Bele v. 21st Century Centennial Insurance
126 F. Supp. 3d 1293, 2015 U.S. Dist. LEXIS 119308, 2015 WL 5155214 (2015)
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Rule of Law:
Under Florida law, a first-party bad-faith claim against an insurer does not accrue until the underlying breach of contract claim for benefits has been resolved in the insured's favor. A premature bad-faith claim is subject to dismissal, and a related claim for declaratory judgment on liability and damages for that potential bad-faith claim lacks the requisite 'actual controversy' to be adjudicated.
Facts:
- In March 2014, Evelyn Bele and her husband, Anthony Bele, were passengers in a vehicle that struck another disabled vehicle, causing them to suffer injuries.
- At the time of the accident, the Beles were insured by 21st Century Centennial Insurance Company ('21st Century') under a policy that included underinsured/uninsured motorist (UM) coverage.
- The at-fault driver who caused the initial collision was underinsured, meaning their insurance policy limits were insufficient to cover the Beles' damages.
- The at-fault driver's insurance company tendered its policy limits of $100,000 per person to the Beles.
- Despite the tender from the at-fault driver's insurer, the Beles' damages exceeded that amount.
- The Beles made a claim to their own insurer, 21st Century, for payment under their UM coverage.
- 21st Century denied the Beles' claim for UM benefits.
Procedural Posture:
- Plaintiffs, Evelyn and William Bele, filed a three-count complaint against 21st Century Centennial Insurance Company in the Circuit Court of the Seventh Judicial Circuit in Volusia County, Florida.
- Defendant removed the case to the U.S. District Court for the Middle District of Florida based on diversity jurisdiction.
- Plaintiffs filed a Motion to Remand the case to state court, which the District Court denied.
- Defendant then filed a Motion to Dismiss Counts II (Bad-Faith) and III (Declaratory Judgment) of the Plaintiffs' Complaint.
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Issue:
When an insured sues an insurer for both breach of contract for uninsured motorist (UM) benefits and statutory bad faith, is the bad-faith claim ripe for adjudication, and does a related claim for a declaratory judgment on liability and damages present an 'actual controversy' before the underlying contract claim is resolved?
Opinions:
Majority - Paul G. Byron
No. A bad-faith claim brought concurrently with the underlying contract claim for UM benefits is premature and subject to dismissal, and a request for a declaratory judgment on damages for that potential bad-faith claim does not present an 'actual controversy'. Under established Florida law, a cause of action for bad faith does not accrue until there is a final determination of both the insurer's liability and the extent of the insured's damages on the underlying contract claim. While courts have discretion to either abate (pause) or dismiss a premature bad-faith claim, dismissal is the proper course here because a plaintiff with an unresolved UM claim is not yet 'entitled to relief' on bad faith under Federal Rule of Civil Procedure 8(a)(2). Similarly, a declaratory judgment action to determine liability and damages for a future, contingent bad-faith claim is improper under the Declaratory Judgment Act because no 'actual controversy' exists until the underlying contract claim is resolved; such a declaration would be speculative and would not resolve the entire controversy.
Analysis:
This decision reinforces the strict procedural sequencing required for insurance litigation under Florida law when handled in federal court. It demonstrates a judicial preference for dismissal over abatement for premature bad-faith claims, prioritizing strict adherence to federal pleading standards over potential judicial economy. The ruling clarifies that a bad-faith claim is not merely unripe but lacks a factual and legal basis until the predicate contract claim is won by the insured. This provides a clear strategy for insurance defense counsel to immediately dispose of improperly joined bad-faith and ancillary declaratory judgment counts, forcing litigation to proceed in two distinct stages: first contract, then tort.
