florida's.  The Florida statutes offer some 600 exemptions where records are not open to the Sunshine.  These exemptions include when the State acquires land, for example.  Land values are sealed until the State makes a conditional decision to buy the land.  When that happens, the exemption expires.  Then the public has 30 days to check out the transaction -- except of course that the values of the land estimated by the State and the sellers are not public until after the State has already agreed to make the purchase, putting the public in the position of putting the brakes on the land deal f they can do it within 30 days -- and of course less time if they don't know about it for awhile. 

• Florida's Sunshine in Litigation Act, Fla. Stat. § 69.081.

Most if not all States and jurisdictions in the U.S. have exemptions from transparency, not just Florida.  But Florida has as its current Attorney General a person who gratuitously vows whenever Sunshine Week rolls around, as it has again this year, to safeguard transparency under the Florida laws.  General Ashley Moody, what transparent public purpose is served in your evaluation when the State acquires land in the dark, the public is in the dark, and the records about the value of the land in that transaction are private until the land is "conditionally" purchased even though it is the public's money that is used for the purchase?   Thank you.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved. 

 

 

HUMP DAY IN SUNSHINE WEEK, ALL OVER AMERICA! FLORIDA TOO!

Wednesday of Sunshine Week is a bit of a potpourri.  This recognizes the fact that Sunshine Week is celebrated all over the United States.  For example, here is a YouTube production assembled by The National Archives about Freedom of Information Act requests: 

National Archives Sunshine Week Celebration: Making Access Happen: FOIA at the National Archives.

What could be more timely than the National Archives commenting during Sunshine Week which as I understand it is also celebrated in Mar-A-SomethingOrOther?

On Tuesday, our sister blog published an article about the Fox and Dominion Voting Systems case:  Tuesdays With More Sunshine Week!  And Ashley Moody!  Specifically, the article referenced a pleading filed in that case by Fox on Friday, March 10, 2023.  It is titled, Fox Defendants' Application for Continued Sealing of Summary Judgment Materials, and you can read it here:  Download Fox Defendants' Application for Continued Sealing of Summary Judgment Materials filed 03.10.23 in US Dominion Inc. v. Fox News Netwk. LLC (Del. Super. Ct. No. N21C-03-257 EMD .CONSOLIDATED).

See what you think.   This is the argument in a nutshell, and it goes to the heart of Dominion's defamation case against Fox:  "For a media company like Fox, proprietary newsgathering processes are the kind of competitive business information that justifies maintaining the seal."  This includes sealing "concrete details" of "how editorial decisions are made," "how reporters source their stories," and how Fox conducts its "fact-checks."  (Id., at 12.)  "Prematurely disclosing these other details on Fox's internal and proprietary journalistic processes may allow competitors to appropriate these processes for their own competitive advantage, to Fox's detriment, and may chill future newsgathering activity."  (Id., at 14.)

Convinced?  

Maybe this will change your mind, when you consider that Fox deserves "extra protection" from the Court "[i]n a high-profile case like this".  (Id., at 18.)

Speaking of Fox and yesterday's article, recall Ashley Moody.  If you do not watch Fox regularly, you might not know that Ms. Moody is the current Attorney General of the State of Florida.  You would not be likely to learn that fact from other TV outlets, because she rarely if ever appears anywhere except on Fox shows. She regularly issues a press release at this time of year that she "vows" to "safeguard" Sunshine Laws in Florida.

So, in the spirit of transparency in this Sunshine Week that Ms. Moody has "vowed" to "safeguard," after all, what does the Attorney General of the State of Florida get from Fox, and what does Fox get from the Attorney General of the State of Florida?

  

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

SUNSHINE WEEK CONTINUES! AND WE HAVEN'T FORGOTTEN YOU, MS. MOODY.

(Gridview_imagefull / FDAC)

In Wiens Capital Mgt., LLC v. Advocate Consulting Legal Grp., PLLC, No. 2:23-cv-81-SPC-KCD, 2023 WL 2435806 (M.D. Fla. Feb. 16, 2023) (USMJ), a U.S. Magistrate Judge faced a motion "to seal a portion of the disclosure statement required by Federal Rule 7.1 and Local Rule 3.03 that lists the identities of the individual members of Wiens Real Estate Ventures, LLC[.]"  Wiens Capital Management, 2023 WL 2435806, at *1.  Ventures was the sole member of Management, the plaintiff that filed this lawsuit.  Wiens Capital Management, 2023 WL 2435806, at *1.

