Insurer as Assignee Entitled to Attorney Fees Under F.S. 627.428 * No Claim Materials Until Coverage Litigation Concluded * No Final Determination of Liability No Bad Faith * No Appeal of Partial MSJ Where Remaining Issues Intertwined with Same Facts * Summary Judgment Denied When Affirmative Defenses Have Not Been Refuted
June 18, 2013
CASE LAW UPDATE
Dear Ladies and Gentlemen:
The Florida District Courts of Appeal have recently issued several opinions concerning coverage and bad faith/good faith claims handling that may of interest to you.
In Ind. Lumbermens Mut. Ins. Co. v. Pa. Lumbermens Mut. Ins. Co., the Fourth District Court of Appeal held that an insurance carrier, as an assignee of an insured’s rights, could recover attorney’s fees and costs pursuant to section 627.428, Florida Statutes since the assignee of an insurance claim stands in the shoes of the insured and should be entitled to an award of attorney’s fees when he/she files suit and recovers on the claim.
In State Farm Fla. Ins. Co. v. Desai, the Third District Court of Appeal quashed a discovery order requiring State Farm to produce claim materials and guidelines pertaining to specific policy language and to provide a representative to testify regarding these materials. The Third District Court held that Florida law prohibited the insured from obtaining claims files and claim handling materials until the coverage litigation had been concluded.
In Lime Bay Condo, Inc. v. State Farm Fla. Ins. Co., the Fourth District Court of Appeal held that if a plaintiff, bringing a bad faith cause of action, does not and cannot allege that there has been a final determination of liability and the amount of damages owed by the insurer, the bad faith cause of action is premature.
In Universal Underwriters Insurance Company v. Angela Stathopoulos, as Trustee of the Bankruptcy Estate of Katherine M. Digregorio and Western General Insurance Company, the Second District Court of Appeal held there can be no appeal of an order disposing of a declaratory judgment if part of a multi-count complaint and all counts are based on the same facts. The court stated that allowing an appeal of the declaratory judgment at that stage in the litigation would “foster impermissible piecemeal review” since the amended complaint reflected that all counts were based on the same facts and interwined.
In People’s Trust Homeowners Ins. v. Avagyan, the Fourth District Court of Appeal reversed a motion for summary judgment against an insurance carrier in which the trial court determined that the insureds homeowners’ claim was covered under an insurance policy issued by the carrier. The court held that a determination that the insureds were entitled to coverage for the loss would require resolution of the cause of damage and the affirmative defenses raised by the carrier and as such, the evidence presented at the summary judgment stage precluded resolution of the issued raised in the motion for summary judgment.
I. Ind. Lumbermens Mut. Ins. Co. v. Pa. Lumbermens Mut. Ins. Co., 4D11-3822, 2013 WL 811583 (Fla. 4th DCA, March 6, 2013).
FACTS AND PROCEDURAL HISTORY
This case involved an attorney’s fee dispute between two insurance carriers, Indiana Lumbermens Mutual Insurance Company (“ILM”) and Pennsylvania Lumbermens Mutual Insurance Company (“PLM”). This dispute arose from a homeowner’s insurance claim where homeowners sued a developer for damages to their home caused by water intrusion. The developer filed a third-party complaint against the subcontractor, which had installed the exterior doors. The complaint sought indemnity and contribution based on the express terms of the subcontract. ILM provided general liability insurance coverage for the subcontractor up to April 30, 2001. PLM’s coverage commenced on June 1, 2001 and continued through at least September, 2004. PLM refused to provide a defense and ILM provided a defense under a reservation of rights. The subcontractor and the homeowners mediated the claims and ILM paid the settlement contingent upon the subcontractor assigning his rights against PLM for failing to defend and indemnify. ILM, as assignee of the insured’s claim, filed suit against PLM for breach of contract, declaratory relief, and equitable/ contractual subrogation.
