Developments in Insurance Law

February 2012 Case Law Update

Southeast Floating Docks, Inc. v. Auto-Owners Ins. Co., No. SC11-285, 2012 WL 301029 (Fla. Feb. 2, 2012) Auto-Owners issued a surety bond in connection with Southeast’s work pursuant to a contract which provided that Southeast would build a floating dock for Rivermar Contracting. Rivermar filed an action against Southeast and Auto-Owners for breach of contract when a dispute arose concerning Southeast’s performance. Auto-Owners settled with Rivermar and then filed suit against Southeast in the Middle District of Florida based on an agreement executed by the carrier and Southeast. The agreement included a choice-of-law clause that provided for the substantive law of Michigan to apply to all disputes arising under the contract. Southeast sent Auto-Owners an offer of judgment pursuant to Fla. Stat. § 768.79, which Auto-Owners rejected. A jury verdict was entered in favor of Southeast. Southeast then filed a motion for attorney’s fees pursuant to Fla. Stat. § 768.79. The district court denied the motion, Southeast sought review of that determination in the Eleventh Circuit, and the Eleventh Circuit certified the question regarding the applicability of Fla. Stat. § 768.79 to the Florida Supreme Court.

The Florida Supreme Court held that Florida’s offer of judgment statute (Fla. Stat. § 768.79) creates a substantive right to costs and attorney’s fees upon the satisfaction of certain conditions. Accordingly, the court held that under a conflict of law analysis, when parties have agreed to be bound by the substantive law of another jurisdiction, Fla. Stat. § 768.79 does not apply.

The court concluded that Southeast was not entitled to costs and fees under Fla. Stat. § 768.79 because the statute is substantive, and therefore inapplicable because Southeast and Auto-Owners had contractually agreed to be bound by the substantive laws of Michigan.

Panjikaran v. State Farm Fla. Ins. Co., 77 So. 3d 1278 (Fla. 2d DCA 2012) An insured sustained hurricane damage to her home. A dispute arose regarding Building Ordinance or Law Coverage benefits owed by State Farm under the policy, and State Farm demanded appraisal. Instead of submitting to appraisal, the insured filed suit against State Farm for declaratory judgment and breach of contract. During the hearing on State Farm’s motion for summary judgment, the insured argued that the carrier’s actions constituted a denial of coverage rather than a dispute over the amount of loss and the carrier argued that the suit was premature because the parties disputed the amount of loss and since the insured failed to submit to appraisal. The lower court entered summary judgment on both counts in favor of State Farm. The appellate court reversed and remanded, holding that a genuine issue of material fact existed because it was unclear whether the parties disputed the amount of loss or a denial of coverage.

State Farm Mut. Auto. Ins. Co. v. Bowling, No. 2D10-1505, 2012 WL 413809 (Fla. 2d DCA 2012) The insured filed suit against State Farm seeking coverage under the UM provision of his policy for auto accident injuries. The insured’s wife had filed a claim for loss of consortium. The jury returned a verdict in favor of the insured and his wife, which was eventually reduced to the UM policy limit. State Farm had retained an expert to testify regarding the reasonableness of the charges submitted for the insured’s medical treatment. The insured and his wife filed a motion to exclude the expert’s testimony, which the trial court granted. The appellate court reversed the final judgment and remanded for a new trial on damages, holding that the trial court abused its discretion in excluding the testimony of State Farm’s expert witness. The court reasoned that the carrier’s expert’s testimony would have assisted the jury in determining whether the insured’s medical bills accurately reflected the treatment he was documented to have received. This was directly relevant to whether the insured’s claimed medical expenses were reasonable and necessary. The court also concluded that the insurer’s expert’s training and experience qualified her as an expert in medical billing coding.

United Prop. & Cas. Ins. Co. v. Concepcion, No. 3D11-889, 2012 WL 634099 (Fla. 3d DCA Feb. 29, 2012) An insured sustained hurricane damage to his property and eventually filed a breach of contract suit against his insurer, United. United responded that the insured had failed to comply with his post-loss obligations (provide requested records and documents, respond to material inquiries during EUO, provide a sworn POL). During the hearing on the insured’s motion to compel appraisal, the trial court did not review evidence on whether the insured complied with his post-loss obligations. The trial court granted the insured’s motion. The appellate court reversed and remanded, since the trial court failed to conduct an evidentiary hearing where an issue of fact remained regarding whether the insured complied with his post-loss obligations. The appellate court noted that argument of counsel does not constitute evidence for that purpose, and further noted that the insured’s EUO transcript, if it had been considered by the trial court, could have constituted a significant piece of evidence from which the court could have concluded that the insured complied his post-loss obligations.

Progressive Express Ins. Co. v. Camillo, 80 So. 3d 394 (Fla. 4th DCA 2012) Progressive issued an auto policy. The insured’s brother, also an insured, was involved in an auto accident and submitted a claim to Progressive. Progressive denied the claim, arguing that the policy had expired several weeks before the accident without being renewed and that no policy was in force at the time of the accident. The insureds then filed a declaratory judgment suit against Progressive regarding coverage. The parties filed cross-motions for summary judgment. The trial court granted the insureds’ motion and entered a final declaratory judgment that coverage existed for the accident. The appellate court first held that the trial court improperly rejected Progressive’s underwriting specialists’ affidavit as self-serving, noting that the affidavit was not framed solely in terms of legal conclusions. The appellate court also held that where a policy expires without the insured making a renewal payment, and a loss occurs after the policy period expires, the insurer may subsequently accept premium payments and reinstate the policy prospectively without waiving the right to deny coverage for the loss. The court reasoned that no waiver occurs because the insurer is not retaining any premiums for the lapsed period between the expiration of the policy and the prospective reinstatement of the policy. The court noted the distinction between a carrier that retains a late premium following a policy cancellation for non-payment of premiums and an insurer that accepts a renewal payment after the expiration of a policy period and reinstates the policy prospectively.

The court did not direct that judgment be entered in favor of Progressive, however, since an issue of fact remained as to whether a potentially misleading bill that the carrier sent to the insured gave rise to an estoppel.

Kiln PLC v. Advantage Gen. Ins. Co., Ltd., 80 So. 3d 429 (Fla. 4th DCA 2012) Advantage filed suit against Kiln and QBE International seeking declaratory relief regarding coverage and damages for breach of contract for failing to pay amounts owed under a personal accident reinsurance policy. Advantage had filed a claim with Kiln and QBE after an aircraft insured by Advantage crashed and caused the death of 2 passengers. Advantage sought reimbursement for the amount it paid to the passengers’ families. The carrier refused to reimburse, arguing that the policy only covered employed passengers and that the policy excluded unemployed persons from coverage. The trial court agreed with Advantage that the language was ambiguous and entered summary judgment in Advantage’s favor. The appellate court agreed with the lower court’s ambiguity determination, but reversed and remanded to allow the parties to submit extrinsic evidence on what, if any, coverage was afforded by the policy to unemployed passengers.

Young v. Prudential Ins. Co. of Am., No. 10-14857, 2012 WL 538955 (11th Cir. Feb. 21, 2012) The Eleventh Circuit held that the district court’s order granting Young partial summary judgment regarding coverage for her claim for benefits under a group long-term disability plan and remanding the case to the plan administrator, Prudential, for further proceedings regarding whether Young was disabled was not a final decision under 28 U.S.C. § 1291. The court also held that the order was not appealable under the collateral order doctrine, as the order involved the merits of Young’s claim. Thus, the court held that it lacked jurisdiction to hear Prudential’s appeal of the district court’s decision.

Ruderman v. Wash. Nat’l Ins. Corp., No. 10-14714, 2012 WL 516066 (11th Cir. Feb. 17, 2012) The Eleventh Circuit agreed with the district court that the Limited Benefit Home Health Care Coverage Policies were ambiguous, but concluded that Florida law is unsettled on the proper way to resolve that ambiguity. The court noted that while Auto-Owners Insurance Co. v. Anderson, 756 So. 2d 29 (Fla. 2000) seemed to support the district court’s entry of summary judgment against the insurer, it noted that the principle of Florida law stated in Excelsior Insurance Co. v. Pomona Park Bar & Package Store, 369 So. 2d 938 (Fla. 1979) supported looking to extrinsic evidence to resolve the ambiguity before construing any remaining ambiguity against the policy drafter.

The Eleventh Circuit certified the following question to the Florida Supreme Court: “does the Policy’s ‘Automatic Benefit Increase Percentage’ apply to the dollar values of the ‘Lifetime Maximum Benefit Amount’ and the ‘Per Occurrence Maximum Benefit’?” That question, the court noted, might include answering the following sub-question: “If an ambiguity exists in this insurance policy – as we understand that it does – should courts first attempt to resolve the ambiguity by examining available extrinsic evidence?”

Flood v. Geico Gen. Ins. Co., No. 8:11-cv-49-T-24TBM, 2012 WL 439036 (M.D. Fla. Feb. 10, 2012) Flood was involved in an auto accident with a third party and the third party filed a claim against Flood’s policy with GEICO. After resolution of the third party’s suit against Flood, Flood filed a bad faith claims handling suit against GEICO. The court denied GEICO’s motion for summary judgment, holding that issues of material fact precluded summary judgment on Flood’s bad faith action. The court also denied Flood’s motion for partial summary judgment regarding 2 of GEICO’s affirmative defenses. In those defenses, GEICO contended that the underlying final judgment was the result of collusion. The court concluded that the jury should hear evidence regarding the totality of the circumstances surrounding the third party’s claim against Flood and GEICO’s attempt to settle it.

Davenport v. State Farm Mut. Auto. Ins. Co., No. 3:11-cv-632-J-JBT, 2012 WL 555759 (M.D. Fla. Feb. 21, 2012) State Farm filed a motion to compel 2 categories of items sought in its request for production to Davenport. The court held that since Davenport’s physical condition and quality of life were at issue in the case, production of photographs depicting Davenport, taken since the date of the accident, and posted to a social networking site, regardless of who posted them, was proper. The court also held that production of all devices by which Davenport accessed any social networking site was overly broad and not reasonably calculated to lead to the discovery of admissible evidence, and was thus improper.

Erickson’s Drying Sys, Inc. v. QBE Ins. Corp., No. 2:11-cv-581-FtM-99SPC, 2012 WL 469746 (M.D. Fla. Feb. 13, 2012) The insured, Riviera Fort Myers Condo Association, suffered a water intrusion loss to the insured building. The building was insured by QBE. Riviera hired Erickson’s to remove water from the property. Riviera and Erickson’s entered into an assignment of the QBE policy. The water loss occurred prior to the assignment of benefits. Erickson’s sued QBE for breach of contract, coverage by promissory estoppel, and declaratory relief, claiming that QBE had not issued payment for the loss. QBE filed a motion to dismiss, arguing that the assignment of the policy was contractually barred by the policy’s provision that the insured may not transfer its rights and duties under the policy without QBE’s written consent. The carrier also contended that the promissory estoppel claim failed because the complaint did not allege fraud and since coverage cannot be extended by estoppel. The court denied QBE’s motion, holding that under Florida law a post-loss assignment of an insurance claim is permitted, that an allegation of fraud is not essential to a promissory estoppel claim, and that promissory estoppel is an exception to the general rule that coverage cannot be extended by estoppel.

Umerah v. John Hancock Life Ins. Co., No. 11-14659, 2012 WL 612551 (11th Cir. Feb. 28, 2012) John Hancock issued a Flexible Premium Adjustable Life Insurance Policy to Umerah’s husband. The policy provided that 30 days prior to termination of coverage, the carrier would “send a notice to your last known address, specifying the amount you must pay to bring the policy out of default.” Umerah’s husband died and a claim was subsequently filed for the policy’s death benefits. The carrier denied the claim due to nonpayment of the premiums, which had resulted in termination of the policy prior to the insured’s death. The Eleventh Circuit affirmed the district court’s entry of summary judgment in favor of John Hancock, which was based on a determination that the carrier complied with the policy by sending a Termination Warning Notice to Umerah’s husband’s last known address. The court held that the language was unambiguous and that it shifted the risk of delivery to the insured. The court thus held that the insured’s contention that it did not receive the Termination Warning Notice was inconsequential. The court concluded that the carrier complied with the terms of the policy and that the policy terminated before the insured’s death.

Certain Interested Underwriters at Lloyd’s, London v. Halikoytakis, No. 8:09-CV-1081-T-17TGW, 2012 WL 487464 (M.D. Fla. Feb. 2, 2012) The insureds argued that Lloyd’s was not entitled to reimbursement of defense fees paid to defense counsel since Lloyd’s did not inform them of its reimbursement rights when providing a defense. The court adopted the Magistrate’s R&R and granted Lloyd’s motion for reimbursement of defense costs. The court rejected the insureds’ contention that, to be effective, an ROR letter must be sent to the insured at the very outset of a defense. The court also held that even though defense counsel entered their appearance in the underlying suit prior to entering into a defense agreement with the insureds, that amounted to a mere means to signal an intent to respond to the suit and prevent a default. The court emphasized that although the underlying suit was filed and required a response, Lloyd’s was still conducting an investigation regarding coverage. The court held that a responsive pleading was not filed until after the ROR letter - in which Lloyd’s proposed Butler Pappas as mutually agreeable defense counsel and reserved the right to seek reimbursement of defense fees if no coverage existed - was received and the insureds had the opportunity to respond. The court thus concluded as follows: Lloyd’s defended the insureds under a ROR letter which informed them that Lloyd’s would seek reimbursement of fees and costs, the insureds had a reasonable time to accept or reject the defense, and the insureds never rejected the defense and never indicated any intention to obtain individual counsel. Thus, the court held that the insureds accepted the defense subject to the carrier’s terms, which included the costs of the defense.

Herring v. Aetna Life Ins. Co., No. 11-CV-81091-RYSKAMP, 2012 WL 456667 (S.D. Fla. Feb. 14, 2012) Herring was a participant in an employee welfare benefits plan insured by Aetna. The plan provided long-term disability benefits to “totally disabled” participants. Aetna approved Herring’s claim for long-term disability benefits, but eventually terminated her benefits. Herring filed suit against Aetna, arguing that she continued to be disabled and seeking an award of long-term disability payments. The court granted Aetna’s motion to partially dismiss the complaint, holding that to the extent Herring’s complaint sought future payments and/or a declaration as to whether she was currently disabled, such a request was improper.

Gov’t Emps. Ins. Co. v. Boehmer, No. 3:10cv495/LAC, 2012 WL 662294 (N.D. Fla. Feb. 29, 2012) The court granted the insurer’s motion for summary judgment, holding that it was entitled to deny coverage for claims arising out of the insured’s auto accident. The insured claimed that the vehicle involved in the accident, although not expressly declared as covered at the inception of the policy period, constituted a vehicle that was added onto the policy as an “owned auto”: “a private passenger, farm or utility auto, ownership of which you acquire during the policy period, if: we insure all private passenger, farm and utility autos owned by you on the date of the acquisition, and you ask us to add it to the policy no more than 30 days later.” The court rejected the insured’s contention, holding that no timely request was made to include the truck involved in the accident on Boehmer’s policy.

James River Ins. Co. v. Bodywell Nutrition, LLC, No. 10-61675-CIV-JORDAN, 2012 WL 360494 (S.D. Fla. Feb. 1, 2012) James River filed a declaratory judgment action against its insured, Bodywell, to determine whether it had a duty to defend and indemnify Bodywell with respect to an underlying suit alleging trademark infringement, false designation of origin, false advertising, and unfair competition. Bodywell contended that a duty to defend and indemnify was owed because the complaint contained covered trade dress and slogan infringement allegations. The court granted James River’s motion for summary judgment regarding the duty to defend, holding that no slogan or trade dress infringement allegations were asserted in the underlying complaint.

