Claims And Issues

THE VENEER OF JUSTICE SAM ALITO.

A veneer is defined as a thin layer covering up something else.  See the Merriam-Webster Dictionary definitions.

          In their latest venture into the tension between businesses and consumers, the U.S. Supreme Court 6 came down together, hard, to restrict people from suing under statutes that legislatures make available to people to sue.  The Supreme Court 6 say that is not constitutional.

          The veneer comes from Justice Sam Alito, one of the Supreme Court 6.  He says that people do not have a leg to stand on when they sue in federal courts unless those people can show their injuries and damages up front, from the get-go.  Many legal scholars parse Alito's words to see if he and the other 6 are being consistent in what they call standing "doctrine."

          The only thing we need to know, as a people, is that standing is a veneer.  The real doctrine is to deny people their rights under statutes that give them their rights -- at least as long as the Supreme Court 6 are on the job.

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BAD FAITH ISN'T ENOUGH? INJURY IN FACT AND STATUTES.

As promised, here and also on Claims and Bad Faith Law Blog, FROM THE 2018 SUPPLEMENT:

 

Litig. & Prev. Ins. Bad Faith § 9:14.50 (3rd ed.)

Litigation and Prevention of Insurer Bad Faith, Third Edition

A pdf of this new section can be accessed here or on my website at www.dennisjwall.com.

  

July 2018 Update

Dennis J. Wall

Part III. First-Party Claims

Chapter 9. Standards of Insurer Conduct

[NOTE:  FROM THIS POINT THROUGH THE END OF THE PIECE, THE FOLLOWING HYPERLINKS ARE PROVIDED VIA THOMSON REUTERS AND REQUIRE A WESTLAW ACCOUNT TO ACCESS THEM.]

• 9:14.50. “Injury in Fact”: What happens to bad faith statutes?

Claims handling and penalties statutes regulating the business of insurance may not any longer provide causes of action to many policyholders and claimants.

In 2016, the Roberts Court grafted a requirement onto the U.S. Constitution which is not found in it—standing — but which is instead found in the Court's cases. Cases decided in lower courts since the Roberts Court raised standing to a constitutional prerogative are divided over whether Congress and State Legislatures can provide standing by providing remedies for statutory violations.

In Spokeo, Inc. v. Robins,¹ the Court raised the judge-made doctrine of standing to constitutional status. “Standing to sue,” the Court recognized, “is a doctrine rooted in the traditional understanding of a case or controversy. The doctrine developed in our case law,” said the Court in Spokeo, Inc. v. Robins.²

One of the elements of standing is “injury in fact,” which the Spokeo Court raised to “a constitutional requirement” which bars legislatures from conferring standing on people and organizations in most cases. To establish injury in fact, a person invoking a statutory remedy now must meet a newly-found constitutional requirement that she or he had a legally protected interest that is concrete and individualized to her or him, and that the harm is “actual” or “imminent,” not “conjectural” or “hypothetical.”³The Spokeo case itself was presented when Mr. Thomas Robins filed a lawsuit claiming an alleged violation of the Fair Credit Reporting Act by an internet search engine service which incorrectly provided information to the world about him. The Roberts Court remanded for a determination of whether Robins adequately alleged an injury in fact in his complaint.

As it has done by replacing “ultimate facts” pleading with “plausibility” pleading, in which allegations of fact in a complaint must be weighed by each individual judge who must dismiss the complaints that he or she does not think are “plausible,” the Roberts Court has laid down another obstacle to filing lawsuits in Federal Courts.⁴ It is fundamental to its process to note how many times the Court would have people believe that its work has consisted for several years now of finding procedural and constitutional limitations which other Courts somehow must have overlooked.

In an interesting application of the Spokeo “standing-means-injury—in-fact” requirement, the District Court in Stromberg v. Ocwen Loan Servicing, LLC^4.10 was confronted with a lawsuit filed as an alleged class action by “Plaintiff Bonnie Lynne Stromberg [who] asserts a California state law claim against two mortgage lenders and a mortgage loan servicing company for failing to reconvey a deed of trust on real property within thirty days after repayment of her home loan.”^4.20 The Court rejected the mortgage lenders' and mortgage servicer's challenges to Ms. Stromberg's standing to sue them by ruling that she had sufficiently alleged “injury in fact” through these “conclusory” allegations (which she handily supported with an affidavit and which the Court considered together with the allegations in her complaint):

The Court does not need to decide whether a bare procedural violation of California's analogous prompt-recording statute constitutes a concrete injury-in-fact for standing purposes because Stromberg has not alleged “a bare procedural violation, divorced from any concrete harm.” Spokeo, 136 S. Ct. at 1549. To the contrary, she has alleged “additional harm beyond the one [the legislature] has identified.” Spokeo, at 1549–50 (emphasis in original). In her complaint, Stromberg alleges that she “suffered injury in the form of slander of title, incurred costs, impaired credit and incomplete and inaccurate public records respecting her financial obligations and credit worthiness.” Compl. ECF No. 58 ¶ 43. Even if this allegation regarding injury is, as Defendants contend, too conclusory by itself to establish an injury-in-fact, Stromberg has also submitted an affidavit that includes further factual support for her standing. ECF No. 101-1, Ex. A.^4.30

Other Courts have found Spokeo standing to assert Fair Debt Collection Practices Act claims,^4.40 Telephone Consumer Protection Act claims,^4.50 Fair Credit Reporting Act claims alleged by a pro se plaintiff,^4.60 and products liability claims in multi-district litigation which include allegations of noncompliance with standards set under regulations issued by the federal Environmental Protection Agency and by the California Air Resources Board.^4.70

As an example of lower federal courts actively seeking situations in which people simply cannot sue for alleged violations of State statutes, even though States have provided the statutory remedies alleged in the given case, the Eleventh Circuit Court of Appeals held after Spokeo that a borrower-mortgagor in New York State could not bring that particular lawsuit for an alleged violation of New York Real Property Law because now the United States Constitution forbids such a suit.⁵ The Eleventh Circuit's decision in this case has been rejected by name in other Circuits,⁶ and it has been distinguished in the Eleventh Circuit based, perhaps ironically, on other Eleventh Circuit case law.⁷

However, this decision is by no means alone.⁸ In Spokeo itself, the Court deciding that case remanded for a determination of “plausibility,” in effect, of whether Thomas Robins and persons like him had alleged injury in fact as the U.S. Constitution now apparently requires.

