IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
PHILLIP LANDERS,
Appellant,
v. Case No. 5D15-4032
STATE FARM FLORIDA
INSURANCE COMPANY,
Appellee.
________________________________/
Opinion filed January 19, 2018
Appeal from the Circuit Court
for Seminole County,
Jessica J. Recksiedler, Judge.
George A. Vaka and Nancy A. Lauten, of
Vaka Law Group, PL, Tampa, and Kelly L.
Kubiak, of Merlin Law Group, Tampa, for
Appellant.
Matthew J. Lavisky, Anthony J. Russo and
Lee Craig, of Butler Weihmuller Katz Craig
LLP, for Appellee.
ON MOTION FOR REHEARING
COHEN, C.J.
Upon consideration of Appellee State Farm Florida Insurance Company’s Motion
for Rehearing, we grant the motion, withdraw our prior opinion, and substitute this one in
its place.
In this appeal, we consider whether, when an insurance contract provides for an
appraisal process, an insured must wait until that process is completed before filing a civil
remedy notice pursuant to section 624.155, Florida Statutes (2008). Because we find no
such limitation in the statute or relevant case law, we reverse.
In 2009, Phillip Landers’s home sustained a loss from suspected sinkhole activity.
He submitted a claim to his insurer, State Farm Florida Insurance Company (“State
Farm”). 1 State Farm hired SDII Global Corporation (“SDII”) to conduct a subsidence
investigation. SDII verified that sinkhole activity was the cause of the damage, and State
Farm admitted coverage. SDll initially concluded that 975 cubic yards of grout needed to
be injected into forty-nine holes around the home’s perimeter. SDII did not recommend
underpinning. After considering the report of a neutral evaluator from the Department of
Financial Services pursuant to section 627.7074, Florida Statutes (2008), SDII amended
its report to require an additional fifteen grout injection points.
Landers obtained an independent opinion from Biller Reinhart Structural Group
(“Reinhart”). In Reinhart’s opinion, proper stabilization required underpinning. 2 State
Farm provided Reinhart’s report for review by the neutral evaluator. The neutral evaluator
concluded that underpinning was unwarranted. While State Farm demanded appraisal
under the policy to resolve the parties’ disagreement over the amount of the loss, 3
1 Landers’s policy provided coverage in excess of $1,000,000.
2
The neutral evaluator’s cost of remediation was estimated at approximately
$350,000. Reinhart’s cost of remediation was closer to $1,000,000.
3 The appraisal clause of the insurance policy stated:
If you and we fail to agree on the amount of loss, either one
can demand that the amount of the loss be set by appraisal.
2
Landers agreed, pursuant to the terms of the insurance contract, to proceed with SDll’s
recommended repair plan, despite his belief that the repairs were inadequate. State Farm
placed its appraisal demand on hold while the stabilization repairs were made. Further
appraisal would be required to address cosmetic repairs to the home.
After the repairs were completed in September 2011, State Farm reiterated its
request for appraisal of the cosmetic damage to the home. The home continued to
experience damage after repairs were completed. As a result, Landers hired Sonny
Gulati, a geotechnical engineer, to examine the property. In January 2012, while Gulati’s
report was pending, Landers filed a civil remedy notice (“CRN”), alleging, among other
things, claim delay, failure to promptly and properly investigate the claim, failure to adjust
the loss, and the failure to tender policy limits. Landers contended that the repairs were
completed pursuant to State Farm’s expert’s recommendation, yet his home remained
unlivable. Landers demanded the immediate tender of “the policy limits for dwelling . . .
of $1,026,500.00 minus any prior payments that have been made to the insured . . . so
that [Landers] may adequately complete the repairs [he] has started to [his] home.” In
response, State Farm requested that all issues be submitted to appraisal.
In March 2012, Landers brought suit against State Farm for breach of contract. In
that suit, State Farm sought to compel appraisal, which Landers opposed. The circuit
If either makes a written demand for appraisal, each shall
select a competent, disinterested appraiser. Each shall notify
the other of the appraiser’s identity within 20 days of receipt
of the written demand. The two appraisers shall then select a
competent, impartial umpire. . . . The appraisers shall then set
the amount of the loss. If the appraisers fail to agree within a
reasonable time, they shall submit their differences to the
umpire. Written agreement signed by any two of these three
shall set the amount of the loss.
3
CASE No. 5D15-4032
NICHOLS, D., Associate Judge, concurring specially, with opinion.
I concur with the opinion of the Court and write to specifically address the “Loss
Payment” provision of the insurance contract.