Fawkes v. Balboa Ins. Co., No. 8:10-cv-2844-T-30TGW, 2012 WL 527168 (M.D. Fla. Feb. 17, 2012) Fawkes suffered damage to her property allegedly caused by a sinkhole. The property was secured by a mortgage serviced by BAC Home Loans. Fawkes eventually stopped making payments on her loan, failed to maintain hazard insurance on the property, and failed to pay county property taxes. BAC obtained a lender placed mortgage protection policy from Balboa. Fawkes submitted a sinkhole claim to Balboa, which Balboa denied. Fawkes then filed a breach of contract suit against Balboa. The court denied Balboa’s motion for summary judgment, first holding that Fawkes had standing to pursue her claim against Balboa as a third-party beneficiary, as she was the owner of the property. The court next held that Fawkes, as a third-party beneficiary, was entitled to pursue her claim against the carrier for repairs to the property in light of BAC’s failure to pursue a claim under the policy for the damage. Thus, the carrier’s argument that no residual amounts of insurance were available to Fawkes as a borrower was irrelevant. The court also rejected the carrier’s argument that Fawkes could not be considered an “insured” under Fla. Stat. § 627.428(1) as a loss-payable mortgagor/borrower under a force-placed lender policy, where Fawkes paid the premiums, and where BAC declined to pursue a claim under the policy and Fawkes was forced to file suit against Balboa.

Liotto v. Hartford Ins. Co. of the Midwest, No. 8:11-cv-02290-EAK-TGW, 2012 WL 646257 (M.D. Fla. Feb. 28, 2012) Hartford issued a homeowner’s policy to the Liottos. The Liottos filed a sinkhole claim with Hartford, and a series of disputes ensued between the parties regarding the method of repair and amount due for repairs. The Liottos filed suit against Hartford for declaratory judgment and breach of contract. The court granted Hartford’s motion to dismiss but denied its motion to strike. The court dismissed the declaratory judgment count, since the complaint failed to allege an actual controversy and since that count was superfluous to the breach of contract count. The court declined to strike several paragraphs of the Liottos’ complaint, since the paragraphs had some possible relation to the breach of contract claim in that they alleged that Hartford undervalued their claim, made insufficient payment on the claim, and as a result breached the policy. The court also declined to strike several other paragraphs, rejecting the carrier’s argument that the Liottos’ were attempting to allege a cause of action for breach of the implied duty of good faith and fair dealing.

Delgado v. Prudential Ins. Co. of Am., No. 11-cv-20520-KMM, 2012 WL 668147 (S.D. Fla. Feb. 29, 2012) Delgado, as guardian for Candolita, sought equitable relief and damages against Prudential and Guardian. Guardian, with Prudential as claims administrator and insurer, provided life insurance for Candolita and her husband. Candolita sought Dependent Term Life benefits and accelerated life insurance benefits after her husband shot her, and sought damages for Prudential’s failure to pay those benefits. The court held that neither Guardian nor Prudential were liable for her claims and entered judgment for the carriers.

Goodin v. Fid. Nat’l Title Ins. Co., No. 3:11-cv-149-J-32JRK, 2012 WL 473913 (M.D. Fla. Feb. 14, 2012) The court granted Fidelity’s motion to dismiss, holding that the court lacked subject matter jurisdiction over the action since Goodin failed to meet the amount in controversy requirement for federal diversity jurisdiction. The court noted that the policy limit cannot serve to satisfy the amount in controversy requirement, that on the record it appeared that Goodin could not recover the amount necessary to satisfy the jurisdictional threshold, and that there was no possibility that Good could recover punitive damages (which would count toward the amount in controversy requirement).

Southern-Owners Ins. Co. v. Wiggins, No. 3:10-cv-390-J-37MCR, 2012 WL 405322 (M.D. Fla. Feb. 9, 2012) Southern-Owners sought a declaration that its CGL policy issued to Sunshine Mart did not require it to defend or indemnity Sunshine Mart or other insureds with respect to Wiggins’ underlying suit against Sunshine Mart and others based on Sunshine Mart’s sale of liquor to a minor. The court granted Southern-Owner’s motion for summary judgment, holding that the policy’s liquor liability exclusion applied since there was no genuine, material dispute that Sunshine Mart allegedly sold alcoholic beverages to minors. The court noted that every claim in the underlying action explicitly referred to or relied upon the sale of alcohol to minors by Sunshine Mart.

Allstate Fire & Cas. Ins. Co. v. Duong Thanh Ho, No. 11-60724-CIV, 2012 WL 442980 (S.D. Fla. Feb. 10, 2012) Allstate filed a declaratory judgment action against its insureds and an injured third party regarding coverage for a personal injury claim stemming from an auto accident. Allstate alleged that it did not owe coverage because the insureds’ actions subsequent to the accident violated the notice and cooperation provisions of the policy. The court denied the parties cross-motions for summary judgment regarding whether the insureds violated the notice and/or cooperation provisions of the policy, holding that genuine issues of material fact remained.

Buckley Towers Condo., Inc. v. QBE Ins. Corp., No. 07-22988-CIV, 2012 WL 573784 (S.D. Fla. Feb. 22, 2012) Counsel for Buckley Towers filed several post-judgment motions to determine and enforce charging liens for professional services rendered. The court exercised its supplemental jurisdiction to resolve the parties’ charging liens under equitable principles, based strictly on Florida charging lien law. The court held it fell within the court’s ancillary jurisdiction to adjudicate fee disputes relating to fees a client owes its attorneys for services provided to the client.

Amerisure Mut. Ins. Co. v. Summit Contractors, Inc., No. 8:11-CV-77-T-17TGW, 2012 WL 716884 (M.D. Fla. Feb. 29, 2012) Amerisure filed a declaratory judgment suit against Summit Contractors and Crum & Forster Specialty Insurance regarding coverage under its umbrella policy for two underlying suits filed by condominium associations against Summit and others for Chapter 553.84 violations, construction defects, and other claims. Amerisure agreed to defend Summit against both suits under a ROR, and ultimately exhausted the limits of its primary CGL policy. Crum & Forster, which also issued a primary CGL policy to Summit, also agreed to defend Summit against both suits under a ROR. Amerisure sought partial summary judgment that its umbrella policy was excess to Crum & Forster’s primary policy, and that its umbrella policy need not respond until all available primary insurance had been exhausted. The court granted in part Amerisure’s motion for partial summary judgment, holding that Amerisure was not obligated to defend until Summit’s SIR had been paid and the Crum & Forster primary policy was exhausted. The court denied Amerisure’s motion regarding its duty to indemnify, holding that that issue was not ripe since the actual facts had not yet been determined.

Baum v. Allstate Prop. & Cas. Ins. Co., No. 2009062887CA01 (Fla. Cir. Ct. 2011) Baum was injured when an uninsured driver struck her husband’s vehicle. Allstate, the uninsured motorist’s carrier, admitted that the tortfeasor was negligent in causing the accident. The jury found that Baum sustained a permanent injury as a result of the accident and awarded her $885,797 in damages. Baum’s bad faith claim against Allstate, seeking to collect the excess judgment, is currently pending.

McCoy v. State Farm Mut. Auto Ins. Co., No. 2010034372CA01 (Fla. Cir. Ct. 2011) An uninsured motorist struck McCoy’s car. The motorist tendered a $20K liability policy limit to McCoy pre-suit. McCoy filed suit against State Farm, the uninsured motorist’s carrier, for UM/UIM coverage. State Farm stipulated that the tortfeasor was negligent in causing the accident. The jury found that McCoy sustained a permanent injury as a result of the accident and awarded him $441,199 in damages. The UM/UIM policy limit was $100K. McCoy’s bad faith claim against State Farm is currently pending.

Ruozzo v. State Farm Mut. Auto. Ins. Co., No. 502009CA041346XXXXMB (Fla. Cir. Ct. 2011) An uninsured motorist struck Ruozzo’s vehicle. The underinsured motorist tortfeasor tendered $200K in liability coverage. State Farm disputed the causal connection between the collision and Ruozzo’s knee symptoms and surgeries. The jury found for Ruozzo in the amount of $187,758 ($112,758 in past medical expenses, $25K in future medical expenses, and $50K in past and future pain and suffering).

Kostopoulos v. State Farm Auto. Ins., No. 482007-CA000272 (Fla. Cir. Ct. 2011) Underinsured motorist claim that proceeded against State Farm after the tortfeasor settled Kostopoulos’s claims for $200K of the underlying $250K liability policy limit. State Farm did not dispute the tortfeasor’s negligence in causing the accident. The carrier did, however, maintain that Kostopoulos did not sustain a permanent injury as a result of the impact. The jury found that Kostopoulos did not sustain a permanent injury as a result of the accident and awarded her $3K in economic damages.

Bayer v. State Farm Fla. Ins. Co., No. 502010CA026958XXXXMB (Fla. Cir. Ct. 2011) Bayer filed suit against State Farm alleging that the carrier wrongfully denied her hurricane property damage claim. State Farm maintained that coverage was voided due to Bayer’s failure to provide prompt notice of the claim. The jury found that Bayer’s failure to provide immediate notice of her claim prejudiced State Farm in its handling of the claim. A verdict for State Farm was entered.

(Withheld) v. State Farm Mut. Auto. Ins. Co., No. 50-2007 CA 021088 XXXX MB (Fla. Cir. Ct. 2011) The plaintiff, a PI attorney, was involved in 2 separate accidents, both with uninsured motorists. The plaintiff later voluntarily dismissed his claim stemming from the former accident, and pursued only his claim as a result of the latter accident. State Farm stipulated to the tortfeasor’s negligence in causing the accident, but disputed the plaintiff’s injuries. The jury found that the tortfeasor’s negligence was not a legal cause of the plaintiff’s injury.

Howard v. Universal Prop. & Cas. Ins. Co., No. 05-2007-CA-70854 (Fla. Cir. Ct. 2011) The plaintiffs claimed that Universal breached their homeowner’s policy by wrongfully denying their claim for fire-related property damage. Universal maintained that coverage was voided based on a material misrep made on the insurance application, specifically that they failed to reveal a prior bankruptcy filing. The policy stated that Universal would not provide coverage for loss if the insureds made “false statements” relating to the insurance. The trial court granted Universal’s motion for summary judgment, interpreted the policy language as unambiguous and ruled that the false statements need not have been made intentionally. The trial court’s ruling was upheld on appeal by the 5th DCA.

Slayton v. Universal Prop. & Cas. Ins. Co., No. 2010-CA-7956-0 (Fla. Cir. Ct. 2011) Slayton filed suit against Universal, alleging that the carrier wrongfully denied his property damage claim for roof damage due to a wind storm under his homeowner’s policy. Universal argued that it paid Slayton fair market value for the damages sustained and that Slayton failed to submit a supplemental claim for the alleged damage. The court granted Universal’s renewed motion for a directed verdict after the testimony of Universal’s adjuster, holding that Universal had timely paid what it deemed to be a reasonable amount. The court noted that Slayton failed to provide any evidence that Universal breached the policy. The court also noted that Universal offered to pay more as costs were incurred, but Slayton never supplemented her claim.

Marrero v. GEICO, No. 52-2006-CA-008234XXXXMB (Fla. Cir. Ct. 2011) The plaintiffs filed suit against GEICO under an uninsured motorist policy, alleging that a minor was struck by an auto negligently operated by the tortfeasor and that the minor sustained traumatic brain injury as a result of the accident. GEICO maintained that the tortfeasor could not avoid the collision when the minor rode his bicycle through a stop sign directly onto the path of his vehicle. The jury found the plaintiff 20% negligent and the tortfeasor/GEICO 80% comparatively negligent. The plaintiff was awarded $1.9 million in damages, which was reduced accordingly.

Guaman v. Allstate Prop. & Cas. Ins. Co., No. 06-2010CA002413 (Fla. Cir. Ct. 2011) Guaman filed suit against Allstate after his vehicle was struck by an uninsured motorist. Allstate, the uninsured motorist’s carrier, stipulated to the tortfeasor’s negligence in causing the accident. The jury found that Guaman sustained a permanent injury as a result of the collision and awarded him $207K in damages. The applicable UM/UIM policy limit was $100K. Guaman’ bad faith claim action against Allstate was settled post-trial.

Marren v. Mobile Mgmt. v. Clarendon Am. Ins. Co., No. 502003 CA 006840 XX ON AA (Fla. Cir. Ct. 2011) Bad faith insurance action where a third-party plaintiff sought to collect an excess judgment based on Clarendon’s alleged bad faith in failing to timely tender its $50K policy limit. Clarendon maintained that the policy limit was timely tendered pursuant to the totality of the circumstances and was rejected by the plaintiff. The jury was hung and a mistrial was declared. The case has been settled for an undisclosed sum.

Farmer v. Allstate Floridian Ins. Co., No. 2007-12264 (Fla. Cir. Ct. 2011) The plaintiffs filed suit against Allstate, alleging that Allstate wrongfully denied their claim for damages under their homeowner’s policy caused by a lightning strike to their home and another claim for loss of property from a vehicle. Allstate contended that the plaintiffs failed to comply with conditions precedent, including submission of a POL and made material misreps when presenting their claims. The parties stipulated that the plaintiffs’ damages totaled $12K. The jury found that the plaintiffs did not substantially comply with their duty to provide Allstate with a signed, sworn POL for their claims. The jury also found Allstate was not prejudiced by the plaintiffs’ failure to provide the POL and thus a verdict for the plaintiffs was entered.

Peterson v. State Farm Mut. Auto. Ins. Co., No. 10-CA4312-AN (Fla. Cir. Ct. 2011) Peterson was operating a vehicle when he was struck by an uninsured motorist. Peterson filed suit against State Farm pursuant to the motorist’s auto insurance policy. State Farm stipulated that the motorist was negligent in causing the accident, but disputed Peterson’s injuries. The jury found that the tortfeasor’s negligence was not a legal cause of Peterson’s injuries. The court granted Peterson’s post-trial motion for a new trial.

U.T. Invs., LLC v. Chubb Custom Ins. Co., No. 09-CA-12803 (Fla. Cir. Ct. 2011) A hotel claimed that Chubb failed to pay all insurance proceeds due for fire, water, and mold damages caused by a fire. Chubb had paid $360K pre-suit for the damages sustained. Chubb argued that the amount already paid was sufficient to cover the damages. The court ultimately entered judgment in favor of the hotel for $3,072.


January 2012 Case Law Update

Sunshine State Ins. Co. v. Jones. et. al., 77 So. 3d 254 (Fla. 4th DCA 2012), Automobile passenger’s homeowner’s insurer sued passenger’s automobile insurer, seeking determination regarding which insurer was liable for defense and indemnity of claim filed against passenger whose actions caused automobile accident. The district court of appeal affirmed the circuit court’s finding that homeowner’s insurer was responsible for defense and indemnity because passenger’s conduct in grabbing steering wheel to annoy driver did not constitute “use of … a non-owned auto” within the meaning of the automobile policy.

Nationwide Ins. Co. of Fla. v. Nelson, No. 5D11-876, 2012 WL 28276 (Fla. 5th DCA Jan. 6, 2012), Insured brought suit against homeowner’s insurer and moved to compel inspection reports generated by inspection company on insurer’s behalf throughout the country for a five-year period preceding the inspection of her home. The insured sought these documents to determine the extent of inspection company’s relationship with insurer and to demonstrate that inspection company was biased towards insurer. The trial court ordered discovery of all the reports, but limited the timeframe to the three-year period preceding the inspection of insured’s home. The district court of appeal quashed the trial court’s order, finding that the request was overbroad and unduly burdensome.

Wheeler’s Moving & Storage, Inc. v. Markel Ins. Co., No. 11-80272-CIV, 2012 WL 87107 (S.D. Fla. Jan. 11, 2012), District court dismissed insured’s complaint for breach of contract based on automobile insurer’s alleged failure to defend insured because the injuries sustained by underlying plaintiff as a result of a crime perpetrated by the insured’s employee in the insured’s parked van was not an accident arising from the vehicle’s “ownership, maintenance or use.”

Ocean View Towers Ass’n v. QBE Ins. Corp., No. 11-60447-CIV, 2012 WL 8569 (S.D. Fla. Jan. 1, 2012), Insurer moved for reconsideration of order granting insured’s motion for summary judgment on insurer’s second and third affirmative defenses, which were premised on insured’s alleged failure to comply with the policy’s post-loss obligation prior to filing suit for breach of contract. The district court denied the motion, finding that, under the unambiguous terms of the policy, insured was not required to file supplemental claims and allow the insurer to investigate prior to filing breach of contract suit because insured was neither seeking declaratory relief nor appraisal.