The following case did not directly involve the Spokeo “injury in fact” directive, but it does illustrate the relative probabilities of success of any statutory action under a “Consumer Protection Act” by whatever name. In Fat Bullies Farm, LLC v. Devenport,⁹ potential sellers of real property brought a New Hampshire Consumer Protection Act (“CPA”) claim against prospective purchasers on account of the alleged conduct of the prospective purchasers. To describe the attitude of the New Hampshire Supreme Court in rejecting a New Hampshire CPA claim in this case as hostile, is to put it mildly. It is nonetheless instructive:

Viewing Fat Bullies and Simmons's [the prospective purchasers'] misrepresentation in conjunction with the remainder of their course of conduct does not alter our determination. Even taken together, the acts of showing up unannounced with an attorney and an option agreement, not recommending that the Devenports [the potential sellers of the real property] obtain legal counsel, attempting to negotiate price, not explaining the meaning of the language contained in the draft agreement, threatening and attempting to enforce an option agreement, and pursuing a contentious litigation strategy would not “raise an eyebrow of someone inured to the rough and tumble of the world of commerce.” (Citations omitted.) We cannot conclude that the subject conduct offends established public policy, is immoral, unethical, oppressive, or unscrupulous, or causes substantial injury. (Citation omitted.)

For these reasons, we reverse the trial court's ruling on the Devenports' CPA claim and its award of attorney's fees to the Devenports as damages under the CPA.¹⁰

If the idea of “injury in fact” has been elevated surreptitiously from standing to the U.S. Constitution, it can certainly have an effect on claims based on State statutes providing remedies to ‘private attorneys general’ that the States rely on to enforce the laws. Time will tell whether State Unfair Claim Handling Practices Acts and Penalties Statutes governing the business of insurance will feel the effects and, if so, how.

Westlaw. © 2018 Thomson Reuters. No Claim to Orig. U.S. Govt. Works.

Footnotes

1

Spokeo, Inc. v. Robins,  U.S. , 136 S. Ct. 1540 (2016).

2

Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).

3

Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547-48 (2016).

4

See, e.g., Klika v. Capital One Bank, N.A., No. C15-0107RSL, 2016 WL 4544373 at *1 (W.D. Wash. June 30, 2016), and “PLAUSIBILITY AS A STANDARD? DON'T BELIEVE IT,” published on Insurance Claims and Issues Blog on Monday, May 1, 2017, at http://insuranceclaimsissues.typepad.com/insurance_claims_and_issu/2017/05/plausibility-as-a-standard-dont-believe-it-its-just-another-way-of-saying-theres-nothing-left-to-lose-with-apologies-to-m.html.

4.10

Stromberg v. Ocwen Loan Servicing, LLC, No.15-cv-04719-JST, 2017 WL 2686540 (N.D. Cal. June 22, 2017).

4.20

Stromberg v. Ocwen Loan Servicing, LLC, No.15-cv-04719-JST, 2017 WL 2686540at*1 (N.D. Cal. June 22, 2017).

4.30

Stromberg v. Ocwen Loan Servicing, LLC, No.15-cv-04719-JST, 2017 WL 2686540at*6 (N.D. Cal. June 22, 2017).

4.40

E.g., Ferrell v. HSI Fin. Serv's, LLC, No. 1:16-cv-04624-RWS-AJB, 2017 WL 8186795 at *4 (N.D. Ga. December 22, 2017) (“After careful consideration of the pleadings and the rapidly expanding catalogue of case law interpreting and applying Spokeo, the undersigned is persuaded that Plaintiff's pleadings are sufficient to establish standing. The Court finds Defendant's motion unavailing on several grounds.”); Abraham v. Ocwen Loan Servicing, LLC, 321 F.R.D. 125, 166 (E.D. Pa. 2017) (“Numerous courts have applying Spokeo found a sufficient ‘injury in fact’ to support a FDCPA claim from allegations that a plaintiff suffered an ‘informational injury’ because the character of a debt had been misrepresented.”).

4.50

Progressive Health & Rehab Corp. v. Strategy Anesthesia, LLC, 271 F. Supp. 3d 941 (S.D. Ohio 2017) (“Indeed, as Plaintiff points out, the overwhelming number of courts that have addressed standing in a TCPA case subsequent to Spokeo have found standing.”) (pinpoint page references not available in April 2018).

4.60

Lovess v. Embrace Home Loans, Inc., No. JKB-17-2212, 2017 WL 4745452 at *2 (D. Md. October 20, 2017) (“This case is very close to Spokeo, but not quite there. Plaintiff is similarly alleging a procedural violation of FCRA and claiming that she is harmed by potential future consequences. But she has also alleged actual damages in the amount of $100,000 stemming from emotional distress and mental anguish, and therefore this is not a ‘bare’ procedural violation of the type at issue in Spokeo.”).

4.70

In re Chrysler-Dodge-Jeep Ecodiesel Marketing, Sales Practices, & Prod's Liab. Lit., No. 17-md-02777-EMC, 2018 WL 1335901 at *6 (N.D. Cal. March 15, 2018)(“Because Plaintiffs allege a financial injury, Spokeo does not support dismissal of their case.”).

5

Nicklaw v. Citimortgage, Inc., 839 F.3d 998, 1002-03 (11th Cir. 2016).

6

See, e.g., Weldon v. MTAG Services, LL, No. 3:16-cv-783 (JCH), 2017 WL 776648 at *6 (D. Conn. Feb. 28, 2017).

7

See Tillman v. Ally Fin. Inc., No. 2:16-cv-313-FtM-99CM, 2016 WL 6996113 at *4 n.7 (M.D. Fla. Nov. 30, 2016).

8

See also Michael G. McLellan, “Finding a Leg to Stand On: Spokeo, Inc. v. Robins and Statutory Standing in Consumer Litigation,” 31 Antitrust 49 (Summer 2017).

9

Fat Bullies Farm, LLC v. Devenport, 170 N.H. 17, 28, 164 A.3d 990 (2017).

10

Fat Bullies Farm, LLC v. Devenport, 170 N.H. 17, 164 A.3d 990, 998–99 (2017).

End of Document	© 2018 Thomson Reuters. No claim to original U.S. Government Works.

Reprinted from Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith, Third Edition (Thomson Reuters). Further reproduction of this article without the express consent of the publisher is prohibited.

IF A TREE FALLS IN PENNSYLVANIA, SECOND OPINION FINAL WORD?

In Todd Aaron, M.D. v. State Farm Fire & Cas. Co., No. 17-2606, 2018 WL 1565617 (E.D. Pa. March 30, 2018), a tree fell on the policyholder's house.  The Court did not report any dispute over coverage.  The policyholder, Dr. Aaron, and the insurance company disputed the amount of the loss however.

The insurance company hired an expert.  He inspected the property four times at the request of the insurance company.  Each time he stood by his original estimate for repairs.

During that time, the policyholder's expert also inspected the property, and wrote a competing estimate for repairs in a report.  The policyholder sent the competing report to the insurance company, which is why the insurance company asked its own expert to revisit the property three times after the initial visit.

The insurance company wrote a check for the amount of repairs which its expert estimated four times.  That is, the carrier wrote one check based on its expert's four inspections of the property which resulted in the same estimate each time.

Dr. Aaron insisted that instead the carrier should write a check for the amount of his own expert's estimate.  He filed suit for breach of contract and statutory bad faith, among other things, when the carrier did not pay the amount of Dr. Aaron's expert's estimate.