It is undisputed that there is a provision in the insurance contract that provides in
the event of a disagreement:
[l]oss will be payable: . . . 60 days after [insurer] receive[s]
[insured’s] proof of loss and:
(1) there is an entry of a final judgment; or
(2) there is a filing on an appraisal award with us.
As stated by the majority, bad-faith claims are governed by section 624.155,
Florida Statutes. Although State Farm paid the claim within sixty days of the appraisal
award, section 624.155(b)(1) specifically provides:
(1) Any person may bring a civil action against an insurer
when such person is damaged:
....
(b) By the commission of any of the following acts by the
insurer:
1. Not attempting in good faith to settle claims when, under all
the circumstances, it could and should have done so, had it
acted fairly and honestly toward its insured and with due
regard for her or his interests . . . .
§ 624.155(1)(b)1., Fla. Stat. (2008).
State Farm argues that because it paid the claim within sixty days of the completion
of the appraisal process as set forth in the insurance contract, it is immune from the
9
application of section 624.155. No language in the statute or the contract prohibited
Landers from filing a civil remedy notice under the circumstances of this case.
State Farm’s position implies that an insurer could cause delays, or otherwise act
in bad faith, so long as payment was made within the sixty-day time period of the appraisal
award with impunity. State Farm’s position would render the bad-faith statute
meaningless.
No opinion is expressed on the merits of Lander’s bad-faith cause of action. As the
majority aptly concludes, “[w]hether State Farm actually acted in bad faith in resolving the
claim presents a question of fact that remains to be resolved.”
10
remedy authorized by the statute. Id. § 624.155(3)(b). During the sixty-day period, the
insurer has an opportunity to cure the alleged violation—no action will lie if, within those
sixty days, “the damages are paid or the circumstances giving rise to the violation are
corrected.”6 See id. § 624.155(3)(d).
There are three prerequisites to filing a statutory bad-faith claim: (1) determination
of the insurer’s liability for coverage; (2) determination of the extent of the insured’s
damages; and (3) the required notice must be filed under section 624.155(3)(a). See
Cammarata v. State Farm Fla. Ins. Co., 152 So. 3d 606, 612 (Fla. 4th DCA 2014). The
settlement of a sinkhole claim via the appraisal process is sufficient to satisfy the first two
requirements. See id. (finding that appraisal award was “‘favorable resolution’ of an action
for insurance benefits, so that [the insured] . . . satisfied the necessary prerequisite to
6 In Talat Enterprises, Inc. v. Aetna Casualty & Surety Co., 753 So. 2d 1278, 1284
(Fla. 2000), the Florida Supreme Court explained that, “in creating this statutory remedy
for bad-faith actions, the Legislature provided this sixty day window as a last opportunity
for insurers to comply with their claim-handling obligations when a good-faith decision by
the insurer would indicate that contractual benefits are owed.” Furthermore, “[t]he purpose
of the civil remedy notice is to give the insurer one last chance to settle a claim with its
insured and avoid unnecessary bad faith litigation—not to give the insured a right of action
to proceed against the insurer even after the insured’s claim has been paid or resolved.”
Lane v. Westfield Ins. Co., 862 So. 2d 774, 779 (Fla. 5th DCA 2003).
In Talat, the insured obtained an appraisal award that was paid in full before the
insured ever filed a CRN. 753 So. 2d at 1283. Accordingly, the insured did not have a
statutory bad-faith claim in that case because the insurer remedied the claim before the
expiration of the sixty-day period following the CRN. Talat did not address and does not
stand for the proposition that a CRN filed after appraisal has been demanded is a legal
nullity as State Farm argues.
6
filing a bad faith claim” (alteration in original) (quoting Trafalgar at Greenacres, Ltd. v.
Zurich Am. Ins. Co., 100 So. 3d 1155, 1158 (Fla. 4th DCA 2012))). 7
State Farm argues that the CRN is not effective until all of the contractual
preconditions to suit are met and there has been a final determination of coverage and
the amount owed. The plain language of section 624.155(3)(d) provides no time limitation
for when a CRN may be filed and does not require a final determination of coverage and
damages before it is filed. The statute simply states that “no action shall lie” if the bad-
faith allegation is corrected or the damages are paid within sixty days of the insurer
receiving the notice.
This case is controlled by Vest v. Travelers Insurance Co., 753 So. 2d 1270, 1272
(Fla. 2000). In Vest, the Florida Supreme Court expressly noted that under section
624.155, “there is no statutory requirement which prevents the insured from sending the
statutory notice before there is a determination of liability or damages. Nor is the insurer’s
appropriate response to that notice dependant on such a determination.” 753 So. 2d at
1275. Vest clarifies that the purpose of the CRN is to facilitate and encourage good-faith
efforts to timely settle claims before litigation, not to vindicate continuing efforts to delay.
