In Lumpuy v. Scottsdale Insurance Co., 2013 WL 1365765 (M.D. Fla. April 4, 2013), a Federal Judge considered a Defendant's Motion to Reconsider its Order Denying Defendant's Motion for Summary Judgment. The Federal Judge denied the motion for reconsideration. In doing so, the Court expounded on its previous holding that evidence of Good Faith or Bad Faith will be admissible to prove Breach of the Insurance Contract in that case, in which the alleged Claim was Breach of Contract because the Insurance Company apparently denied Coverage. (It seems to be the case, but the opinion on rehearing is understandably not prolonged in its discussion of the case history.)
In any case, it seems that the Plaintiff-Policyholder has not alleged a claim for Bad Faith in this case, only a claim for Breach of Contract. See Lumpuy v. Scottsdale Insurance Co., 2013 WL 1365765 *2 (M.D. Fla. April 4, 2013).
The Court's further explanation assists greatly in understanding the Court's resolution of the issues in this case. In denying the Insurance Company's motion for reconsideration, the Court's original holding at first seems on its face to be outside the majority view, which has it that an actionable Breach of Contract cannot properly be determined by evidence of the breaching party's motive.
In this case, the Plaintiff is the owner of Commercial Property. The Defendant issued an Insurance Policy of an undescribed nature to the Plaintiff which contained "sinkhole coverage." The Policyholder received a repair recommendation from an engineering concern, one FTE. In reliance on FTE's recommendation, the Policyholder entered into a contingent contract with one Champion to repair its property; the contingency was that the Defendant would approve the contract.
The Defendant did not approve the Champion contract. Rather than accepting FTE's repair recommendation, the Defendant chose a competing recommendation by one Miller. Whether the Defendant acted in Good Faith or not with regard to its choices, would have to be determined in order for the jury to reach the ultimate issue of whether the Defendant Breached its Insurance Contract in this case, according to the District Judge:
In the instant case, Plaintiff asserts a breach of contract claim based on two things: (1) Defendant's failure to tender the policy limits, even after the neutral evaluator estimated the repair costs to exceed the $150,000 policy limit; and (2) Defendant's failure to approve the Champion contract. Plaintiff does not assert a claim for breach of the implied warranty of good faith and fair dealing, and as such, the OBE decision [QBE Insurance Corp. v. Chalfonte Condominium Ass'n, 94 So. 3d 541 (Fla. 2012)] does not control this issue.
Furthermore, in order to determine whether Defendant breached the insurance policy, the jury will have to determine: (1) whether FTE's repair recommendation was superior to Miller's repair recommendation; (2) whether Defendant acted in good faith, or whether it acted unreasonably, when it failed to approve of FTE as the engineer; and (3) whether Defendant acted in good faith, or whether it acted unreasonably, when it failed to approve the Champion contract based on FTE's repair recommendation. If the jury concludes that (1) FTE's repair recommendation was superior to Miller's repair recommendation; (2) Defendant acted unreasonably when it failed to approve of FTE as the engineer; and (3) Defendant acted unreasonably when it failed to approve the Champion contract based on FTE's repair recommendation, then the jury could find that Defendant breached the insurance policy by failing to tender the remaining policy limit for Plaintiff's sinkhole claim.
Lumpuy v. Scottsdale Insurance Co., 2013 WL 1365765 *2 (M.D. Fla. April 4, 2013).
Nor, the Court wrote parenthetically, was there any need to interpret Policy provisions in this case:
In the instant case, there is no need to construe a policy provision. Instead, the jury will be asked to determine whether there was a basis for Defendant to deny payment of Plaintiff's claim, and as such, whether Defendant's denial amount to a breach of the insurance policy.
Lumpuy v. Scottsdale Insurance Co., 2013 WL 1365765 *3 (M.D. Fla. April 4, 2013).
Well there you have it. Sometimes Courts will not only allow evidence of Good Faith or Bad Faith even when no Bad Faith Claim is alleged, but sometimes as in this case they will hold that such evidence is determinative of the outcome of a Breach of Contract Claim.
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