The question under Pennsylvania law, as it would be under the law of first-party bad faith in most jurisdictions, was whether the carrier's conduct was reasonable.  The Court held that it was and granted the carrier's motion for summary judgment on the first-party bad faith claim.

Or, to put it another way, the moral of the story is that if a tree falls in Pennsylvania, the policyholder's expert does not automatically get the final word.

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APPRAISAL NOT A HURDLE TO FLORIDA STATUTE'S CIVIL REMEDY NOTICE.

In an appeal from Seminole County, Florida, two judges of the Fifth District Court of Appeal agreed in Landers v. State Farm Fla. Ins. Co., No. 5D15–4032, 2017 WL 3443077 (Fla. 5th DCA August 11, 2017) (STATED NOT RELEASED FOR PERMANENT PUBLICATION AND SO SUBJECT TO REVISION OR WITHDRAWAL), that the onset of Florida's "Bad Faith" statute was not delayed by the insurance policy before the court in that case.

In Landers, the Florida court was confronted with a homeowner's insurance policy provision requiring an appraisal in the event of a dispute over value.  The policy's appraisal provision is reproduced in footnote 3 of the majority opinion on appeal.

The appraisal provision applied to a dispute over the claim's value, in essence.  The insurance policy did not make appraisal a condition precedent to coverage, and it did not raise a bar to suing the carrier under a statute or otherwise for bad faith or unfair dealing until after an appraisal process was finished.

Resting its analysis on the Florida statute, neither does the Florida "Bad Faith" Statute make completing the appraisal process a condition precedent, the majority held.  The policyholder in that case was permitted to proceed with a civil remedy notice of insurer violation which he had filed under the statute even before the appraisal process was completed.

Parenthetically, the one judge who dissented did not file a reported opinion.

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"INJURY IN FACT": WHAT HAPPENS TO BAD FAITH STATUTES?

          Claims handling and penalties statutes regulating the business of insurance may not any longer provide causes of action to many policyholders and claimants.

          In 2016, the Roberts Court grafted a requirement onto the U.S. Constitution which is not found in it -- standing -- but which is instead found in the Court's cases.  Cases decided in lower courts since the Roberts Court raised standing to a constitutional prerogative are divided over whether Congress and State Legislatures can provide standing by providing remedies for statutory violations.

    In Spokeo, Inc. v. Robins, ___ U.S. ___, 136 S. Ct. 1540 (2016), the Court raised the judge-made doctrine of standing to constitutional status. "Standing to sue," the Court recognized, "is a doctrine rooted in the traditional understanding of a case or controversy.  The doctrine developed in our case law," said the Court in Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).

     One of the elements of standing is "injury in fact," which the Spokeo Court raised to "a constitutional requirement[.]"  To establish injury in fact, a person invoking a statutory remedy now must meet a newly-found constitutional requirement that she or he had a legally protected interest that is concrete and individualized to her or him, and that the harm is "actual" or "imminent," not "conjectural" or "hypothetical."  Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547-48 (2016).  The Spokeo case itself was presented when Mr. Thomas Robins filed a lawsuit claiming an alleged violation of the Fair Credit Reporting Act by an internet search engine service which incorrectly provided information to the world about him.  The Roberts Court remanded for a determination of whether Robins adequately alleged an injury in fact in his complaint.

    As it has done by replacing "ultimate facts" pleading with "plausibility" pleading, in which allegations of fact in a complaint must be weighed by each individual judge who must dismiss the complaints that he does not think are "plausible," the Roberts Court has laid down another obstacle to filing lawsuits in Federal Courts.  It is fundamental to its process to note how many times the Court now finds procedural and constitutional limitations which other Courts somehow must have overlooked.

To be continued on Insurance Claims and Issues Law blog.

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FLORIDA UM DAMAGES DETERMINATION BINDS BAD FAITH ACTION.

In a ground-breaking decision of an unsettled question of law, the Supreme Court of Florida has held that the determination of damages in an underlying uninsured motorist (UM) action sets the measure of at least one element of damages in a later bad faith action:

[A]n insured is entitled to a determination of liability and the full extent of his or her damages in the UM action before filing a first-party bad faith action. That determination of damages is then binding, as an element of damages, in a subsequent first-party bad faith action against the same insurer so long as the parties have the right to appeal any properly preserved errors in the verdict. The history of first-and third-party bad faith actions, this Court's precedent, and the legislative intent to eliminate the distinction between first- and third-party bad faith claims all support our conclusion. We also conclude that the trial court in this case did not err in retaining jurisdiction to allow the filing of a bad faith cause of action.

Fridman v. Safeco Ins. Co., 185 So. 3d 1214, 1216 (Fla. 2016).

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WHEN COVERAGE IS NOT ENOUGH, CAN BAD FAITH PREVENT REMAND?

In Alber v. GEICO General Ins. Co., No: 6:17-cv-160-Orl-31KRS, 2017 WL 1045504 (M.D. Fla. March 20, 2017) (Presnell, J.), a U.S. District Court denied a plaintiff's motion to remand because the plaintiff had filed a bad faith claim in addition to his claim for uninsured motorist (UM) coverage.

Under the UM contract claim, the plaintiff in this case conceded that he was seeking recovery of $40,000.00 in UM benefits.  That left $35,000.00 in order to reach the $75,000.00 federal jurisdictional limit in this case.

Under the bad faith claim, "[a]ssuming," said the Court, that the bad faith claim "ripens," the plaintiff could theoretically seek to recover all the damages he incurred as a result of the UM carrier's coverage denial.  In this case, those damages, the Court said, include:

• “'[B]odily injury and resulting pain and suffering, disability, disfigurement, mental anguish, loss of capacity for the enjoyment of life, expense of hospitalization, medical and nursing care and treatment, loss of earnings, loss of ability to earn money, and aggravation of a previously existing condition'”;
• "[H]e also asserts that these injuries are continuing and that he expects to suffer more in the future."
• The plaintiff also "asserts that he suffers from serious pain in his back and neck, that he has undergone $15,000 in spinal injections and that he intends to have more in the future."
• The plaintiff's "orthopedic surgeon opined that if Alber's pain continues, he may be required to undergo a discogram to his spine for surgical planning."

In the Court's eyes, "[t]hose alleged damages, combined with the attorney's fees incurred in pursuing the instant case, could easily exceed $35,000, taking the amount in controversy beyond the jurisdictional minimum."  Alber v. GEICO General Ins. Co., No: 6:17-cv-160-Orl-31KRS, 2017 WL 1045504, at *2 (M.D. Fla. March 20, 2017).

However, consider that this same District Court has held that a bad faith claim in a UM case in Florida should be abated, because it will not be actionable unless UM coverage is determined in favor of the plaintiff in the first place.  See "FLORIDA UM BAD FAITH CLAIM ABATED UNDER SECTION 624.155," posted on Insurance Claims and Bad Faith Law Blog on March 24, 2016.  See in addition "REMOVAL DOES NOT REMOVE VALUE," posted here on March 1, 2017 (federal jurisdictional limit of $75,000.00 was met where record established that policyholder demanded $100,000.00 UM policy limit before removal).  That would seem to make the bad faith claim speculative at best, and so perhaps an uncertain ground on which to assert federal jurisdiction.