ILM filed a motion for summary judgment seeking a declaration that: 1) the ILM policy did not cover the subcontractor for the damages; (2) the PLM policy provided coverage; (3) PLM breached its duty to defend the subcontractor; (4) ILM, as assignee of the subcontractor’s claim, was entitled to reimbursement of its costs of defending; and (5) ILM was entitled to recover its attorney’s fees for prosecuting the declaratory judgment action against PLM. The trial court awarded summary judgment in favor of ILM and awarded compensatory damages and pre-judgment interest. The trial court reserved jurisdiction on the issue of attorney’s fees. PLM appealed the trial court’s decision to the Fourth District Court of Appeals. The Fourth District affirmed the trial court’s decision. After the court’s decision, ILM moved for an award of attorney’s fees and costs pursuant to section 627.428, Florida Statutes. The trial court denied ILM”s motion for attorney’s fees and costs and ILM appealed the decision.
APPELLATE COURT DECISION
The Fourth District Court of Appeals reversed the trial court’s decision denying ILM’s request for attorney’s fees and costs under section 627.428, Florida Statutes. The court held that since ILM, as an assignee of the subcontractors claim, had to file suit to enforce its rights against PLM and obtain a favorable judgment, ILM fell within the class entitled to recover under the statute.
ILM contended that the trial court erred in denying its request for attorney’s fees under section 627.428, Florida Statutes since the statute allowed an assignee of an insured’s rights to recover attorney’s fees when an insurer denies coverage. PLM argued that attorney’s fees could not be awarded for attempting to establish the right to indemnification and that ILM did not obtain the type of assignment that would permit an award. PLM also contended that ILM did not prevail on the significant issues.
The court rejected PLM’s arguments and explained that under section 627.428, Florida Statutes, “[a] trial court should award attorney’s fees to an insured pursuant to section 627.428 when it appears as though the insurer ‘would not have paid the insured the proper amount of the loss without judicial intervention.” The fact that ILM was an insurer seeking attorney’s fees under the statute did not preclude recovery. The court cited to Cont’l Cas. Co. v. Ryan Inc. E., and noted that the Florida Supreme Court had already approved an award of attorney’s fees when coverage was obtained through an assignment from an insured.
The court explained that an assignee of an insurance claim stands in the shoes of the insured and should be entitled to an award of attorney’s fees when he files suit and recovers on the claim.
II. State Farm Fla. Ins. Co. v. Desai, 106 So.3d 5 (Fla. 3d DCA 2013)
FACTS AND PROCEDURAL HISTORY
This is a declaratory judgment action regarding whether a plumbing loss was covered under a homeowner’s insurance policy issued by State Farm Florida Insurance Company (“State Farm”) to insureds. During these proceedings, the court ordered State Farm to produce claim materials and guidelines pertaining to specific policy language and to provide a representative to testify regarding these materials. State Farm filed a petition for writ of certiorari requesting review of the discovery order.
APPELLATE COURT DECISION
The Third District Court of Appeal granted the petition for writ of certiorari and quashed the discovery order. In support of their petition, State Farm argued that Florida law prohibited an insured from obtaining claims files and claim handling materials until the coverage litigation had been concluded. Id. The court agreed with State Farm’s position and cited to Gen. Star. Indem. Co. v. Atl. Hospitality of Fla., LLC, in support of its holding. In Atl. Hospitality of Fla., LLC, the Third District granted certiorari and quashed a discovery order because the order compelled the production of bad faith materials which were not subject to discovery until there was a determination of coverage.
III. Lime Bay Condo, Inc. v. State Farm Fla. Ins. Co.94 So.3d 698 (Fla. 4th DCA 2012)
FACTS AND PROCEDURAL HISTORY
This matter involved a lawsuit filed by an insured against its insurance carrier alleging that the carrier acted in bad faith in handling his insurance claim. The insured, a condominium association, was insured under a policy issued by State Farm Florida Insurance Company (“State Farm”). The insured filed a claim for property damage caused by Hurricane Wilma. The parties disagreed as to the amount of the damages. The insured obtained an expert to appraise the damages and submitted its estimate to State Farm for its consideration. The insured then filed a Civil Remedy Notice alleging that State Farm had acted in bad faith in handling its claim and also filed a breach of contract lawsuit. Two years later, the claim was brought to appraisal and an appraisal award in the amount $1,051,251.41 was provided.
