First DCA Denies Citizens Property Insurance Corporation Immunity From Bad Faith Claims

In Perdido Sun Condominium Association, Inc. v. Citizens Property Ins. Corp., Case No. 1D13-1951 (Fla. 1st DCA January 23, 2014), the First District Court of Appeal addressed whether Citizens is entitled to immunity from claims alleging bad faith insurance practices. In denying immunity to Citizens, the First District acknowledged conflict with a decision from the Fifth District Court of Appeal, Citizens Property Ins. Corp. v. Garfinkel, 25 So. 3d 62 (Fla. 5th DCA 2009), disapproved on other grounds, Citizens Property Ins. Corp. v. San Perdido Association Inc., 104 So. 3d 344 (Fla. 2012), and certified the immunity issue to the Florida Supreme Court for its resolution.

In Perdido Sun, the condominium had sustained damage from a 2004 hurricane, and it previously recovered property insurance benefits under its Citizens policy. Thereafter, the condominium brought a bad faith claim pursuant to section 624.155, Florida Statutes, alleging Citizens failed to attempt in good faith to settle the property insurance claim. That statute provides a civil remedy when a person is damaged by the insurer's acts in "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 trial judge dismissed the lawsuit, ruling that Citizens was immune from the bad faith claim based on section 627.351(6)(s)1, Florida Statute. That statute generally creates immunity for Citizens but lists five exceptions. The exception addressed by the First District allows Citizens to be sued for "any willful tort." The First District denied immunity, ruling that a bad faith claim pursuant to section 624.155 constitutes a "willful tort."

The First District acknowledged that there is no statutory definition of "willful tort." In reaching its construction of the term, the First District relied on general definitions of "willful" ('with actual knowledge or belief that such act or omission constitutes such violation and with specific intent nevertheless to commit such act of omission") and "tort" (a "civil wrong").

According to section 627.351(6)(s)2, Citizens has a "duty to its policyholders to handle claims carefully, timely, diligently, and in good faith." The First District reasoned that a violation of such duty fell within the broad definition of a "tort." Thus, the First District allowed the condominium to sue Citizens for bad...