Further, the mention of attorney's fees being available under the bad faith claim ignores the fact that in Florida an insured prevailing on coverage can recover his attorney's fees anyway, even without the bad faith claim.  See Fla. Stat. § 627.428.

Using theoretically recoverable damages to ignore whether a bad faith claim is viable in the first place.  That is how this motion to remand came to an end.  Now, having retained federal jurisdiction over this UM case, the federal court will be in a position potentially to award $40,000.00 in contract damages and grant a future motion to dismiss or for summary judgment on the bad faith claim, thereby removing the bad faith claim from this case and simultaneously adjudicating the absence of federal jurisdiction.  In such an event, attorney's fees alone would most likely not make up all of the $35,000.00 shortfall in order to reach the $75,000.00 federal jurisdictional threshold in this particular case.

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DETERMINATION FOR FLORIDA BAD FAITH LAWSUIT INCLUDES COVERAGE BELOW LIMITS.

In Florida, a determination of first-party coverage has been held to be a precondition to an action under Florida's Bad Faith Statute.  In Barton v. Capitol Preferred Ins. Co., 208 So.3d 239 (Fla. 5th DCA 2016), it was held in effect that a determination is a determination.

In that case, the determination was made when the carrier settled a sinkhole insurance coverage claim for less than policy limits.

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Statutory COVERAGE ANYONE? WHEN UNFAIR PRACTICES REQUIRE OFFICIALS "TOO BIG TO SUE."

In Hackler v. State Farm Mut. Auto. Ins. Co., No. 3:14-cv-00531-MMD-VPC, 2016 WL 5402743, at *2 (D. Nev. September 26, 2016), the policyholder invoked many of the practices regarding coverage which are prohibited by Nevada's Unfair Claim Practices Act.  She alleged these unfair practices in a claim against her underinsured motorist (UIM) carrier based upon the statute:

    NRS § 686A.310 lists a number of activities that are considered unfair practices in the context of insurance. Hackler argues that State Farm has violated subsections (b), (c), (d), (e), (f), (k), and (n), which prohibit the following:

(b) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.

(c) Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.

(d) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured.

(e) Failing to effectuate prompt, fair and equitable settlements of claims in which liability of the insurer has become reasonably clear.

(f) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered.

[...]

(k) Delaying the investigation or payment of claims by requiring an insured or a claimant, or the physician of either, to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.

[...]

(n) Failing to provide promptly to an insured a reasonable explanation of the basis in the insurance policy, with respect to the facts of the insured's claim and the applicable law, for the denial of the claim or for an offer to settle or compromise the claim.

NRS § 686A.310.

Her statutory claim for alleged unfair practices failed, however.  There was no evidence in the record of what the statute required as to proof of who was responsible at the insurance company for these practices.  The Nevada statute requires that the offending practice come at the hands of an officer, director or department head of the insurer who knowingly permitted the unfair practice.  There was insufficient proof in the record on this issue.  As a result, the policyholder's statutory claim failed in this case and the District Court both denied the policyholder's motion for summary judgment on this claim, Hackler v. State Farm Mut. Auto. Ins. Co., No. 3:14-cv-00531-MMD-VPC, 2016 WL 5402743, at *3 (D. Nev. September 26, 2016), and granted the carrier's motion for summary judgment on this claim.  Id. at *5.

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FLORIDA CONSUMER COLLECTION PRACTICES ACT HOLDS LOAN SERVICER IN CASE.

Storm clouds over the Gulf of Mexico.  Image Copyright Dennis J. Wall.  All rights reserved.

The Florida Consumer Collection Practices Act "prohibits a party from collecting a debt when it 'knows that the debt is not legitimate.' Fla. Stat. § 559.72(9)."  Martorella v. Deutsche Bank Nat'l Trust Co., 161 F. Supp. 3d 1209, 1226 (S.D. Fla. 2015).  The FCCPA thus requires allegations of knowledge or intent by debt collectors before the debt collectors can be liable under the Act.

A mortgage loan servicer was kept in the case in Martorella because Ms. Martorella alleged that the servicer knew that she had insurance before it force-placed insurance on her and tried to make her pay the premium as a part of her monthly mortgage payment.  And also because Ms. Martorella alleged that the servicer "continued its debt collection efforts" even after it knew that she had adequate insurance.  Martorella v. Deutsche Bank Nat'l Trust Co., 161 F. Supp. 3d 1209, 1226 (S.D. Fla. 2015).

The fact that the servicer tried to make Ms. Martorella pay the premium for the insurance it placed on her by force was undisputed.

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THE "EARTH" IN AN EXCLUSION: NO COVERAGE, NO BAD FAITH CLAIM.

Image courtesy of NASA.

The "earth" in a typical earth movement exclusion means "all natural materials that comprise the surface of the earth, including rocks and soil," said the Montana Supreme Court.  That being the situation, the Court held that the policy at bar thus excluded coverage for damage caused by a large rock falling down a hillside into the insured’s cabin.  Parker v. Safeco Ins. Co. of Am., 384 Mont. 125, 376 P.3d 114 ¶ 22 at 119 (2016).

There being no coverage, there could be no claim for bad faith in this case, either.  Specifically, in this case there could be no claim under the Montana Unfair Trade Practices Act as a result of the holding that there was no insurance coverage under the earth movement exclusion here.  Parker v. Safeco Ins. Co. of Am., 384 Mont. 125, 376 P.3d 114, ¶ 33 at 121 (2016).  This is a pretty universal holding:  Where there is no coverage, there can be no claim for insurer bad faith.

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GOT A LENDER FORCE-PLACED INSURANCE CASE?

WHEN PENALTIES BEGIN ON LENDER TITLE POLICY CLAIMS.

RM Kids is not a daycare center.  It is a lender.

RMK's predecessor, Peachtree Bank, lent money to a party to buy property.

Later, after RMK succeeded to the Bank's position (or, actually, succeeded to the position of RBC Bank which had purchased Peachtree Bank's loan), RMK foreclosed.

The question was when penalties could possibly begin for the title insurance company's denial of coverage:  Was it the date that Peachtree Bank closed on the loan, or the date that RMK foreclosed on the property?

Following the majority view on the question, the Court held that Georgia law in this case would pick the latter of the two dates, the date that RMK foreclosed.  When RMK foreclosed and its interest in the property was actually calculated, that is when RMK's damage was determined and its claim to penalties was complete.  Thus, the date of foreclosure was the date that the penalties period began to run on alleged bad-faith failure to timely pay the lender's title policy claims in this case.    Old Republic Nat'l Title Ins. Co. v. RM Kids, LLC, ___ S.E.2d ___, Nos. A16A0257 & A16A0258, 2016 WL 3563732, at *4, *9 (Ga. Ct. App. June 29, 2016).

