Joseph Cammarata and Judy Cammarata v. State Farm Florida Insurance Company
2014 WL 4327948, 152 So. 3d 606, 2014 Fla. App. LEXIS 13672 (2014)
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Rule of Law:
A first-party bad faith claim against an insurer is ripe when there is a determination of the insurer's liability for coverage and the extent of the insured's damages. This determination can be made through a binding appraisal award, and a separate judicial finding of a breach of contract is not a prerequisite for the bad faith action to accrue.
Facts:
- In October 2005, the insureds' home sustained damages from Hurricane Wilma.
- In September 2007, the insureds filed a claim for benefits under their homeowners' policy.
- In October 2007, the insurer inspected the home and notified the insureds that the estimated damages were lower than the policy deductible, resulting in no payment.
- In April 2008, the insureds invoked the policy’s appraisal process to resolve the dispute over the amount of damages.
- After the parties' respective appraisers submitted conflicting estimates, a neutral umpire was appointed.
- On October 16, 2009, the umpire issued a damage estimate that was higher than the policy deductible.
- The insurer’s appraiser agreed to the umpire’s damage estimate.
- In December 2009, the insurer paid the insureds the full amount of the appraisal award, minus the policy deductible.
Procedural Posture:
- The insurer and the insureds each filed petitions in the circuit court to appoint a neutral umpire for the appraisal process.
- The circuit court appointed the neutral umpire.
- After the insurer paid the appraisal award, the circuit court entered an agreed order dismissing the petitions with prejudice.
- The insureds then filed a separate civil action against the insurer in circuit court for statutory bad faith.
- The insurer moved for summary judgment, arguing the bad faith claim was not ripe because there had been no determination of its liability for breach of contract.
- The circuit court (trial court) granted the insurer's motion for summary judgment and dismissed the insureds' bad faith action.
- The insureds (appellants) appealed the final summary judgment to the Fourth District Court of Appeal.
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Issue:
Does an insured's first-party bad faith claim become ripe upon the conclusion of an appraisal process that determines the existence of the insurer's liability and the extent of the insured's damages, even without a separate judicial determination that the insurer breached the contract?
Opinions:
Majority - Per Curiam
Yes. An insurer’s liability for coverage and the extent of damages, not necessarily its liability for breach of contract, must be determined before a bad faith action becomes ripe. The court traced the evolution of Florida Supreme Court precedent from Blanchard v. State Farm to Vest v. Travelers Insurance Co. Vest clarified that the 'determination of the existence of liability... and the extent of the insured's damages' are simply elements of a bad faith cause of action. The court reasoned that an appraisal award, much like a settlement, functions as a 'favorable resolution' that establishes these elements. Therefore, the conclusion of the appraisal process in the insureds' favor was sufficient to ripen their bad faith claim, making a separate judicial finding of breach of contract unnecessary. The court explicitly receded from its prior conflicting opinion in Lime Bay.
Concurring - Gerber, J.
Yes. While compelled to agree with the majority due to the controlling precedent set by the Florida Supreme Court in Vest, this outcome is concerning. This decision creates a 'slippery slope' where an insured could sue for bad faith anytime an insurer disputes a claim but then pays even a nominal amount more than its initial offer through an agreed-upon dispute resolution process like appraisal. This could punish insurers for exercising their contractual right to contest a claim in good faith. The concurring opinion suggests that the legislature may need to amend the statute to require a formal finding of breach of contract or a settlement significantly above the initial offer as a prerequisite to a bad faith claim.
Analysis:
This decision clarifies that a formal breach of contract lawsuit is not the exclusive gateway to a statutory bad faith claim in Florida. By holding that an appraisal award constitutes a sufficient 'favorable resolution,' the court lowers the procedural barrier for insureds to bring bad faith actions following a payment dispute. This ruling will likely increase insurers' exposure to bad faith litigation and may encourage them to settle claims more readily to avoid the risk of a subsequent, more costly lawsuit. The court's action in receding from its own precedent in Lime Bay resolves an internal conflict and solidifies the principle that the determination of liability and damages, by any conclusive method, is the key event that ripens a bad faith claim.
