August 2, 2019
Re: Client Update
Recent Impactful Florida Decisions Regarding Bad Faith and Public Appraisers
Just when we thought all was lost in Florida, sanity reemerges. While Florida is often described as a challenging jurisdiction for insurance companies, this month we are pleased to share with you two recent breakthrough opinions which are very favorable for insurance carriers. One opinion regarding a bad faith set up,
Montanez v. Liberty Mut. Fire Ins. Co., 2019, No.18-80788, WL 3302308, (S.D. Fla. July 23, 2019) and another regarding the definition of “disinterested” public appraisers in property damage cases, State Farm Fla. Ins. Co. v. Sanders, No. 3D19-927, 2019 WL 3309217 (Fla. 3d DCA July 24, 2019).
Montanez v. Liberty Mut. Fire Ins. Co., No. 18-80788, 2019 WL 3302308, (S.D. Fla. July 23, 2019)
In Montanez v. Liberty Mut. Fire Ins. Co., Plaintiff’s counsel Fred Cunningham, the same trial lawyer who brought the bad faith suit in Harvey v. Geico Gen Ins. Co. 259 So. 3d 1 (Fla. 2018), brought a bad faith claim against Liberty Mutual on the unfounded position that an insurance carrier has an obligation to immediately tender and settle the most egregious claim—wrongful death before apportioning the remainder of a policy to other claimants.
This case arose from the claims handling of a motor vehicle accident which occurred on January 30, 2010, involving three vehicles, resulting in the death of a child and injuries to four passengers. Montanez, 2019 WL 3302308, at *1. The accident occurred when Liberty Mutual’s insured, Jason Brown rear-ended Nya Yanitza Montanez and her two minor children. Id. After making impact, Brown’s vehicle spun into another car occupied by Jose Ramos and an eight-year-old. Id. The tragic accident killed three-month old Yanely Gonzalez, ejected eight-year old Edwardo Gonzalez, resulting in head trauma and injured their mother Ms. Montanez. Id. Both Jose Ramos and the minor child in the second vehicle were also injured as a result of the accident. Id.
On February 1, 2010, Douglas Brown, Jason Brown’s father contacted Liberty Mutual to report that his son had been involved in an accident which resulted in a death. Id. Jason Brown had been driving his father’s vehicle at the time which was insured by Liberty Mutual with limits of $250,000 per person and $500,000 per accident. Id. The Court cites and relies upon a detailed chronology of the claims handling and order of events that took place. See id.
All within a week of the accident, the insureds were sent excess letters, and affidavits of no other insurance, and Liberty Mutual ran an internet search which showed there were 4 other injured people in the accident. Id. They also ordered the police report and contacted Mr. Brown and advised it would be in his best interest to obtain counsel. Id. Liberty Mutual also conducted an investigation and discovered that Jason Brown, the driver was not listed as an additional driver on the policy and immediately opened a coverage investigation and sent the Brown’s a reservation of rights letter. Id.
Bad Faith “Set Up”
During the claims handling, Liberty Mutual learned through the Plaintiff’s PIP adjuster that the Montanez family had retained counsel. Id. Over the next 30 days, the Liberty Mutual adjuster called a total of five times and left “important messages” for counsel to contact her regarding their representation of the Plaintiff and never received a call back from Plaintiff’s counsel. Id. at *2.
On March 4, 2010, thirty-three days after the accident and after the telephone calls to Plaintiff’s counsel, Liberty Mutual sent a letter to counsel for all claimants that they were making the full policy limits available and that it would be arranging a settlement conference. Id. On that same day, Plaintiff’s counsel, Lewis Jack, contacted Liberty Mutual and officially stated he represented the Plaintiff and mentioned that he would not be needing the other claimant’s counsel’s contact number. Id.
On March 31, 2010, about sixty days after the accident, Plaintiff’s counsel rejected Liberty Mutual’s opportunity to settle on the grounds that they should have immediately tendered the $250,000 instead of arranging a global settlement conference for the bodily injury claims. Id. In this same letter they demanded $125,000 for Ms. Montanez’s claims and $125,000 for Edwardo Jr. Gonzalez’s claims. Id. That same week, Liberty Mutual sent correspondence to Plaintiff’s counsel that they would make the $250,000 remaining on the policy available for claims from the Estate of Yanely Gonzalez and Liberty Mutual tendered all three checks by April 13, 2010. Id.
On April 14, 2010, Plaintiff’s counsel filed a lawsuit against the Brown’s which included a wrongful death claim, resulting in an excess verdict of $8,250,000. Id. at *3. On June 15, 2010, the Plaintiff amended her previous complaint to include a bad faith count against Liberty Mutual, and in turn, Liberty Mutual filed a motion for summary judgment. Id.
Plaintiff’s position was that “Liberty Mutual’s decision to pursue a global settlement conference, rather than immediately tender the $250,000 per person liability limits to settle Plaintiff’s wrongful death claim, constituted bad faith…Liberty Mutual had an obligation to settle the most egregious claim—the wrongful death claim—before apportioning the remainder of the policy.” Id. at *4. However, the Court disagreed stating, that “Plaintiff’s cabined conception of Florida’s bad faith jurisprudence, however, is not supported by the case law in this State, or this District.” Id.