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LIABILITY FOR COVERAGE BEFORE LIABILITY FOR FIRST-PARTY BAD FAITH.

It has been held under Florida law that the requisite liability to be determined before a statutory first-party bad faith action will lie, is the liability of the carrier for coverage, along with the extent of the policyholder’s damages:

We hold that an insurer’s liability for coverage and the extent of damages, and not an insurer’s liability for breach of contract, must be determined before a bad faith action becomes ripe.

Cammarata v. State Farm Fla. Ins. Co., 152 So. 3d 606, 610 (Fla. 4th DCA 2014)(en banc).

Please Read The Disclaimer.  Copyright 2015 by Dennis J. Wall.  All Rights Reserved.  No Claim to Original U.S. Government Works.

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Insurance Claims and Bad Faith Law Blog: NO COVERAGE, NO BAD FAITH UNDER PENNSYLVANIA LAW.

"DECEPTIVE PRACTICES" AND LENDER FORCE-PLACED INSURANCE: NEW YORK'S EXAMPLE.

    The role that New York's Deceptive Practices Act is playing in recent lender force-placed insurance ("LFPI") cases is on display in two parts on Thomson Reuter's Legal Solutions Blog.  Both are entitled "'Deceptive Practices' and Lender Force-Placed Insurance:  New York's State of Mind".  Here is Part 1, and here is Part 2.

    Check them out.  The New York statute is a lesson in progress on how to prosecute and defend LFPI claims under State Unfair and Deceptive Practices Acts.

The author is at work on a book on "Lender Force-Placed Insurance" to be published by the American Bar Association in the Spring of 2015.

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NO COMMERCIAL BAD FAITH IN PHILADELPHIA INSURANCE BAD FAITH CASE.

          In a case against an insurance company for bad faith denial of a claim, a Federal Court in Philadelphia faced a claim alleged against an insurance company under Pennsylvania's Unfair Trade Practices and Consumer Protection Law, the Pennsylvania UTPCPL.  The Federal Court effectively extended the intentional conduct requirements of insurance bad faith causes of action under Pennsylvania law to commercial bad faith causes of action.

          The Court in that case held that a claim under the UTPCPL for 'commercial' bad faith does not reach denial of an insurance claim under an insurance contract, unless the denial is accompanied by more than simply a breach of the contract.    In line with established Pennsylvania law, a simple breach of contract may be actionable at Pennsylvania common law, see Post v. Liberty Mutual Group, Inc., 2014 WL 2777396 (E.D. Pa., June 17, 2014), but it is not actionable under the Pennsylvania UTPCPL any more than an outright claim for insurance bad faith is actionable under 42 Pa. C.S.L. § 8371, Pennsylvania's 'Insurance Bad Faith Statute,' which it is not. 

 

© 2014 by Dennis J. Wall.  All rights reserved.  No claim to original U.S. Government works.

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Related articles

Late Notice Coverage Defense: Recent Florida Cases, New York Law.

No Coverage, No Bad Faith Under Pennsylvania Law.

ALL, PART PAYMENT DELAYED OF FLORIDA PROPERTY INSURANCE CLAIMS ... The Conclusion.

This is the conclusion of an article begun in a post on Insurance Claims Bad Faith Law Blog on Sunday, March 10, 2013.

           The provision of Florida Statute Section 627.70131(5)(a) which pertains to this discussion sets out a 90-day window within which to pay certain claims:

 (5)(a)Within 90 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer which reasonably prevent such payment.

          The charter fishing boat Joe Cool was recently the subject of a Claim under this Statute.  The Joe Cool was hijacked and damaged.  Certain parties made Insurance claims, although the actual Policyholder was not one of the parties making the Insurance claims at issue.

          A Florida Appellate Court pointed out that these Claims were not subject to Florida Section 627.70131(5)(a) for three good reasons.  First, the Florida Statute applies only to residential property insurers.  Great Lakes Reinsurance (U.K.) PLC v. Branam, 2013 WL 811677 *6 (Fla. 3d DCA March 6, 2013)(STATED NOT FINAL UNTIL RELEASED FOR PERMANENT PUBLICATION).   In making this ruling, the Appellate Court only followed the restrictions expressed in Subsection (4) of the same Florida Statute:  "(4) For purposes of this section, the term “insurer” means any residential property insurer."  In this case, Great Lakes was acting as a Marine Insurer and the Florida Statute did not apply for that reason.

          Second, Subsection 627.70131(5)(a) applies to Claims received "'from a policy holder.'"  Great Lakes Reinsurance (U.K.) PLC v. Branam, 2013 WL 811677 *6 n.5 (Fla. 3d DCA March 6, 2013).  [Emphasis by the Court.]  As noted above, the claims at issue were not received from a Policyholder.

          Third and perhaps most important, Florida law did not apply in this case according to the Appellate Court.  New York law applied here.  Even under New York law, there were no such applicable deadlines the Florida Appellate Court ruled, and the Claims at bar were legally insufficient.  The Appellate Court therefore reversed the Trial Court's denial of the Carrier's Motion for Entry of Directed Verdict and remanded with instructions to enter Judgment for Great Lakes.    Great Lakes Reinsurance (U.K.) PLC v. Branam, 2013 WL 811677 *6-*7 (Fla. 3d DCA March 6, 2013).

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Adverse Selection, Tuition Refund Insurance, and Mental - Physical Health Coverage.

   According to some of those offering it, Tuition Refund Insurance is a victim of adverse selection.  Adverse selection, so this thinking goes, is a cause of offering less Coverage for Mental Health issues than for Physical Health issues.  To put it more simply, perhaps, adverse selection involves the concept that those who need the line of Insurance are mainly the ones who will buy it.  Some background is probably required in order to understand what is going on here.

   Tuition Refund Insurance has been offered for a long time.  Its purpose has always been to provide Coverage for Tuition Refunds when a student is forced to withdraw before the end of the term.  Historically, there was a difference between Claims payments for a student's withdrawal due to Physical problems vs. a withdrawal due to Mental Health issues.  Coverage was historically greater for Physical than for Mental Health issues in Tuition Refund Insurance.  The justification for the difference was said to be due to adverse selection.  See Ron Lieber, "Your Money / Tuition Refunds,  But Not Quite on Equal Terms" p. B1, col. 1 (New York Times, "Business Day" Section, Saturday, July 23, 2011).

   To their credit, private Insurance Companies reportedly have abolished any such distinction.  More in line with current thinking on the subject, they offer equality in their Coverages -- and claims handling -- of Tuition Refund Insurance with respect to Physical vs. Mental Health issues when those concerns cause a student to withdraw from a course of study and her or his tuition is not refunded.  Sometimes this thinking was apparently brought about by Court decisions, and sometimes voluntarily, but this thinking is now the norm in the private Tuition Refund Insurance Industry.  See Lieber / New York Times, supra.