Filing a CRN before the appraisal process is complete and damages are determined does
not render the CRN a legal nullity, precluding Landers’s bad-faith claim. 8
7 The trial court correctly relied on Cammarata for the proposition that a bad-faith
claim is not ripe until the appraisal process is complete. However, a finding that an action
is not ripe does not mean that the CRN was not appropriately filed.
8Federal courts that have addressed this issue likewise have reached the merits
of bad-faith claims, even when the CRN was filed after the invocation of appraisal. See
Fox Haven of Foxfire Condo. IV Ass’n v. Nationwide Mut. Fire Ins. Co., No. 2:13-CV-399-
FTM-29CM, 2015 WL 667935, at *1 (M.D. Fla. Feb. 17, 2015) (denying insurer’s motion
for summary judgment as facts did not demonstrate that insurer acted in good faith as a
7
Preventing an insured from filing a CRN before coverage and liability have been
conclusively established would frustrate the purpose of the statute by further delaying the
time necessary to assess and pay out claims and discouraging insurers from taking
timely, independent action on claims. Accordingly, we find that pursuant to the plain
language of section 624.155(1)(d), the fact that the appraisal process is ongoing does not
render a CRN filed during that process a legal nullity. Once the appraisal process is
complete, and a legally sufficient CRN had previously been provided, the conditions
precedent to filing a statutory bad-faith claim are met. Cf. Cammarata, 152 So. 3d at 612.
In this case, Landers filed his CRN before the appraisal process was complete.
State Farm did not cure the alleged violation within the sixty-day window in section
624.155(3)(d). Landers’s position is that had State Farm properly investigated his claim,
it would have known that the subsurface repair plan was inadequate. Whether State Farm
actually acted in bad faith in resolving his claim presents a question of fact that remains
to be resolved. Yet, nothing in the statute or case law precludes the filing of a CRN while
a demand for appraisal is outstanding. We reverse the order granting summary judgment
and remand for further proceedings.
REVERSED and REMANDED.
NICHOLS, D., Associate Judge, concurs, and concurs specially with opinion.
BERGER, J., concurs in part and dissents in part, with opinion.
matter of law; insured demanded appraisal and then filed CRN while the appraisal
process was ongoing); see also 316, Inc. v. Maryland Cas. Co., 625 F. Supp. 2d 1187,
1193 (N.D. Fla. 2008).
8
CASE No. 5D15-4032
NICHOLS, D., Associate Judge, concurring specially, with opinion.
I concur with the opinion of the Court and write to specifically address the “Loss
Payment” provision of the insurance contract.
It is undisputed that there is a provision in the insurance contract that provides in
the event of a disagreement:
[l]oss will be payable: . . . 60 days after [insurer] receive[s]
[insured’s] proof of loss and:
(1) there is an entry of a final judgment; or
(2) there is a filing on an appraisal award with us.
As stated by the majority, bad-faith claims are governed by section 624.155,
Florida Statutes. Although State Farm paid the claim within sixty days of the appraisal
award, section 624.155(b)(1) specifically provides:
(1) Any person may bring a civil action against an insurer
when such person is damaged:
....
(b) By the commission of any of the following acts by the
insurer:
1. Not attempting in good faith to settle claims when, under all
the circumstances, it could and should have done so, had it
acted fairly and honestly toward its insured and with due
regard for her or his interests . . . .
§ 624.155(1)(b)1., Fla. Stat. (2008).
State Farm argues that because it paid the claim within sixty days of the completion
of the appraisal process as set forth in the insurance contract, it is immune from the
9
application of section 624.155. No language in the statute or the contract prohibited
Landers from filing a civil remedy notice under the circumstances of this case.
State Farm’s position implies that an insurer could cause delays, or otherwise act
in bad faith, so long as payment was made within the sixty-day time period of the appraisal
award with impunity. State Farm’s position would render the bad-faith statute
meaningless.
No opinion is expressed on the merits of Lander’s bad-faith cause of action. As the
majority aptly concludes, “[w]hether State Farm actually acted in bad faith in resolving the
claim presents a question of fact that remains to be resolved.”
10
CASE NO. 5D15-4032
BERGER, J., concurring in part and dissenting in part, with opinion.
I agree with the majority that nothing precludes the filing of a CRN while a demand
for appraisal is outstanding. However, because I also agree with the trial court that no
bad faith claim can be maintained under the facts of this case, I would affirm the order
granting summary judgment. Accordingly, in all other respects, I dissent.
11