Throughout the opinion, caselaw is cited stating that under Florida law an insurer is allowed a reasonable time to investigate a claim and is not required to immediately tender its policy nor accept a settlement offer without time for investigation. Id.; citing Johnson v. Geico Gen. Ins. Co., 318 F. App’x 847, 851 (11th Cir. 2009). Relying on the chronology of the claims handling, the opinion cites that Liberty Mutual investigated the claim, sent out affidavits, and excess letters, called Plaintiff’s counsel five times, left multiple messages with requests for callbacks, and made the entire policy available to Plaintiff all in the span of about one month. Montanez, 2019 WL 3302308, at *4.
While Plaintiff argues that Liberty Mutual “delayed settling this known catastrophic claim for 66 days,” the Court was not impressed by the bad faith scheme and noted that “Plaintiff ignores the fact that her counsel did not return Defendant’s calls for an entire month and subsequently sat on Defendant’s settlement offer for a month before rejecting it in favor of a bad faith claim…Here, even under the most favorable construction of the facts, the Court cannot ignore Plaintiff’s counsel’s hand in manufacturing the delay Plaintiff now complains about. The Court will not tolerate the use of bad faith claims as a sword for claimants in insurance litigation.” Id. at *5.
Further, the Court took a strong stance that the Plaintiff’s position defies Florida law and “common sense” and granted Liberty Mutual’s motion for summary judgment. In ruling for Liberty Mutual, the Court brilliantly determined, “[a]s required by Harvey and Florida’s bad faith jurisprudence, Liberty Mutual diligently investigated the numerous potential claims arising out of this multi-car accident… no reasonable jury could conclude that Liberty Mutual acted in bad faith.” Id. at *6.
State Farm Fla. Ins. Co. v. Sanders, No. 3D19-927, 2019 WL 3309217 (Fla. 3d DCA July 24, 2019)
In State Farm Fla. Ins. Co. v. Sanders, Respondents, Charles Sanders and Diana Sanders (Insureds) had a homeowners’ insurance policy with State Farm to provide coverage for property damages. On August 13, 2018, the insureds filed suit against State Farm for breach of contract arising out of a Hurricane Irma property damage claim, alleging that State Farm failed to provide coverage for the loss. In response to the complaint, State Farm filed a Motion to Invoke Appraisal. The dispute arose from the appraisal condition in State Farm’s Homeowner Policy which states that, “[e]ach party will select a qualified, disinterested appraiser…” Sanders, 2019 WL 3309217 at *1.
The insureds selected Gian Franco Debernardi of 911 Claims Corporation as their appraiser who was the insureds’ agent pursuant to contract. Their contract states that he will “be the agent and representative, under the insurance contract by State Farm Insurance … to adjust, appraise, advise and assist in the settlement of the loss.” Id. State Farm argued that the Insureds chosen adjuster was not independent as required by court order and by the State Farm policy as the insureds contract with their chosen adjuster assigned 10% of the amount recovered to 911 Claims Corporation, and that Mr. Debernardi previously inspected the property, reported the insurance claim to State Farm, and prepared the $88,536.41 estimate that is the subject of the dispute between the parties. Id. at *3.
The Third DCA began their analysis of whether the Insureds adjuster was disinterested by looking at the process of appraisal and the true meaning of the word “disinterested.” They also analogized the current matter to Fla. Ins. Guar. Ass’n v. Branco, 148 So. 3d 488, 491 (Fla. 5th DCA 2014) (citing appraisals are creatures of contract and the subject or scope of the appraisal depends on the contract provisions). Sanders, 2019 WL 3309217 at *2. Here the policy is the contract which requires a disinterested appraiser.
In Branco, the insureds named one of their attorneys as an appraiser in the insureds’ sinkhole claim. Branco, 148 So. 3d at 494. The appellate court held that if an appraiser owes his nominating party a “fiduciary duty of loyalty” or a “confidential relationship,” then “[t]he existence of such a relationship between a litigant and an [appraiser] creates too great a likelihood that the [appraiser] will be incapable of rendering a fair judgment.” Id. It was determined that the Insureds attorney was not considered “disinterested.” Id.
The Court then determined that the contract between 911 Claims and the Insureds, made their selected public adjuster the insureds agent. Following this conclusion, the court cited agency law and determined that since the agent requires a fiduciary duty to his or her principal that Mr. Debernardi cannot be named the insureds disinterested appraiser. Sanders, 2019 WL 3309217 at *3.
The Court also cited a federal case which supported State Farm’s position. In Verneus v. Axis Surplus Ins. Co., No. 16-21863-CIV, 2018 WL 3417905 (S.D. Fla. July 13, 2018), a court order required both parties to select “competent and impartial” appraisers. In this case, the insured selected a public adjuster who had originally inspected the loss and submitted his estimate to the insurer and the federal district court agreed with the insurance company’s position that the public adjuster was not impartial as he had an interest to protect. Id. The adjuster was also considered impartial as “he was a professional who presumably relied on his reputation for his work and therefore was unlikely to reach a conclusion as an appraiser that is significantly different from the work product he already produced.” Id. at *6.
Similarly, in the present case, Mr. Debernardi had previously inspected the loss, and he was the person who prepared the written estimate of damages the insureds used to file their claim. Sanders, 2019 WL 3309217 at *4. The Court then stated the obvious that it is “hard to imagine that Mr. Debernardi is going to reach a different amount from the initial $88,56.41 estimate he already reached.” Id.
Accordingly, the Appellate Court made an impactful decision for insurance carriers by correctly holding, “that a fiduciary, such as a public adjuster who is in a contractual agent-principal relationship with the insureds, cannot be a disinterested appraiser as a matter of law.” Id.
Very truly yours,
JOHN BOND ATKINSON