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Florida Supreme Court Ruling Obliterates Common Law Bad Faith Claims

badfaith.jpgThe Florida Supreme Court recently eradicated some significant protections for Floridians in a case involving damage from Hurricane Wilma and dissatisfaction with QBE Insurance Corp.’s handling of the claim and its investigation. In that case Florida’s high court addressed several issues of significant import.

The first issue addressed by the Florida Supreme Court was whether Florida law recognizes a first-party claim for breach of implied warranty of good faith and fair dealing if an insurance company fails to investigate and assess the claim within a reasonable time? The court answered that no such claim existed in Florida.

In reaching its conclusion, the court reasoned that the legislative history indicates that there is no common law first-party bad-faith action in Florida, and limited insured parties to the statutory remedy of filing a bad faith claim. While Florida’s high court acknowledged that several Florida courts have concluded that such claims are permissible, the Court went on to reason that those courts misapplied Florida law. In other words, Florida’s Supreme Court concluded that insureds may only file a claim for bad faith and may not assert a separate claim for breach of the implied warranty of good faith and fair dealing under a first-party insurance claim.

Next, the Court determined if an insured party may bring a claim against the insurer for failure to comply with the statutory language and font-size requirements. QBE partially failed to comply with the notice requirements under the statute. QBE’s Hurricane Deductible notice contained the word “windstorm” instead of hurricane and the font-size was 16.5 instead of the required 18 point. The Court needed to determine if the failure to comply opened QBE up to liability to its insured.

Because the plain language of the statute does not prescribe a penalty for failure to comply with the word-choice and font-size requirements the Court next had to look at whether they would imply one. Looking at the legislative intent when the statute was enacted was important to the Court’s determination. Because the Legislature had provided, in other sections, liabilities for failure to abide by the statutes the Court reasoned that it was clear that it was not the legislature’s intent to impose harsh penalties on insurers who failed to comply with this particular section. The underlying purpose for notice requirements was part of a larger design to provide access to affordable housing insurance in the state through higher hurricane deductibles; the Legislature was not intending to create another avenue for insured parties to sue.

In addition, the notice requirement was created to make certain that the insured was aware of the deductible, and the Plaintiff here, did not argue they weren’t aware of the deductible only that the notice didn’t comply with statute requirements. The Court determined QBE could not be held civilly liable for the failure to comply with the statute requirements and that the judgment was reduced by the policy’s deductible.

The final issued the Court addressed revolved around policy language requiring QBE to remit payments upon a “final judgment.” The plaintiff argued that QBE failed to remit payment within 30 days following the trial court’s final judgment and therefore QBE waived its right to a stay of execution by procuring a bond. The Court disagreed determining that the words “final judgment” would not supersede the ability of a party to obtain a stay of execution by bond and that the “final judgment” wording included any appeal period thereafter.

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