Jennings Constr. Services Corp. v. Ace Am. Ins. Co., No. 6:10-cv-1671-Orl-28KRS, 2012 WL 85180 (M.D. Fla. Jan. 11, 2012), Insurer moved to dismiss suit filed by assignees, who claimed that insurer materially breached the policy when it denied the insureds’ claim for failing to provide timely notice under a claims-made and reported policy. The district court dismissed the suit because assignees failed to allege that they had reported the claim during the policy period or that they had purchased an extended reporting period. The court also rejected the assignees’ argument that insurer was barred under Section 627.426, Florida Statutes, from asserting its defense of late notice because, under Florida law, a defense that a claim was reported outside the coverage period of a claims-made and reported policy is not a coverage defense and is not precluded by a failure to comply with Section 627.426.

Morales v. Zenith Ins. Co., No. 8:10-cv-733-T-30TGW, 2012 WL 124086 (M.D. Fla. Jan. 17, 2012), District court entered summary judgment in favor of insurer, finding that estate’s wrongful death claim arising from a workplace accident was excluded by workers’ compensation exclusion in the policy. The district court also held that insurer’s failure to defend insured in the underlying tort suit did not preclude insurer from raising the workers’ compensation exclusion to disclaim coverage.

Petty v. Fla. Ins. Guar. Ass’n, No. SC10-2097, 2012 WL 143605 (Fla. Jan. 19, 2012), Insured brought action against property insurer seeking to compel appraisal of hurricane damage to her home. After an appraisal indicated that insurer owed insured additional benefits, insured moved to confirm award and for attorney’s fees. After paying additional benefits, insurer become insolvent and was replaced by Florida Insurance Guaranty Association (FIGA). The circuit court awarded summary judgment to insured on the claim for attorney’s fees, finding that insurer’s payment of the appraisal award to insured constituted a confession of judgment, triggering the attorney’s fee provisions of Section 627.428, Florida Statutes. The Second District Court of Appeal reversed, finding that insured’s fee award was not based upon a coverage provision of insured’s policy and was not a covered claim that FIGA must pay under Section 631.54(3), Florida Statutes. The Second District Court of Appeal also certified conflict with Third District Court of Appeal’s decision in Florida Insurance Guaranty Ass’n v. Soto, 979 So. 2d 964 (Fla. 3d DCA 2008). On appeal, the Florida Supreme Court agreed with the Second District and disapproved Soto. The Florida Supreme Court held that because insured’s policy did not expressly provided coverage for a Section 627.428 fee award, the fee award fell outside the scope of Section 631.54(3).

Barreau v. Peachtree Cas. Ins. Co., No. 5D10-3637, 2012 WL 162035 (Fla. 5th DCA Jan. 20, 2012), Insured was involved in automobile accident and sought coverage from his automobile insurer for property damage to his car. Insurer initially denied coverage, claiming that insured had failed to pay the policy’s premium. After insured filed suit but prior to being served with insured’s complaint, insurer notified insured that the policy had been reinstated retroactive to the date of the accident because it had determined that the policy premium had been paid. Nine months after the accident, insurer paid the insured’s claim. Following payment, insured moved for fees under Section 627.428, Florida Statutes, which the circuit court awarded but only through the date insurer acknowledged that coverage had been reinstated. The district court of appeal held that the trial court erred in not awarding attorney’s fees through the date on which payment had been made for the insured’s property damage claim. The court noted that a delay of nine months from the date of the accident until the tender of payment was not reasonable nor justified under the circumstances.

Bollinger v. State Farm Mut. Auto. Ins. Co., No. 1:11-cv-14257, 2012 WL 112937 (S.D. Fla. Jan. 12, 2012), District court dismissed first-party bad faith suit against insurer, finding that the suit was not ripe for review because insured had failed to file a Civil Remedy Notice of Insurer Violation, a statutory condition precedent to bringing a cause of action under Florida Statutes § 624.155.

Universal Ins. Co. of N. Am. v. Warfel, No. SC10-948, 2012 WL 224104 (Fla. Jan. 26, 2012), Florida Supreme Court held that sinkhole claim process statute (Florida Statutes, §627.7073), governing the claims process and sinkhole reports that must be obtained by insurers and filed by the professional engineer or geologist hired by the insurer during the claim adjustment process to test for sinkhole damage does not apply in the litigation context.

Kendall Lakes Towers Condo. Ass’n v. Pacific Ins. Co., Ltd., No. 10-24310-CIV, 2012 WL 266438 (S.D. Fla. Jan. 30, 2012), District court granted partial summary judgment in favor of property insurer, finding that insured failed to provide timely notice since it waited more than four years after Hurricane Wilma struck insured’s property to provide notice of the loss. The district court, however, concluded that a genuine issue of material fact existed as to whether insurer was prejudiced by the late notice.

QBE Ins. Corp. v. Jorda Enterprises, Inc., No. 10-21107-CIV, 2012 WL 266431 (S.D. Fla. Jan. 30, 2012), Insurer brought subrogation action against subcontractor for common law indemnity and equitable subrogation after paying more than $3 million on a water damage claim to an insured condominium association. Subcontractor moved for sanctions based on insurer’s purported failure to adequately designate and prepare witnesses as required under Federal Rule 30(b)(6). The district court granted the motion and issued a sanctions order, precluding insurer from offering any testimony at trial on the subjects which its designee was unable or unwilling to testify at the 30(b)(6) depositions and awarding costs and fees to subcontractor. The district court found that sanctions were warranted because insurer waited until the day of the deposition to announce that its designee did not have knowledge on many of the topics identified in the notice and because the designee could have (but did not) review substantially more material in order to be a more responsive witness. The district court also precluded insurer from introducing any testimony at trial on the subjects which insurer hoped its insured would have testified about had it agreed to send a representative to the deposition. The district court reasoned that this result was a “natural consequence of [insurer’s] inability to obtain knowledge from its insured on the relevant subjects listed in the 30(b)(6) notice.”


December 2011 Case Law Update

Am. Home Assurance Co. v. Arrow Terminals, Inc., No. 8:11-cv-1278-T-33AEP, 2011 WL 6098011 (M.D. Fla. Dec. 7, 2011) National Union sought a declaratory judgment regarding its obligations under a policy providing various forms of liability coverage to Arrow Terminals, a supplier of defective Chinese drywall. Willett, a third party who had filed suit against Arrow, was accordingly named as a defendant in National Union’s action. In response, Willett sought his own declaratory judgment that National Union had a duty to indemnify Arrow. The court granted the insurer’s motion to dismiss the counterclaim on the ground that FLA. STAT. § 627.4136(1) does not permit claims by third parties against insurers until a settlement or verdict against the insured is obtained. Further, the counterclaim was not compulsory under Fed. R. Civ. P. 13 because it was not ripe. A third party must satisfy the condition precedent under the statute before raising such a claim against an insurer.

Breedlove v. Hartford Life & Accident Ins. Co., No. 6:11-cv-991-Orl-28GJK, 2011 WL 6132254 (M.D. Fla. Dec. 9, 2011) Hartford brought a motion to dismiss a first-party insured’s common law cause of action for breaching the implied covenant of good faith and fair dealing by failing to investigate, adjust, process, pay, or settle the claim in a timely, reasonable manner. The court found that Florida law does not provide for a common law cause of action in the first-party context for breach of an implied covenant of good faith and fair dealing for an insurer’s failure to investigate and assess an insured’s claim within a reasonable time. The motion was granted for failure to state a claim upon which relief can be granted.

Florida Ins. Guar. Ass’n v. Somerset Homeowners Assoc., Inc., No. 4D10-4157, 2011 WL 6373028 (Fla. 4th DCA Dec. 21, 2011) Somerset condominium buildings sustained extensive damage due to two hurricanes and instituted suit against its insurer to enforce the appraisal process. Though the policy required that the insured repair or replace the damage as a condition precedent to receiving RCV, Somerset failed to do so. The appraisal award nonetheless reflected RCV rather than ACV, and the trial court entered a judgment accordingly. On appeal by FIGA, Somerset argued that under the doctrine of prevention of performance, it was excused from the contractual obligation to complete the repairs before receipt of payment because the insurer delayed payment of the appraisal award. The court disagreed and reversed because the appraisal award was contrary to the express terms of the policy. The case was remanded with instructions to reduce the judgment to reflect ACV.

Bay Farms Corp. v. Great Am. Alliance Ins. Co., No. 8:10-CV-2460-T-27EAJ, 2011 WL 6099367 (M.D. Fla. Dec. 7, 2011) Bay Farms brought an action for damages and declaratory relief against its insurer, Great American, alleging that the insurer failed to compensate for property damage caused by sinkhole activity. The parties filed cross-motions for partial summary judgment. The issue was whether a 2011 amendment to the Florida statutory scheme governing sinkhole insurance that added a statutory definition of “structural damage” should be applied retroactively to the insurance policy at issue or, in the alternative, whether the term “structural damage” in the policy should be treated as an undefined term. The undisputed evidence demonstrated that absent the 2011 Amendment, Bay Farms’ claim involved “structural damage” to covered property so as to fall within the policy’s definition of “sinkhole loss.” Because retroactive application of the statutory definition of “structural damage” would impair Bay Farms’ vested contractual rights under the policy by narrowing the scope of coverage, Bay Farms’ motion for partial summary judgment was granted.

Alpine Fresh, Inc. v. Washburn, No. 3D10-3076, 2011 WL 6183518 (Fla. 3d DCA Dec. 14, 2011) Alpine filed a complaint alleging professional negligence against Washburn for failing to procure adequate insurance coverage. Washburn moved for summary judgment, asserting that he had been released by virtue of a settlement and full release between Alpine and the carrier, Zurich. Alpine claimed Washburn was merely an insurance broker who serviced several lines of insurance including Zurich, and therefore was not released by the agreement. The court disagreed and found that Washburn was an agent of Zurich, as evidenced by the fact that he was designated as an agent, possessed the necessary authority to write the lines of business, and was understood to be a representative of Zurich. The language of the release was sufficiently broad to include Washburn acting as a representative and agent, and the appellate court affirmed the summary judgment granted by the trial court.

Koogle v. Aetna Life Ins. Co., No. 11-20422-CIV, 2011 WL 6257177 (S.D. Fla. Dec. 14, 2011) The plaintiff filed a breach of contract action under ERISA seeking damages against Aetna for the direct, foreseeable, and consequential losses she allegedly suffered due to the insurer’s failure to pay for the plaintiff’s bariatric surgery. This included, inter alia, the amount the plaintiff financed to have the surgery done, interest on the financed amount, follow-up care, attorney’s fees, and court costs. The insurer filed a motion to strike the claim for consequential damages – here, the interest on the financed amount the plaintiff incurred to pay for the surgery – contending that ERISA does not authorize such a recovery. Relief under ERISA may take the form of accrued benefits due, a declaratory judgment on entitlement of benefits, or an injunction against a plan administrator’s improper refusal to pay benefits. The court accordingly held that interest on a financial amount is not a plan benefit and is not provided for under ERISA’s civil remedy scheme. Because ERISA does not authorize recovery of consequential damages, the insurer’s motion to strike was granted.

Barnard v. Geico Gen. Ins. Co., No. 11-12851, 2011 WL 61155690 (11th Cir. Dec. 9, 2011) The insureds’ daughter was involved in a car accident that resulted in her passenger’s death. The insureds reported the accident to Geico the following day and eleven days later, the insurer tendered a check for the full policy limits made out to the personal representative of the deceased’s estate and attorney. A release accompanied the check and a separate letter was sent to the insureds advising them of their policy limits, of the possibility that they could face liability in excess of their policy limit, and of their right to retain an attorney to represent their interests. Geico attempted to contact the estate’s attorney on at least sixteen separate occasions to discuss the status of its release and tender of the policy limits, and the attorney failed to respond to any communications. The deceased’s estate later filed suit against the insureds, which resulted in a consent judgment for $2.5 million and a third-party bad faith action against Geico. The court affirmed summary judgment in the insurer’s favor, holding that no reasonable juror could conclude that the failure to settle was due to Geico’s bad faith when the estate’s attorney thwarted settlement attempts for over six months by being unavailable and avoiding all of the insurer’s communications.

First Protective Ins. Co. v. Hess, No. 1D10-6577, 2011 WL 6117215 (Fla. 1st DCA Dec. 9, 2011) Hess was insured through a homeowner’s policy issued by First Protective that contained certain personal property limitations on recovery. A claim was filed with the insurer when Hess’ home was burglarized, and First Protective invoked the policy’s appraisal process. The umpire issued an award to Hess, and specified that the award did not consider any limitations or exclusions which may or may not exist under the terms of the insurance contract. The insurer reduced the award to satisfy the loss in accordance with the policy’s deductible, personal property policy limitations, and prior payments, and Hess filed a complaint seeking confirmation of the original appraisal award. The trial court was able to apply the deductible and prior payments based on the face of the policy, but refused to reduce the award by applying the policy limitations for personal property. The appellate court affirmed, holding that a trial court may not look beyond the face of an appraisal award and consider extrinsic evidence to determine the basis for the award.

Campbell v. Household Life Ins. Co., No. 5D11-223, 2011 WL 6258830 (Fla. 5th DCA Dec. 16, 2011) Campbell filed a declaratory action asking the trial court to determine the rights and duties of the parties under a Mortgage Insurance Policy. A couple refinanced the mortgage on their home and simultaneously applied for optional credit life insurance through HLIC as offered by the lender. The Campbells executed and submitted an application for credit life insurance and a disclosure form, which expressly stated there would be no insurance until the insurer had approved the application. Mr. Campbell passed away a few days after the application was submitted and before a certificate of insurance was issued. When Ms. Campbell made a claim with HLIC for the life insurance benefits on the life of her husband, she was informed that the couple’s application for coverage had been rejected. Her action asked the trial court to find that HLIC wrongfully refused to honor the insurance policy, that the rejection letter was not timely, and that the return of the couple’s premium was ineffective to cancel coverage. The trial court entered summary judgment for the insurer and the appellate court agreed, finding that HLIC did not approve the application before Mr. Campbell’s death, and there was no language in the disclosure suggesting that insurance coverage became effective at any time before approval of the application.

Fed. Ins. Co. v. Donovan Indus., Inc., No. 2D10-5767, 2011 WL 6058301 (Fla. 2d DCA Dec. 7, 2011) Federal appealed a declaratory judgment determining that coverage existed for a claim filed by Schneck against its insured, Donovan Industries, for injuries he sustained while using an exercise ball sold by Donovan. When coverage was initially procured, Donovan had agreed to exclude this product from coverage. While the issued policy contained the exclusion endorsement, the schedule of products to be excluded was inadvertently left blank. The error was discovered and corrected before the Schneck claim was filed, though Donovan did not know about the corrected endorsement until after the claim was made. The trial court concluded that the claim was covered and the insurer was not entitled to the equitable remedy of reformation because, inter alia, the original policy delivered to Donovan did not contain the exclusion and Donovan relied on the language of that policy. The appellate court reversed, finding that Federal’s inclusion of a blank exclusion schedule in the original policy was a mutual mistake because it and Donovan had agreed to the exclusion of the exercise balls from coverage. Federal would have been entitled to reformation even if it had not discovered the error in the policy until after the Schneck claim was filed. The insurer was accordingly entitled to reformation of the policy as a matter of law.

Geovera Specialty Ins. Co. v. Hutchins, No. 8:09-CV-1973-T-17EAJ, 2011 WL 6444609 (M.D. Fla. Dec. 21, 2011) Geovera sought a declaratory judgment that it had no duty to defend or indemnify its insured under a homeowner’s policy pursuant to an exclusion for bodily injury arising out of assault or battery. The insured was showing off a recently purchased handgun when he pressed the barrel up against the victim’s neck. The gun discharged, killing her. The policy specifically provided that assault and battery was not an occurrence, and excluded coverage for bodily injury arising therefrom. Despite the contention that the resultant harm was brought about by the insured’s negligence, the court found that the allegations established intentional conduct that fell within the policy exclusion. As such, the insurer possessed neither a duty to defend nor a duty to indemnify under the policy.


November 2011 Case Law Update

Gassman v. State Farm Fla. Ins. Co., No. 4D11-360, 2011 WL 5170298 (4th DCA Nov. 2, 2011) The Fourth District held that a property insurer’s failure to notify its insured of her right to participate in mediation after a first-party claim for hurricane damage relieved the insured of her obligation to participate in the appraisal process as a precondition to a legal action against the insurer for breach of contract.

