NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
PATTI FORTUNE and JEREMY DOMIN, )
)
Appellants, )
)
v. ) Case No. 2D19-2209
)
FIRST PROTECTIVE INSURANCE )
COMPANY d/b/a FRONTLINE )
INSURANCE, )
)
Appellee. )
___________________________________)
Opinion filed September 4, 2020.
Appeal from the Circuit Court for Collier
County; Elizabeth V. Krier, Judge.
John H. Pelzer of Greenspoon Marder
LLP, Fort Lauderdale; and Jeremy F. Tyler
and Jonathan B. Aversano of Greyer Fuxa
Tyler Attorneys at Law, Sunrise, for
Appellants.
Jay M. Levy and Ryan L. Marks of Jay M.
Levy, P.A., Miami; and Karen D. Fultz and
Phillip J. Sheehe of Sheehe & Associates,
P.A., Miami, for Appellee.
SILBERMAN, Judge.
Patti Fortune and Jeremy Domin (the Homeowners) filed a bad faith
action pursuant to section 624.155, Florida Statutes (2017), against First Protective
Insurance Company d/b/a Frontline Insurance (the Insurer) concerning a claim that
arose from losses caused by Hurricane Irma. The Homeowners appeal a final
summary judgment1 in favor of the Insurer which determines as a matter of law that
the Insurer cured a Civil Remedy Notice of Insurer's Violations (CRN) by invoking the
appraisal process before the CRN was filed and by paying the appraisal award more
than sixty days after the CRN was filed. Because pursuing the appraisal process
does not constitute a cure of the violations alleged, we reverse and remand for further
proceedings.
The Homeowners' property was insured by a policy with the Insurer.
After suffering losses from Hurricane Irma on September 10, 2017, they timely filed a
claim with the Insurer. The Insurer investigated the loss and determined that after
applying the policy's deductible and depreciation, the amount of the loss was
$3,013.20. The Homeowners presented the Insurer with their public adjustor's
estimate of what they alleged were the full scope of necessary repairs.
The Insurer then invoked the appraisal process pursuant to the policy
on December 27, 2017. Section I of the policy contains a provision that either party
may demand a mediation or appraisal of the loss if the parties "fail to agree on the
settlement regarding the loss." The policy also provides that "unless there has been
full compliance with all of the terms under Section I of this policy," the Homeowners
cannot bring an action against the Insurer.
1The
trial court's order is entitled, "Order Granting Defendant's Motion
for Summary Judgment." However, the order contains words of finality, and the
Homeowners are thus appealing a final summary judgment. See Walters v. CSX
Transp., 778 So. 2d 396, 396 n.1 (Fla. 2d DCA 2001).
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On January 8, 2018, the Homeowners filed a CRN alleging violations of
section 624.155(1)(b)(1) and section 626.9541(1)(i), Florida Statutes (2017). One of
those allegations was that the Insurer made a lowball offer and "flagrantly breached"
its duty to attempt in good faith to settle claims, as required by section
624.155(1)(b)(1). The Homeowners asserted that the Insurer was given the
opportunity to inspect the loss and was placed on notice of the severity of the
damage. They contended that the Insurer failed to identify the full scope of
necessary repairs that was corroborated by the public adjustor's estimate which
"dwarfed" the Insurer's estimate. The Homeowners alleged that the Insurer refused
to reassess its payment of benefits and the basis for payment and that the Insurer
"turn[ed] a blind eye and refuse[d] to properly adjust and settle the claim."
The Insurer generally denied the allegations, claiming that it did not owe
any insurance proceeds to the Homeowners under the "insurance policy at this time."
Further, the Insurer stated that it had not committed any acts of bad faith and that it
had sought appraisal to resolve the parties' dispute as to the amount of loss. The
Insurer also asserted that it would be unable to cure any alleged violations based on
the "vague and general demands" in the CRN. The Insurer did not pay any damages
within sixty days of the filing of the CRN.
The Homeowners' appraiser and the neutral umpire set the amount of
the loss, and an appraisal award was entered on June 1, 2018, in the total amount of
$121,516.55. On July 17, 2018, the Insurer paid the net amount owed of
$110,067.35.
