Claims and Bad Faith Law Blog

MORE ABOUT THE CONTRACTUAL LIMITATIONS PERIOD IN INSURANCE CONTRACTS.

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In Ransom v. Erie Ins. Co., ___ N.E.3d ___, No. 21 HA 0011, 2022 WL 4675876 (Ohio Ct. App., 7th Dist., Harrison County, Sept. 30, 2022), a property insurance  carrier convinced a trial judge to dismiss the policyholders' complaint with prejudice based on the policy's one-year limitations period for bringing suit against the carrier.  The policyholders-homeowners made a claim for damage to their roof; the carrier agreed that the claim was covered but contested the amount of damage.  The policyholders then sued, but it was over one year later.

In the trial court and in the appellate court, the carrier and the policyholders-homeowners contended:

    Appellee then moved to dismiss, arguing the complaint was filed beyond the one-year time limit to do so, as set forth in the contract of insurance.  As alleged, Appellants filed suit more than one year after the date the damage occurred.  However, Appellants urged the court to find Appellee had waived this provision based on its conduct showing it relinquished the one-year limitation because the parties were still negotiating the value of the claim when it expired.

Ransom, 2022 WL 4675876, at *5, ¶ 30.  The appellate court reversed the trial court, holding that the complaint raised a reasonable inference that, based on the carrier's negotiating conduct, the carrier may have waived its own contractual  limitations period:

    Upon accepting all factual allegations in Appellants’ complaint as true and making all reasonable inferences in favor of Appellants, this court concludes Appellee agreed there was coverage under the policy and the parties’ negotiations about the value of Appellants’ claim were ongoing one year after the date of damage to their roof. Because of the continued and unresolved nature of the claim here, it can reasonably be inferred these negotiations or contacts showed Appellee waived the right to invoke the contractual one-year limitation.

Ransom, 2022 WL 4675876, at *6, ¶ 32.

Moreover, the contractual limitations period did not apply to the plaintiffs' bad faith claims in this case, either, because under Ohio law "an insurer's breach of the duty to act in good faith is a tort and consequently governed by the statute of limitations for torts."  Ransom, 2022 WL 4675876, at *7, ¶ 43.  The carrier argued that in this case, the plaintiffs' bad faith claims should nonetheless be dismissed, based on the underlying nature of the claims themselves:

    We acknowledge Ohio courts, including this one, have recognized two different types of bad faith claims—the first is when a claimant must prove the insurer had no lawful basis to deny coverage, and the second is when the claimant does not have to establish the underlying coverage since the claim arises from the company having a lack of a reasonable justification to act in the manner it did.  [Citation omitted.]   However, this distinction does not affect our decision here. Based on the broad nature of Appellants’ bad faith allegations plus the fact we are reviewing a decision which granted a motion to dismiss, this distinction makes no difference. As stated, Appellants’ bad faith claim alleged Appellee breached its duty to act in good faith by refusing to pay the entire cost to repair the roof; initially denying coverage altogether; purposely delaying the handling of their claim without reasonable justification; and canceling their policy after they made a legitimate claim for coverage….

    Consequently, the trial court erred by dismissing Appellants’ second claim for relief by applying the one-year contractual limitation to Appellants’ bad faith claim.

 Ransom, 2022 WL 4675876, at *7, ¶¶ 44-45.

          The contractual limitations period in an insurance policy depends for its enforcement on the conduct of the carrier which wrote it.  This is a pretty universal rule in the law of jurisdictions in the United States.  Further, insurance bad faith claims are generally governed by statutes of limitations, not contract periods of limitation.  See generally 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH §§ 11:2 & 11:15 (West 3d Edition and 2022 Supplements).

Please read the disclaimer.  □2022 Dennis J. Wall.  All rights reserved.

THIS TIME THE CRN IS SUFFICIENT. THE CARRIER'S REFUSAL IS NOT.

In Lugassy v. Utd. Prop. & Cas. Ins. Co., No. 4D21-2929, 2022 WL 17171368, at*2 (Fla. 4th DCA Nov. 23, 2022) (STATED NOT FINAL), the Civil Remedy Notice at issue was held legally sufficient despite not stating a specific "cure amount" for the carrier to pay:

    Here, the Homeowners’ CRN listed the specific statutory provisions that United allegedly violated, referenced the specific policy language relevant to the violations, and gave a detailed recitation of the facts surrounding the violation. In relevant part, the CRN stated United gave “a lowball estimate that failed to include the floors at all, and otherwise under-scoped such items as drywall repairs and paint” and ignored documentation showing that additional payments were owed. We hold the CRN sufficiently complied with section 624.155(3)(b)'s specificity requirements and “sufficiently put [United] on notice of the facts and circumstances giving rise to the violations and the corrective action required to remedy the violations.” 

(The link in the above quote is to the 2022 version of Fla. Stat. § 624.155(3)(b) which is identical to the version cited in the Lugassy case.)

