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Citizens Property Insurance Corporation v. Blaha

District Court of Appeal of Florida
194 So. 3d 411, 2016 WL 1385629, 2016 Fla. App. LEXIS 5399 (2016)
ELI5:

Rule of Law:

An insurer's breach of an insurance policy does not waive a condition precedent to payment for a covered loss, such as a requirement that the insured first enter into a contract for repairs before the insurer is obligated to pay for those repairs.


Facts:

  • Daniel and Clyndon Blaha held a homeowners insurance policy from Citizens Property Insurance Corporation, which included sinkhole coverage.
  • The policy stipulated that Citizens would pay for subsurface repairs, such as grouting, only after the Blahas entered into a contract for the performance of those repairs.
  • On March 8, 2011, the Blahas reported damage to their home consistent with sinkhole activity.
  • Citizens' hired engineering firm, AEI, confirmed sinkhole activity and recommended a specific subsurface repair plan involving compaction grouting.
  • The Blahas obtained a proposal from a contractor, Champion Foundation Repair Systems, based on recommendations from their own engineer, which were similar but not identical to AEI's.
  • On November 21, 2011, the Blahas submitted a signed contract with Champion to Citizens for approval and payment to begin the work.
  • Citizens did not respond to or approve the Champion contract, later claiming at trial it was because the proposed amounts of materials did not exactly match AEI's recommendations.

Procedural Posture:

  • The Blahas filed a complaint for breach of contract against Citizens in the trial court.
  • Litigation was stayed pending a neutral evaluation procedure pursuant to Florida statute.
  • The case proceeded to a jury trial.
  • The jury found that Citizens breached the policy by failing to authorize and pay for the contract submitted by the Blahas.
  • The jury awarded the Blahas damages totaling $195,000 for compaction grouting, chemical grouting, and cosmetic repairs.
  • The trial court denied Citizens' motion for a directed verdict and entered a final judgment in favor of the Blahas for the full jury award plus prejudgment interest.
  • Citizens, as appellant, appealed the final judgment to the intermediate appellate court, with the Blahas as appellees.

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Issue:

Does an insurer's breach of contract by failing to approve a repair plan excuse the insured's policy obligation to enter into a contract for subsurface repairs before the insurer's duty to pay for those repairs is triggered?


Opinions:

Majority - Wallace, Judge

No. Notwithstanding any breach by the insurer, policy provisions that condition payment for subsurface repairs on the insured first entering into a repair contract remain in effect. The court reasoned that an insurer's breach of contract can excuse an insured's performance of some policy obligations, but it cannot expand the scope of coverage. The requirement to enter into a contract before payment is a matter of coverage, defining when and how benefits are paid, not a condition of forfeiture that can be waived by the insurer's conduct. Therefore, Citizens' earlier refusal to approve a contract did not eliminate its right to withhold payment until the Blahas actually entered into a contract for the subsurface repairs.



Analysis:

This decision reinforces the distinction between an insurer's performance obligations and the fundamental terms of coverage. It establishes that a condition precedent to payment, such as signing a repair contract, is considered part of the coverage itself and is not excused by the insurer's prior breach. This protects insurers from having to issue large cash payments for repairs that might not be performed, upholding the 'repair-first, pay-later' model common in property insurance. For future cases, it means policyholders cannot convert a breach of contract claim into an immediate cash windfall for repairs; they must still satisfy the contractual prerequisites to trigger the insurer's payment duty for those specific costs.

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