Kathy Johnson v. Omega Insurance Company
200 So. 3d 1207
| Fla. | 2016Background
- Kathy Johnson filed a homeowner’s sinkhole-damage claim with Omega; Omega’s insurer-selected engineer (Rimkus) concluded no sinkhole activity and Omega denied benefits.
- Johnson hired an independent expert (BASIC) who found sinkhole damage; Omega still refused payment and requested neutral evaluation; a later Omega-retained expert (WRS) and the neutral evaluator confirmed sinkhole damage.
- After litigation was filed, Omega conceded Johnson was entitled to benefits and conditioned payment on remediation; Johnson sought attorney’s fees under Fla. Stat. § 627.428, arguing Omega’s post-suit payment was the functional equivalent of a confession of judgment.
- The trial court granted confession-of-judgment relief and awarded fees; the Fifth District reversed, holding the statutory presumption for insurer reports under the sinkhole statutes applied pretrial and that § 627.428 required insurer wrongdoing/bad faith.
- The Florida Supreme Court granted review to resolve conflicts with Universal Ins. Co. of N. Am. v. Warfel and Ivey v. Allstate regarding (1) whether the sinkhole-statutory presumption extends into litigation and (2) whether § 627.428 requires bad faith for fee recovery.
Issues
| Issue | Plaintiff's Argument (Johnson) | Defendant's Argument (Omega) | Held |
|---|---|---|---|
| Does the statutory presumption of correctness for insurer-selected experts in the sinkhole statutes extend to trial? | Presumption applies only to initial claim process; not to bar fee recovery at trial. | Presumption should be applied pretrial and in litigation to shield insurer’s report. | Presumption is limited to the initial claims/investigative process and does not apply at trial (Warfel reaffirmed). |
| Does recovery of attorney’s fees under § 627.428 require insurer bad faith or wrongful intent? | No; an incorrect denial followed by judgment or post-filing payment (functional equivalent of confession of judgment) suffices. | Yes; fees should require a wrongful or bad-faith denial — mere incorrectness is insufficient. | Rejected bad-faith requirement; § 627.428 entitles insureds to fees when benefits were incorrectly denied and recovery is had. |
| Is a post-filing payment by insurer the functional equivalent of a confession of judgment entitling insured to fees? | Yes; payment after suit is filed equals confession of judgment and triggers fees. | Payment after filing does not automatically mandate fees if insurer complied with sinkhole statutes or acted reasonably. | Confirmed: post-filing payment/concession is the functional equivalent of confession of judgment and supports fee award. |
| Does compliance with minimum sinkhole-statutory procedures shield insurer from fees when initial investigation was inadequate? | No; meeting minimal statutory steps does not excuse an incorrect denial discovered after litigation. | Compliance with statutory investigative requirements should limit fee exposure. | Compliance does not bar fee recovery where denial was incorrect and insured prevailed. |
Key Cases Cited
- Universal Ins. Co. of N. Am. v. Warfel, 82 So.3d 47 (Fla. 2012) (statutory presumption for insurer’s sinkhole-investigation reports is limited to the initial claims process and not an evidentiary presumption at trial)
- Ivey v. Allstate Ins. Co., 774 So.2d 679 (Fla. 2000) (§ 627.428 fees arise from an incorrect denial — bad faith is not required; post-filing payment is equivalent to confession of judgment)
- Ins. Co. of N. Am. v. Lexow, 602 So.2d 528 (Fla. 1992) (insurer’s good faith in litigation is irrelevant to statutory fee obligation under § 627.428)
- Wollard v. Lloyd’s & Cos. of Lloyd’s, 439 So.2d 217 (Fla. 1983) (payment or settlement after suit is the functional equivalent of a confession of judgment or verdict for insured)
- State Farm Fla. Ins. Co. v. Colella, 95 So.3d 891 (Fla. 2d DCA) (discusses sinkhole-statute compliance; relied on by Fifth District but factually distinct and not a bar to fees where insurer’s denial is incorrect)