239 So. 3d 218
Fla. Dist. Ct. App.2018Background
- Thomas and Joanne Demase reported suspected sinkhole damage to their State Farm homeowner’s policy; multiple inspections produced conflicting opinions about sinkhole activity.
- The Demases complied with insurer requests (inspections, documentation, examinations under oath) and served a civil remedy notice (CRN) under §624.155 on August 27, 2014, triggering a 60-day cure period.
- State Farm paid nothing during the 60-day cure period but later (April 10, 2015) conceded the home could not be repaired and tendered the policy limits.
- The Demases sued for first-party bad faith under §624.155, alleging failures in investigation, adjustment, and good-faith settlement.
- The trial court dismissed with prejudice, reasoning the Demases had not alleged a favorable resolution of an underlying action for insurance benefits (e.g., judgment, arbitration, appraisal, or action on the contract).
- The Fifth District reversed, holding payment of policy limits after the 60-day cure period can satisfy the prerequisites for a §624.155 bad-faith suit (determination of liability and extent of damages).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an underlying breach-of-contract action is required before a §624.155 bad-faith suit accrues | Demase: Bad-faith accrues when insurer raises no coverage-defeating defense and the extent of loss is determined; State Farm’s post-cure payment of policy limits satisfied those conditions | State Farm: Under Blanchard, insured must first obtain a favorable resolution of an underlying first-party action (judgment, arbitration, appraisal, or action on the contract) before suing for bad faith | Court: No underlying action required; only a determination of insurer liability and extent of damages is required, which can be satisfied by insurer’s payment of policy limits after the 60-day cure period |
Key Cases Cited
- Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So. 2d 1289 (Fla. 1991) (supreme court held bad-faith claim accrual tied to favorable resolution of insured’s underlying claim in context of claim-splitting question)
- Imhof v. Nationwide Mut. Ins. Co., 643 So. 2d 617 (Fla. 1994) (discusses requirement that insured show a valid claim — determination of damages serves that purpose)
- Vest v. Travelers Indem. Co., 753 So. 2d 1271 (Fla. 2000) (clarifies Blanchard: bad-faith suit premature until liability and extent of damages determined; settlement/payment can satisfy that requirement)
- Fridman v. Safeco Ins. Co. of Ill., 185 So. 3d 1214 (Fla. 2016) (describes §624.155 60-day cure period purpose and presumption of bad faith when insurer fails to respond)
- QBE Ins. Corp. v. Chalfonte Condo. Apartment Ass’n, 94 So. 3d 541 (Fla. 2012) (describing statutory origin and purpose of first-party bad-faith cause of action)
- Brookins v. Goodson, 640 So. 2d 110 (Fla. 4th DCA 1994) (holds insurer’s payment of policy limits is the functional equivalent of a determination of damages)
- Cammarata v. State Farm Fla. Ins. Co., 152 So. 3d 606 (Fla. 4th DCA 2014) (en banc) (reiterates that determination of liability and extent of damages—not litigation on the contract—is the prerequisite for bad-faith suit)
- Trafalgar at Greenacres, Ltd. v. Zurich Am. Ins. Co., 100 So. 3d 1155 (Fla. 4th DCA 2012) (holds judgment is not the only way to obtain favorable resolution)