Florida Hurricane Damage Insurance Claims – Citizens is Immune From First Party Bad Faith Suits

Florida Hurricane Damage Attorney_fightsforyou.netIf you live in South Florida and own a townhouse, condominium, house or other property, and you are insured by Citizens for Hurricane, windstorm, tornado or other storm damage, it appears that Citizens has no incentive to adjust claims in good faith given that they apparently are immune from first party bad faith lawsuits — so says the Fifth District Court of Appeal in the case of Citizens Property Insurance v. La Mer Condominium Association, 37 So.3d 988 (Fla. 5th DCA 2010).

A first party action is when a homeowner brings a claim against their own insurance company for some form of damage to their residence or property, whether it arises out of a Hurricane or other type of storm damage, or it can arise out of a pipe burst, leaky sink or toilet/washer failure.  When the claim is made, the property damage insurer may wrongfully deny your claim, delay and take forever to adjust or investigate the claim, or simply undervalue the claim by paying less than the property damage is worth.  When this occurs, a homeowner will usually hire a Hurricane damage or homeowners insurance claim lawyer to bring a lawsuit against the insurance company for breach of contract and possibly bad faith.

Well, at this time, the law forbids a homeowner from bringing a bad faith lawsuit against Citizens.  In the La Mer Condominium Association case, where the condo association apparently brought a first party bad faith insurance claim for damage arising out of a Hurricane or some other storm, the court cited to its previous decision in Citizens Property Insurance Corp. v. Garfinkel, 25 So.3d 62 (Fla 5th DCA 2009), where they held that Citizens is immune from first-party bad faith claims pursuant to sections 627.351(6)(r)(1) and 624.155(1)(b)(1), Florida Statutes.

Moral of Story:  whether you live in Coral Springs, Cooper City, Hallandale, Boca Raton, Homestead, Key Biscayne, Weston, Pompano Beach, Tamarac, Wilton Manners, Hialeah or another area within Miami, Fort Lauderdale or Palm Beach, your Florida Hurricane damage insurance attorney will not be able to bring a bad faith lawsuit against Citizens.  Clearly, this holding is a shield to Citizens and a dent in the homeowner’s arsenal in making sure their insurance claims are adjusted fairly.

For additional Hurricane damage and bad faith claim analysis, see my previous post. For additional Citizens Insurance claim denial and dispute analysis, see my previous post.

Florida Fire Damage Claim Disputes – A Bad Faith Analysis

As a South Florida homeowner, I know how hot it gets in the summer, wherein we sometimes experience extensive periods of heat, drought and lightning strikes.  These types of conditions can cause wildfires that reach your house or business, or your residence can simply experience an electrical problem or power surge, to which a fire breaks out as a result.  There are also  fires that occur due to arson, an accident (such as a product or appliance malfunction), or even a burglary gone wrong.  After a fire has devastated your home or business, several types of damage can result, including structural damage, water damage, smoke damage, roof damage, melting issues, damage to the building’s plumbing or electric systems, and damage to the personal property inside the structure (such as furniture, office equipment, appliances, clothes, papers, etc.).  A business may also suffer a significant loss of profits due to a business interruption.

When a fire occurs, a home or business owner may seek out the assistance of a fire damage insurance claim lawyer, given that insurance companies commonly look for ways to deny a property damage claim (by claiming fraud or arson), or they fail to pay the full value of the fire damage loss.  If your fire damage claim has been denied, delayed, disputed or evaluated in bad faith by your insurance company, you may have to file a bad faith lawsuit for breach of the insurance contract.

This is the type of situation that was apparent in the case of Talat Enterprises, Inc. v. Aetna Cas. and Sur. Co., 753 So.2d 1278 (Fla. 2000), wherein a restaurant/business owner that sustained fire damage to his business brought a first party bad faith lawsuit against Aetna Insurance Company.  Apparently, after Aetna made an initial payment for damage, the business owner submitted proofs of loss for additional damages, including personal property and loss of business income.  Thereafter, an appraisal award was entered in favor of the business owner, to which Aetna paid the full amount of this award.  Sometime after Aetna’s appraisal award payment, the business owner issued a statutory notification of intent to pursue a bad faith claim against Aetna under section 624.155  of the Florida Statutes.   After the sixty day cure period expired without an additional payment, the business owner filed suit against Aetna, who moved for summary judgment.  Aetna claimed that it was entitled to judgment as a matter of law under section 624.155(2)(d) (states that “[n]o action shall lie if, within 60 days after filing notice, the damages are paid or the circumstances giving rise to the violation are corrected.”),  because it paid the underlying contract damages (ie., the appraisal award) within the sixty days from the date that the business owner filed its bad faith notice (they actually paid prior to the sixty day notice). The business owner countered that Aetna was required to pay not only the damages owed under the insurance policy, but also all extra-contractual damages flowing from Aetna’s alleged failure to make a good-faith attempt to settle his claim.

