Florida Supreme Court: First-Party Bad Faith Claims Only By Statute.

    I recently returned from Washington, D.C. where I testified at Trial as an Expert Witness in a Bad Faith case.  I found 461 EMails in my in-box, and many raised questions about QBE Insurance Corp. v. Chalfonte Condominium Apartment Ass'n, 2012 WL 1947863 (Fla. May 31, 2012), Download QBE v. Chalfonte (Fla. May 31, 2012) Answers to Certified Questions.  In particular, people wanted to know whether the Florida Supreme Court's answer to certified questions in this case, means that the Court is ready to alter or abolish Florida's common law cause of action for "Insurer Bad Faith," especially where such a claim is based on an inadequate investigation of a claim by an Insurance Company, as in this case.

     The idea of a common law cause of action, or claim upon which relief can be granted, in "Bad Faith" cases against First-Party Insurance Companies resurfaced so far as I can tell, with one Federal Judge in Miami a couple of years ago.  She ruled that although there is no common law claim or cause of action for First-Party Bad Faith (i.e., against your own Insurance Company for failure to pay your claim, such as theft, fire, etc.), and although there never has been such a common law action in Florida, still there could be a claim or cause of action for breach of an implied covenant of Good Faith and Fair Dealing at common law even though the Defendant was a First-Party Insurance Company.

     In the Chalfonte case, the Federal District Judge let a claim of breach of implied covenant of Good Faith and Fair Dealing by QBE go to the Jury.  The Jury found against the First-Party Insurance Company on that claim, among others.  The District Judge denied QBE's motion for the entry of judgment as a matter of law and for new trial, and QBE appealed.

     The Eleventh Circuit certified the question to the Supreme Court of Florida.

     The resulting answer to the certified question is the Florida Supreme Court decision, which did not break any new ground:  There is not now, and never has been, a common law claim or cause of action in Florida against First-Party Insurance Companies for Bad Faith.

     That is why Section 624.155 of the Florida Statutes was enacted in 1982.  If a person wants to pursue a First-Party Bad Faith Claim in Florida, it is pretty clear that that statute is the only way to do it, as the Florida Supreme Court discussed in its Chalfonte decision.

     Moreover, the Supreme Court's answer to the certified questions in this case almost certainly did not change Third-Party Bad Faith claims against Liability Insurance Companies, whether at common law or by statute.

     Now, it's on to the "other" Supreme Court decision, the one on the constitutionality of the Affordable Care Act, which could be released any day now.

    Thank you.  All the best.
               Dennis Wall.

P.S.

I was on the stand for 4 hours in Washington testifying about the claims handling in that case.  One-half hour was cross-examination.  It was a good Jury in that case; they returned a Verdict for the party retaining me.

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Comments

[Dennis Wall]

Additional perspective on the meaning of the Chalfonte decision of the Florida Supreme Court is also posted at, for example, the May 31, 2012 post of TallyInsLaw, accessible here: http://www.tallyinslaw.com/2012/05/chalfonte-decided-first-party-bad-faith.html#more

Dennis Wall