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On October 25, 2018, the Homeowners filed their complaint that sought
relief for insurer bad faith under section 624.155(1)(b)(1). They alleged that the
Insurer had "failed to promptly, fully, and adequately pay [the Homeowners] under the
Policy and 'low-balled' [their] damage estimate." Further, they alleged that the Insurer
had failed to pay damages within sixty days of receipt of the CRN, as section
624.155(3)(d)2 requires.
The Insurer filed a motion to dismiss or, in the alternative, a motion for
summary judgment, to which the Homeowners filed a response in opposition. The
Insurer asserted that it "fully cured the alleged bad faith during the cure period set
forth under Florida Statutes by complying with the appraisal process, which resolved
the dispute between the parties and was agreed to by [the Homeowners] as
demonstrated in the Appraisal Award dated June 1, 2018."
After a hearing on the Insurer's motion, the trial court determined that
the Insurer was entitled to summary judgment.3 The court's written ruling states
"[t]hat, as a matter of law, [the Insurer] cured the Civil Remedy Notice of Insurer's
Violations by its invocation of the appraisal process, in accordance with the
applicable insurance policy, before [the Homeowners'] filing of the Civil Remedy
2In an amendment effective July 1, 2019, this provision is now
contained in section 624.155(3)(c). See Ch. 2019-108, §§ 6, 18, Laws of Fla. Note
also that the sixty-day period begins when the notice is electronically filed, not when it
is received. See Harper v. GEICO Gen. Ins. Co., 272 So. 3d 448, 451 (Fla. 2d DCA
2019).
3As the Homeowners note, the Insurer did not file any summary
judgment evidence contemplated by Florida Rule of Civil Procedure 1.510(c).
Rather, the Insurer appears to have relied on the allegations in the complaint and
exhibits to the complaint, arguing the issue as a motion to dismiss and asking for
summary judgment in the alternative.
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Notice of Insurer's Violation and by [the Insurer's] subsequent payment of the
appraisal award." The trial court denied the motion to dismiss as moot.
On appeal, the Homeowners contend that the trial court erred in
concluding that the Insurer cured the CRN merely by invoking the appraisal process
and then paying the appraisal award outside the sixty-day time limit of section
624.155(3)(d). They contend that the pendency of an appraisal does not affect how
an insurer must respond to a CRN.
Section 624.155(1)(b)(1), provides a civil remedy for an insurer's bad
faith and provides as follows:
(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[.]
The statute also provides a civil remedy for violations of specific provisions of section
626.9541. § 624.155(1)(a)(1). As a condition precedent to filing an action, the
plaintiff must give the Florida Department of Financial Services and the insurer sixty
days' written notice of a violation. § 624.155(3)(a). The CRN must provide the
specific statutory provision allegedly violated, the facts giving rise to the violation, the
names of involved individuals, any relevant policy language, and a statement that
giving the notice perfects the right to pursue the civil remedy section 624.155
authorizes. § 624.155(3)(b).
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The statute gives an insurer a cure period which provides that "[n]o
action shall lie if, within 60 days after filing notice, the damages are paid or the
circumstances giving rise to the violation are corrected." § 624.155(3)(d). If a
"payment is owed on the contract," the insurer can "cure the claimed bad faith by
paying the benefits owed on the insurance contract." Vest v. Travelers Ins. Co., 753
So. 2d 1270, 1275 (Fla. 2000).
The prerequisites to file a statutory bad faith action are: "(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)." Landers v. State Farm Fla. Ins. Co., 234 So. 3d 856, 859 (Fla. 5th
DCA), review denied, No. SC18-292, 2018 WL 6839539 (Fla. Dec. 31, 2018). An
appraisal award satisfies the first two requirements. Id.; see also Hunt v. State Farm
Fla. Ins. Co., 112 So. 3d 547, 549 (Fla. 2d DCA 2013) (recognizing that an appraisal
award satisfies the condition precedent of "a determination of liability and extent of
damages owed" (quoting Vest, 753 So. 2d at 1276)).