The trial court held in this case that a specific cure amount is required in the Civil Remedy Notice in Florida.  The appellate court reversed in this case because a specific cure amount is definitely not required in a Civil Remedy Notice under the Florida "Bad-Faith" Statute.  Lugassy, 2022 WL 17171368, at *3.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

CONTRACT LIMITATION ON LAWSUITS HELD "UNCONSCIONABLE."

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In Tadych v. Noble Ridge Constr., Inc., 519 P.3d 199, ¶ 18, at p. 204 (Wash. 2022), a split en banc decision, the Washington Supreme Court held that a short, one year, limitation period in a construction contract was "unconscionable" and therefore unenforceable.

This decision has implications for similar short, sometimes one year, limitations periods in insurance contracts.

Let the issuer beware.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

ANOTHER FLORIDA CIVIL REMEDY NOTICE IS 'VOID FOR VAGUENESS.'

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In Demase v. State Farm Fla. Ins. Co., No. 5D21-2078, 2022 WL 16909408 (Fla. 5th DCA Nov. 14, 2022), Thomas and Joanne Demase served their property insurance carrier with a Civil Remedy Notice of their intent to sue for bad faith under Florida's bad-faith statute, Fla. Stat. § 624.155.¹  The Demases made a claim for coverage as a result of damage from a sinkhole.  The Florida bad-faith statute requires identification of the policy provisions relied on by the claimant writing the notice.

The Demases  wrote in their Civil Remedy Notice "SEE SUBJECT POLICY."  Further, they wrote that they based their pursuit of a civil remedy on "ALL INSURANCE POLICY PROVISIONS THAT PROVIDE COVERAGE TO THE INSURED PROPERTY," and apparently for good measure, on "ALL POLICY PROVISIONS."  Demase, 2022 WL 16909408, at *1.

In this case, Florida's Fifth District Court of Appeal joined its sister court from the Fourth District Court of Appeal in rejecting such a vague CRN as insufficient under the Florida statute.  The Fourth District's decision came in a similar case, Julien v. Utd. Prop. & Cas. Ins. Co., 311 So. 3d 875, 878 (Fla. 4th DCA 2021), and the Fifth District panel expressly agreed with it in Demase, 2022 WL 16909408, at *2-*3.

¹The 2022 version of the statute, linked here, is identical in pertinent part to the 2014 version at issue in Demase, which the appellate court reproduced in its opinion, Demase, 2022 WL 16909408, at *2.

Civil Remedy Notices in first-party cases like Demase are gathered in Section 9:21 of Volume 2, DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, and 2022 Supplements), and third-party cases involving CRN's are collected in id., Volume 1, Section 3:30.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

FORCE-PLACED INSURANCE: FLORIDA REAL ESTATE INVESTOR LOST WITHOUT DOCUMENTATION.

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In Foster v. PNC Bank, N.A., 52 F.4th 315 (7th Cir. 2022) (page numbers not available from Westlaw at this time), an investor in real estate in Fort Lauderdale tried to counter the summary judgment motion of the bank that force-placed insurance.  The mortgage that the investor gave to the bank was apparently a Uniform Mortgage because under Section 5 the bank had the right to force-place insurance in the event that the investor did not maintain the required insurance on the Fort Lauderdale property or was not current in his payments, in part here pertinent.

The investor filed his own affidavit (so described by the appellate court, not a declaration) that he obtained required flood insurance and that he was current on his loan payments.  (He also testified in his affidavit about his purchase of required wind insurance, which was held sufficient to rebut the bank's motion in the trial court as to the investor's purchase of wind insurance, so that it was not an issue on appeal.)

The trial court ruled that this affidavit testimony did not present a triable issue of fact as to the flood insurance  and the current loan payments issues, however, and so the district judge granted the bank's motion for summary judgment in the investor's lawsuit against the bank for damages.  The appellate court agreed.

Holding that the investor's testimony in the face of the bank's contrary records was conclusory and not worthy of consideration even on summary judgment, the appellate court affirmed the summary judgment.  To dig a little deeper, although the investor did file what was called an affidavit, the investor's testimony was only that he spoke to a bank representative on the telephone.  He did not state anything about the limits and provisions or any other facts of the flood insurance policy he said he purchased, only that he purchased flood insurance, and he did not say anything in his affidavit testimony about how much he paid on his loan, or when, or how, just that he was current.  He did not provide any documentation to prove his conclusory statements either that he obtained flood insurance or that he was current on his loan payments.

For these reasons, the trial court entered summary judgment for the bank and the appellate court affirmed.  The lessons for practitioners are clear:  More will be required of mortgagors contesting the forced placement of insurance by lenders than just the mortgagors' unsupported conclusions that they purchased the required insurance and that they were current on their loan payments.  Parenthetically, this federal case was filed in Illinois because the investor, who is a resident of Florida, also purchased property in Chicago, Illinois that was the subject of his lawsuit in the trial court but not the subject of this appeal.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

ANOTHER CIVIL REMEDY NOTICE DECISION.