  The linked newspaper report does not offer a definition of "adverse selection" as understood in the Insurance industry.  Wikipedia does offer such a definition, noting that it describes a situation where from the Insurance Company's point of view in offering Coverage, a potential Policyholder has greater information about her or his condition or status than does the Insurance Company, so that the Insurance Company generally charges a higher Premium for Coverage in these situations of different degrees of knowledge or "asymptomatic information".  See Wikipedia Definition of "Adverse Selection".

   This discussion is important because Sallie Mae apparently decided to underwrite or offer Tuition Refund Insurance that would provide lesser Coverage for Mental Health than for Physical Health.  According to its website, Sallie Mae was brought into existence  by a Federal Statute as a government-sponsored entity in 1972 but is now a publicly held, private sector corporation.  Reportedly, however, Sallie Mae is for some reason not subject to Federal anti-discrimination laws in offering Health-related Insurance Coverages.   As a result of the newspaper's inquiries, however, the New York Times reports that Sallie Mae is apparently now pursuing an offering that would treat Mental and Physical Health Coverages more or less equally.  See Lieber / New York Times, supra.

If so , Sallie Mae is welcome to the world already occupied by private Tuition Health Insurance Companies.

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Direct Action Allowed Based Only on Wisconsin "Business Operations" Coverage.

   In Download Casper v. American International Southern Insurance Co. (Wis. Case Nos. 2006AP1229 et al, Opinion Filed July 19, 2011) PUBLIC ACCESS, also published as 2011 WL 2820530 (Wis. July 19, 2011) (authorized password required to access Westlaw), the opinion of the Wisconsin Supreme Court identified three issues for the Court's consideration.  We are concerned here with the second of those issues, which the Court's opinion identified in the following terms:

    ¶ 4 Second, can the Caspers maintain a direct action claim against National Union when its policy of insurance was neither delivered nor issued for delivery in Wisconsin but the insurance policy covers the insured's “business operations” conducted in this state? Relying on Kenison v. Wellington Insurance Co., 218 Wis.2d 700, 582 N.W.2d 69 (Ct.App.1998), the circuit court and court of appeals answered “no.” In this review, the Caspers contend that a plain reading of Wis. Stat. § 631.01(1), together with Wis. Stat. § 632.24, authorizes direct action against an insurer in any of four situations stated in the disjunctive in Wis. Stat. § 631.01(1). Only one of these four situations requires delivery of the policy in Wisconsin.

Casper v. American Southern International Insurance Co., 2011 WL 2820530 at *1 ¶ 4.

   The Supreme Court overruled previous intermediate appellate court case law and held that the answer to its own question is, in this case, a resounding "yes":

¶ 8 Second, a liability insurance policy need not be delivered or issued for delivery in this state in order to subject the insurer to a direct action under Wis. Stat. §§ 632.24 and 803.04(2). Kenison is accordingly overruled, and the decision of the court of appeals on this issue is reversed.

 Id. at *2 ¶ 8.  (Prosser, J., for the Supreme Court of Wisconsin).

   The Supreme Court's decision has far-reaching implications for direct actions under similarly worded statutes in other jurisdictions.  Insurers which have issued all kinds of Insurance Policies may find themselves defending lawsuits in places they never imagined going.  Until then, keep an eye on the Wisconsin Bar Website, among other sites, such as "Legislation:  Insurance Litigation & Regulatory Law Blog" (see in particular there, this post on August 10, 2010 by James Carlyle, "The California Supreme Court Reiterates Analysis for Determining Whether a Statutory Violation Confers a Private Cause of Action") to see what others have to say about the implications of this Wisconsin Supreme Court decision.

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Establishing Diversity Jurisdiction: Burden of Proof, Standard of Proof ... Counterclaim?

   American General Life and Accident Insurance Company issued a Life Insurance Policy to Mr. William Johnson.  After that, it increased the face amount of the Policy from $50,000.00 to $100,000.00.  Mr. Johnson died.  His death took place within two years of the effective date of the face amount increase, which triggered "a routine contestable investigation" by American General.  Download American General Life & Accident Insurance Co. v. Johnson (M.D. Ga. Case No. 7.10cv00136, Order Filed April 7, 2011) PUBLIC ACCESS., also published as 2011 WL 1336554 *1 (M.D. Ga. April 7, 2011)(authorized password required to access Westlaw), to which the Federal Court added an Addendum the same day:  Download American General Life & Accident Insurance Co. v. Johnson (Addendum Order Filed April 7, 2011) PUBLIC ACCESS.

   What American General found in its investigation was not identified by the Federal Court in this case, but whatever it was it was enough for American General to file a Complaint in Federal Court for a Declaratory Judgment of Rescission.  Not rescission of the entire Life Insurance Policy.  American General paid the previous face amount of $50,000.00.  American General instead contested the increase of the face amount by another $50,000.00 to $100,000.00.  American General Life & Accident Insurance Co. v. Johnson, 2011 WL 1336554 at *1.

   Betty Johnson was the Defendant.  She was William Johnson's wife and life insurance beneficiary.  She responded to the Complaint for Declaratory Relief with a Motion to Dismiss based on lack of diversity and therefore a lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).  Id.

   The attack on diversity focused on the Federal statutory requirement that Federal Court diversity jurisdiction include an amount in controversy in excess of $75,000.00, exclusive of interest and costs.  American General as the Plaintiff invoking Federal Court diversity jurisdiction bore the burden of proof by a preponderance of the evidence "that the claim exceeds $75,000."  Id. at *2.

   American General's Complaint was for Declaratory Relief and did not specify the amount in controversy.  "There is no question that the $50,000 additional face amount is in controversy."  Id.  The fight was about whether there was $25,001.00 more at issue in this case to meet the jurisdictional amount which was required to exceed $75,000.00.

   Although the Federal Court in this case said that it did not consider a Counterclaim filed by Ms. Johnson, id. at *3 n.3, it surely appears that in fact, it did.  Ms. Johnson carefully filed a Counterclaim "for the $50,000 unpaid portion of the policy, as well as a statutory bad faith penalty not to exceed $24,999 ....  Thus, Ms. Johnson specified in her counterclaim that she was seeking a maximum amount of $74,999."  Id. at *1.

   The Federal Court just as carefully examined the bad faith penalties that Ms. Johnson was seeking in this case.  "The issue is whether the claimed bad faith damages and attorneys' fees are sufficient to establish the rest of the jurisdictional amount."  Id. at *2.  "Under Georgia law," wrote the Federal Court, applied to the facts alleged in this case, "bad faith" statutory penalties could include a maximum award of 50% of the denied benefit, or here, 50% of $50,000.00 which would be a maximum additional $25,000.00, plus Ms. Johnson's attorney's fees.  Therefore, if Ms. Johnson was awarded the maximum statutory bad faith penalty plus at least $1.00 in attorney's fees, the jurisdictional amount would be satisfied in this case.  The problem with assuming that Ms. Johnson would receive the maximum available statutory bad faith penalty in this case, however, is that this assumption would "'an impermissible speculation as to what a jury may or may not award in this case.'"  Id. at *3.  In fact, in the eyes of the District Judge, that assumption "is too speculative to give this Court jurisdiction."  Id. at *2.

