In QBE Insurance Corporation v. Chalfonte Condominium Apartment Association, Inc., Case No. SC09-441 (May 31, 2012), the Florida Supreme Court issued an opinion last week in a Hurricane Wilma property insurance case, which originated in the U.S. District Court for the Southern District of Florida. The District Court dismissed the condominium association’s causes of action for breach of the implied covenant of good faith and fair dealing and violation of the font-type requirements set forth in Florida Statutes § 627.701(4)(a). Both the carrier and the condominium association appealed the ruling to the Eleventh Circuit Court of Appeals.
Upon appeal, the Appellate Court certified the following issues to the Florida Supreme Court:
- Whether Florida law recognizes a cause of action premised on theories of breach of implied covenant of good faith and fair dealing;
- Whether Florida Statutes § 627.701(4)(a) provides an insured with a private cause of action and civil remedy for a carrier’s noncompliance; and
- Whether the policy’s requirement that mandated payment of benefits upon “entry of final judgment” waived the right to post a bond and stay the execution of a money judgment pending resolution of appeal.
The Court concluded that “it is clear that there is no common law first party bad faith action in Florida” and that the “implied covenant of good faith and fair dealing does not exist as a separate claim from a statutory bad-faith claim in the first party insurance claims in Florida.” The Court declined to extend the general principle that there exists an implied covenant of good faith and fair dealing in every contract to first-party claims.
Additionally, the Court noted that Florida Statutes § 627.701(4)(a) requires that a policy with a separate hurricane deductible is to include a statement regarding out-of-pocket expenses printed in “boldfaced type no smaller than 18 points.” QBE’s policy did not comply with the font-type or language required by the statute. However, the Court refused to penalize QBE for the non-compliance because “the statute does not provide for either a private cause of action or a penalty for a violation of its requirements.”
Finally, the Court concluded that the policy’s use of the phrase “entry of final judgment” in the Loss Payment Clause, does not waive the right to stay execution of the judgment pending appeal by posting a supersedeas bond (a type of surety bond a court requires from an appellant who wants to delay payment of a judgment).
The Court’s ruling is favorable to insurance carriers. However, it is likely that during the next the legislative session this ruling will bring about proposed changes to Florida Statutes § 627.701, and have the potential to generate new laws giving homeowners stronger remedies against carriers in a state where property damage claims against carriers are already commonplace.