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Good News for Florida Policy Holders – An Insured Can Bring a Bad Faith Claim against its Insurance Company after the Issuance of an Appraisal Award

Insurance PolicyThe Second District Court of Appeal concluded that an insured can bring a bad faith claim against an insurance company after the issuance of an appraisal award.  This is a significant ruling for insureds as insurance companies often argue that bad faith claims are not ripe until a judgment has been entered in the insured’s favor.  This case, however, dismisses that argument.

The facts in Hunt v. State Farm are rather straight forward.  Mr. Hunt sustained sinkhole damage in July of 2006.  Mr. Hunt then filed a claim with his insurance company, State Farm, to recover for those damages.  After disagreeing with State Farm’s estimate for damages, Mr. Hunt filed a civil remedy notice of insurer violation (“CRN”).  The civil remedy notice triggered the start of a 60 day period in which State Farm could cure its alleged wrongful conduct.  Mr. Hunt then sued State Farm for a bad faith claim.

In response, State Farm moved to dismiss the lawsuit and compel appraisal.  The trial court granted the motion to dismiss, and ordered the parties to appraisal.  During appraisal an award of over $150,000.00 was issued in Mr. Hunt’s favor.  However, Mr. Hunt subsequently dismissed his initial lawsuit and filed a bad-faith action.

State Farm moved for summary judgment, and the trial court granted State Farm’s summary judgment.  It was granted because the trial court reasoned that Mr. Hunt had not obtained a judgment against State Farm and that he failed to state a specific amount in his Civil Remedy Notice.

Mr. Hunt then appealed the trial court’s adverse ruling to the Second District Court of Appeal.  That court concluded that an appraisal award establishing the validity of an insured’s claim satisfies the condition precedent required to bring a bad faith action.  In so doing, the appellate court relied on Trafalgar v. Zurich, 100 So.3d 1155 (Fla. 4th DCA 2012), which also noted that a “judgment on a breach of contract action is not the only way of obtaining a favorable resolution” against an insurance company.  The Trafalgar court noted that “an arbitration award establishing the validity of an insured’s claim satisfies the condition precedent required to bring a bad faith action.”

In regards to the claim that Mr. Hunt failed to state a specific amount, which would bar him from relief, the District Court of Appeals ruled that §624.155 Fla. Stat. does not require a specific cure amount in order for Mr. Hunt to bring a claim. They ruled that Mr. Hunt did what was required by the statute and that a specific amount is not necessary in order for him to pursue his cause of action.

This ruling will no doubt aid Florida insureds pursue bad faith claims against their insurance companies if their insurance company is conducting themselves in bad faith.  Please do not hesitate to contact our office if you wish to discuss your claim further.

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