   There was another way to establish diversity jurisdiction consdering Ms. Johnson's Counterclaim.  Her award of statutory bad faith penalties, and her attorney's fees award, might result in an additional $25,001.00 if she also recovered the $50,000.00 face amount increase in her late husband's Life Insurance Policy.  Not only was this again speculative, said the Federal Court, id. at *2 - *3, but "[i]n addition, American General has provided no evidence whatsoever to establish a dollar amount" for Ms. Johnson's attorney's fees.  "Consequently, American General has failed to show by a preponderance of the evidence that its Complaint satisfies the amount in controversy and, as a result, this Court lacks jurisdiction to hear the case."  Id. at *3.  In and Addendum Order, the Court corrected this statement to acknowledge that American General had indeed filed an Affidavit reflecting that Ms. Johnson's attorney's fees, if awarded, would be over $30,000.00.  Download American General Life & Accident Insurance Co. v. Johnson (Addendum Order Filed April 7, 2011) PUBLIC ACCESS.  The Federal Court did not alter its ruling, however.  The amount in controversy was still too speculative for the Court to exercise jurisdiction in this case.

   For all these reasons, the Federal Court in this case granted Ms. Johnson's Rule 12(b)(1) Motion to Dismiss for lack of subject matter jurisdiction.

   Removal and remand, establishing diversity jurisdiction and amounts in controversy, and related burdens of proof and standards of proof in Insurance Cases are examined in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" §§ current 5:1, new 5:57 (Third-Party Cases) and current 11:1, new 11:23 (First-Party Cases) (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement; Third Edition in process for projected June, 2011 publication).

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"Premature" Appraisal Not Bad Faith, Connecticut Appellate Court Holds.

    In a decision that, on  the face of it, seems dated a little prematurely, Download Jansma v. Patrons Mut. Insurance Co. (Conn. App. Ct., Case No. 31705, Opinion Filed for Publication on March 1, 2011) PUBLIC ACCESS, NOT FINAL,, also published as 2011 WL 638295 (Conn. App. "Decided [actually, to be published on] March 1, 2011")(authorized password required to access Westlaw), the Appellate Court of Connecticut rejected a contention that allegedly "premature" appraisal in a first-party case constituted actionable bad faith.  The plaintiffs claimed that the defendant Homeowner's Insurance Company delayed payment of their claim by electing to proceed to appraisal.  (The Homeowner's Insurance Company in this case paid the full amount of the Appraisal Award.  After that, the Plaintiffs filed this lawsuit for Bad Faith, and also for alleged breach of contract, negligent infliction of emotional distress, intentional infliction of emotional distress, and several statutory violations.)

   To the contrary, in the Court's eyes, "our review of the record, including the policy, reveals that the defendant was fully justified in electing appraisal.  Thus, the [Superior Court, Middlesex County trial] court properly granted the defendant's motion for summary judgment."  Id. at *2.

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Civil Remedy Notice Without Amount, Can Still Satisfy Statute: Court.

   In Florida, a so-called "Bad Faith Statute" requires a Civil Remedy Notice of Insurer Violation as a condition precedent.  Fla. Stat. § 624.155(3) (2009).

   Following settled Florida case law, a Federal Court held in a First-Party case that failure to state a specific cure amount in what the Court called a "CRN" is not required in order to meet the Florida Statute's requirement of "specificity."  Royal Marco Point I Condominium Ass'n v. QBE Insurance Corp., Download Royal Marco Point I Condominium Ass'n v. QBE Insurance Corp. (M.D. Fla. Case No. 2.07cv16, Memorandum Opinion Filed July 13, 2010)FREE ACCESS DOWNLOAD also published as 2010 WL 2757240 *3 (M.D. Fla. July 13, 2010)(Westlaw subscription required to access Westlaw).  The Federal Court in that case denied the Defendant Insurance Company's Motion to Dismiss and its Motion for Summary Judgment.

   In following this settled Florida rule of law, the Federal Court in this case joined a growing number of Courts and cases in both Third-Party and First-Party situations, which have addressed issues of the sufficiency of Florida Civil Remedy Notices of Insurer Violations in defense of alleged Statutory Bad Faith Claims.  See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" §§ 5:1 (Introduction to Third-Party Insurer's Defenses, including to Alleged Statutory Bad Faith in Settlement), 5:23 (Introduction to Liability Insurer's Defenses, including to Alleged Statutory Bad Faith Claims in Failing or Refusing to Defend), 5:36 (Introduction to Defenses Raised by Liability Insurers in Alleged Inadequate Defense Cases) , 11:1 (Including Defenses to Alleged Statutory Bad Faith in First-Party Cases) (Shepard's/McGraw-Hill First Edition, West Publishing Company Second Edition and 2010 Supplement).

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Wind Insurance Claim, Hurricane Ivan, Home Destroyed: Insurance Coverage Issues.

   In 2004, Hurricane Ivan destroyed Mr. and Mrs. Hamilton's mobile home in Milton, Florida.  The Hamiltons made a Flood Insurance Claim on their Flood Insurance Policy, which was paid on the basis of a covered "flood loss".  Mr. Hamilton returned a sworn Proof of Loss to the Hamiltons' Flood Insurance Company that "he was claiming under the policy for the full value of the home and its contents, based on the 'flood loss' of September 2004."  Citizens Property Insurance Corp. v. Hamilton, Download Citizens Property Insurance Corp. v. Hamilton (Fla. 1st DCA Case No. 1D09.4128, Opinion Filed July 7, 2010) also published as 2010 WL 2671808 *1 (Fla. 1st DCA July 7, 2010)(Westlaw subscription required to access Westlaw; STATED NOT RELEASED FOR PUBLICATION IN PERMANENT LAW REPORTS AND SUBJECT TO REVISION OR WITHDRAWAL).  The Flood Insurance Claim was paid for the mobile home.  (The Hamiltons sustained losses to other structures which are not the subject of this post, although they were involved in other parts of the decision than those commented on here.)

   The Hamiltons thereafter filed a Wind Insurance Claim.  A flood of Insurance Coverage Issues ensued.  Among them, the Florida Appellate Court first dealt with Citizens' argument that it should have been allowed to put on evidence of the amount of the Flood Insurance payment.  (The Trial Court permitted Citizens to put on evidence that there was Flood Coverage, that there was Flood Damage, and that the Hamiltons made a Flood Loss Claim on their Flood Insurance Policy, "except as to dollar amount."  Hamilton, 2010 WL 2671808 at *3.)   Citizens was thus arguing that it should have been allowed to put on evidence of the amount of the Flood Insurance Claim despite the Collateral Source Rule.