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Hurricane Nicole became Tropical Storm Nicole when it reached here.  The storm did not blow you away, but a new decision will.

In the State of Washington, the Insurance Fair Conduct Act (IFCA) provides remedies to parties allegedly injured by the conduct of insurance carriers, in pertinent part.  IFCA defendants can include insurance carriers and IFCA requires the equivalent of a Civil Remedy Notice just as so-called "bad faith statutes" do.  The CRN is a condition precedent to suit in all such statutory actions.

In Lyons v. USAA Cas. Ins. Co., No. 3:22-cv-05462-JHC, 2022 WL 16854273  (W.D. Wash. Nov. 10, 2022), the plaintiff filed the complaint on June 24, 2022 and perfected his IFCA notice thereafter.  The plaintiff is a claims adjuster formerly employed by the defendant; the plaintiff filed his complaint after the defendant denied his homeowner's claim.

The plaintiff alleged several claims, including for declaratory relief, breach of contract, "Violation of Duty of Good Faith" citing Washington's Unfair Claim Settlement Practices Regulation and alleging the defendant's violation of "industry standards for the handling of insurance claims" (¶ 49), "Negligent Claims Handling," and alleged violations of the Washington Consumer Protection Act. These facts are not mentioned in the Court's opinion, but you can see them for yourself here  in the plaintiff's complaint uploaded here from the Electronic Court File:  Download Lyons v. USAA Cas. Ins. Co. DE 1 Complaint filed June 24 2022 (W.D. Wash. No. 3.22-cv-05462).

In the complaint, the plaintiff also "reserved the right" to allege a future claim in the case under the Insurance Fair Conduct Act.  After filing the complaint, the plaintiff requested leave to amend to add an IFCA claim to his other claims including the bad faith claims.  The carrier defended on two grounds in this case:  First, that the IFCA claim was perfected only after the lawsuit was filed, and second, that the plaintiff actually gave notice under IFCA after the plaintiff filed the lawsuit.

The federal district judge in this case rejected both of those objections and granted the plaintiff's motion for leave to amend to add the IFCA claim.  Lyons, 2022 WL 16854273, at *2-*3.

IFCA plaintiffs in insurance cases now have it on good authority that they can give the IFCA notice to the carrier after the plaintiffs have filed suit and that they can perfect their IFCA claims after they file suit regardless of when they give the required IFCA notice.

After Lyons, plaintiffs across the United States pursuing bad-faith claims under statutes that require Civil Remedy Notices now have the same precedent.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.

THE VOTER VIGILANTES OF MARICOPA COUNTY, FEDERAL LAW & JUDGE: UPDATE.

 

The recent developments in an Arizona federal case surrounding the Voter Vigilantes of Maricopa County are confused and confusing by the mainstream media.  So I went out to the case docket on PACER (Public Access to [Federal] Court Electronic Records).  Here is what I found to be the case.

When last we left the story on Friday, October 28th, a federal judge had entered an order refusing to enjoin the Voter Vigilantes from  voter intimidation.  He said that he could not see how the First Amendment (right of intimidation?) could be reconciled with such an injunction, so he denied the injunction.

That was on October 28th.  Since then, the plaintiffs, augmented by the League of Women Voters, wrote an order together with the defendants reconciling the First Amendment with such an injunction.  Download Arizona Alliance for Ret. Am's v. Clear Elect's USA DE 51 Temporary Restraining Order (Stipulated and Contested) filed Nov. 1 2022 (D. Ariz. No. 2.22.cv.01823.MTL)  The federal judge signed the parties' stipulated Temporary Restraining Order on November 2, 2022 and, apparently emboldened by the parties' ability to write an order, he went further and ordered injunctive relief requested by the plaintiffs to which the defendants had not apparently agreed.

In the stipulated part of the Temporary Restraining Order, the defendants agreed not to carry guns to drop boxes in Maricopa County; to stay away from drop boxes the same 75 feet that Arizona law requires them to stay away from polling places; post a statement on their existing website and social media and on any new social media account they make, that directly contradicts everything they have been writing about drop boxes in Arizona; and other things. 

In the unstipulated part of the Temporary Restraining Order, this federal judge restrained the defendants from doxing any individuals (meaning enjoining them from publishing the names and contact information and such) who wanted to drop off their ballots.  Over the defendants' apparent opposition, this federal judge also enjoined the defendants from saying false things about Arizona voting law "through the close of voting on Election Day 2022."  Download Arizona Alliance for Ret. Am's v. Clear Elect's USA DE 51 Temporary Restraining Order (Stipulated and Contested) filed Nov. 1 2022 (D. Ariz. No. 2.22.cv.01823.MTL)

So, those are some of the things that have actually happened since last Friday, October 28, 2022 in the case of the Voter Vigilantes of Maricopa County.

Please read the disclaimer.  ©2022 Dennis J. Wall.  All rights reserved.