Section 624.155 does not prevent the insured from sending a CRN prior
to a determination of liability or damages. Vest, 753 So. 2d at 1275; Landers, 234
So. 3d at 856. The Florida Supreme Court in Vest further explained:
Nor is the insurer's appropriate response to that notice
depend[e]nt on such a determination. The insurer's
appropriate response is based upon the insurer's good-
faith evaluation of what is owed on the insurance contract.
What is owed on the contract is in turn governed by
whether all conditions precedent for payment contained
within the policy have been met. An insurer, however,
must evaluate a claim based upon proof of loss required
by the policy and its expertise in advance of a
determination by a court or arbitration.
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753 So. 2d at 1275-76 (emphasis added). Thus, the Insurer's response was not
dependent on the determination of damages, in this case by way of appraisal. The
Insurer was required to evaluate the claim based upon the policy's required proof of
loss "and its expertise in advance of a determination" of damages. Id. The statutory
claim for bad faith "is founded upon the obligation of the insurer to pay when all
conditions under the policy would require an insurer exercising good faith and fair
dealing towards its insured to pay." Id. at 1275. Thus, an insurer must "timely
evaluate and pay benefits owed on the insurance policy." Id.; see also Bryant v.
GeoVera Specialty Ins. Co., 271 So. 3d 1013, 1022 (Fla. 4th DCA 2019) (quoting
Vest, 753 So. 2d at 1275). Of course, a mistaken denial of payment does not
necessarily mean that the insurer acted in bad faith. See Vest, 753 So. 2d at 1275.
But the issue of good faith or bad faith is usually a question for the finder of fact. Id.;
see also Landers, 234 So. 3d at 860 (recognizing that it remained to be resolved as a
question of fact whether the insurer acted in bad faith when it resolved the claim).
In Landers, a bad faith action regarding a sinkhole claim, Landers
alleged, among other violations, "claim delay and low-balling." 234 So. 3d at 858.
He "filed his CRN before the appraisal process was complete," and the insurer failed
to cure the alleged violation within the sixty-day period. Id. at 860. The insurer
argued that the CRN was invalid because "a condition precedent to payment—
determining the amount of loss through appraisal—had not been fulfilled." Id. at 858.
The appellate court disagreed and stated that "[p]reventing 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
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out claims and discouraging insurers from taking timely, independent action on
claims." Id. at 860. For instance, Landers asserted that if the insurer had "properly
investigated his claim, it would have known that the subsurface repair plan was
inadequate." Id. The appellate court reversed the final summary judgment in favor
of the insurer and remanded for further proceedings. Id.
Even if a policy requires the mediation or appraisal process to occur
prior to suit being filed, an appraisal is not a condition precedent to the insurer
fulfilling its obligation to fairly evaluate the claim and to either deny coverage or to
offer an appropriate amount based on that fair evaluation. See id. at 859-60. A fair
evaluation would be evidence that an insurer did not act in bad faith. But a lowball
offer made in bad faith is not cured by an insurer ultimately paying what it is later
found to owe via the appraisal process.
The language of section 624.155(3)(d) does not toll the cure period until
an appraisal is completed. Although not applicable here, an amendment to section
624.155, effective July 1, 2019, see Ch. 2019-108, §§ 6, 18, Laws of Fla., reinforces
the Homeowners' position that seeking an appraisal is not a cure to a failure to
attempt to timely settle a claim in good faith. The legislature added a new section
624.155(3)(f) which states, "A notice required under this subsection may not be filed
within 60 days after appraisal is invoked by any party in a residential property
insurance claim." This new provision affects the time when an insured can file a CRN
but does not treat an appraisal or payment of an appraisal award as a cure of any
violations alleged in the CRN. And, as the Homeowners argue, if an insured cannot
file a bad faith action until the appraisal award is made, see Bryant, 271 So. 3d at
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1022, but the appraisal process cures a bad faith violation as a matter of law, then it
places insureds in a catch-22 situation. It would allow an insurer to act in bad faith
without consequence in settling claims as long as the insurer later pays the appraisal
award within the time set by the insurance policy.
The Insurer asserts that when the CRN does not state the amount
necessary to cure the alleged bad faith, the Insurer's invocation of the appraisal
process constitutes a corrective action within the meaning of section 624.155(3)(d).
