There are many aspects of an insurance claim dispute that necessitate legal representation and counsel from an experienced Florida Insurance Claims Lawyer. The outcome of legal claims often turn as much on skilled navigation of complex procedures and potential pitfalls of litigation as the merits of a claim. When a layperson comes up against an experienced insurance defense lawyer, the policyholder who does not have the benefit of extensive litigation experience and legal training is at a distinct disadvantage. A recent decision by Florida’s 2nd DCA provides an example of the importance of procedural tactics on the outcome of insurance claims litigation.
In North America Capacity Insurance Co. (NAC) v. C.H., NAC, the insurer, appealed a judgment involving consolidated claims arising out of alleged child abuse by S.C. at a daycare facility operated by the Raes, the party insured by NAC. C.H. sued the Raes based on allegations that their son sexually molested C.H.’s daughter while she was in the care of the Raes daycare center. When the Raes submitted a claim for indemnity and defense against the claim by the insurer, NAC denied the claim but agreed to defend under a reservation of rights. At trial, a jury returned a verdict against the Raes in the amount of $6,225,340.
After the trial on the underlying action, NAC filed a request for a declaratory judgment that the policy did not cover the claim. The insurer contended that the Raes had no right to indemnification from the verdict. NAC also requested a determination that it did not commit bad faith in handling the Raes’ claim and defense. The Raes filed a separate action in state court requesting a finding that the policy covered the underlying claim and alleging bad faith by the insurer. NAC sought removal of the Raes action to federal court where the cases were consolidated. The federal district court determined there was no actual controversy regarding the bad faith claim because it was contingent on a final judgment from the state court on the issue of coverage. The appellate court also dismissed the coverage claim because the amount at issues was insufficient for diversity jurisdiction. The consolidated lawsuits were than remanded back to state court.
The circuit court issued an order authorizing C.H. to add NAC as a defendant and to allow claims for policy limits ($50,000) and insurance bad faith. NAC opposed the request based on the contention that the third party coverage and bad faith claims should not have been brought into an underlying tort action against the policyholder. The C.H. case was consolidated with the Raes and NAC actions after they were removed to federal court than remanded back to state court.
NAC filed to have C.H.’s bad faith count dismissed based on the lack of a final judgment on the coverage issue. The circuit court denied this request, but the bad faith action was abated until the issue of coverage was resolved. Both C.H. and NAC entered motions for summary judgment, the judge granted summary judgment for C.H. for policy limits.
NAC appealed the summary judgment on the issue of coverage reasoning that the nonjoinder statute, Section 627.4136, Florida Statutes (2013), was “not intended to allow a party to inject an insurance bad faith claim into the tort action.” In opposing the joinder, NAC argued that the judge improperly permitted C.H. to add a bad faith claim more than a year following filing the action. The insurer contended that it was denied the opportunity to remove the case to federal court which had to be done within one year of commencement of the action.
The court observed that NAC was not actually challenging the coverage issue but rather trying to reach back to rulings on prior bad faith claims. The court also noted that an appeal of a final order empowers the court to review “all necessary interlocutory steps leading to that final order, whether they were separately appealable or not.” However, the bad faith procedural rulings were not necessary interlocutory steps in the ruling on the issue of coverage. A decision permitting the bad faith procedural rulings under the guise of an appeal of the coverage issue would fly in the face of the rationale for allowing the coverage appeal to move forward in the first place. As the court concluded, coverage issues are separate and distinct from bad faith claims, so coverage must be determined prior to bad faith claims.
While this appellate court decision has been simplified to make it easier to follow, the court’s reasoning and the complex procedural maneuvers will be relatively difficult to follow unless you are an experienced insurance claims professional. These types of sophisticated procedural tactics can have a significant impact on the outcome of insurance claims litigation. Because effectively navigating the complex procedural and evidentiary rules associated with insurance litigation can be nuanced and difficult, the decision to promptly seek legal advice must occur sooner rather than later.
If you have questions about an insurance claims dispute, you are invited to contact our law firm to speak to an experienced Florida insurance claims attorney. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095or Toll Free 1-866-71-CLAIM.