Payment of Appraisal Award After CRN Cure Period Does Not Cure an Alleged Statutory Claim of Bad Faith

Insurer afforded coverage for Hurricane Irma claim but determined the amount of the loss was under the deductible. The homeowners disputed the value of the loss and submitted a competing damage estimate. The insurer invoked appraisal and the homeowners filed a Civil Remedy Notice (CRN). Appraisal was not completed within 60 days. Following the appraisal award, the insured paid the net amount owed. Thereafter, the homeowners sued for bad faith. The trial judge held the bad faith claim was “cured” by the insurer’s invocation of appraisal before the CRN was filed, and its subsequent payment of the appraisal award. The appellate court reversed the judgment holding that the pendency of an appraisal does not affect how an insurer must respond to a CRN. The insurer’s payment of an appraisal award, after the expiration of the 60-day cure period, did not cure the alleged claim of statutory bad faith. Fortune v. First Protective Ins. Co., 2d DCA (Sept. 4, 2020).

Tips & Lessons

• In July 2019, the legislature amended the statute so that a CRN may not be filed within 60 days after appraisal is invoked.
• If appraisal has been invoked and a CRN has been filed, the appraisal must be expedited to conclude before the expiration of the 60 day cure period.

Civil Remedy Notice that Lacks Specificity is Deficient and Precludes Action for Statutory Bad Faith

 An insured filed suit against his homeowner insurer alleging a statutory claim of “bad faith.” Prior to filing suit, the insured filed a civil remedy notice citing to 35 statutory violations and listing nearly every provision in the policy. The trial court dismissed the bad faith complaint with prejudice finding the civil remedy notice failed to satisfy the statutory requirement that an insured “state with specificity” the policy language and the statutory provisions at issue. The appellate court agreed and held the notice was facially invalid and, therefore, the insured could not state a cause of action for statutory bad faith. Julien v. United Property & Cas. Ins. Co., 4th DCA (September 23, 2020).

Tips & Lessons

• Boilerplate references to statutes and administrative code provisions that have no bearing on the claim at issue undermine the purpose of the notice provision.
• Carefully analyze civil remedy notices and raise the lack of specificity and other deficiencies in the notice when responding.

Failure to Attend EUO Presents “Fact Question” if Insured Presents Evidence of Cooperation to Some Degree or Provides Explanation for Non-Compliance

An insured reported plumbing losses to his homeowner insurance company. By the time the insurer arrived to inspect the damage, the leak had been repaired and mitigation work had been completed. The insurer requested an EUO and coordinated a date with the insured’s attorney. The day prior to the scheduled EUO, the attorney withdrew as counsel to the insured. The insurer’s counsel sent a letter to the insured reminding him of the EUO, but the insured did not appear for his EUO the following day. The insured retained new counsel who advised the insured was not aware his EUO was scheduled and he had been out of the country. His attorney offered to reschedule the EUO, but the insurer did not reschedule the EUO and denied the claim. The insured filed suit for breach of contract and the insurer sought summary judgment based on the insured’s failure to satisfy his post-loss obligations. The trial court granted the summary judgment. The appellate court, however, reversed holding that there was a “fact question” regarding the willfulness of the homeowner’s failure to attend the EUO. Abdo v. Avatar Prop. and Cas. Ins. Co., 4th DCA (September 9, 2020)

Tips & Lessons

• The insured presented evidence that he cooperated “to some degree” and gave an explanation for his nonattendance at the EUO.
• The court focused only on whether there was “a willful and material breach” of the EUO provision and did not address the other post-loss obligations to provide prompt notice or show the damage, or the presumption of prejudice to the insurer.

One More Quick Note

• The Florida Supreme Court has declined to review recent decisions from the Fifth District Court of Appeal holding that the homestead exception did not prohibit a homeowner from assigning post-loss insurance benefits to a contractor in exchange for repairing damage to the property. The insurer raised the Florida constitutional “homestead exemption” as barring a post-loss assignment of benefits. The Fifth District had certified the question to the Florida Supreme Court as one of great public importance.