For years a debate raged over whether Florida law recognized an action for breach of a common law obligation of good faith and fair dealing in a first party insurance claim. At the center were condominium associations that suffered damages from Hurricane Wilma and either had their claims underpaid or denied altogether. After years of waiting, the Florida Supreme Court issued its ruling in QBE Insurance Corporation v. Chalfonte Condominium Association, Inc.,1 holding there can be no independent cause of action for breach of the common law obligation of good faith and fair dealing.
Public insurance adjusters play an important role for many policyholders, both commercial and residential, after a loss occurs. By all accounts, policyholders that retain the services of public adjusters generally obtain larger settlements from their insurance companies and often are able to avoid problems that could delay the claim.
Just in time for hurricane season, the Florida Supreme Court, finally made its decision on numerous important issues that have a dramatic effect on insurance law in the state. As Chip Merlin mentioned in his recent post “Policyholders Lose Rights in Florida Courts,” the Court recently rejected a condominium association’s arguments relating to five important questions of law in QBE Insurance Corporation v. Chalfonte Condominium Association Inc., Case No. SC09-441 (Fla. May 31, 2012).
There is a lot of litigation from Hurricane Wilma still proceeding in Florida state and federal courts. Much of that litigation has concerned whether the policyholders have complied with their post-loss duties to submit information, documentation and appear for examination under oath. During the last year or so, probably the heaviest litigated issue concerns whether the policyholder gave adequate notice of the loss to the insurer as required by policy terms. Insurers that raise such a defense are looking for a judgment on a technicality, and request the court to declare that they have no responsibility for any damages because the policyholder breached their duty to notify them of the loss.
"Custom in law is the established pattern of behavior that can be objectively verified within a particular social setting.” Wikipedia. Recently, the Federal Middle District Court in Florida decided a discovery dispute between a condominium association and its insurer, Nationwide, in the case Pepperwood of Naples Condo. Ass’n., Inc. v. Nationwide Mut. Fire Ins. Co., No. 2:10-cv-753, 2011 WL 3841557 (M.D. Fla. August 28, 2011). Discovery disputes arise when one party asks another to produce information, but the other party coes not comply. It is common for insurers to refuse to produce claim file materials, claiming the documents are protected by certain privileges and citing other objections. The Pepperwood case involved a situation where the condominium association sued Nationwide for bad faith damages for not promptly paying all insurance proceeds from the 2004 hurricane damages and forcing it to incur additional expenses in the claim presentation through an appraisal process.
Almost twelve years ago, Florida’s Third District Court of Appeal published its opinion in U.S. Fid. & Guar. Co. v. Romay, 744 So. 2d 467 (Fla. 3d DCA 1999). As of the writing of this post, Romay has been cited in no less than 44 published court opinions. Most of these cases, like the recent Citizens Prop. Ins. Corp. v. Gutierrez, 59 So. 3d 177 (Fla. 3d DCA 2011), cite the language from Romay which requires that “[t]he insured must comply with all of the policy’s post-loss obligations before the appraisal clause is triggered.” Unfortunately, this statement is only half of Romay. This is the half that focuses on the insured’s obligations. There is another side of Romay that focuses on the insurer’s obligations, and although this other side is not often discussed, it recently found its way into a published opinion from the United States District Court for the Southern District of Florida in 200 Leslie Condo. Ass’n, Inc. v. QBE Ins. Corp., No. 10-61984-CIV, 2011 WL 2470344 (S.D. Fla. June 21, 2011).
In a recent opinion, a federal trial court reviewing Florida law ruled on the issue of whether a Complaint involving a condominium association stated a claim against insurers for breach of a fiduciary duty in adjusting a first-party claim for damages. Grandrimo v. Parkcrest Harbour Island Condo. Assoc., Inc., No. 10-964, 2011 WL 550579 (M.D. Fla. February 9, 2011). The claim involved significant water damage, requiring extensive repairs forcing the Plaintiff, a unit owner within the condominium association, to stay in a hotel. The Plaintiff filed suit against the condominium association and numerous insurer Defendants asserting, among other things, that the insurers breached a fiduciary duty in the handling of the claim.
Last week on the Property Insurance Coverage Law blog, I wrote about new appeals that had been filed in Florida’s Third District Court of Appeal in Miami regarding insurance appraisals. Since November of 2010, three new cases regarding appraisal had come out of the Third District: Citizens Prop. Ins. Corp. v. Galeria Villas Condo. Ass’n, Inc., 48 So. 3d 188 (Fla. 3d DCA 2010), Citizens Prop. Ins. Corp. v. Maytin, No. 3D10-693, 36 Fla. L. Weekly D51 (Fla. 3d DCA Dec. 29, 2010), and Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass’n 12, Inc., No. 3D10-2014, 2011 WL 613518 (Fla. 3d DCA Feb. 9, 2011). As of last week’s blog post, four new appeals had been filed by Citizens, which makes a total of seven (7) appraisal appeals filed by Citizens in the Third District alone.
Anyone who has submitted an insurance claim knows that the investigation can be lengthy. For a condominium association, the investigation can be much more troublesome. Not only must the association investigate potential damage, but the insurance company and its adjusters and consultants will undoubtedly want access as well.
The Southern District Court of Florida entered summary judgment in favor of the Royal Bahamian Condominium Association and found coverage for the windows and sliding doors damaged during Hurricane Wilma in 2005. Royal Bahamian Association, Inc. v. QBE Insurance Corporation, No. 10-21511 (S.D. Fla. October 28, 2010). It is an important ruling, since a majority of the damage claimed by the association from Hurricane Wilma was to the windows and sliding doors. QBE took the position that the windows and doors were not covered because those items are the individual unit owners’ responsibility to maintain under the condominium declarations. The association board members operated under the mistaken belief for several years after the loss that the unit owners were responsible for repairing and replacing the windows and doors damaged during the hurricane. The board sent out notices advising the unit owners of its interpretation of the condominium declarations and quoting the pertinent sections of the declarations related to unit owner responsibility to maintain the windows and doors. Once the association retained counsel and a team of experts experienced in first-party property insurance, it submitted a Proof of Loss to QBE for over $8 million in damages caused by Hurricane Wilma in 2009.