• Fourth District Court of Appeal Rules Bad Faith Claim May Proceed Even In Absence of Breach of Contract
  • September 12, 2014
  • Law Firm: Colodny Fass, P.A. - Fort Lauderdale Office
  • On September 3, 2014, in an en banc decision, the Fourth District Court of Appeal expressly stated that an insured may proceed with a bad faith claim even when there has been no determination that the insurer has breached any contractual duties. Cammarata v. State Farm Fla., Ins., 2014 WL 4327948 (Fla. Sept. 3, 2014).

    In Cammarata, the en banc panel considered whether an insured could proceed with a bad faith claim after the parties had undergone the appraisal process and an appraisal award had been entered against the carrier. Paraphrasing the Florida Supreme Court's decision in Vest v. Traveler's Ins. Co., 753 So.2d 1270 (Fla. 2000), the panel stated, "the determination of the existence of liability and the extent of the insured's damages are the conditions precedent to a bad faith action, along with the notice requirement of section 624.155(3)(a)..." Cammarata, 2014 WL at *6.

    In finding that an appraisal award constituted a favorable resolution for benefits, which would allow a bad faith claim to go forward, the court specifically receded from its prior precedent in the case of Lime Bay Condominium, Inc., v. State Farm Fla., Ins. Co., 94 So.3d 698, 699 (Fla. 4th DCA 2012), which had refused to allow a bad faith claim to proceed after an appraisal award where the breach of contract action remained pending. Indeed, the Vest decision was cited along with the case of Blanchard v. State Farm Mutual Auto Insur. Co., 575 So.2d 1289 (Fla. 1991) as constituting "Supreme Court Precedent Compelling Our Reversal."

    The Cammarata opinion was unanimous, with the exception of Judge Martha Warner, who recused herself.

    In a concurring opinion, Judge Jonathan Gerber wrote to express his concerns over the possible effect of the opinion and the potential need for legislative intervention: "In theory, the majority opinion would open the door to allow an insured to sue an insurer for bad faith any time the insurer dares to dispute a claim, but then pays the insured just a penny more than the insurer's initial offer to settle without a determination that the insurer breached the contract . . . this slippery slope may be avoided if an insured was required either to: (1) establish an insurer's liability for breach of contract as a condition precedent to suing an insurer for bad faith; (2) obtain a settlement amount which is at least a certain percentage above the insurer's initial offer to settle. However, any such requirement is one which the legislature must impose through an amendment to section 624.155, Florida Statutes (2011)." Cammarata, 2014 WL at *7.

    Judge Gerber further pointed out that a bad faith claim was likely not warranted under the circumstances present in Cammarata: "After the insured took two years to file their Hurricane Wilma claim, the insurer took only one month to inspect their home and estimate the amount of their damages. Then, after the insured took six more months to request the insurer to participate in the policy's appraisal process, the insurer took only one month to agree to the appraisal process. When the parties' appraisers did not agree on a damage estimate, it was the insurer and not the insureds which first filed a petition requesting the circuit court to appoint a neutral umpire. Within two months of the neutral umpire issuing its own damage estimate, the insurer paid the insureds the neutral umpire's damage estimate. In sum, the record here provides no basis indicating the that insurer breached the contract, much less failed to act in good faith." Cammarata, 2014 WL at *8.