Losat v. Geico Cas. Co., No. 8:10-cv-1564-T-17TGW, 2011 WL 5834689 (M.D. Fla. Nov. 21, 2011) The Middle District of Florida granted summary judgment in favor of the insurer and held that GEICO is not liable for an excess judgment against its insured and that GEICO did not act in bad faith. In determining that the insurer did not act in bad faith, the court considered the claimant’s unwillingness to settle the claim. Specifically, GEICO tendered the policy limits fourteen times.

State Farm Mut. Auto. Ins. Co. v. H Rehab, Inc., No. 3D11-965, 2011 WL 5554787 (3d DCA Nov. 16, 2011) State Farm appealed the Eleventh Judicial Circuit’s decision granting H Rehab’s motion to compel production of State Farm’s surveillance video of State Farm’s insured, prior to allowing State Farm the opportunity to depose the subject of the video. The Third District quashed the trial court’s order granting the motion to compel and remanded with instructions that State Farm is not required to produce the video.

Socas v. Northwestern Mut. Life Ins. Co., No. 07-20336-CIV, 2011 WL 5223085 (S.D. Fla. Nov. 2, 2011) The Southern District of Florida ruled in favor of a disability insurer on an insured’s claim for breach of contract. The court agreed with the insurer that the insured was not entitled to benefits because the insured did not meet the “Total Disability” standard, as the insured was able to perform the majority of the material duties of her occupation. The court also held that the insured failed to comply with the policy’s notice of claim provision, because the insured did not file a notice of claim within 60 days of the beginning of the loss and the insurer was prejudiced as a result.

Northland Ins. Co. v. Top Ranking Trucking of Kissimmee, Inc., No. 6:11-cv-1126-Orl-22KRS, 2011 WL 5428558 (M.D. Fla. Nov. 9, 2011) The insurer filed an action for declaratory judgment seeking a determination of its potential liability and duties owed under a policy issued to Top Ranking. The insured brought a motion to dismiss the complaint for declaratory judgment on the ground that the declaratory judgment action should not proceed because there is a similar state-court case. The court denied the insured’s motion because Northland is not a party to the state-court case and because the state-court case and the federal case do not present the same legal issues.

Raven v. Lincoln Nat’l Life Ins. Co., No. 07-23137-CIV, 2011 WL 5553837 (S.D. Fla. Nov. 15, 2011) Raven, the beneficiary under her late husband’s life insurance policy, sought declaratory judgment that the insured’s insurance policy with Lincoln, including a Waiver of Premium Rider, was in full force and effect and that Raven is entitled to all benefits under the policy. The court considered whether a Disability Rider was a part of a second policy issued by the insurer. Raven claimed that the Disability Rider carried over from the first policy because of representations made by the insurer’s agent. The court, however, rejected this claim because the second policy required that binding changes be made in writing by the insurer’s president, vice president, secretary or assistant secretary. Therefore, the court held that the agent did not have the authority to make a binding change to the policy and that the insured was on inquiry notice because of the express terms of the policy.

Yacht Club on the Intracoastal Condo. Ass’n, Inc. v. Lexington Ins. Co., No. 10-81397-CV, 2011 WL 5223127 (S.D. Fla. Nov. 2, 2011) Insured brought a declaratory judgment action against James River Insurance and Lexington Insurance for damages sustained during Hurricane Wilma. At the time suit was filed, James River and Lexington had not denied coverage for the claim. In fact, Lexington was still conducting its investigation of Plaintiff’s claim and making requests for documents and other discovery-type activities pursuant to the Lexington policy. James River first received notice of the claim on October 8, 2010, and was added as a party to the lawsuit on October 22, 2010. The court dismissed the complaint without prejudice on the grounds that the case was not yet ripe for review.

Landmark Am. Ins. Co. v. Studio Imports, Ltd., Inc., No. 4d10-5001, 4D10-5073, 2011 WL 5554840 (4th DCA Nov. 16, 2011) Insured brought breach of contract and bad faith action against insurer simultaneously. Insurer appealed a non-final trial court order in which the trial court denied Landmark’s motion to dismiss the breach of contract and bad faith claims. The Fourth District held that insurer should not be required to defend against both claims simultaneously, as the contract issue must be determined prior to a bad faith claim.

Amerisure Ins. Co. v. Walker, No. 11-61480-CV, 2011 WL 5597325 (S.D. Fla. Nov. 17, 2011) Amerisure sought a declaration as to its defense and indemnity obligation under a liability policy. In the underlying case, Walker filed suit for personal injuries that he allegedly sustained while working for the insured, JBI, Inc. The insurance policy excluded coverage for bodily injury to employees. The insured alleged that despite the presence of the exclusion, the insurer still had a duty to defend because the underlying complaint pleaded in the alternative that Walker was an employee of JBI and was a business invitee on the subject premises. The court held that the additional language of “business invitee” did not trigger Amerisure’s duty to defend because it was clear that any bodily injury Walker received was excluded since he was an employee. To reach this holding, the court relied on Fourth District case law holding that “[w]here the application of one or more policy exclusions applies to the face of the complaint, no duty to defend exists, even if the complaint alleges facts that would otherwise give rise to a covered claim.” Id. at *3.

Grider-Garcia v. State Farm Mut. Auto., No. 5D10-1238, 2011 WL 5243388 (5th DCA Nov. 4, 2011) Insured brought a breach of contract action against her automobile insurer. The trial court granted the insurer’s motion for directed verdict because the insured failed to introduce the insurance policy into evidence. The insured argued that the policy had been attached to the complaint. The trial court, however, found that attaching a document to a complaint does not place it into evidence. Despite the insured’s failure to introduce the policy into evidence, the Fifth District held that the trial court should have allowed the insured to reopen her case to introduce the policy.

Chandler v. Geico Indem. Co., No. SC10-1068, SC10-1070, 2011 WL 5864808 (Fla. Nov. 23, 2011) The Florida Supreme Court considered whether a car insurer has a duty to defend and indemnify its insured when its policyholder allows someone else to drive a rental car rented by the insured and gets into an accident. The car rental agreement prohibited anyone not authorized by the rental agency from driving the car. The car insurance policy covered the insured’s primary car and a “temporary substitute auto,” which is a vehicle not owned by the insured but used with the permission of the car owner. The insurer argued that it had no coverage obligation because the rental car company did not give its insured, Shazier, express permission to drive the rental car and, therefore, the car did not constitute a “temporary substitute auto.” The Supreme Court, however, disagreed on the basis that Avis consented to the use of a rental car beyond Aviss' immediate control. As a result, the car qualified as a "temporary substitute" and Geico was obligated to defend the suit against Shazier.


October 2011 Case Law Update

Joule v. General Insurance Company of American States Insurance Company, No. 8:11-cv-216-T-33EAJ; 2011 WL 5358722 (M.D. Fla. Oct. 28, 2011): Following the settlement of a bad faith claim, the policyholder's former attorney filed a notice of Quantum Meruit Lien seeking payment of fees for the work he performed before being discharged by the insured. The insured moved to dismiss, but the Court denied dismissal, ruling that an issue of fact existed as to whether the discharged lawyer's efforts had resulted in "tangible fruits" benefiting his former client.

Pepperwood of Naples Condo. Ass'n, Inc. v. Nationwide Mutual Fire Insurance Company, No. 2:10-cv-753-FtM-36SPC, 2011 WL 4596060 (M.D. Fla. Oct. 3, 2011): In a lawsuit based on insurer's bad faith delay in paying claims and unfair trade practices, the Court granted motion to compel documents allegedly covered by work product and attorney-client privilege. Relying on bad faith cases Allstate v. Ruiz and Cozort v. State Farm, the Court concluded that work product and attorney-client privilege did not apply to documents generated prior to the filing of the lawsuit. The Court also granted insured's motion to compel personnel files, loss reserves, and human resources and training manuals as relevant and discoverable.

**Rynd v. Nationwide Mutual Fire Insurance Company (VPL Case), No. 8:09-cv-1556-T-27TGW (M.D. Fla. Oct. 7, 2011): The Court rejected a renewed motion for judgment as a matter of law and motion for new trial. First, sufficient evidence supported the jury's verdict finding bad faith, which the Court declined to disturb. In this regard, though the Court agreed with Nationwide's position that negligence alone does not equate to bad faith, it concluded that the facts of the case provided sufficient evidence that Nationwide failed to use the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his business. Second, the Court approved of a jury instruction on bad faith, which omitted language (requested by Nationwide) that bad faith could not be proved by negligence alone. Finally, the Court reaffirmed several evidentiary rulings, including one which excluded testimony by Nationwide's expert that was not included in his expert report or disclosed prior to trial.

Williams v. Wells Fargo Bank, N.A., No. 11-21233-CIV 2011 WL 4901346 (S.D.Fla. Oct. 14, 2011): The Court permitted a class action lawsuit against Wells Fargo and QBE to proceed, where Wells Fargo and QBE were accused of acting jointly to breach the implied covenant of good faith as parties to a contract. Contrary to the interests of the mortgagor/homeowner, Wells Fargo and QBE had an agreement which permitted QBE to be the sole provider of forced-placed homeowners insurance in cases where a homeowner's prior insurance had lapsed in contravention to their mortgage agreements. In return for the opportunity to charge excessive premiums (equaling up to 10 times what would be found on the open market), Wells Fargo received commissions and other kickbacks from QBE. The Court concluded that these allegations constituted a valid case of bad faith breach of the covenant of good faith, and accordingly rejected Wells Fargo's motion to dismiss.

Gavin's Ace Hardware, Inc. v. Federated Mutual Insurance, Co., No. 2:11-cv-162-FtM-36SPC, 2011 WL 5104476 (M.D. Fla. Oct. 27, 2011): The Court largely denied a policyholder's motion to compel "claims file" documents where a bad faith case had not yet been filed, stating that state and federal law generally precludes discovery of an insurer's claims file in a suit for breach of contract.

Potts v. Harvey; Harvey v. Geico Insurance General Company, No. 11-80495-CIV, 2011 WL 4637132 (S.D. Fla. Oct. 6, 2011): Where a negligence suit had been pending against the policyholder for three years prior to the policyholder filing a counterclaim against Geico for bad faith, the Court ruled that Geico could not petition for removal to federal court under 28 U.S.C.A. § 1441. This statute barred removal of proceedings that had been pending for more than a year in state court. In so ruling, the Court distinguished a line of middle district cases that had held otherwise by concluding that these had misapplied the "separate and independent" controversy test to diversity cases, which in inapplicable to diversity cases under § 1441's express terms.

**Kafie v. Northwestern Mutual Life Insurance, Co. (VPL Case), No. 11-21251-CIV 2011 WL 4636889 (S.D. Fla. Oct. 6, 2011): The Court granted a policyholder's motion to compel personnel files in a bad faith case, stating, "to the extent that the requested personal files contain information regarding how the employees handle claims, how the employees were compensated and evaluated, and the employees' education and training and handling of other claims, the files may be relevant and thus are discoverable."

**Green v. Travelers Indemnity Co. (VPL Case), No. 3:11-cv-922-J-37TEM, 2011 WL 4947499 (M.D. Fla. Oct. 18, 2011): The Court denied Travelers petition for removal, ruling that the policyholder's complaint and CRN (which both claimed damages in excess of $100,000) were insufficient evidence to demonstrate that the amount in controversy reasonably exceeded the statutory requirement of $75,000. The Court commented that the amounts claimed in the complaint and CRN were consistent with "mere puffery" and thus Travelers' burden was to produce other proof of the amount in controversy in order to satisfy the statutory requirements for removal.

N.P.V. Realty Corp. v. Nationwide Mutual Insurance Co., No. 8:11-CV-1121-T-17TBM 2011 WL 4948542 (M.D. Fla. Oct. 17, 2011): The Court granted insurer's motion to dismiss (without prejudice) where plaintiff attached supporting documents which were inconsistent with his theory of coverage and failed to provide any other documents which supported his position.

Nix v. State Farm & Casualty Company, Inc., No. 11-11584, 2011 WL 5010187 (11th Cir. Oct. 20, 2011): The Court upheld summary judgment for insurer based on uncontroverted testimony of insurer's engineering expert, who testified that damage to the policyholder's home had been caused by an uncovered peril. In so ruling, the Court noted that testimony from a non-expert contractor and the policyholder, neither of whom witnessed the cause of the damage, and both of whom were mere lay witnesses, was insufficient to contradict the expert witness's expert opinion. (To the extent that the non-expert contractor had posited a different, covered cause for the loss, his opinion testimony was inadmissible and could not be considered for purposes of summary judgment.)

Leonhart v. Geico Casualty Co., No. 8:11-CV-1988-T-23TBM, 2011 WL 5359840 (M.D. Fla. Oct. 28, 2011): The Court remanded a case to state court, ruling that diversity had been defeated by the joinder of a non-diverse party to the action. In reaching its conclusion, the Court rejected Geico's claim that the party had been joined fraudulently to defeat diversity, concluding that Geico had not sufficiently demonstrated fraud to bar remanding to state court.

United Property and Casualty Insurance Co v. Valladares, No. 3d10-2706 (Fla. 3rd DCA Oct. 19, 2011): Where insured entered into a consent order through the Office of Insurance Regulation for payment of his burst pipe claim, and received a settlement payment under the terms of the consent order without raising or reserving the right to seek ALE damages, insured's breach of contract suit for ALE damages was properly dismissed.

State Farm Florida Insurance Company v. Silber, Nos. 4D10-1549 and 4D10-4148 (Fla. 4th DCA Oct. 19, 2011): Where insurer participates in appraisal and pays timely pays appraisal amount awarded by umpire, trial court erred in awarding attorneys fees and prejudgment interest to policyholder under Fla. Stat. 627.428.


September 2011 Case Law Summary

AIG Premier Ins. Co. v. RLI Ins. Co., 2011 WL 4347197 (M.D. Fla. Sept. 15, 2011): Court granted excess insurer RLI's motion for summary judgment against another excess insurer in a coverage dispute arising out of a motorcycle accident, finding that the excess policies' "other insurance" clauses were "mutually repugnant" and required each excess insurer to contribute to a settlement on a pro rata basis.

Certain Interested Underwriters at Lloyd's, London v. Halikoytakis, 2011 WL 4091869 (11th Cir. Sept. 15, 2011): Insurer brought declaratory judgment action against insured to obtain a declaration that policy did not cover personal injury claims asserted insured. The Eleventh Circuit affirmed the lower court's entry of summary judgment in favor of insurer, finding that the policy (as modified by the endorsements) was essentially converted to a premises liability policy that did not provide coverage for injuries occurring off the insured premises.

Duke's Steakhouse v. Certain Interested Underwriters at Lloyd's, London, 2011 WL 4376788 (M.D. Fla. Sept. 6, 2011): Court dismissed insured's claim for unfair trade practice as a premature bad faith claim.

Landmark American Ins. Co. v. Moulton Properties, Inc., 2011 WL 3962636 (11th Cir. Sept. 8, 2011): Eleventh Circuit vacated in part entry of summary judgment in favor of insureds on insurer's claim of misrepresentation, finding that the district court failed to consider whether the insurer was entitled to rescind coverage based on misrepresentations in a "property summary" provided by agent to insurer.

Pepperwood of Naples Condo. Assoc., Inc. v. Nationwide Mut. Fire Ins. Co., 2011 WL 4382104 (M.D. Fla. Sept. 20, 2011): Court overruled insurer's objections and ordered it to produce discovery in lawsuit for unfair claims handling practices. The court ordered that insured's counsel could conduct ex parte communications with low-level former employees, and could speak with former high-ranking employees (senior commercial claims representatives or managers) through insurer's counsel. The court also discussed the practice of partially answering discovery "subject to" and "without waiving" objections, noting that other courts have concluded "whenever an answer accompanies an objection, the objection is deemed waived and the answer, if responsive, stands." The court also ordered insurer to identify in the claim file names of fact witnesses that would support its answer to an interrogatory, noting that Fed. R. Civ. P. 33 does not permit an insurer to simply answer that the information is in its previously produced business records.

Sabatula v. State Farm Mut. Auto. Ins. Co., 2011 WL 4345302 (M.D. Fla. Sept. 16, 2011): Court denied insurer's motion for a more definite statement in a bad faith lawsuit based on an uninsured/underinsured motorist policy with no judgment in excess of policy limits.

