State-Created Insurance Entity Exempt from Florida’s First-Party Bad Faith Statute

In Citizens Property Insurance Corp. v. Perdido Sun Condominium Ass’n, the Florida Supreme Court was asked to decide “whether the Florida Legislature intended … [for] a state-created entity that provided property insurance to be liable for statutory first-party bad faith claims as an exception to its statutory immunity from suit.” After prevailing in a breach of contract action against Citizens, Perdido Sun sued Citizens for bad faith under Florida’s Section 624.155(1). Citizens sought to dismiss the bad faith complaint based upon its statutory immunity. Perdido Sun countered, contending the bad faith claim fell within the “willful tort” exception to immunity under Section 627.351(6)(s)(1).

In its complaint, Perdido Sun alleged that Citizens “(1) refused to pay the full amount owed to [the insured] … (2) refused to take part in the required appraisal process … (3) delayed payment of the appraisal award and improperly attempted to condition payment of the award … and (4) engaged in a pattern and practice of seeking to avoid or delay full settlement of claims.” Perdido Sun sought to recover based on an exception to immunity for “any willful tort.” The trial court found Citizens to be immune because a statutory bad faith claim was not enumerated in the exceptions. The Florida First District Court of Appeals, however, disagreed with the trial court (and the Fifth District Florida Court of Appeals), finding that the claim fell within the “willful tort” exception.

The Florida Supreme Court agreed with the trial court. It stated, “[i]n examining the relevant statutory provisions at issue, we find no support that the Legislature intended for [the state created insurer] to be liable for a breach of the duty to act in good faith by allowing its policyholders to bring a statutory first-party bad faith cause of action.” It specifically pointed to the listed exceptions to immunity as evidence, finding persuasive that a bad faith claim was not listed as an exception. Instead, it found the immunity language clear, as Citizens was immune from liability for “any action taken by it in the performance of its duties or responsibilities … which necessarily includes a breach of the duty of good faith.”

The Supreme Court further found that the claim did not fall within the “willful tort” exception. In doing so, it quoted the Fifth District’s opinion stating that a first-party bad faith claim “now exists in Florida not because they are torts, but because they are a statutory cause of action.” As such, the bad faith claim could not be “wedged into” the willful tort exception.

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