The Magistrate Judge denied the motion.  The people who requested secrecy from public view failed to overcome the presumption of public access.  In short, the identities of these people are in the sunshine now.  What a positive ruling to report for Sunshine Week in Florida!

Ms. Ashley Moody, we have not forgotten your self-stated "vow to safeguard" Florida's Sunshine Laws.  Nice words, those.  You did not have to say them, in fact, you did not have to say them for years whenever Sunshine Week rolls around.  What say you now about people who do not comply, such as the Florida governor?  The people of Florida deserve more than crickets from you, Ms. Moody, especially since you said a vow (to safeguard, no less) that you offered up voluntarily.  See Sunday's article published on our sister blog, IT'S THE FIRST DAY OF SUNSHINE WEEK IN FLORIDA!

Make your vows over the years to safeguard Florida's Sunshine Laws more than press releases, Ms. Moody.  Make them real.  

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

"NO ATTORNEY'S FEES FOR YOU!" ONLY PROPERTY INSURERS NEED APPLY.

 

A Courtroom.  (Pacific Standard)

The risk of paying an insured's  attorney's fees in the event the insured  prevails in litigation with an insurer is one of the factors that insurers must take into account.  This is something that comes to an insurer's attention first at the stage when the carrier decides whether it will deny coverage.  At that stage, the calculus includes the insurer's best guess whether the fact, timing, or context of denying an insured's claim is likely to lead to litigation.

          Once in litigation, most if not all insurers will continue the calculus by estimating the likelihood that its insured  may prevail.  The threat of paying its insured's attorney's fees is a continuing factor in making the insurance carrier's decision whether to affirm or deny coverage, whether that decision is made before or after litigation with the insured has begun.  The threat of paying an insured's attorney's fees cannot be underestimated. 

          In 2022, the statute which previously authorized a prevailing insured to recover its  attorney's fees in litigation caused by its insurer, was changed exclusively for the sole benefit of property insurers. Since the change, policyholders that win their case cannot recover their attorney's fees from a property insurer even if their property insurer was the one that caused the fees to be incurred.   However,  other insurance companies remain subject to the risk.  See Fla. Stat. § 627.428.

          The property insurers were also protected by changes to the Surplus Lines Statute governing Attorney's Fees.  In a mirror image of Section 627.428 applicable to all insurers generally, before 2022 insureds prevailing in litigation caused by their surplus lines insurers could recover their attorney's fees incurred in defending or prosecuting the litigation.  That changed in 2022, as well, but once again  only with respect to property insurers.  Other surplus lines insurance companies remain subject to the risk.  See Fla. Stat. § 626.9373.

Thomson Reuters is publishing the author's forthcoming article, Consumers Had No Voice:  Changes to Property Insurers' Laws in Florida, in the next edition of Insurance Litigation Reporter.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

PROPERTY INSURERS PROTECTED FROM BAD FAITH CLAIMS IN FLORIDA.

 

(Matt Whitaker / New York Times)

The 2022 Florida Legislature enacted the property insurers' list of protections from bad faith claims in Florida.  Topping the list was Florida's Bad Faith Statute,  Subsection 624.155(1)(b).  That was the property insurers' greatest concern, and it has been the greatest concern of every insurer doing business in Florida since it was enacted.

More precisely, the greatest concern to any insurer is the provision of the Bad Faith Statute that makes an insurer's bad-faith settlement conduct actionable in Florida.   Fla. Stat. § 627.155(1)(b)1.  Dr. Johnson once wrote that there is nothing like a person's impending execution to focus the mind.  Well, in Florida, there is nothing like the prospect of being sued to focus the mind (including insurers).

In 2022, things changed for property insurers in Florida.  Section 624.1551 was enacted to make exceptions for property insurers.  Alone among insurance companies, property insurers were granted a return to the past as far as bad faith liability in Florida  is concerned.   It used to be that there was no such thing as bad faith exposure to any insurance companies issuing "first-party" policies or insurance contracts for coverage claims by  their policyholders, such as health insurance companies and fire insurance carriers.