Trailer Bridge, Inc. v. Illinois Nat'l Ins. Co., 2011 WL 4346579 (M.D. Fla. Sept. 19, 2011): Eleventh Circuit held that CEO of freight company's allegedly misleading statement made in an interview targeted to investors, describing general market conditions, did not trigger duty to defend insured in anti-trust action under "personal and advertising injury" provision in CGL policy.

Ziolkowski v. Landmark American Ins. Co., 2011 WL 4346516 (M.D. Fla. Sept. 16, 2011): Court denied insurer's motion for directed verdict in lawsuit for coverage under a claims-made policy because substantial evidence supported jury's verdict in favor of insured. The jury was asked to first determine whether by the preponderance of the evidence, the policy covered the claim, and was then asked whether the insurer established by a preponderance of the evidence that the insured knew of an act, error, or omission likely to give rise to a claim against it.


August 2011 Case Law Summary

State Auto Prop. & Cas. Co. v. Matty, No. 11-10419 (11th Cir. Aug. 19, 2011)

Court of Appeals affirmed the jury's finding that incident in which the insured struck two bicyclists constituted two occurrences for purposes of liability limits. The insured submitted "testimony from an investigator to establish that after the cause of the initial collision, [the insured] regained control of the vehicle before [the] subsequent collision, so that that it [could] be said there was a second intervening cause and therefore a second accident." The Court noted that "[a]lthough the [insured] told the investigator that she 'blacked out' before the collisions, the investigator opined that either 'the feel of the road or the sound of the impact' or 'the feel of the impact' caused [the insured] to wake back up' and [turn] her vehicle back onto the road'" where she hit the second cyclists.

State Farm Mut. Auto. Ins. Co. v. Duckworth, No. 09-15690 (11th Cir. Aug. 11, 2011)

Court of Appeals held that to invoke "public policy exception" to Florida's lex loci contractus choice of law rule where an insurance contract is at issue, insured, in addition to showing that Florida has a paramount public policy interest in applying its own law and the insured is a Florida citizen in need of protect, must prove that it provided its insurer with reasonable notice of a permanent change of residence such that the insurance risk would thereafter be centered in Florida. The reasonable notice requirement turns on the clarity with which the insured expressed his/her intent to make Florida the permanent home.

Markel Int'l Ins. Co., Ltd. v. Fla. W. Covered RV & Boat Storage LLC, No. 11-11511 (11th Cir. Aug. 11, 2011)

Court of Appeals affirmed that absolute pollution exclusion in insurance policy barred coverage for third-party's claim against insured. Third party sued insured after he "was forced to wade through retained flood water to retrieve his personal property from a storage unit that he leased" from the insured and as a result "contract[ed] bacterial poisoning," "a severe bacterial infection," and "'injury' due to 'millings from roadwork' which had mixed with the flood water." The Court agreed with the district court's finding that millings mixed with flood water constituted a "pollutant" within the meaning of the absolute pollution exclusion, because the underlying complaint alleged that the presence of millings in the water is what caused the injuries. The Court further explained that "it is a product's ability to produce an irritating effect that places the product within the definition of an irritant. Consequentially, a product that causes no harm when used properly still may be classified as a pollutant under the exclusion [because] it can obviously cause harm when it is not used properly."

Okun v. Provident Life & Acc. Ins. Co., No. 8:11-cv-1162-T-23EAJ (M.D. Fla. Aug. 26, 2011)

District court denied insurer's motion to dismiss insured's promissory estoppel cause of action, because "factual development is necessary to determine the scope of [the insured's] insurance policies and to determine whether [his] remedy at law is adequate." The Court also rejected the insurer's attempt to block "further investigation into the parties' extra-contractual communications by citing a merger clause in each insurance policy," because "insurance policy merger clauses fail to impress Florida courts." The Court nonetheless noted that the insured "will soon face the arduous task of attempting to justify promissory estoppel by clear and convincing evidence, the governing standard in the context of expanding insurance coverage."

View W. Cond. Assoc. Inc. v. Aspen Specialty Ins. Co., No. 11-20423 (S.D. Fla. Aug. 23, 2011)

District court dismissed coverage claim on statute of limitations grounds based on Senate Bill 408 (effective June 1, 2011) that amended Florida Statute §95.11 to provide that "an action for breach of a property insurance contract [must be brought within five- years] with the period running from the date of loss." The Court explained: "Here, the date of loss was August 25, 2005. Plaintiff filed this lawsuit on October 23, 2010, and waited until July 11, 2011 to amend its complaint to add a claim for breach of property insurance contract based on Hurricane Katrina damages. Because Plaintiff brought its Hurricane Katrina claim more than five years after the date of the loss, the claim is barred by the statute of limitations." The Court did not address whether the new law applies retroactively, because it was clear Plaintiff did not assert its Hurricane Katrina claim until after the law was in effect.

Estrella v. Fed. Ins. Co., No. 10-20938 (S.D. Fla. Aug. 19, 2011)

District court denied the insurer's motion for summary judgment finding a genuine issue of material fact: "Although the evidence presented by [the insurer] supports an inference that [the insured] intentionally caused [its boat] to be scuttled, [the insured] has come forward with evidence that directly contracts that inference. Specifically, [the insured] and the two men he allegedly hired to scuttle the boat all swore at their deposition that they did not participate in any scheme to scuttle [the boat.] Resolving this factual question would require the court to weigh the evidence presented by both Parties, and to make a credibility determination as to the witnesses. The Court is not permitted to weigh the evidence or pass on credibility of witnesses when ruling on a motion for summary judgment. To do so would be an impermissible invasion of the province of the jury."

State Farm Mut. Auto. Ins. Co. v. Menendez, No. SC10-116 (Fla. Aug. 25, 2011)

Florida Supreme Court held that a household exclusion barring coverage for "any bodily injury to" "any insured or any member of an insured's family residing in the insured's household" unambiguously eliminates coverage for bodily injuries suffered by the members of the household of a permissive-driver, because a permissive driver is an "insured" under the terms of the policy.

Wilshire Ins. Co. v. Birch Crest Apartments, Inc., No. 4D10-5004 (Fla. 4th DCA Aug. 17, 2011)

District Court of Appeal held that exclusion "J(5)" for "that particular part of real property on which [the insured is] performing operations if the 'property damage' arises out of those operations" and an exclusion "J(6)" for "that particular part of any property that must be restored, repaired or replaced because [the insured's] work was incorrectly performed on it" barred coverage for damage to glass doors and windows caused by the insured painting contractor's efforts to remove paint that had spattered on them while painting the apartments. The Court applied the exclusions because "the scope of the contractor's operations were intended to include the apartments which were being painted and would, if required, involve cleaning up surfaces which were spattered with paint" and "the underlying claim resulted from the insured's incorrect work on the glass doors and windows of the apartments."

Gonzalez v. Claywell, No. 1D10-5694 (Fla. 1st DCA Aug. 15, 2011)

District Court of Appeal held that plaintiff's proposal for settlement pursuant to Fla. Stat. §768.79 and Florida Rule of Civil Procedure 1.442 was invalid and unenforceable when it required the defendant's insurer, a non-party to the lawsuit, to tender a check well in excess of the policy limits. The Court explained that the proposal was invalid and unenforceable "[b]ecause the proposal contained a condition that [the Defendant] could not possibly perform, and divested him of independent control of the decision to settle" the lawsuit.

Mid-Continent Cas. v. First Coast Energy, LLP et al.¸ No. 1D10-5740 (Fla. 1st DCA Aug. 15, 2011)

District Court of Appeal held that 40 C.F.R. §280.97(b)(2)(2)(d), which provides that "cancellation or any other termination" of insurance is effective only upon written notice and only after the expiration of 60 days after written notice, did not apply where insured allowed policy to expire on its own terms.

S. Owners Ins. Co. v. Mathieu, No. 2D11-557 (Fla. 2d DCA Aug. 5, 2011)

District Court of Appeal granted certiorari and quashed an order denying an insurer's motion to dismiss, holding that Florida's nonjoinder statute (Fla. Stat. §627.4136) requires dismissal "where an injured third-party brings a declaratory judgment action against an insurer prior to obtaining a settlement with or verdict against the insured." The Court rejected the injured party's argument that the statute did not apply because its declaratory judgment action against the insurer was initiated in a separate proceeding from the underlying negligence action.


July 2011 Case Law Summary

Waring v. Nationwide Mut. Fire Ins. Co., 65 So. 3d 1207 (Fla. 2d DCA July 29, 2011)

Automobile insurer brought action against motorist, seeking subrogation for uninsured motorist (UM) coverage that insurer had paid to insureds as a result of injuries caused by accident between insureds and motorist. The trial court entered summary judgment in favor of the insurer and the motorist appealed. The Second DCA concluded that the trial court correctly granted summary judgment as to liability but not as to damages because there were genuine issues of material fact as to the amount of damages attributable to the accident. Although the insurer filed an affidavit in support of its motion for in which a representative testified that the company paid the motorist $18,500 pursuant to the policy, the court found that the insurer did not meet its burden of establishing what damages the check was intended to cover, much less that such damages were related to the accident.

McLacklan v. State Farm Mut. Auto. Ins. Co., 2011 WL 3156588 (M.D. Fla. July 26, 2011)

Plaintiff brought a declaratory judgment action to determine rights under an auto policy. On his way home from purchasing a used vehicle from a non-party, plaintiff struck an object in the road, damaging the vehicle and injuring himself. Plaintiff sought UM benefits under the non-party's insurance policy. The parties agreed that the only possible way Plaintiff could qualify as an insured under the policy is as a permissive user. Applying Georgia law, the court found that the undisputed material facts demonstrated that title to the vehicle passed when the non-party delivered the vehicle along with the certificate of title and key, and therefore, the vehicle did not qualify as "your car" at the time of the accident under the terms of the policy. Thus, Plaintiff could not be a permissive user and was not entitled to UM benefits under the policy.

Axis Ins. Co. v. Farah & Farah, P.A., 2011 WL 3156544 (M.D. Fla. July 26, 2011)

An attorney alleged to be a former partner of Defendant law firm was sued for malpractice as a result of prematurely filing an underlying medical malpractice claim. About five months before the legal malpractice complaint was filed, the law firm applied for professional liability insurance with Plaintiff Axis. In its application, the law firm represented that neither the firm nor any person proposed for coverage was aware of any situation that might provide grounds for any claim under the proposed policy. The law firm subsequently sought benefits under the ensuing claims made policy related to the underlying malpractice claim. Axis brought a declaratory judgment complaint alleging that the failure to disclose vitiates coverage. A central issue was whether the attorney was a former partner in the law firm and thereby an insured under the policy. The district court concluded that the law firm did no show that there was no genuine issue of material fact as to whether the attorney was a former partner and therefore denied Axis' motion for summary judgment. The court also rejected the attorney's argument that he would be considered an "innocent insured" under the policy because Axis did not invoke any exclusion that would trigger the "innocent insured" provision.

State Farm Florida Ins. Co. v. Seville Place Condo. Ass'n, Inc., 2011 WL 2905642 (Fla. 3d DCA July 20, 2011)

A condo association brought an action against its insurer fro breach of a policy that was in effect at the time Hurricane Wilma caused damage to the property. The parties disagreed on the damages and the association made a written demand for appraisal under the policy. After ordering the parties to appraisal, the umpire fixed the loss at $2,960,405 in favor of the insured, excluding any interest, costs and attorneys' fees. The trial court confirmed the appraisal award, denied State Farm's emergency motion for removal of the umpire, and granted the association's motions to amend its complaint to add statutory and common law bad faith claims. The trial court did not enter a final judgment fixing a total amount of principal and any prejudgment interest in a form ready for execution or ripe for appeal. State Farm then petitioned for certiorari review to the Third DCA, arguing that the bad faith claim was premature. The appellate court concluded that it should not exercise certiorari jurisdiction because no discovery pertaining to the bad faith claims or the punitive damages claim had yet been sought or compelled, and State Farm had not yet responded to the amended complaint such that no irreparable injury had occurred and none was certain to follow. The court noted that while premature bad faith discovery and an order granting a motion to compel production of an insurer's claims file may demonstrate an irreparable harm, an order merely permitting amendment to add an allegedly -premature bad faith claim does not.

Lammers v. USAA Life Ins. Co., 2011 WL 2784161 (M.D. Fla July 15, 2011)

The beneficiary of a life insurance policy that USAA issued to her husband sued to compel payment of the policy proceeds. Three years before his death, the husband stopped making premium payments on the policy. Plaintiff argued that the policy did not terminate because her husband had a "total and permanent disability" as contemplated by a rider to the policy that provides that the insurer will waive the premium payments during such disability. However, the rider requires notice and proof of the disability to be presented while the insured is living and still totally and permanently disabled unless the insured shows that it was not reasonably possible to comply and the insured did comply as soon as it was reasonably possible to do so. Plaintiff's position is that strict compliance was impossible because her husband was incapacitated. The insurer moved for summary judgment arguing that there was insufficient evidence that the husband was incapacitated when he stopped paying the insurance premiums without providing notice of any disability. The district court granted summary judgment in favor of the insurer, finding that there was no evidence to show when the husband began to experience the loss of his mental and physical abilities, much less when his incapacitation reached a point that it was impossible or unreasonable for him to provide notice of his disability.

Palm Beach Grading, Inc. v. Nautilus Ins. Co., 434 Fed. Appx. 829 (11th Cir. July 14, 2011)

General contractor brought action against its insurer seeking reimbursement under subcontractor's CGL policy for $256,208 stemming from the repair of a defective sewer system pipe. The district court granted summary judgment after concluding that the claim was not covered by the policy. On appeal, the Eleventh Circuit concluded that the repair costs the general contractor incurred as a result of the subcontractor's negligence are not covered under the CGL policy because the damage did not constitute "property damage" within the meaning of the policy. While faulty workmanship may constitute an "occurrence" under the policy, the fact that damages may result from an "occurrence" under a CGL policy is only the first step in determining whether the damages are covered. The problem with the general contractor's claim, according to the court, was that the defective pipe did not cause damage independent of the repair and replacement of the pipe as required by Florida law. For example, the pipes never burst, caused sinkholes, or caused back-ups. Rather, the general contractor's claim was solely for the costs of repairing and removing the defective pipe, which is not a claim for "property damage."

Wellington Specialty Ins. Co. v. Kendall Crane Service, 434 Fed. Appx. 794 (11th Cir. July 12, 2011)

As a result of injury sustained by an employee of a subcontractor on a residential construction project when a crane operated by an employee of another subcontractor struck him and caused him to fall to the concrete floor below, an injured worker sued the crane company for gross negligence. The crane company's CGL insurer defended under a reservation of rights and brought a declaratory judgment action in federal court, arguing that an exclusion precluding coverage for bodily injury to employees applied. The district court determined that the employee exclusion was inapplicable and the insurer appealed. The Eleventh Circuit held that under Florida law the injured subcontractor's employee was not the horizontal subcontractor's statutory "employee," within the meaning of the exclusion in the CGL policy because the injured worker's employer did not sublet its contractual obligation to the other subcontractor. Ver Ploeg & Lumpkin, P.A., successfully represented the crane company.

Nationwide Mut. Fire Ins. Co. v. AFO Imaging, Inc., 71 So. 3d 134 (Fla. 2d DCA July 6, 2011)

Provider of MRI services to brought a class action against automobile insurers seeking additional personal injury protection (PIP) benefits for services provided to insureds. The trial court granted final summary judgment to the providers and the insurers appealed. The Second DCA held that the insurers could not cap their reimbursement of health care providers that performed non-emergency, non-hospital MRI services for insureds pursuant to the PIP coverage of the insureds' policies by using the Medicare Hospital Outpatient Prospective Payment System (OPPS). In reaching this conclusion, the court determined that the Florida Motor Vehicle No-Fault Law expressly requires insurers to base their minimum reimbursement on the participating physicians schedule of Medicare Part B, and that OPPS was a distinct and separate component of Medicare Part B that was used to limit the amounts paid for services provided to Medicare recipients.

Central Square Tarragon LLC v. Great Divide Ins. Co., 2011 WL 2622382 (Fla. 4th DCA July 6, 2011)

The purchaser of insured property brought action against its insurer seeking additional benefits for damages caused by Hurricane Wilma. The trial court entered judgment on a jury verdict finding that the purchaser had not proven a valid assignment of the policy, and denied the purchaser's motion for new trial. On appeal, the Fourth DCA held that the joint pretrial stipulation between the parties, which limited the dispute to the amount to be paid to purchaser for hurricane damage, eliminated the need for the purchaser to prove a valid assignment to it of the policy. Accordingly, the trial court's submission of the assignment issue to the jury entitled the purchaser to a new trial.