The insured filed a bad faith complaint alleging several violations under section 624.155, Florida Statutes. State Farm filed a motion to dismiss the complaint based on its contention that there had not been a final determination of liability. Further, State Farm argued that the complaint should also be dismissed as it intended to dispute liability in the breach of contract case. The trial court dismissed the bad faith complaint and the insured appealed the court’s decision.
APPELLATE COURT DECISION
The Court affirmed the trial court’s dismissal of the bad faith complaint holding that the trial court must first determine State Farm’s liability for breach of contract and consider the significance of the appraisal award before a bad faith claim can accrue. Thus, the bad faith complaint was filed prematurely Id. The court began its analysis by noting that if a plaintiff bringing a bad faith cause of action could not allege that there has been a final determination of liability and the amount of damages owed by the insurer, the bad faith cause of action is premature. In cases where a bad faith complaint is premature, the court can either dismiss the complaint without prejudice or abate the bad faith action until a determination of the insurer’s liability. In the present case, since the breach of contract case was still pending, the insured could not allege that there had been a final determination of liability. Id. at 3.
IV. Universal Underwriters Insurance Company v. Angela Stathopoulos, as Trustee of the Bankruptcy Estate of Katherine M. Digregorio and Western General Insurance Company, 2013 WL 645914 (Fla. 2d DCA, February 6, 2013)
FACTS AND PROCEDURAL HISTORY
This claim arose out of an automobile accident. Katherine M. Digregorio, represented by Ms. Stathpoulos as bankruptcy trustee, had purchased a vehicle at a car dealership. After she had left the dealership, her application for financing was rejected and the dealership requested that she return the vehicle. Before she could return the vehicle, Ms. Digregorio’s boyfriend was operated the vehicle and was involved in a car accident that resulted a death of another person. At the time of sale of the vehicle, Western General Insurance Company (“Western General”) was the insurance carrier providing coverage for the vehicle. Universal Underwriters Insurance Company (“Universal”) was the insurance carrier who had written the dealership’s garage policy. There was an issue as to whether Universal was potentially responsible for coverage of the loss since the loan for financing was rejected. Thus, the vehicle arguably belonged to the dealership at the time the driver was involved in the accident.
A wrongful death lawsuit ensued and Western General indemnified and defended the driver of the vehicle. At the conclusion of the wrongful death lawsuit, the driver consented to a $3 million dollar judgment in favor of the estate of the deceased and assigned to the estate any causes of action against Universal. Thereafter, Ms. Stathpoulos and Western General filed a lawsuit against Universal for breach of contract, a declaratory judgment, and bad faith for failure to defend and indemnify the driver in the wrongful death suit. A partial final judgment was entered against Universal. The order entered declared that the driver was an insured under Universal’s insurance policy. The count for breach of contract and bad faith for failure to defend and indemnify remained pending. Universal appealed the partial final judgment and Stathpoulos and Western General filed a motion to dismiss the appeal.
APPELLATE COURT DECISION
The Court granted Stathpoulos and Western General’s Motion to Dismiss and dismissed Universal’s appeal.
Universal argued that the court had jurisdiction to review the order pursuant to Florida Rule of Appellate Procedure 9.110(m) and Canal Insurance Co. v. Reed, 666 So.2d 888 (Fla. 1996). The Court rejected Universal’s arguments and cited to Centennial Insurance Co. v. Life Bank, 953 So.2d 1 (Fla. 2d DCA 2006). In Centennial Insurance Co, the Court construed the Florida Supreme Court’s decision in Reed and concluded that the holding in Reed did not create a new basis of jurisdiction for the district courts. The Court cited to the decision where the court explained “[i]nsofar as the court [in Reed] discerned that declaratory judgments determining coverage are final orders, the district courts already had jurisdiction to review them by appeal. Art. V, § 4(b)(1), Fla. Const. The Court in Centennial Insurance Co also concluded that the Reed decision “did not establish jurisdiction in the district courts to entertain appeals from nonfinal orders determining coverage” and that Florida Rule of Appellate Procedure 9.110(m) did not create a new basis of jurisdiction.
