A Florida district court recently denied two insurers’ motion to dismiss a count for breach of the implied warranty of good faith and fair dealing. Arlen House East Condo. v. QBE Int’l Ins. Ltd., No. 07-23199, 2008 WL 4500690 (S.D. Fla. Sept. 30, 2008). The court rejected the insurers’ argument that the breach of implied warranty count was merely a “disguised” first-party statutory bad faith claim.
In Arlen House, the insured sued both its insurers for breach of contract after they denied coverage for damage to the insured’s property. The insurers moved to dismiss a separate count for breach of the implied warranty of good faith and fair dealing, relying on Quadomain Condo Ass’n, Inc. v. QBE Ins. Corp., 20 Fla. L. Weekly Fed. D870 (S.D. Fla. May 14, 2007), and arguing that the breach of implied warranty count was analogous to a bad faith claim under section 624.155, Florida Statutes, and thus was premature.
The district court rejected the insurers’ attempt to equate “bad faith” with “lack of good faith.” The court found that the insured had properly alleged the breach of an implied warranty of good faith and fair dealing because it also asserted that the insurers had breached an express term of the contract. The court noted, however, that it would limit the insured to contractual damages and would prohibit any attempt to pursue the extra-contractual, tort-like, or punitive, damages generally sought in a bad faith claim.