Citizens Property Ins. Corp. v. Admiralty House, Inc., 66 So. 3d 342 (Fla. 2d DCA July 1, 2011)

Citizens appealed the trial court's nonfinal order grating the insured's motion to compel appraisal in a breach of contract and declaratory judgment action for property damage sustained in Hurricane Wilma. Despite Citizens' argument that the insured failed to comply with its duties after the loss, the Second DCA determined that the trial court failed to make the requisite preliminary determination under Florida law as to whether the insured's demand for appraisal was ripe, reversing the order compelling appraisal and remanding for an evidentiary hearing on that issue. Citizens also argued that the insured waived its right to request appraisal by not pleading such relief and by aggressively litigating the case for ten months. The court disagreed and concluded that the insured did not waive its right to appraisal because it did not maintain a position inconsistent with the appraisal remedy. Instead, the insured made a presuit demand for appraisal and then included as part of the complaint against Citizens a declaratory action to determine whether it was entitled to appraisal.


June 2011 Case Law Summary

Chong v. Medmarc Cas. Ins. Co., No. 10-12237 (11th Cir. May 27, 2011)

Nadella Chong, Esq. ("Chong") maintained a professional liability insurance policy with Medmarc, which covered "all claims of negligence arising from an act or omission in the performance of 'professional services' rendered by Chong." Chong, misbelieving his client legitimately sought to establish a subsidiary in the United States, deposited a cashier's check from the client into the firm's trust account and then, per the phony client's direction, wired money from the trust account to the client's overseas business partners. End result - Chong wired money belonging to other clients because the cashier's check proved fraudulent.

Medmarc claimed that the acts at issue did not constitute a "professional service." The Middle District Court of Florida agreed with Medmarc, granting summary judgment in the carrier's favor. The Eleventh Circuit reversed, however, holding that (a) an attorney's management of trust funds constitutes a "professional service," (b) "Chong's erroneous transfer of its clients' trust funds to a third party was an act or omission in the conduct of its professional fiduciary duties to its clients that would give rise to a claim of negligence against it by those clients and for which it would have been liable in damages," and (c) "[s]uch a claim for a negligent act or omission is covered by the plain terms of the policy."

Barnard v. Geico Gen. Ins. Co., No. 10-cv-213 (N.D. Fla. May 25, 2011)

Layura Sellers ("Sellers") was involved in an automobile accident, which resulted in the death of Michael Scarberry ("Scarberry"). The vehicle operated by Sellers was owned by her father, Raymond Paulk ("Paulk"), and insured by GEICO. Paulk's bodily injury coverage was capped at $10,000.00. Settlement discussions failed and the Scarberry estate sued the Paulks, resulting in a $2.5 million consent judgment in favor of the Scarberry estate. Following the consent judgment, the Scarberry estate and the Paulks filed separate third-party bad faith suits against GEICO, which were consolidated.

In assessing GEICO's bad faith liability, the Court found that GEICO had offered policy limits eleven days after the accident, repeatedly attempted to contact the attorney representing the Scarberry estate, Hosam Zawahry ("Zawahry"), and kept the Paulks informed of settlement efforts. Accordingly, Judge Smoak, operating under a totality of the circumstances standard, held that Zawahry was the party responsible for failed settlement efforts (not GEICO), and granted GEICO's motion for summary judgment. Judge Smoak was not persuaded by Zawahry's argument that the original releases submitted to Zawahry by GEICO were invalid due to GEICO's not including Paulk on the releases, holding that "this was clearly merely an oversight" by GEICO possibly amounting "to negligent behavior, not bad faith."

Bessman v. Traveler's Prop. Cas. Co. of Am., No. 09-cv-123 (N.D. Fla. Mar. 29, 2011)

While operating a vehicle in the course of his employment with Hope Lumber & Supply Co. ("Hope"), Paul Bessman ("Bessman") was involved in an accident with an uninsured/underinsured motorist. Traveler's denied Bessman's UM/UIM claim because Hope had rejected UM/UIM coverage, as was Hope's right under Section 627.727 of the Florida Statutes. The decision hinged on the factual determination that the Hope agent who rejected UM/UIM coverage was, in fact, authorized to do so.

Fontainebleu Gardens Condo. Assoc., Inc. v. Pacific Ins. Co., Ltd., No. 11-cv-20552 (S.D. Fla. Apr. 27, 2011)

This suit arose out of a Hurricane Wilma damage dispute. Pacific removed to federal court. Fontainebleu attempted to join non-diverse parties and remand to state court. The issue before Judge Altonaga was whether Fontainebleu's joinder attempt was fraudulent; i.e., aimed solely at destroying complete diversity.

Counts III and IV of Fontainebleu's amended complaint asserted negligence claims against Pacific adjusters. Judge Altonaga determined that "there is no possibility that Fontainebleu, as Pacific's insured, c[ould] assert a valid state-law claim for negligence against [Pacific's adjusters]" because "Florida law does not recognize a cause of action by an insured against an independent insurance adjuster in simple negligence." Accordingly, Judge Altonaga held that the Pacific adjusters "were fraudulently joined and remand should not be granted on the basis of their joinder."

Count II of Fontainebleu's amended complaint asserted negligence against Pacific agents. Judge Altonaga determined that, under Florida law, "[an agent's] negligent failure to procure requested insurance coverage is a valid claim... ." Judge Altonaga further opined, however, that, "[u]nder Florida law, an insured's cause of action against an agent for negligence does not accrue until the proceedings against the insurer are final." Accordingly, Judge Altonaga held that Fontainebleu's "proposed joinder of [Pacific's agents] is not a case of joinder of indispensible parties; [Fontainebleu] may, as it admits, file a separate claim against them in state court."

FIGA, Inc. v. Devon Neighborhood Assoc., Inc., No. SC10-347 (Fla. June 30, 2011)

"This case arose from certain hurricane damage claims made by [Defendant], under a 2004 insurance policy... ." FIGA demanded appraisal. Devon argued that it did not have to complete appraisal as a condition precedent to suit because (a) Section 627.7015 of the Florida Statutes (pertaining to alternative property dispute resolution) applied retroactively to Devon's claim, (b) Devon was not notified of its mediation rights pursuant to Section 627.7015, and (c) an insured is excused from appraising a property dispute prior to suit if an insurer fails to notify the insured of its mediation rights. The trial court and Florida's Fourth District Court of Appeal agreed with Devon, but the Supreme Court of Florida quashed and remanded, determining that the 2005 amendments to Section 627.7015 do not retroactively apply to contracts formed prior to the amendments' enactment.

Certain Interested Underwriters at Lloyd's, London Subscribing to Policy No. M12226 v. Chabad Lubavitch of Greater Ft. Lauderdale, Inc., No. 4D10-762 (Fla. 4th DCA June 8, 2011)

"A building owned by [Defendant] was damaged when a crane landed on it during Tropical Storm Barry." This case revolved around an all-risk policy's wind exclusion / anti-concurrent cause language. In sum, the Court interpreted the subject policy's wind exclusion as follows: If wind alone creates damage, the loss is excluded. But if wind damages a heating system and a fire erupts, for example, the heating system damage is excluded and the fire damage is covered.

Mid-Continent Cas. Co. v. United Rentals, Inc., No. 4D11-149 (Fla. 4th DCA June 1, 2011)

"[A]n electrician performing contract work ... died after operating a scissor lift leased by [General Interior Systems Southern, Inc.] from United Rentals, an equipment rental company." This third-party wrongful death suit resulted. The lesson to be learned from this opinion is that, although severance is discretionary under Florida Rule of Civil Procedure 1.270(b) ("may"), a tort suit should be severed from a coverage suit so that the jury's tort liability determination is not influenced by the fact the defendant is insured. To not do so, the Court determined, would run afoul of Florida's non-joinder of insurers statute, Section 627.4136(1) of the Florida Statutes.

Elliott, et al. v. State Farm FL Ins. Co., No. 4D09-3887 (Fla. 4th DCA June 1, 2011)

Plaintiff, Katie Marie Frontiero ("Katie"), was a passenger on a golf cart that was being operated by Defendant, Alexander Elliott ("Alexander"), on a private road just a few blocks away from Alexander's home. Alexander's parents maintained a homeowner's policy with State Farm. Katie fell out and was injured. Katie's parents sued Alexander's parents.

State Farm sought declaratory relief as to whether there was coverage for the accident under the homeowner's policy. The cased revolved around the policy's "insured location" provision. The Court held that a private road located within a gated community that is used for ingress and egress to a residence is not an "insured location." As support for its decision, the Court cited to several other cases from across the nation that were similarly resolved. For example, the Court cited a Massachusetts case where an ATV accident occurred on a private beach owned by 242 homeowners of a homeowner's association and it was decided that the accident did not take place at an "insured location" merely because the beach was used regularly in connection with the nearby, insured residences.

Universal Prop. & Cas. Ins. Co. v. Colosimo, et al., No. 3D11-180 (Fla. 3d DCA May 25, 2011)

This suit arose out of a kitchen water damage dispute. Universal adopted inconsistent coverage positions during the claim process, so the Colosimos invoked the policy's appraisal process. The parties' appraisers failed to agree as to the amount of damage. Shortly thereafter, the Colosimos filed a breach of contract and breach of implied covenant of good faith and fair dealing suit.

Universal sought to stay the proceedings until the conclusion of the arbitration process, but the Court denied Universal's motion because Universal failed to comply with Section 627.7015 of the Florida Statutes; i.e., Universal failed to explicitly notify the Colosimos of their right to mediate disputed property claims. The Court held that the burden of mediation notification is on the insurer and the insurer cannot evade its notification duty by claiming the insured knew of his right to mediate. Since Universal did not officially notify the Colosimos of their mediation rights, the Court determined that mediation was not a condition precedent to the Colosimos filing suit. Florida's Third District Court of Appeal confirmed the trial court's decision, adding that no authority "indicate[s] that an insured's commencement or exploration of a contractual process irrevocably binds that party through the conclusion of the appraisal."


March 2011 Case Law Summary

Precise Constr., Inc. v. Amerisure Ins. Co., No. 10-10976, 2011 WL 855821 (11th Cir. Mar. 14, 2011)

A general contractor filed suit against a subcontractor's insurer to recover the cost of demolishing and rebuilding a mislocated foundation of a construction project. The general contractor was an additional insured under the subcontractor's CGL policy. The Middle District granted summary judgment in favor of the subcontractor's insurer. The Eleventh Circuit affirmed on two grounds: First, the appellate court held that because the damage arose out of the subcontractor's work, the damages resulting from improper construction of the foundation were excluded pursuant to Exclusion j(5). Second, the appellate court held that there was no covered "property damage," since the damages sought were solely for the removal and repair of the misplaced foundation: "There are no allegations of damage other than to the foundations themselves, which [the general contractor] concedes were correctly constructed but made defective through [the general contractor's] misplacement."

Genovese, M.D. v. Provident Life & Acc. Ins. Co., No. SC06-2508, 2011 WL 903988 (S.D. Fla. Mar. 17, 2011)

The certified question was "whether [the Florida Supreme Court's] holding in Allstate Indemnity Co. v. Ruiz, 899 So. 2d 1121 (Fla. 2005), permitting the discovery of work product in first-party bad faith actions brought pursuant to section 624.155, Florida Statutes (2010), also applies to attorney-client privileged communications in the first-party bad faith context." The Court answered the certified question in the negative, holding that its decision in Ruiz did not extend to attorney-client privileged communications. Thus, the Court held that attorney-client materials are not discoverable in a first-party bad faith suit. The Court recognized, however, that "cases may arise where an insurer has hired an attorney to both investigate the underlying claim and render legal advice." In that situation, the Court held that "the trial court should conduct an in-camera inspection to determine whether the sought-after materials are truly protected by the attorney-client privilege. If the trial court determines that the investigation performed by the attorney resulted in the preparation of materials that are required to be disclosed pursuant to Ruiz and did not involve the rendering of legal advice, then that material is discoverable." The Court also emphasized that its opinion was not intended to undermine the "at issue" doctrine, where discovery of attorney-client privileged communications between an insurer and its counsel is permitted where the insurer raises the advice of its counsel as a defense to the action and the communication is necessary to establish the defense.

Garden-Aire Vill. S. Condo. Ass'n Inc. v. QBE Ins. Corp., No. 10-61985-CIV, 2011 WL 1184737 (S.D. Fla. Mar. 31, 2011)

An insured condominium association filed a declaratory suit against its insurer. The insurer moved to dismiss the first two counts of the action and to stay the third. The Court sided with the carrier, holding that the third count, a request for a declaration that the policies' hurricane deductible was void pursuant to Section 627.701(4) of the Florida Statutes, should be stayed pending the Florida Supreme Court's decision in Chalfonte. As to the first count, regarding coverage for glass windows and sliding glass doors, the Court held there was no justiciable controversy between the parties, since the carrier had not issued an adversarial response regarding coverage for those items. The Court also held that the second count, regarding entitlement to an appraisal, was premature since the insured filed suit seeking appraisal prior to any notice or meaningful exchanges with the insurer and since the insurer was not given the opportunity to invoke the policies' post-loss conditions.

United Auto. Ins. Co. v. The Estate of Stephen D. Levine, No. 3D09-3234 (Fla. 3d DCA Mar. 30, 2011)

The appellate court affirmed the lower court's entry of final judgment and denial of post-trial motions in a statutory bad faith case. The appellate court rejected the insurer's argument that it should have been permitted to show the jury that it settled certain claims, in a multiple-claimant situation, quickly and by tendering more than the aggregate policy limits. The appellate court explained that the fact that one independent claimant negotiated separate settlement terms with the carrier did not tend to prove whether the carrier acted properly regarding the claim of another independent claimant. The appellate court noted that inclusion of that evidence would have distracted the jury. The appellate court also rejected the carrier's contention that the underlying plaintiff should not have had the opportunity to offer testimony to prove her status as the assignee of the carrier's insured, stating that the assignment was not a required element of the plaintiff's statutory bad faith claim. The appellate court also rejected the carrier's argument that the jury instructions impermissibly shifted the burden of proof to the carrier. The appellate court lastly held that the plaintiff satisfied its burden to set forth a prima facie statutory bad faith case, highlighting the carrier's insistence on the execution of a "one-size-fits-all" release, the carrier's failure to follow up in a catastrophic injury situation, and the insurer's failure to present expert testimony regarding its claims-handling policies.

State Farm Fla. Ins. Co. v. Puig, No. 3D10-2104 (Fla. 3d DCA Mar. 23, 2011)

In a first-party statutory bad faith action, the trial court granted the plaintiffs' motion to compel the carrier's entire claim file. The carrier sought a writ of certiorari quashing the trial court's order. The appellate court first held that the trial court correctly compelled the insurer to produce work product materials in its claim file that were prepared on or before the date that the underlying litigation concluded (when the trial court confirmed an appraisal award). The appellate court held that the trial court erred, however, in ordering production of work product materials prepared after the underlying litigation concluded, since the plaintiffs did not demonstrate good cause, special relevance or need, and did not ask the court to compel production of those documents. The appellate court also held that the lower court erred in ruling that the Florida Supreme Court's decision in Ruiz eliminated the attorney-client privilege for insurers involved in bad faith litigation, citing Genovese.

Gen. Star Indem. Co. v. Atl. Hospitality of Fla., LLC, No. 3D10-3109 (Fla. 3d DCA Mar. 9, 2011)

A commercial property insurer sought a writ of certiorari quashing 2 discovery orders compelling 2 of the insurer's senior officers (the president/CEO and the corporate secretary) to appear for deposition in a windstorm insurance case. The officers were each pre-printed signatories to the insurer's form policies. The carrier filed an affidavit establishing that the officers had no role in the investigation or adjustment of the claim at issue. The appellate court quashed the trial court's orders, holding that the insured had not shown that the president's deposition was "reasonably calculated to lead to the discovery of admissible evidence." The appellate court emphasized that the carrier had shown that its president was a manager, not an adjuster or other employee with personal knowledge regarding the claim. The appellate court concluded that neither the president's pre-printed signature on the policy nor the president's receipt of a loss assessment warranted the president's deposition, especially where the adjuster had not yet been deposed regarding the claim. The appellate court also rejected the insurer's request to apply the "apex doctrine."

