CatClaims, Coverage, Part Disclaimer With Part Payment ....

                            and Florida Statutory Bad Faith.

    Two days before this post, Florida's First District Court of Appeal issued a Catastrophe Claim decision in a First Party Bad Faith case.  The decision does not represent new law but it is significant.  The results are a reminder to people who have handled Claims of this kind and a caution to people who have not.  Here is a link to the case:  http://opinions.1dca.org/written/opinions2006/11-15-06/05-5503.pdf.

    Hurricane Ivan totalled the residence of Mr. and Mrs. Roy and Kerry Golmon in 2004.  Vanguard is the Golmons' Homeowner's Insurance Company.  Vanguard paid part of its policy limits for the residence, a fact which is buried in the opinion, but left unpaid some of the loss to Mr. and Mrs. Golmons' dwelling, and Vanguard did not pay any part of the Golmons' other claimed losses such as Other Structures, Personal Property, and Loss of Use among others.  Vanguard denied any remaining Coverage on the ground that is at the heart of many, many CatClaims Coverage disputes:  Vanguard refused to pay the full policy limit(s) "because the loss to the Golmons' property was caused by both wind damage, which was covered under the policy, and flood damage, which was not covered." 

    The Golmons sued Vanguard for breach of contract and for Florida Statutory Bad Faith.  Vanguard filed a motion to dismiss the Statutory Bad Faith counts which the Trial Court denied.  On appeal, Florida's First District applied established law to hold two things:  First, in Florida establishing Insurance Coverage is a necessary first step or condition to pursuing these Statutory Bad Faith Claims and, in addition, the Insurance Company would be prejudiced if it was forced to defend itself simultaneously on the Contract Claim and on the Bad Faith Counts.  The First District reached these twin holdings regardless of the fact that "Vanguard's attorney conceded at the hearing that the insurer had some liability under the policy".  (Vanguard paid part of its policy limit for loss that Vanguard apparently admitted is covered under its policy.)  The First District held that the Trial Court's finding that Insurance Coverage is undisputed in this case, is erroneous:  "Both the existence of liability and the extent of damages are elements of a statutory cause of action for bad faith that must be determined before a statutory cause of action for bad faith will lie."

    In quashing the Trial Court's Order, however, the First District strongly suggested that the Trial Court should consider abating but not dismissing the Bad Faith Claims against Vanguard while the case goes forward on the Contract Claims in which the issue of Coverage will be determined.
 
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

Comments

[George Meier]

Thanks Dennis for alerting me to this recent case.