Noteworthy here is that although the Homeowners' CRN did not state a specific cure
amount, it did state that they had provided their public adjustor's estimate to the
Insurer which covered "the full scope of necessary repairs to the direct and ensuing
damages." Thus, the Insured had the public adjuster's estimate and knew the
amount the Homeowners sought. Neither the statute nor this court's precedent
requires the CRN to contain a specific amount sought to cure the alleged bad faith.
See § 624.155(3)(b); Hunt, 112 So. 3d at 548.
The Insurer relies upon 316, Inc. v. Maryland Casualty Co., 625 F.
Supp. 2d 1187 (N.D. Fla. 2008), to support its position that because the CRN did not
contain a cure amount, the Insurer cured the CRN by invoking the appraisal process
under the policy before the cure period expired. This court has addressed 316 and
determined that a specific cure amount is not a requirement for the CRN under
section 624.155(3)(b). See Hunt, 112 So. 3d at 550-551.
In addition, the issue on summary judgment that the trial court
determined in 316 was that the insurer had not acted in bad faith as a matter of law.
625 F. Supp. 2d at 1195. Discussing 316, the Middle District has rejected an
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insurer's argument that "316 stands for the proposition that when the insurer follows
the appraisal process as set forth in the policy and promptly pays the agreed upon
appraisal amount, the insurer will not be held as having acted in bad faith." 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 *5 (M.D. Fla. Feb. 17, 2015). The Fox Haven court
determined that "the ruling in 316 is not that broad" and that the "court's conclusion
that the insurer had acted in good faith was based primarily on the fact that the
insurer 'paid almost sixty-percent of the final award in advance of the appraisal
process.' " Id. (quoting 316, 625 F. Supp. 2d at 1193).
Here, the trial court did not resolve on summary judgment whether the
Insurer acted in bad faith, which is generally for the finder of fact to determine. See
Vest, 753 So. 2d at 1275. Instead, the trial court determined as a matter of law that
the Insurer cured the CRN by invocation of the appraisal process and subsequent
payment of the appraisal award after the cure period.
The Insurer contends that invoking appraisal met the cure provision
which states, "No action shall lie if, within 60 days after filing notice, the damages are
paid or the circumstances giving rise to the violation are corrected." § 624.155(3)(d)
(emphasis added). The Insurer contends that it corrected the circumstances giving
rise to the violation such that a bad faith claim could not proceed. But in Vest, the
Florida Supreme Court stated, "The insurer then has sixty days in which to respond
[to the CRN] and, if payment is owed on the contract, to cure the claimed bad faith by
paying the benefits owed on the insurance contract." 753 So. 2d at 1275. Thus,
when payment is owed, the cure is paying the benefits owed. As the Homeowners
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argue, the statutory language "or the circumstances giving rise to the violation are
corrected" in section 624.155(3)(d) would apply to other violations not involving the
payment of benefits.
For instance, the Homeowners also alleged a violation of section
626.9541(1)(i)(3)(a) for "[f]ailing to adopt and implement standards for the proper
investigation of claims." The Homeowners requested that the Insurer create and
implement such standards as a remedy. The implementation of such standards
would show that "the circumstances giving rise to the violation are corrected." §
624.155(3)(d). But an alleged payment violation would require payment within the
sixty-day cure period.
In summary, at issue here is the alleged violation of "[n]ot attempting in
good faith to settle claims when, under all the circumstances, [the Insurer] could and
should have done so, had it acted fairly and honestly towards its Insured, and with
due regard for her or his interests." We conclude that the Insurer's invocation of the
appraisal process and payment of the appraisal award after the cure period expired
did not cure, as a matter of law, an alleged violation for failing to attempt to settle
claims in good faith. Therefore, we reverse the final summary judgment entitled
"Order Granting Defendant's Motion for Summary Judgment" and remand for further
proceedings in which the Homeowners can pursue their action for bad faith. We
express no opinion on the factual issue of whether the Insured acted in bad faith.
Reversed and remanded.
VILLANTI and LaROSE, JJ., Concur.
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