 Section 624.1551 changed the focus but only for property insurers.  Now people asking for "extracontractual" damages first must prove that the property insurer is liable for a breach of contract.  Here's the thing:  Bad-faith settlement conduct in Florida was never a breach of the insurance contract.

You thought the calendar said 2023?  Not in Florida, at least not for property insurers.  Their focus is on the past, and welcome to it.  You can stay as long as you don't try to sue a property insurer for bad faith.

The author's article, Consumers Had No Voice:  Changes to Property Insurers' Laws in Florida, is scheduled for publication this week by Thomson Reuters' Insurance Litigation Reporter.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

FEDERAL COURTS APPARENTLY CONFUSED OVER FILED insurance RATE DOCTRINE.

 

Courtroom.  (Pacific Standard)

In a federal case decided in Washington State, a federal judge apparently applied the State Filed Insurance Rate Doctrine to grant motions to dismiss filed by a lender (Bank of America) and a force-placed insurance carrier (QBE).  Hong v. Bank of Am., N.A., No. C20-1667RSM, 2021 WL 3207684, at *3 (W.D. Wash. July 29, 2021) (describing Washington's Filed Rate Doctrine as recognizing "principle of nonjusticiability" barring courts from deciding reasonableness of rates that were both filed and approved by the relevant Washington State authority, here, the Washington Insurance Commissioner), aff'd with opinion, No. 21-35742, 2022 WL 2235469 (9th Cir. June 22, 2022) (stated in a footnote "not for publication and is not precedent" with exception if a particular Ninth Circuit Local Rule applies; not addressing "principle of nonjusticiability" or any other principle that some say underlie Filed Rate Doctrine).

However, the federal judge apparently felt constrained to nod in the direction of the competing Federal  Filed Rate Doctrine.  The federal court pointed out that "f]ederal courts recognize a further principle underlying the doctrine," namely, what the federal courts call the "principle of nondiscrimination").  Hong, 2021 WL 3207684, at *3.  This was dicta in the context of this court's ultimate holding, which was pretty clearly reached under Washington State law and not federal law.

Still, federal judges are fond of their Federal Filed Rate Doctrine and reluctant to give it up completely, it would appear, even when a State Filed Insurance Rate Doctrine is available to decide the case.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

STATUTORY BAD FAITH IN MINNESOTA.

(Gridview_Imagefull_FDACS)

"In 2008, the Minnesota Legislature created a private cause of action for bad faith in first-party insurance."  Friedberg v. Chubb & Son, Inc., 800 F. Supp. 2d 1020, 1025 (D. Minn. 2011) (Keyes, United States Magistrate Judge).  The Minnesota statute is Minn. Stat. § 604.18 (West; Westlaw current with legislation effective through February 22, 2023 from the 2023 Regular Session. Some statute sections may be more current, check credits under statute on Westlaw for details.).

The Eighth Circuit quickly and clearly summarized the statute in 2022:

    To make a bad faith claim, the insured must establish both that the insurer lacked a reasonable basis for denying the insurance benefits and that the insurer knew it lacked a reasonable basis for denying benefits or acted in reckless disregard of the lack of a reasonable basis.

Wobig v. Safeco Ins. Co. of Am., 40 F. 4th 843, 848 (8th Cir. 2022) (construing and applying Minn. Stat. § 604.18 subd. 2(a)).

Or, as the Minnesota Supreme Court put it in a slightly lengthier interpretation, reaching the same result: 

    Several things are clear from the plain text and structure of the statute. First, the burden rests with the insured to prove that the insurer violated the standard of conduct. Second, to prevail, the insured must establish two independent facts: (1) the insurer did not have a reasonable basis for denying the benefits of the insurance policy, and (2) the insurer either knew it lacked a reasonable basis for denying the benefits or it recklessly disregarded the fact that it lacked a reasonable basis for denying the benefits.

Peterson v. W. Nat'l Mut. Ins. Co., 946 N.W.2d 903, 910 (Minn. 2020).

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

FLORIDA CHANGED PROPERTY INSURANCE LAWS IN 2022. INCLUDING BAD FAITH.

 

(Image via Central District of California's Website)

Section 624.155(1)(b) is clearly the target of Section 624.1551 and its amendments.  Section 624.1551 and its amendments were all enacted in 2022.  Although the Florida Legislature did not touch any part of Florida's Bad Faith Statute itself, Section 624.155, the changes made by the Legislature changed the law of insurer bad faith in Florida.

