Claims and Bad Faith Law Blog

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    In 2023, as noted in the footnote, Section 627.428 was repealed entirely, as to all insurance carriers in Florida.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As was noted in the above footnote, Section 626.9373, too, has been repealed by the 2023 Florida Legislature.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  Section 627.428 has since been repealed.  2023 Fla.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.