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.
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