           Property insurers were obviously concerned about the risk of exposure to bad faith damages beyond and maybe even above their policy limits.  As a result, property insurers had every reason to make it especially hard to sue under Fla. Stat. § 624.155(1)(b) for extracontractual damages.  Section 624.155 itself was untouched by the Florida Legislature in 2022.  That includes Paragraph (b) of Subsection (1), which was chosen for limitation to property insurers through the enactment of new and amended Section 624.1551.

          It is not hard to identify the provision of Paragraph (b) of Subsection 624.155(1) that was the greatest concern to property insurers.  It is the same provision that has always been the greatest concern to insurance companies since Subsection  624.155(1) was first enacted:  The greatest concern to any insurer is Subparagraph (b)1.

           Over all, Paragraph (1)(b) of Section 624.155 provides that any person may bring a civil action against an insurance carrier when that person is damaged by the insurer's commission of any of the following acts:

1. Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests[.]

`         As the Florida Supreme Court has held since 1995, Subparagraph 1 of Paragraph 624.155(1)(b) "provides remedies for both first- and third-party causes of actions."^[1] Subparagraph 1 of Paragraph (1)(b) of the Bad Faith Statute sets the standard for all bad faith actions under Florida law, whether by statute or at common law, and whether third-party or first-party.[2]  It is certainly no coincidence that Subparagraph 1 of Florida Statute Paragraph 624.155(1)(b) is nearly identical to the language of Florida's Standard Jury Instruction for an Insurer's Bad Faith (Failure to Settle).^[3]

This blog article is based on an article in progress by the author, tentatively titled "Consumers Had No Voice:  Changes to Property Insurers' Laws in Florida."

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

 

[1] State Farm Mut. Auto. Ins. Co. v. Laforet, 658 So. 2d 55, 62 (Fla. 1995).

[2] See Laforet, 658 So. 2d at 63.

[3] Compare Fla. Stat. § 624.155(1)(b)1 with Florida Standard Jury Instruction 404.4, Insurer's Bad Faith (Failure to Settle).

.

MANDATORY PROPERTY INSURANCE ARBITRATION

 

In Special Session in December, 2022 the Florida Legislature adopted much if not all of the property insurers' agenda.  It was a desperate but understandable effort to keep property insurance companies doing business in Florida, although what benefit it might be to Florida policyholders to pay premiums for a lot less coverage – if any – is a good question.  The Session was originally billed, by the way, as an attempt to lower property insurance premiums.  That was before the agenda was enacted into law, of course.

One of the features of the Special Session was the enactment of a new statute providing for mandatory arbitration provisions in property insurance policies issued in Florida.  (Just property insurance policies.)

The new statute is Section 627.70154.  It provides what appear to be several requirements in order for property policies to be issued in Florida with mandatory arbitration provisions.  One of them  is that "[t]he insurer also offers the policyholder a policy that does not require that the policyholder participate in mandatory binding arbitration."  Fla. Stat. § 627.70154(5).

Nothing is said about premiums for the alternative property policy in the new statute, nor is anything said about alternative property premiums anywhere else in the insurance code so far as is known, or for that matter, anywhere else in the Florida Statutes.

What will property insurance companies issuing policies in Florida charge for policies without mandatory arbitration provisions?

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

"A FINAL JUDGMENT OR DECREE" BEFORE BAD FAITH: SETTLEMENT PROPHYLAXIS?

Judge's gavel.  (Handout photo by The Sun Sentinel)

The Florida Legislature amended Fla. Stat. § 624.1551 to require two things before a property insurer can be sued for bad faith under Fla. Stat. § 624.155(1)(b), part of Florida's Bad Faith Statute.  Both of the two new requirements became effective December 26, 2022.

The two new requirements in Section 624.1551 are, first, "an adverse adjudication by a court of law" (there goes an  arbitration award as the functional equivalent of a judgment) that the property insurer breached the policy and, second, "a final judgment or decree has been rendered against the insurer."  Presumably, this last requirement refers to a final judgment or decree by a court of law that the property insurer breached the policy.