   "As applied, the common law collateral source rule militates against evidence of the dollar amount of flood insurance payments, disbursed by an entity wholly independent of appellant, under a plainly distinct contractual obligation, and paid for entirely by premiums remitted by the Hamiltons, Accordingly, we find no abuse of discretion in the ruling on this matter."  Id. at *4.  [Emphasis added.]  The Appellate Court pointed out that with respect to this 2004 loss, "under the statute in effect at the time of the loss, the common law collateral source rule had not been legislatively altered.  See § 627.702(1), Fla. Stat. (2004)."  Id.  Section 627.702(1) has since been legislatively altered:  See Fla. Stat. § 627.702(1) (2009).

  Another Insurance Coverage Issue of interest in this case involves determining an "actual total loss" vs. a "constructive total loss".  "A building is considered an actual total loss, under the identity test, if it 'has lost its identity and specific character as a building, and becomes so far disintegrated, it cannot be possibly designated as a building, although some part of it may remain standing.  [Citation omitted.]  '[A] building is considered a constructive total loss when the building, although still standing, is damaged to the extent that ordinances or regulations in effect prohibit the building's repair, such that the building has to be demolished.'"  Id. at *5.  [Emphasis added.]  In this particular case, the Appellate Court held that the Trial Court's ruling on "the constructive total loss instruction" was not error and, even if it was error, Citizens was not prejudiced by it here.

   A third and final Insurance Coverage Issue of interest involves the Appellate Court's rejection at common law of a doctrine legislatively enacted, at least in part, into the relevant Statute:  the total loss recovery rule.  "The total loss recovery rule is a theory of damages based on indemnity principles, limiting an insured's recovery as between two or more insurers to the pre-loss value of the subject structure."  Id. at *7.  The Florida Appellate Court pointed out in its Hamilton decision that Florida Courts had rejected this rule before, and it rejected it at common law again, in this case.  In an echo of its ruling on the Collateral Source Rule, the First District held in this case:  "Accordingly, where the covered peril causes a total loss, the insurer has no equitable plea to reap a windfall from, in effect, a total set-off for unrelated insurance payments."  Id. at *8.

   The Florida Legislature's subsequent limited enactment of "the total loss recovery rule" did not affect the outcome in the Hamilton case:  "That the Legislature in 2005 amended the VPL [Florida's Valued Policy Law] to incorporate the spirit of the total loss recovery rule further supports our conclusion that this doctrine was not previously part of our canon of common law.  See § 627.702(1)(b),  Fla. Stat. (2005)....  In light of these decisions and the subsequent amendment to the VPL, we find no error in the court's refusal to apply the total loss recovery rule."  Id.   Here is a link to the current version of the Statute cited by the Hamilton Court.

   In many respects, losses incurred from Hurricanes in 2004 -- which included Hurricanes Charley, Frances and Jeanne, in addition to Ivan -- swept legislation into place in 2005 which had not previously existed in Florida.  The outcomes of decided cases may be different since then if the statutory changes apply to the given loss.

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Good Faith - Bad Faith Evidence of "Company-Wide Policies, Practices" ...

   **Author's Note:  If you have reached this blog through a list that carries advertising, your computer may or may not be put at risk either through the list or through the advertising.  I do not accept or authorize any commercial advertising of any kind on any list or post.  Placing commercial advertisements with or near any of my web log posts is prohibited.  Further, I do not recommend any products or services advertised with or near any of my posts or any list of my posts.**  

   ... Was Allowed in a Florida Statutory First-Party Bad Faith Action in Federal Court, Where the Evidence Was Offered for the Purpose of Showing That the Policyholder-Plaintiff "was directly harmed by them (i.e., that the bad faith in handling his claim resulted, at least in part, from these policies, practices, and procedures)."

This was one of the many holdings of the Court in response to 14 motions in limine filed by the parties, in Download Kearney v. Auto-Owners Insurance Co. (M.D. Fla. Opinion Filed November 5, 2009), also published as Kearney v. Auto-Owners Insurance Co., 2009 WL 3712343 *7 (M.D. Fla. November 5, 2009)(Westlaw subscription required to access Westlaw).

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"Actions have consequences."--"No EOB Deadline, No ... Statutory Cause"--CONTINUED.

   "However, actions have consequences."   Download United Automobile Insurance Co. v. A 1st Choice Healthcare Sys's, Inc. (Fla. 3d DCA Opinion Filed November 4, 2009), at 6.  Consider what those consequences can include, in this further post of what the Florida Appellate Court observed in this interesting new decision under Florida Statute Section 627.736(4).

   The Florida Appellate Court reasoned in this new case that an overdue payment under the Florida Personal Injury Protection Statute, Section 627.736, entitles the insured "by law to an award of interest on the overdue payment and potentially an award of attorney fees for non-payment if counsel is involved."  Download United Automobile Insurance Co. v. A 1st Choice Healthcare Sys's, Inc. (Fla. 3d DCA Opinion Filed November 4, 2009), at 6-7.

   "Furthermore," said the Court in this recent decision, "an insurer who does not act 'fairly and honestly toward its insured' in the settlement of properly submitted personal injury protection benefits claims may be subject to a statutory first-party bad faith action with all of its attendant consequences....  This is the manner in which the legislature has chosen to regulate insurers in matters of this type."  Download United Automobile Insurance Co. v. A 1st Choice Healthcare Sys's, Inc. (Fla. 3d DCA Opinion Filed November 4, 2009), at 7.

   The role of legislative regulatory schemes in fashioning implied or private causes of action in first-party insurance cases in particular, or as in this recent decision, refusing to do so, is explored by Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" §§ 9.15-9.16 (Second Edition Shepard's/McGraw-Hill, 2009 Supplement West Publishing Company).

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No EOB Deadline, No Private or Implied Statutory Cause of Action.

   In a newly released Florida Appellate Court decision, the Court confronted two issues involving Florida Statute Section 627.736(4)(2004), which was and is a subsection of Florida's Personal Injury Protection or "PIP" Statute.  The first issue was whether the Florida Statute establishes "a firm deadline" for providing a Policyholder with an Explanation of Benefits ("EOB") under Florida's Motor Vehicle No Fault Law.

   The Florida Appellate Court held that it does not.  Download United Automobile Insurance Co. v. A 1st Choice Healthcare Sys's, Inc. (Fla. 3d DCA Opinion Filed November 4, 2009), attached Official Slipsheet Opinion at 7-8.

   The second issue was whether the Florida Statute conveys a private or implied statutory cause of action in cases where it is allegedly breached.

   The Florida Appellate Court again held that it does not.  Download United Automobile Insurance Co. v. A 1st Choice Healthcare Sys's, Inc. (Fla. 3d DCA Opinion Filed November 4, 2009), at 8.

   "However, actions have consequences."   Download United Automobile Insurance Co. v. A 1st Choice Healthcare Sys's, Inc. (Fla. 3d DCA Opinion Filed November 4, 2009), at 6.  Consider what those consequences can include, in a further post yet to come, involving this interesting new decision under Florida Statute Section 627.736(4).

  TO BE CONTINUED ......

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