In the present case, the issue before the court was whether the order resolving the declaratory judgment against Universal was reviewable under: 1) Florida Rule of Appellate Procedure 9.130, which governs appeals from nonfinal orders; 2) reviewable pursuant to certiorari review; or 3) whether the order was a final judgment subject to appeal under Florida Rule of Appellate Procedure 9.110. The Court noted that other courts, in similar cases, had resolved appeals under Florida Rule of Appellate Procedure 9.110(m) or Reed however, the cases were decided without jurisdictional analysis. The court certified conflict with these cases to the extent that they conflict with the court’s decision in this case.
The Court began its analysis by explaining when partial final judgments are reviewable. Pursuant to Florida Rule of Appellate Procedure 9.110(k) partial final judgments can be reviewed on appeal from the partial final judgment or on appeal from the entire case. The court explained that in order to make a determination whether an order dismissing less than all counts in a Complaint is reviewable as a partial summary judgment pursuant to Florida Rule of Appellate Procedure 9.110(k), certain factors must be considered. These factors include: 1) whether the cause of action disposed of by the partial summary judgment could be maintained independently of the other remaining causes of action; (2) whether one or more parties were removed from the action when the partial summary judgment was entered; and (3) whether the counts are separately disposed of based on the same or different facts?
In accordance with Mendez v. W. Flagler Family Ass’n, 303 So.2d 1, 5 (Fla. 1974), the court held that allowing an appeal of the declaratory judgment at this stage in the litigation would “foster impermissible piecemeal review” since the amended complaint reflected that the breach of contract count, bad faith count, and declaratory judgment count were based on the same facts and interwined. The court also concluded that it could not exercise jurisdiction under Florida Rule of Appellate Procedure 9.130, governing appeals from non-final orders, and it lacked certiorari review.
V. People’s Trust Homeowners Ins. v. Avagyan, 97 So.3d 905 (Fla. 4th DCA 2012)
FACTS AND PROCEDURAL HISTORY
This case involved a declaratory action filed by insureds regarding whether a water loss was covered under an insurance policy issued by People’s Trust Homeowner’s Insurance (“People’s Trust”). The insureds filed a claim with People’s Trust for damages allegedly sustained from a pipe burst leak in their home. People’s Trust denied the claim and the insureds filed suit. In their declaratory judgment count, the insureds requested that court determine that they were entitled to “full coverage” for the loss and that People’s Trust was estopped from claiming the insurance policy was void.
People’s Trust answered the complaint and raised several affirmative defenses including, that the damages were caused by a pre-existing condition, that People’s Trust did not have an adequate opportunity to inspect the property and that the insureds had removed portions of the drywall which prevented People’s Trust from determining the scope of damage. People’s Trust also alleged that the insureds concealed or misrepresented facts which rendered the insurance policy void. The insureds filed a motion for summary judgment alleging that there were no issues of material fact. In their motion, they asserted that they were entitled to a declaratory judgment determining that there was coverage for the loss and that the policy was not void. The trial granted the motion for summary judgment and People’s Trust appealed.
APPELLATE COURT DECISION
The court reversed the trial court’s decision granting the insureds’ motion for summary judgment and held that there was sufficient evidence to preclude summary judgment.
The court citing to Alejandre v. Deutsche Bank Trust Co. Americas, 44 So.3d 1288 (Fla 4th DCA 2010), explained that when there are issues of fact raised by affirmative defenses that have not been refuted, summary judgment should not be granted. The court noted that a determination that there was coverage for the loss would require resolution of the cause of the loss and the affirmative defenses raised by People’s Trust. At summary judgment, the evidence presented included the following facts: 1) the insureds had removed the drywall; 2) some of the flooring in the rooms where the drywall was removed showed no signs of water damage; and 3) the individual (handyman) who had removed the drywall was of the opinion that there was evidence of long-term damage. Based on these facts, the court concluded that the evidence presented precluded resolution of the issues raised in the summary judgment motion.