The trial court granted Aetna’s Motion for Summary Judgment, finding that Aetna “ha[d] timely paid ‘the damages’ and ha[d] corrected ‘the circumstances giving rise to the violation’ ” within the meaning of section 624.155(2)(d)., and that Aetna had satisfied the dictates of section 624.155(2)(d) by paying the restaurant owners contractual damages, i.e., the amount awarded via the appraisal award, before the expiration of the sixty-day cure period.  The trial court rejected the business owners reading of the statute as requiring the insurer to pay whatever the insured demands.  The Supreme Court agreed with the Trial Court’s reasoning (was answering a question certified as a matter of great public importance), finding that a bad faith cause of action does not even become ripe until after the 60 day notice requirement expires without any payment of the damages owed under the insurance contract.  In this case, Aetna paid the amounts owed under the insurance policy, preventing a bad faith cause of action under section 624.155 for extra contractual damages.

Moral of Story: If you are a homeowner or business owner that sustains fire damage, and your attorney brings a first party fire damage insurance claim under your insurance policy, whether you live in Miramar, Cutler Bay, Palmetto Bay, Homestead, Key West, Doral, West Kendall, Davie, Sunrise, Miami Springs, Margate, Pembroke Pines or another area within Miami, Fort Lauderdale or Palm Beach, know that if your insurance company pays an appraisal award (ie., the damages owed under the insurance contract), even if you sustain extra contractual damages, a bad faith claim is prohibited under section 624.155 given that the contractual damages have been paid.

Florida Hurricane/Storm Damage Claims – Implied Warranty of Good Faith and Fair Dealing: Does it apply in claim by an Insured Against its Insurer for Failing to Investigate a Hurricane Loss in a Timely Manner?

It does not, so says the Florida Supreme Court in the case of QBE Ins. Corp. v. Chalfonte Condominium Apartment Ass’n, Inc. (May 2012), where Chalfonte Condominium sued their insurance company, QBE, arising out of a property damage loss from Hurricane Wilma.  Chalfonte submitted an estimate of damages to QBE on December 18, 2005, and then submitted a sworn proof of loss to QBE on July 12, 2006.  Not satisfied with QBE’s investigation and processing of its claim, Chalfonte filed suit in the United States District Court for the Southern District of Florida for among other things, breach of contract (breach of the implied warranty of good faith and fair dealing).

The jury found for Chalfonte on all of its claims, including the awarding of moneys for QBE’s breach of the implied warranty of good faith and fair dealing.  QBE would end up appealing the judgement to the Eleventh Circuit Court of Appeals, to which the Eleventh Circuit certified five questions to the Florida Supreme Court, one of which was the following:

Did Florida law recognize a claim for breach of the implied warranty of good faith and fair dealing by an insured against its insurer based on the insurer’s failure to investigate and assess the insured’s claim within a reasonable period of time?

Of note, the Florida Supreme Court recognized that “Florida courts imposed an independent duty on liability insurers to act in good faith when defending insureds against third-party claims,” and recognized a common law cause of action for bad faith within the context of third-party actions.  These  third-party bad-faith actions would involve a claim “in which an insured sues his liability insurance company for bad faith in failing to settle a claim which ultimately results in a third-party judgment against him in excess of the policy limits.”  The Florida Supreme Court then noted section 624.155 of the Florida Statutes (2009), specifically,  section 624.155(1)(b)(1), which created a statutory first-party bad-faith cause of action.    Section 624.155(1)(b)(1) states that “any person may bring a civil action against an insurer when such person is damaged…by the commission of any of the following acts by the insurer..not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests…”

After reviewing the current status of “bad faith” law, the Florida Supreme Court, while acknowledging that “Florida contract law does recognize an implied covenant of good faith and fair dealing in every contract,” concluded that this implied covenant did not create a separate first-party action against an insurance company based on its bad-faith refusal to pay a claim.  Moreover, the Court held that “such first-party claims [by Chalfonte] are actually statutory bad-faith claims that must be brought under section 624.155 of the Florida Statutes.”

Moral of the story:  Florida does not recognize a claim for breach of the implied warranty of good faith and fair dealing by an insured against its insurance company for failing to investigate a hurricane loss, as such a claim is actually a statutory bad-faith claim that must be brought under section 624.155 of the Florida Statutes.  As such, Florida Hurricane/storm damage claims lawyers in Hollywood, Dania, Weston, Plantation, Aventura, Miami Beach, Bal Harbour, Coral Gables, Kendall, Pinecrest or other areas throughout Miami, Fort Lauderdale and Palm Beach, will now have to bring such a claim as a statutory bad-faith claim.