FPCA Homeowners Division: Third District Court of Appeal Withdraws Opinion Allowing Bad Faith Claims to Go Forward Solely on Basis of Appraisal Award

Jul 25, 2011


Florida Property and Casualty Association Homeowners Division Members:

We are happy to report that, upon rehearing, the Third District Court of Appeal has withdrawn its opinion in State Farm Florida Ins. Co. v. Seville Place Condominium Association, — So. 3d —, 2009 WL 3271300 (Fla. 3d DCA 2009), which had allowed bad faith claims against State Farm to go forward without full resolution of the underlying claims dispute. The FPCA submitted an amicus brief to the court in support of State Farm’s motion for rehearing, which took issue with the troubling original opinion.

The new opinion, a copy of which is attached for your convenience, denied State Farm’s appeal for a writ of certiorari, holding that only insurers facing imminent, irreparable, harm may seek certiorari review of erroneous orders of the trial court.  Since State Farm had not yet suffered irreparable harm – “on the record before us, no discovery pertaining to the bad faith claims or the punitive damages claim has yet been sought or compelled” – the petition for certiorari review was denied. Id. at *3.

The en banc ruling receded from the broad holding in XL Specialty, Ins. Co. v. Skystream, Inc., 988 So. 2d 96 (Fla. 3d DCA 2008), which held that “certiorari is available to challenge a premature bad faith claim or premature bad faith discovery.” XL Specialty, 988 So. 2d at 98 (emphasis added). The Third District explained that certiorari will be granted only when “imminent” irreparable, material, harm is shown. Under the new Seville Place opinion, certiorari would not be available to preclude amendment of a pleading to assert bad faith, but would be available in cases where the trial court granted a motion to compel discovery of claims procedures.

The original Seville Place opinion contained a tortured analysis that permitted unripe bad faith claims to go forward before the final determination of coverage issues. The new Seville Place opinion, fortunately, does away with the unsettling discussion. However, as pointed out by Judge Shepherd’s concurring decision, the ultimate question of whether a bad faith claim will be allowed to proceed solely upon the filing of an appraisal award but before any rulings on coverage, has been left for another day:

Unlike our sister courts, see Illinois Nat’l Ins. Co. v. Bolen, 53 So.3d 388, 390-91, (Fla. 5th DCA 2011); XL Specialty Ins. Co. v. Aircraft Holdings, LLC, 929 So.2d 578, 587 n.7 (Fla. 1st DCA 2006), petition for cert. filed, No. SC 06-1303 (Fla. June 29, 2006), and dismissed No. SC06-1303 (Fla. Sept. 9, 2008); United Auto. Ins. Co. v. Tienna, 780 So.2d 1010, 1011 n.4 (Fla. 4th DCA 2001); Mich. Millers Mut. Ins. Co. v. Bourke, 581 So.2d 1368, 1370 (Fla. 2d DCA 1991), which have reached the issue and concluded that a bad faith claim is premature and does not accrue until the underlying insurance contract action is concluded and “the … carrier’s appeal has been finally determined,” see Bolen, 53 So.3d at 389-90, the message of this court today is that we will not exercise our jurisdiction to review orders granting leave to amend to add a bad faith claim, denying a motion to dismiss a bad faith claim, or prematurely lifting an order abating a bad faith claim on the ground the claim itself was brought prematurely, but rather will wait for a proper case.

Despite the court’s avoidance of this important issue, its decision to retract from the original Seville Place opinion is welcome, as it helps restore the balance needed for fair and just litigation of insurance claims.


Should you have any questions or comments, please contact Katie Webb (kwebb@cftlaw.com) at Colodny Fass.