Flores v. Am. Sec. Ins. Co., No. 3D09-3246 (Fla. 3d DCA Mar. 2, 2011)

A homeowner appealed the lower court's denial of his motion for prejudgment interest on an appraisal award from the date of loss. The appellate court affirmed, relying on Sunshine State v. Davide, 15 So. 3d 749 (Fla. 3d DCA 2009), and distinguishing North Pointe Insurance Co. v. Tomas, 16 So. 3d 977 (Fla. 3d DCA 2009). The appellate court based its decision on the fact that the insurer had initially admitted coverage. When the loss was initially submitted to the insurer, the carrier made payment on the claim. The insured maintained that the payment was inadequate and filed a supplemental claim, which the carrier denied. The insured then filed suit, and the carrier invoked the policy's appraisal provision. The insured won an appraisal award which the carrier paid within 30 days. The appellate court held that since the dispute turned on quantifying the covered loss, not the existence of coverage, the insured was not entitled to prejudgment interest on the supplemental amount of the appraisal award as computed from the date of loss.

Ellie's 50's Diner, Inc. v. Citizens Prop. Ins. Corp., No. 4D09-1768 (Fla. 4th DCA Mar. 2, 2011)

An insured appealed the lower court's denial of its motion for prejudgment interest from the date of loss. The appellate court affirmed, relying in part on Sunshine State v. Davide, 15 So. 3d 749 (Fla. 3d DCA 2009). The appellate court reasoned that because the policy allotted the carrier 30 days within which to pay an appraisal award and the carrier made payment within that time period, the insured was not entitled to prejudgment interest. When the loss was initially submitted to the insurer, the carrier made payment on the claim. The insured then filed suit against Citizens claiming entitlement to additional funds. Citizens moved to compel appraisal; an appraisal award was entered in favor of the insured resulting in further payment to the insured. Citizens paid the appraisal award within 30 days. The appellate court held that the "Loss Payment" provision of the policy precluded a prejudgment interest award, since the carrier paid the claim within the time allotted by the policy.

Citizens Prop. Ins. Corp. v. Gutierrez, No. 3D10-2134, 2011 WL 710148 (Fla. 3d DCA Mar. 2, 2011)

The insureds' property sustained damage due to Hurricane Wilma. The insureds filed a claim for damages with Citizens. Citizens made initial payment on the claim. Almost 4 years later, the insureds filed a supplemental claim for Hurricane Wilma damages, and demanded appraisal. Citizens made numerous requests for additional information & documents, which the insureds allegedly failed to provide. The insureds subsequently filed suit against Citizens, and filed a motion to compel appraisal, alleging that they had complied with the policy's post-loss conditions. Citizens filed an answer and response to the motion to compel appraisal, asserting that the insureds refused to provide information & documents requested, and that the insureds' compliance with the policy was a condition precedent to appraisal. The lower court held a hearing on the motion to compel appraisal, where the parties disputed whether the insureds were in compliance with the post-loss conditions. At the conclusion of the hearing, the lower court granted the motion to compel appraisal. The appellate court reversed and remanded for an evidentiary hearing on the issue of the insureds' compliance with the policy's post-loss conditions, citing Mango Hill, Galeria Villas, and Maytin.

Ruderman v. Wash. Nat'l Ins. Co., No. 08-23401, 2011 WL 915721 (S.D. Fla. Mar. 16, 2011)

Plaintiffs' counsel in a class action suit against a home health care insurer moved for an award of attorney's fees ($4 million) under Section 627.428 of the Florida Statutes and costs ($66,560). The Court engaged in a detailed fee and cost analysis.

Buckley Towers Condo., Inc. v. QBE Ins. Corp., No. 07-22988, 2011 WL 710699 (S.D. Fla. Mar. 1, 2011)

The Court addressed the reasonableness/recoverability of filing fees, process server fees, transcript costs, witness fees, photocopying and interpreter fees. The Court ultimately awarded $34,047.07 in costs to the insured.

Smith v. N.H. Indem. Co., No. 1D10-3423 (Fla. 1st DCA Mar. 16, 2011)

The appellant argued that the trial court erred in finding that Section 627.7282 of the Florida Statutes did not invalidate the cancellation of his auto insurance policy; the appellant argued that the cancellation was void because it violated Section 627.7282. The appellate court affirmed, holding that Section 627.7282 only applied to situations where an insurer sets an incorrect premium at the time an insured applies for insurance coverage, not at the time of renewal. The appellate court concluded that based on the plain language of the statute, the insurer was entitled to summary judgment on the issue of whether it properly and effectively cancelled the policy.

Great Am. Ins. Co. of N.Y. v. Admiral's Walk, Inc., No. 10-81217, 2011 WL 802319 (S.D. Fla. Mar. 7, 2011)

The Court stayed the insurer's declaratory judgment action as to coverage and as to the limits of the policy, since there was a pending state court proceeding that involved the same issues between the same parties. The Court held that the claims and defenses of all parties to the federal action could be fully adjudicated in the state court proceeding. Thus, to avoid duplicative proceedings, the Court stayed the declaratory action pending the outcome of the state court suit.

Am. Empire Surplus Lines Ins. Co. v. Chabad House of N. Dade, Inc., No. 10-20872-CIV, 2011 WL 1085558 (S.D. Fla. Mar. 21, 2011)

The Court held that an abuse or molestation exclusion in a CGL policy relieved the insurer of its duty to defend and indemnify with respect to an underlying action involving injuries sustained by a special needs child. The Court also held that a designated premises endorsement to the policy did not bar coverage for acts that occurred away from the insured's volunteer agency office.

Valero v. Fla. Ins. Guar. Ass'n, Inc., Nos. 4D09-1151 and 4D09-1335 (Fla. 4th DCA Mar. 2, 2011)

An insurer filed a declaratory judgment action arguing that it had no duty to defend or indemnify its insureds with respect to a negligent supervision action arising out of sexual molestation. The insurer denied coverage based on its policies' sexual molestation exclusions. The lower court granted the insurer's motion for summary judgment on the applicability of the sexual molestation exclusion, and the appellate court affirmed. The appellate court held that the exclusion was clear and unambiguous.

Certain Interested Underwriters at Lloyd's London Subscribing to Certificate of Ins. No. 9214 v. Halikoytakis, No. 8:09-CV-1081-T-17TGW, 2011 WL 1296816 (M.D. Fla. Mar. 31, 2011)

The Court granted the insurer's motion for summary judgment, holding that the carrier had no duty to defend or indemnify its insured. The Court held that the insured's noncompliance with the "Independent Contractors Special Condition" in Lloyd's landlord/tenant policy invalidated the policy, relieving the carrier of its duties.

MGM Constr. Serv. Corp. v. Travelers Cas. & Sur. Co. of Am., No. 06-12616 (Fla. 3d DCA Mar. 2, 2011)

Appeal from the trial court's determination that a subcontract entered into with an unlicensed subcontractor should be automatically dishonored as a matter of law. Underlying action involved a dispute between a contractor and subcontractor regarding several construction projects. Travelers issued bonds that obligated it to pay the subcontractors for labor and material expenses they incurred on behalf of the contractor. The contractor sued the subcontractor; the subcontractor filed a third-party complaint against Travelers. The contractor and Travelers asserted the affirmative defense of illegality/unenforceability of contract, on the basis that the subcontractor did not possess a specialty contractor's license as required by Miami-Dade County Code of Ordinances. The appellate court reversed, remanding to the lower court to consider a list of factors when analyzing whether the subcontract should be dishonored.

Barcelona Hotel, LLC v. Nova Cas. Co., No. 3D10-1934 (Fla. 3d DCA Mar. 2, 2011)

Appeal from the trial court's grant of summary judgment in favor of the building and personal property insurer. The appellate court reversed, holding that the trial court erred in ruling that an excavator was not a "vehicle," and thus not a named peril under the policy. The appellate court held that, applying a plain meaning analysis, the excavator was a "vehicle" under the policy, and thus a named peril.

St. Paul Mercury Ins. Co. v. Fed. Deposit Ins. Corp., No. 08-21192-CIV, 2011 WL 1195402 (S.D. Fla. Mar. 29, 2011)

The Court denied the insurer's motion for summary judgment as to coverage under a bond for losses incurred on a $15 million bank loan. The FDIC claimed the loan loss under the insurance bond, alleging as the basis for coverage the bank director's dishonest or fraudulent conduct and his receipt of kickbacks out of the loan proceeds. The carrier argued that there was no coverage because the bank did not "discover" the loss during the bond period. The Court declined to adopt the carrier's position as a matter of law, holding that a genuine issue of material fact existed as to whether a reasonable person would have assumed, based on the facts known to the bank, that a covered loss had been incurred.

Fisk Elec. Co. v. Solo Constr. Corp., No. 09-16273, 2011 WL 891797 (11th Cir. Mar. 16, 2011)

The Eleventh Circuit affirmed the Southern District of Florida's denial of a subcontractor's motion to modify the jury's verdict and to enter judgment holding both defendants jointly and severally liable for the jury's award. The Eleventh Circuit held that the subcontractor waived its right to contest the verdict by failing to raise an objection to the verdict before the jury was dismissed. The Eleventh Circuit also affirmed the Southern District's denial of the subcontractor's motion for a new trial, holding that admission of evidence that a mediation took place and resulted in a payment did not violate Florida law or Federal Rule of Evidence 408.

Beach Cmty. Bank v. St. Paul Mercury Ins. Co., 635 F.3d 1190 (11th Cir. 2011)

The Eleventh Circuit vacated the Northern District of Florida's entry of summary judgment in the insurer's favor, holding that a financial institution bond covered losses that a bank suffered upon a loan default that had been secured by a forged guaranty. The Eleventh Circuit held that the insurer failed to establish that the loss did not result directly from the extension of credit. The Eleventh Circuit also held that factual issues remained as to whether the bank relied on the guaranty in issuing the loan, whether the bank had physical possession of the guaranty when it issued the loan, and whether the bank issued the loan in good faith.

Van Dyke v. Matrix Employee Leasing, No. 1D09-1393 (Fla. 1st DCA Mar. 2, 2011)

Appellate court reversed in part an order of the Judge of Compensation Claims ("JCC") which denied claims for temporary partial disability benefits and for the authorization of medical care. The appellate court affirmed the denial of the claim for authorization of a doctor, because the claimant failed to establish the medical necessity of the care.

Langevin v. First Union Nat'l Bank, No. 1D10-4308 (Fla. 1st DCA Mar. 3, 2011)

Appellate court affirmed an order of the JCC denying permanent total disability benefits, holding that the JCC properly found that the claimant failed to satisfy the five-step inquiry used to establish catastrophic injury under Section 440.15(1)(b) of the Florida Statutes.

Jewell v. Gevity HR & Chartis Ins., No. 1D10-4126 (Fla. 1st DCA Mar. 23, 2011)

Appellate court reversed the JCC's order finding that the employer/carrier was entitled to apportionment, holding that the JCC erred in concluding that the need for medical care was the result of merger with a preexisting condition. The appellate court explained that although there was evidence that the claimant had preexisting conditions, there was no evidence that the claimant had a preexisting permanent impairment or disability. Thus, there could be no merger under Section 440.15(5)(b) of the Florida Statutes.

Kauffman v. Cmty. Inclusions, Inc./Guarantee Ins. Co., No. 1D10-4046 (Fla. 1st DCA Mar. 23, 2011)

Contains discussion regarding workers' compensation fee awards under Section 440.34(1)(b) of the Florida Statutes. The appellate court rejected the claimant's constitutional challenge to Section 440.34.

McDermott v. United Parcel Serv./Liberty Mut., No. 1D10-3557 (Fla. 1st DCA Mar. 28, 2011)

Contains discussion regarding workers' compensation fee awards under Section 440.34(1)(b) of the Florida Statutes.


February 2011 Caselaw Summary

Illinois National Ins. Co. v. Bolen, Case No. 5D10-2856, 2011 WL 248541 (Fla. 5th DCA, Feb. 4, 2011)

In an action involving an insured's claim for uninsured motorist benefits, the court held that the trial court's lifting of abatement of a bad faith claim was premature until the carrier's appeal of a verdict on the coverage action was determined.

Penn-American Ins. Co. v. Lucky Entertainment, LLC, Case No. 8:08-CV-02538-EAK-AEP, 2011 WL 397944 (M.D. Fla., Feb. 4, 2011)

Court rejected an insured's request for a contingent risk multiplier, finding that the contingent fee agreement in question was executed seven days prior to the court's order of liability in the insured's favor. Court awarded a total of $91,906 in fees and costs to the insured, finding that the $450 hourly fee charged by the partner on the file was reasonable, as were the fees charged by associates and staff. Court adopted an average billable rate of $416.

The Bartram, LLC v. Landmark American Ins. Co., Case No. 1:10-CV-00028-SPM-GRJ, 2011 WL 528206 (N.D. Fla., Feb. 4, 2011)

In a discovery dispute centered on the insured's request for the carrier's claim file, court held that under federal law, an insurer's claim files are not automatically entitlted to work-product protection in a first party case. The date for triggerring the "anticipation of litigation" requirement should be the date of the claim denial. Regarding a request for internal claims related policies and procedures, the court found such a request to be not reasonably calculated to the discovery of admissible evidence in a coverage dispute.

In re Deepwater Horizon Oil Spill Litigation, MDL No. 2179, 2011 WL 484286 (U.S. MDL Panel, Feb. 8, 2011)

Multi-District Litigation Panel handling claims relating to the gulf oil spill ordered that two declaratory actions filed against Transocean Offshore Deepwater Drilling by its insurers be transferred to the MDL from the Eastern District of Louisiana. Unlike insurance policies relating to the currently pending Chinese Drywall MDL, the policies at issue here "involve coverage issues with respect to the core of the MDL", namely the explosion of the oil rig and the ensuing spill, and the insureds here are two principal defendants in the MDL (Transocean and BP).

Citizens Property Ins. Corp. v. Mango Hill Condo. Ass'n, No. 3D10-2014, 2011 WL 613518 (Fla. 3d DCA, Feb. 9, 2011)

Court reversed an order compelling appraisal in a Hurricane Wilma case, and ordered that the trial court conduct an evidentiary hearing on whether the insured complied with the policies post-loss requirements. Trial court must determine whether post-loss conditions have been complied with by the insured before appraisal can proceed.

Essex Ins. Co. v. Big Top of Tampa, Inc., No 2D10-116, 2011 WL 519916 (Fla. 2d DCA, Feb. 16, 2011)

CGL carrier has no duty to defend insured where the insured faces claims for assault and battery. Second DCA reversed the trial court, who determined, following a non-jury trial, that the policy's "assault and battery" exclusion did not apply because the underlying complaint described an arrest which was lawful and did not constitute an assault and battery within the meaning of the exclusion. Second DCA reasoned that because the underlying complaint clearly alleged that a battery occurred, and the trial court erred by going beyond the allegations of the complaint to determine the issue.

Arrowood Indemnity Co. v. Acosta, Inc., No1D10-1060, 2011 WL 522795 (Fla. 1st DCA, Feb. 16, 2011)

In an action to determine coverage under a D&O policy, the carrier served a statutory offer of judgment in the amount of $1000. After the trial court granted summary judgment in the carrier's favor on the issue of coverage, the carrier moved for attorney's fees under its offer. Trial court denied the motion on the grounds that the offer was not made in good faith, and the carrier appealed. The appellate court held that the trial court erred in applying a wholly objective standard to determine whether the offer was made in good faith, and by not giving appropriate consideration to the carrier's justification for its offer. The trial court should have first considered the carrier's explanation, then determined whether, despite consideration of the objective factors, the carrier had a "subjectively reasonable belief on which to base its offer."

Allstate Ins. Co. v. Andrews Florist on 4th Street, Inc., No. 8:08-CV-2253-T-EAJ, 2011 WL 672349 (M.D. Fla., Feb. 17, 2011)

In a coverage action arising out of a car accident, court held that the accident was covered under the carrier's commercial auto policy. Although driver of the vehicle was not an insured, the coverage under the policy did not depend on the employment status of the driver; coverage is found regardless of who owns, uses, or maintains a covered vehicle. Subsquent jury trial resulted in verdict for the insured that (1) carrier did not provide an adequate defense to the insured, (2) the amount of the settlement contained in a Coblentz agreement was not unreasonable, and (3) the Coblentz agreement was not entered into in bad faith.