What happens when the property insurer settles the breach of contract claim in order to forestall a bad faith claim, which now expressly requires that some sort of "final judgment or decree has been rendered against the insurer."  If the property insurer settles the contract claim, usually there will not be a final judgment or decree; in the ordinary simple breach-of-contract case there is just a settlement which is not ordinarily followed by a "final judgment or decree."

It appears to be a live issue of what effect will be given to the new statutory requirement of "a final judgment or decree … rendered against the insurer" when, by settling, the insurer prevents a final judgment or decree from being rendered ?

There clearly appears to be an issue.  Time will tell how it is resolved.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

EXCESSIVE PREMIUMS & NOT INCLUDING MORTGAGORS ON LFPI POLICY: CLAIMS ALLOWED.

 

Mortgagors alleged that their lender placed insurance on their mortgaged property by force after the insurance lapsed that they had agreed in their mortgage agreement to keep in place on the property.  The Court had no problem with this.

The mortgagors alleged that their lender breached their mortgage agreement, apparently not just because the lender force-placed insurance which, as the Court noted, the lender had a right to do under the circumstances.

Instead, the mortgagors alleged that the lender force-placed insurance (LFPI) was objectionable on the basis of two allegations:  (1) they were forced to pay excessive premiums under the  LFPI policy and (2)  the lender failed to include them on the policy.  On these two allegations, they claimed that the lender acted in bad faith and breached fiduciary obligations under Florida law as a result.

In an opinion that is published at less than one page in Westlaw, the Court agreed.  The lender's motion to dismiss was denied.

The case has just been reported on Westlaw.  It is Meyer v. Bank of Am., N.A., No. 3:21-cv-1088-HES-JRK, 2022 WL 18492520 (M.D. Fla. Aug. 18, 2022).

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.

INSURANCE FOR FRACKING EARTHQUAKE DAMAGE?

Earthquakes have increased by 9 times in the past 5 years in Texas, while fracking has increased over the same period.  In particular, reinjection of salt water waste produced by fracking seems to be the culprit.  All this leads to questions of insurance availability – and insurance coverage  questions.

"Earthquake insurance is not something people generally purchase in West Texas, though there has been talk of it now, particularly in the larger cities of Odessa and Midland."  J. David Goodman, In Texas Oil Country, an Unfamiliar Threat: Earthquakes, NEW YORK TIMES, online Saturday, January 28, 2023, https://www.nytimes.com/2023/01/28/us/texas-earthquakes-fracking.html.

"Earth Movement" Exclusions and fracking coverage questions are discussed in § 7:9, Earth Movement, by Dennis J. Wall in Volume 1 of John K. DiMugno, Steven Plitt, and Dennis J. Wall, CATASTROPHE CLAIMS (Thomson Reuters Dec. 2022 Edition).

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.  

DOES YOUR FILED insurance RATE DOCTRINE INCLUDE REFUNDS?

Utilities;  Pennsylvania Power & Light.  (nypl.digitalcollections.510d47d9-b681-a3d9-e040-e00a18064a99.001.w)

The filed rate doctrine applied by Federal agencies and approved by Federal Courts is where some States get the inspiration for State agencies and State Courts to apply filed insurance rate doctrines.

In Ameren Ill. Co. v.  Fed. Energy Reg. Comm'n, ___ F.4th ___, No. 20-1277 Consolidated with Nos. 20-1450, 21-1154 &  21-1254,  2023 WL 363887 (D.C. Cir. Jan. 24, 2023), the Federal Energy Regulatory Commission ordered refunds to consumers of electricity from regulated electric utilities which charged more than their filed rates allowed.   FERC was affirmed on appeal in this case.

The Court made this point which was crucial to its determination to affirm FERC's refund order in this case:  "The Commission has 'authority to order refunds if it finds violations of the filed tariff.'”  Ameren Illinois, 2023 WL 363887, at *2 (citation omitted).  Practitioners in States in which Federal or State Courts follow a filed insurance rate doctrine, would be well advised to research whether their State Insurance Commissioners, by whatever name (in Florida, the Insurance Commissioner is in the recently more widely recognized Office of Insurance Regulation, currently housed within the Department of Financial Services), have the authority to order refunds if they find violations of the filed tariff.  This will almost certainly determine the outcome of many clients' cases.

Please read the disclaimer.  ©2023 Dennis J. Wall.  All rights reserved.