We hope you find the above cases helpful and insightful. Should you have any questions with respect to the foregoing, please do not hesitate to contact the undersigned at your earliest convenience.
Very truly yours,
 See Pa. Lumbermens Mut. Ins. Co. v. Ind. Lumbermens Mut. Ins. Co., 43 So.3d 182 (Fla. 4th DCA 2010).
 Id. at 189.
 Ind. Lumbermens Mut. Ins. Co. v. Pa. Lumbermens Mut. Ins. Co., 4D11-3822, 2013 WL 811583 (Fla. 4th DCA, March 6, 2013).
 Barreto v. United Servs. Auto. Ass’n, 82 So. 3d 159, 162 (Fla. 4th DCA 2012) (quoting Jerkins v. USF & G Specialty Ins. Co., 982 So. 2d 15, 18 (Fla. 5th DCA 2008)).
 Cont’l Cas. Co. v. Ryan Inc. E., 974 So.2d 368, 375 (Fla. 2008).
 All Ways Reliable Bldg. Maint., Inc. v. Moore, 261 So. 2d 131, 132 (Fla. 1972).
 Gen. Star. Indem. Co. v. Atl. Hospitality of Fla., LLC, 993 So.3d 501 (Fla. 3d DCA 2012).
 Id. at 503
 State Farm Mut. Auto. Ins. Co. v. O’Hearn, 975 So.2d 633, 635-36 (Fla. 2d DCA 2008).
 Id. at 635-636.
 Fla. R. App. P. 9.110(m) Exception; Insurance Coverage Appeals. Judgments that determine the existence or nonexistence of insurance coverage in cases in which a claim has been made against an insured and coverage thereof is disputed by the insurer may be reviewed either by the method prescribed in this rule or that in Fla. R. App. P.P. 9.130.
 In Reed, the First District Court of Appeal certified the following question to the Florida Supreme Court:
When an insurance coverage issue had been decided in a third-party declaratory judgment action between the insurer and its insured, prior to a final determination of liability in the underlying action, and, as a result, the insurer must provide liability coverage for the insured in the underlying action, may the insurer seek immediate review of the of the order entered in the declaratory judgment and, if so, what constitutes the proper avenue of review: Petition for Writ of Certiorari, appeal of a non-final order pursuant to rule 9.130, or appeal of a final order?
Canal Insurance Co. v. Reed, 666 So.2d 888, 889-890 (Fla. 1996). The Florida Supreme Court answered the question in the affirmative and held that the third-party declaratory judgment should be treated as a final order for purposes of appeal. Id. at 890.
 The court in Centennial Insurance Co. explained that the purpose of Florida Rule of Appellate Procedure 9.110(m) was to “provide a more expeditious procedure for appeals of judgments deciding coverage disputes when a claim has been made against an insured. It does not expand the district courts’ jurisdiction to entertain appeals of nonfinal orders.” Id. at 4.
 See, e.g., Wilshire Ins. Co. v. Birch Crest Apartments, 60 So.3d 975 (Fla. 4th DCA 2011); Am. Reliance Ins. Co v. Perez, 712 So.2d 1211 (Fla. 3d DCA 1998).
 Fla. R. App. P. 9.110(k).
 Dahly v. Dep’t of Children & Family Servs., 876 So. 2d 1245, 1248 (Fla. 2d DCA 2004).
 The Court explained that although Ms. Stathpoulos and Western General may have been able to file a declaratory action in a separate lawsuit, did not alter the Court’s conclusion. The Court cited to Gulf Power Co. v. Harper, 940 So.2d 535, 536 (Fla. 1st DCA 2006), where a partial summary judgment resolving a declaratory judgment of a multi-count complaint was appealed, the court stated that “while a declaratory judgment may be appealable when it is unaccompanied by other claims, that does not avoid the non-appealable [sic] nature of the order in the present case, under the dictates of Mendez.” Id.
 People’s Trust Homeowners Insurance v. Avagyan, 97 So.3d 905 (Fla. 4th DCA 2012).