Claims and Bad Faith Law Blog

CHALLENGING APPRAISAL BASED ON WAIVER.

"The party challenging the validity or enforceability of an appraisal clause based on waiver bears the burden of establishing both waiver by conduct of the party seeking appraisal and prejudice to itself."  Coleman v. Amguard Ins. Co., ___ F. Supp. 3d ___, No. 4:22-cv-03442, 2023 WL 9052250, at *1 (S.D. Tex. Dec. 28, 2023).

Appraisal is the author's subject in § 2:7, Volume 1 of Catastrophe Claims / Insurance Coverage for Natural and Man-Made Disasters (Thomson Reuters Nov. 2023 ed.).

Please read the disclaimer.  ©2024 Dennis J. Wall.  All rights reserved.

 

WAIVER OF A DEFECT IN A CIVIL REMEDY NOTICE.

(Gridview_Imagefull/Florida DACS)

It has been held in a case under Florida law that defects in a Civil Remedy Notice of alleged first-party bad faith can be waived.  In that case, waiver existed when the carrier responded to the CRN without raising any objections to it.  Neal v. GEICO Gen. Ins. Co., 358 So. 3d 749, 752 (Fla. 4th DCA 2023).

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.  Waiver in the first-party insurance bad faith case law is examined in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:14 (3d Edition, West Publishing Company; 2023 Supplements in process).

WAIVER/NO WAIVER OF INSURER DEFENDANTS' COVERAGE OR POLICY DEFENSES.

Two recently decided cases illustrate the general rule that it is exceedingly difficult to prove an insurer's waiver of its defenses to insurance coverage.  E.g., Legend's Creek Homeowners Ass'n v. Travelers Indem. Co. of Am., 33 F.4th 932, 935, 937 (7th Cir. 2022) (Indiana substantive law; no waiver where there is no unquestioned duty to speak as to assertion of limitations period in an insurance policy, and no implicit waiver in this case, either); Grill House, LLC v. Berkshire Hathaway Homestate Ins. Co., No. 20-cv-2108-WJM-KLM, 2022 WL 1487575, at *4 (D. Colo. May 11, 2022) (no waiver of plaintiff's alleged failure to provide prompt notice).

Questions of waiver of, and of estoppel to assert policy and coverage defenses, are discussed in 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:2 (discussing in particular, context of first-party bad faith claims) (3d Edition West Publishing Company, 2023 Supplements in process).

Please read the disclaimer.  This blog article ©2023 Dennis J. Wall.  All rights reserved.

MORE ABOUT THE CONTRACTUAL LIMITATIONS PERIOD IN INSURANCE CONTRACTS.

(Insurance Clip Art)

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.

WAIVING THE CIVIL REMEDY NOTICE REQUIREMENTS IN FLORIDA.

(Photo via Florida Department of Agriculture and Consumer Services)

The case of  Bay v. United Serv's Auto. Ass'n, 305 So. 3d 294 (Fla. 4th DCA 2020), involved a failure to strictly comply with the content requirements of a Civil Remedy Notice in Florida.  The complainant "misidentified the insurer as 'USAA Casualty Insurance Company' instead of 'United States Automobile Association' or 'USAA.'”  The trial judge held that this "misidentification" violated Florida Civil Remedy Notice requirements as a matter of law.

However, this was not an issue on appeal.  The trial court's remaining ruling was the issue on appeal in this case.

The trial court's ruling that was challenged on appeal concerned the question of whether the carrier waived the noncompliance.  The carrier did not raise this argument in its response to the civil remedy notice.

When it addressed this issue in this case, the Florida appellate court issued a new interpretation of Florida law concerning the waiver of contract rights.  The appellate court's ruling affects many contract cases but in particular it will determine the outcome of many insurance bad faith matters.

The Florida appellate court held for apparently the first time that not responding pre-suit to a complainant's apparent failure to comply with statutory conditions to asserting rights, will result in a waiver by the challenged party of its corresponding right to object or respond to the notice when litigation is filed later.

"However, the insurer waived the failure of the condition precedent by not raising the misidentification in its response to the civil remedy notice."  The CRN is a statutory condition precedent to filing suit for first-party bad faith in Florida.  The CRN always comes before suit is filed.  A response to a Civil Remedy Notice under Florida law generally if not always comes before suit is ever filed. 

In sum, the holding on appeal was on an apparently novel issue at least under Florida law.  The Florida appellate court held for what appears to be the first time that not raising a complainant's apparent failure to comply with statutory conditions to asserting rights even before suit is filed, will result in a waiver of the defense, i.e., an inability as a matter of law to raise the defense in litigation by a challenged party which might seek to object or respond to the notice when suit is filed later.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.