Florida 1st District Court of Appeals Confirms Citizen’s Not Immune from Bad Faith Claims

J.P. Gonzalez-Sirgo
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Citizens Property Insurance Corporation is the Florida insurance company created by the Florida Legislature with the official policy objective of providing “affordable property insurance to applicants who are in good faith entitled to procure insurance through the voluntary market but are unable to do so.”  Florida Statutes §627.351(6)(a)1.  However, the notorious reputation Citizens has acquired for dealing with policyholders has created a dual meaning to its designation as the Florida insurance company of last resort.  Because Citizens is a semi-public entity, it functions differently than private insurers in some respects.  All of its responsibilities, procedures, and operations are governed by Florida Statute §627.351(6).

An issue that has been raised as a defense in a number of Florida court cases involves the extent to which Citizens can rely on governmental immunity to avoid liability for bad faith practices.  This defense was recently raised in Perdido Sun Condominium Association, Inc. v. Citizens Property Insurance Corporation, 129 So.2d 1210 (Fla. 1st DCA 2014).  The policyholder had its property damaged during a hurricane and filed a claim with Citizens.  Perdido Sun was unsatisfied with the amount Citizens offered to settle the claim and filed a breach of contract lawsuit.  Perdido Sun prevailed on the breach of contract claim in the trial court and the decision was upheld on appeal.

Because the policyholder prevailed in the trial court on the breach of contract claim, it filed a claim under Florida Statutes §624.155 for Citizens’ failure to settle the insurance claim in good faith.  Citizens asserted that it was immune from tort liability under Florida Statutes §627.351(6)(s)(1).  The insurer further alleged that the insurance bad faith statute was not among the enumerated exceptions to sovereign immunity from civil tort lawsuits under the previously referenced provision.  The circuit court accepted the sovereign immunity defense and dismissed the insured’s lawsuit.  The policyholder appealed.

The appellate court indicated that the issue was Citizens’ immunity from suit under 627.351(6)(s)(1), which provides in pertinent part:

“There shall be no liability on the part of, and no cause of action of any nature shall arise against, the corporation or its agents of employees, for any action taken by them in the performance of their duties or responsibilities under this subsection.  Such immunity does not apply to:

(a)Any of the foregoing persons or entities for any willful tort;

(b)The corporation or its producing agents for breach of any contract or agreement pertaining to insurance coverage;…”

On appeal Perdido Sun contended that the statutory bad faith claim fell under the “willful tort” exception to subsection (a) of the above cited provision.  The court equated the term “willful tort”, which was not specifically defined under the statute, to an intentional tort.  The appellate court noted that Citizens as a semi-public entity has a “duty to manage its assets responsibly to minimize its assessment potential”.  However, the court also noted the same statute imposed on Citizens a “duty to its policyholders to handle claims carefully, timely, diligently, and in good faith.” §627.51(6)(s)(2) Fla. Stat.  The court reasoned that because the statute imposes an express duty on Citizens to act in good faith, the “willful tort” exception permits the quasi-public insurer to be sued under Florida’s insurance bad faith statute.

Although Florida courts have ruled that the statutory bad faith provision has essentially eliminated common law claims for bad faith, rulings rejecting immunity claims by Citizens ensure that policyholders continue to have a viable remedy for Citizens’ bad faith practices.

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

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