December 2010 Case Law Summary

United Nat'l Ins. Co. v. Best Truss Co., No. 09-22897-CIV, 2010 WL 5014012 (S.D. Fla. Dec. 3, 2010)

Insurer moved for summary judgment arguing that the insured's roof damages did not manifest during the policy period, because the insured did not notice the damages until after the policy period expired. The insured's expert opined, however, that the damages began soon after the roof was installed during the policy period and would have been visible save for physical obstructions. The district court agreed with the insured finding a genuine issue of material facts as to the manifestation of damages, because "visibility from within the enclosed and inaccessible attic does constitute manifestation."

Colony Ins. Co. v. Total Contracting & Roofing, Inc., No. 10-23091-CIV, 2010 WL 5093663 (M.D. Fla. Dec. 8, 2010)

Insurer filed a complaint for declaratory relief against its insured Total Contracting and the Smiths, who had filed suit against Total Contracting for damages arising out of the installation of defective Chinese drywall in their home. The Smiths filed a counterclaim against the insurer. The district court dismissed the Smiths' counterclaim based on Florida's non-joinder statute. The district court rejected the Smiths' argument that it was a compulsory counterclaim in the absence of a judgment or settlement against Total Contracting. The district court also rejected the Smiths' argument that the non-joinder statute did not apply because they only filed their counterclaim in response to the insurer's complaint.

Altheim v. Geico Gen. Ins. Co., No. 8:10-cv-156-T-24TBM, 2010 WL 5092721 (M.D. Fla. Dec. 8, 2010)

District court granted and denied in part motion to compel documents of underlying lawsuit in subsequent bad faith lawsuit. The court held that under Allstate Indemnity Co. v. Ruiz, 899 So.2d 2d 1121 (Fla. 2005), the insurer was required to produce all work-product documents created up to the resolution of the underlying claim. The court, however, held that Ruiz did not apply to attorney-client communications: "Ruiz provides no authority for the wholesale piercing of the attorney-client privilege in connection with such discovery. Until such time as the Florida Supreme Court undertakes to decide the matter, I am obliged to side with those [Florida appellate] courts concluding that the privilege should be maintained."

Royal Marco Point I Cond. Assoc., Inc. v. QBE Ins. Co., No. 2:07-cv-16-FtM-99SPC, 2010 WL 5161111 (M.D. Fla. Dec. 14, 2010)

District court held that insurer's claims manual, litigation manual and other related policies and procedures documents are neither attorney-client communications nor work-product documents and must be produced in a bad faith lawsuit.

Wapnick v. State Farm Mut. Auto. Ins. Co., No. 4D09-3432, 2010 WL 5093221 (Fla. 4th DCA Dec. 15, 2010)

Court of Appeal reversed the trial court's finding of no coverage, because the insured's complaint for declaratory judgment sought only whether State Farm's designated location for an independent medical examine was reasonable. "The court was asked to determine only where the IME should take place, but instead the court determined that there was no coverage [as a result of the insured's refusal to attend the IME.] This was error. The trial court should have simply declared that the insured was required to attend the IME as requested by State Farm. Instead the court prematurely declared there was no coverage."

Harrington v. Citizens Prop. Ins. Co., No. 4D09-2591, 2010 WL 5093204 (Fla. 4th DCA Dec. 15, 2010)

Court of Appeal reversed the trial court's finding of no coverage determining that the policy was ambiguous. The insureds owned a primary residence and a rental property. The insureds sought liability coverage under their Citizens homeowners policy for an injury to a worker at the primary residence. The policy defined, in part, the "insured location" as "the part of other premises, other structures and grounds used by you as a residence, and which is shown in the Declarations." The Declarations Page listed the primary residence under the insureds' name and as the policy's mailing address. It listed the rental property as "Location of the Residence Premises." After concluding that the primary residence met the policy's undefined term of "other premises," the Court found the policy ambiguous, because "even though the primary property was listed as the mailing address, nothing indicates the 'insured location' definition excludes such a listing. Although Citizens many not have intended for coverage to extend to the [primary residence] for an injury that occurred there and had nothing to do with the [rental] 'Residence Premises,' the insurance policy appears to cover it, based on the plain reading of 'insured location.'"

Contender Fishing Team, LLC v. City of Miami, No. 10-10454, 2010 WL 5095873 (11th Cir. (Fla.) Dec. 15, 2010)

Court of Appeal affirmed the district court's finding that the city's marina operators liability policy did not cover an accident involving one of the city's police boats. The court held that coverage for "normal business operations" meant "marina operations," not just any operations in which the city happened to engage. The court rejected the city's argument that the policy was ambiguous, because "when we read the entire policy ... we conclude that the phrase 'normal business operations' clearly means 'marina operations' and not just any operations. The Policy itself is called 'Marina Operators Legal Liability Policy,' the introduction states that the Policy is one for 'marina owners' and covers 'marina operations' [and] the words 'marina operation' are referred to repeatedly throughout the Policy."

Westgate Miami Beach, Ltd. v. Newport Operating Corp., No. 09-1881, 2010 WL 5110237 (Fla. Dec. 16, 2010)

Receding from prior case law, the Supreme Court held that: (1) a trial court is allowed to reserve jurisdiction in a final judgment to award prejudgment interest; (2) an appeal from a final judgment reserving jurisdiction to award prejudgment interest will not divest the trial court of jurisdiction to award prejudgment interest; and (3) a final judgment that authorizes execution but reserves jurisdiction to award prejudgment interest will be considered final for purposes of appeal.

Hale v. State Farm Fla. Ins. Co., No. 4D09-1901, 2010 WL 5173889 (Fla. 4th DCA Dec. 22, 2010)

Court of Appeal held that insurer had a duty to defend its insured against a defamation lawsuit even though the policy excluded intentional acts, because the complaint "alleges that the defamation was done 'knowingly and/or negligent,' and the factual allegations do not clearly exclude the incident from coverage. Accordingly, whether the loss in the instant case would be covered depends on whether [the insured] acted intentionally or negligently, which is an issue of fact for the jury."

Sheldon, D.C. v. United Serv. Auto. Ass'n., No. 1D10-0777, 2010 WL 5306461 (Fla. 1st DCA Dec. 28, 2010)

Court of Appeal held that once PIP benefits are exhausted, an insured (or assignee) is barred from filing or maintaining a previously filed lawsuit against an insurer solely to pursue a claim for penalties, interests and/or attorney's fees based on benefits that were reduced or denied prior to the exhaustion of benefits.

Citizens Prop. Ins. Co. v. Maytin, No. 3D10-693, 2010 WL 5348554 (Fla. 3d DCA Dec. 29, 2010)

Court of Appeal reversed trial court's grant of motion to compel appraisal. Insurer argued that insured failed to comply with post-loss conditions precluding the invocation of the appraisal clause under the policy. Appellate court remanded for an evidentiary hearing to determine whether insured had complied with the policy's post-loss conditions enabling him to invoke the appraisal provision.


November 2010 Case Law Summary

Coda Roofing, Inc. v. Gemini Ins. Co., 2010 WL 4689325 (S.D. Fla. Nov. 10, 2010)

District court denied carrier's motion for reconsideration of order granting judgment as a matter of law in insured's favor, where insurance company could not prove that it intended to include, but omitted due to clerical error, a "torch down roofing exclusion" in roofing company's commercial general liability policy.

Thompson v. Cincinnati Ins. Co., 2010 WL 4667100 (N.D. Fla. Nov. 9, 2010)

District court denied non-party attorney's motion to quash subpoena duces tecum issued by insurance company in bad faith lawsuit, seeking information regarding the dates and times he met with his client (the claimant in an underlying wrongful death lawsuit) because the information was not protected by the attorney-client privilege. The insured sued carrier to recover excess judgment allegedly caused by carrier's failure to timely tender policy limits. The insurance company asserted as a defense that it made several attempts to contact claimant prior to filing of wrongful death lawsuit, but claimant never returned calls or responded to correspondence. Carrier sought information regarding meetings between claimant and counsel to support the inference that the claimant purposely ignored communications from the carrier and thwarted its effort to settle.

Young v. Lexington Ins. Co., 2010 WL 4282117 (S.D. Fla. Nov. 1, 2010)

District court granted insurance company's motion to strike insureds' expert witnesses, where insured failed to calendar agreed dates for expert disclosures contained in joint scheduling report, did not disclose experts until after defendants disclosed experts, after deadline to file Daubert motions, and only ten days before discovery cut-off. Court found that insurance company was prejudiced by this delay because it did not have time to conduct expert discovery, and denied motion for extension of time to complete discovery.

USAA v. Kindl, Case No. 5D10-1722, Fifth DCA Nov. 12, 2010: district court granted insurance company's petition for writ of certiorari and quashed trial court's order compelling carrier to produce its claim file while coverage issue remained pending.

1550 Brickell Associates v. QBE Ins. Co., 2010 WL 4443733 (S.D. Fla. Nov. 1, 2010)

District court denied insurance company's appeal of magistrate judge's orders pertaining to carrier's rebuttal witnesses. District court found that magistrate judge properly entered order striking insurer's rebuttal experts because they were testifying on new topics and the prejudice to the insured could not be cured through other means. In addition, the testimony of the rebuttal witnesses was cumulative to its other experts.

Mizner Grand Condo. Assoc., Inc. v. Travelers Prop. Cas. Co. of America, 2010 WL 4683540 (S.D. Fla. Nov. 18, 2010)

District court granted insurance company's motion to compel responses to request for production where insured's assignee in breach of contract action produced 100,000 unsegregated and uncategorized documents in response. The court rejected the assignee's assertion that documents were produced as kept in the usual course of business, and stated that even if the documents were produced as they were kept in the ordinary course of business, if the record-keeping system is "so deficient as to undermine the usefulness of production," that party would not meet obligations under Fed. R. Civ. P. 34. Assignee was ordered to organize and label the production to reasonably correspond to the discovery request categories.

Citizens Prop. Ins. Co. v. Galeria Villas Condo. Assoc., Inc., 2010 WL 4740049 (Fla. 3d DCA Nov. 24, 2010)

District court reversed trial court's order compelling appraisal of damage caused by Hurricane Wilma and remanded to trial court with instructions to compel the insured to provide records requested by Citizens regarding its claim, and to allow reasonable access to property damaged by storm. Citizens originally inspected the insured property and concluded that the damage did not exceed the deductible. The insured retained a public adjuster and submitted a signed and sworn proof of loss, but did not produce 13 categories of documents requested by Citizens. In addition, Citizens complained that it had not been permitted to reinspect the property since 2005. Four days after submitting the proof of loss, the insured sued Citizens for breach of contract and a month later, moved to compel appraisal. The Third DCA stated that appraisal was premature because "[o]nly when there is a 'real difference in fact, arising out of an actual and honest effort to reach an agreement between the insured and the insurer' is an appraisal warranted."

Citizens Prop. Ins. Co. v. Ashe, Case No. 1D1D09-1546, First DCA Nov. 17, 2010

Appellate court reversed trial court's application of "other insurance" clause in wind policy, where insured's waterfront home was totally destroyed by Hurricane Ivan and flood insurance carrier paid full policy limits, and Citizens paid the adjuster's estimate minus the deductible. Insured sought to recover the total loss value under his wind-only VPL policy.


October 2010 Case Law Update

Mercury Ins. Co. of Fla. v. Jackson (Fla. 1st DCA Oct. 29, 2010)

In a declaratory judgment action brought by the insurer to determine whether it had acted in good faith in adjusting claims against its insureds arising out of a car accident, there was no error in transferring the case to the county in which the accident occurred, the estate had been opened, and any settlement would have ultimately been paid. Although an insured's county of residence may be a significant factor in other cases where bad faith venue is at issue, it was not a significant factor under unique facts presented in this case.

Citizens Property Ins. Co. v. Michigan Condo. Ass'n (Fla. 4th DCA Oct. 27, 2010)

Trial court erred by granting insured's motion to compel appraisal before the court had resolved the underlying coverage dispute. The Fourth District determined that the insurer did not waive its right to deny coverage by failing to deny coverage before suit was filed.

Beverly v. State Farm Fla. Ins. Co. (Fla. 2d DCA Oct. 27, 2010)

Trial court erred by entering summary judgment for the insurer finding that insurer's post-suit payment of additional policy proceeds did not entitle the insured to fees under Fla. Stat. s. 627.428. The insured argued that its insurer wrongfully caused it to resort to litigation in order to resolve the conflict when it was within the company's power to do so. The Second District held that there were factual issues as to whether the insured was forced to file suit to resolve the claim that precluded summary judgment.

Pineda v. State Farm Fla. Ins. Co. (Fla. 3d DCA Oct. 27, 2010)

The Third District held that no attorneys' fees were awardable under 627.428 for a portion of the case seeking appraisal under a homeowner's policy where the parties were unable to agree on an umpire and the insurer filed a petition for selection of a neutral umpire. However, the court determined that the insureds were entitled to an award of attorneys' fees for successfully defeating the insurer's request that the trial court direct the umpire to provide an itemized appraisal.

Allstate Property & Cas. Ins. Co. v. Archer (Fla. 2d DCA Oct. 13, 2010)

Auto insurer was not entitled to writ of certiorari to prevent the deposition duces tecum of one of its adjusters, as insurer failed to establish that the taking of the deposition would result in irreparable harm, given limitations imposed on the deposition by the trial court.

O'Brien v. McMahon (Fla. 1st DCA Oct. 7, 2010)

The First District determined that there was no error by the trial court in concluding that the owner of a Prudential life insurance policy had substituted his younger daughter for his niece as beneficiary of the policy years before his death in compliance with the policy's terms.

Citizens Property Ins. Corp. v. San Perdido Ass'n, Inc. (Fla. 1st DCA Oct. 6, 2010)

The First District determined that the trial court's denial of Citizens' motion to dismiss a bad faith action on the ground of sovereign immunity is not reviewable by writ of prohibition or certiorari. The appellate court certified the following question to the Florida Supreme Court: "Whether, in light of the Florida Supreme Court's ruling in Dep't of Ed. v. Roe, 679 So. 2d 756 (Fla. 1996), review of the denial of a motion to dismiss based on a claim of sovereign immunity should await the entry of a final judgment in the trial court?"

Office Depot, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh (S.D. Fla. Oct. 15, 2010)

In an action filed by an insured against a primary and excess insurer seeking declaratory judgment that the primary insurer breached a claims made executive and organization liability policy, the court held on summary judgment that: (1) the phrase "proceeding against," in the context of a "carve back" clause, defining "Securities Claim," referred to formal legal action rather than preliminary agency investigatory action; (2) sums paid by insured on behalf of its officers, directors, and employees in connection with SEC inquiry before receiving a subpoena or Wells notices did not constitute "loss" arising from "Claim;" (3) "relation back" provision did not apply to pre-suit investigation costs that may have related to and benefited defense of covered "subsequent Claims" that were not covered "loss" that "arises from" those "subsequent claims;" (4) definition of covered "loss," including "defense costs," did not include cost of investigating potential or anticipated claims; and (5) sums incurred by Office Depot in connection with the internal investigation performed by the Audit Committee and restatement of its financials did not "result solely from" the investigation and defense of federal securities litigation, and did not "arise from" covered "Securities Claim."

Trianon Condo. Ass'n, Inc. v. QBE Ins. Corp. (S.D. Fla. Oct. 1, 2010)

In an action filed by an insured against its property insurer asserting claims for breach of contract and breach of implied warranty of good faith and fair dealing alleging that the insurer failed to provide it with any estimate of hurricane-related damages, and to adjust, pay, and/or settle its claims under the policy, the insurer moved to dismiss for failure to state a claim. The Southern District held that: (1) the insured failed to state a cause of action for declaratory relieve under Florida law; (2) there is no independent cause of action under Florida law for violating statute requiring that insurance policies containing hurricane deductibles must contain boldfaced type stating that policies contain such deductibles; and (3) insured's claim for breach of implied warranty of good faith and fair dealing was really an unripe statutory bad faith claim.