Groelle & Salmon Adds Attorneys to Litigation Teams in Its Florida Offices
The recent windstorms experienced by Florida in the past two years have prompted an unusual surge in litigation filings over the past year, and Groelle & Salmon has responded by adding litigation personnel to the teams in all of its Florida offices. The time period in which litigation on hurricane claims can be filed has been reduced by fairly recent litigation, the amount of new filings related to disputed claims has increased for that ‘window” in which litigation may be commenced.
Please join us in welcoming Jacqueline Alastra on her return as a partner to the firm’s Orlando-area office. Mrs. Alastra has over a decade of litigation and coverage evaluation experience in first party claims and in defense of first property claims litigation. Many firm clients have previously had opportunity to work with Ms. Alastra over past years, and know the benefits of her talents and legal skills in property coverage evaluations, claims investigation, and litigation defense. The firm is proud to welcome Jackie Alastra back to the Groelle & Salmon team in Central Florida! Also joining the firm in the Orlando office are partner Bruce Epple, and associate attorneys Tamara Braz and Lucie Robinson.
The West Palm Beach office has also added partner Adam Baer; and associates Cynthia Olea-Diaz, Taylor Phipps and Wayne Pratt, to the team in West Palm Beach. The Miami office has also added partner Aaron White and a few associates to its roster, including Alexander Williams, Micheline Gros-Jean, Raul Flores, Chazz Pearce and David Carnright. The Tampa office has added attorneys Damien Sullivent, Thomas Whigham, Brooke Belling, Matthew Daley and J. Cory Wilkinson. In our Vero Office, Matthew Groom has joined the team. And we are not done growing yet! We do expect the number of new lawsuits filed related to the most recent windstorm, Hurricane Irma on September 9th and 10th, 2017, will have public adjusters and loss consultants ‘knocking on doors’ for the next two years, and insurers will experience the wave of new claims and “re-opens” that plagued the insurance claims market in the years following the 2005 hurricanes. But we will be ready!
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Appraisal is Still Regarded by Some Courts as an Alternative Dispute Resolution Forum…
In a recent interesting appellate ruling by the Fourth DCA, there is some judicial support for the principal that when an alternative dispute resolution forum settles the claim, there is some finality in litigation. In the case of Goldman vs United State Automobile Assn., on appeal from a trial court final summary judgment entered in favor of the insurer; the Fourth DCA affirmed a ruling favorable to the insurer by opinion dated April 18th, 2018.
In that case, after a plumbing line leak damaged their house, the homeowners notified the insurer, which investigated the claim and issued a claim payment. Thereafter, the homeowners filed suit for breach of contract against USAA without ever advising the insurer that they disputed the amount of claim payment. The insurer immediately moved to compel appraisal; the appraisal was allowed and took place; and the insurer timely paid the appraisal award. Because the appraisal process established the amount of damages, and the insurer paid that amount, the court granted summary judgment in the insurer’s favor. The homeowners took the matter up on appeal.
In affirming the trial court final summary judgment for USAA, the Goldman Court noted that “The homeowners seek to distinguish Hill [v. State Farm Fla. Ins. Co., 35 So. 3d 956 (Fla. 2d DCA 2010)], arguing it is the incorrect denial of benefits and not some sinister concept of wrongfulness that triggers fees. They are correct that it is the incorrect denial of benefits that triggers an award of attorney’s fees under section 627.428; yet, they are wrong to distinguish Hill on that basis. In Hill, and here, the insured never gave the insurer the opportunity to incorrectly deny the benefits before filing a lawsuit. The Hill court questioned ‘whether this lawsuit was filed to force [the insurer] to conduct an appraisal or whether it was merely a preemptive lawsuit intended to obtain attorneys’ fees for the usual efforts in negotiating an insurance claim.’ 35 So. 3d at 960. Here, the circuit court found that was the exact reason the lawsuit was filed. Thus, the court properly granted summary judgment in favor of the insurer.”
Yes, there are appellate courts out there that rely on logic and rationale in their holdings! This was a commonsense application of case precedent, and a perfectly logical outcome.
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New York Trial Court Dismisses Untimely Complaint
United Property & Casualty Insurance Company successfully obtained a dismissal of an untimely action filed against the insurer in the Supreme Court for Nassau County, New York. Andrew Labbe and Joseph Nett of Groelle & Salmon’s New York office successfully brought and argued the Motion to Dismiss.
The underlying claim was for a loss that occurred on April 5, 2015 and involved extensive water damage to the property and contents, with claimed damages in excess of $1.5 million. The Complaint was filed in the Court on August 26, 2017.
United moved to dismiss the legal action based on the expiration of the two (2) year statute of limitations set forth in the policy. Plaintiff opposed the Motion to Dismiss, arguing that United was estopped from relying on the statute of limitations by its own action contributing to delay in claim handling, and by issuing a partial payment of the claim. Plaintiff also asserted that the policy was not properly issued or delivered, so the modified statute of limitations in the policy was not agreed to by the parties.
Ultimately, the trial court agreed with United that perceived delays in the claim handling process do not negate application of the statute of limitations, and no conduct of United justified application of the estoppel doctrine. Further, Plaintiff’s argument that the policy was not issued to the actual fee owner of the property did not impact application of the statute of limitations; and the court agreed Plaintiff’s argument simply demonstrated that she had no insurable interest in the property and lacked standing to maintain the lawsuit. The trial court also agreed with United’s position that, even if Plaintiff had not physically received the policy, as it was delivered to the insurance agent, Plaintiff was conclusively presumed to know its contents.
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Fourth District Court of Appeals Proposes Sebo Jury Instructions
The Fourth District Court of Appeal recently took a position setting forth the proper jury instructions where more than one peril potentially caused a loss. In Jones v. Federated National Insurance Co. (Case No. 4D16-2579), in breach of contract action for insurance benefits under a homeowners’ insurance policy, plaintiffs asserted their roof was damaged by a hailstorm. At trial, the parties presented conflicting evidence as to the actual cause of claimed damage, including whether the roof damage existed prior to the hailstorm, and was the result of wear and tear, attributable in part to leaks from solar panels installed on the roof. The trial court, in following Sebo I, approved jury instructions offered by the insurer, to apply the efficient proximate cause doctrine.
On appeal, the appellate court reviewed the trial court’s jury instruction regarding whether an excluded event was the efficient cause of damage. The Jones Court concluded the trial court erred in the allocation of the burden of proof, as it placed the initial burden on the insured to demonstrate that the hailstorm was “the most substantial or responsible cause of the damage to the roof.” The Jones Court noted that, under an all-risk policy, the insured must establish a loss within the terms of the policy, and then the burden is on the insurer to prove the loss arose from an excepted cause. The court set forth the appropriate jury instructions involving an all-risk policy where more than one potential cause of damage was raised by the parties, as follows:
1. The insured has the initial burden of proof to establish that the damage at issue occurred during a period the damaged property had insurance coverage. If the insured fails to meet this burden, judgment shall be entered in favor of the insurer.
2. If the insured's initial burden is met, the burden shifts to the insurer to establish that (a) there was a sole cause of the loss, or (b) in cases with more than one contributing cause, there was an "efficient proximate cause" of the loss.
3. If the insurer meets the burden of proof under either 2(a) or 2(b), it must then establish that this sole or efficient proximate cause was excluded from coverage by the terms of the insurance policy. If it does so, then judgment shall be entered in its favor. If the insurer establishes that there was a sole or efficient proximate cause, but fails to prove that this cause was excluded by the all-risk insurance policy, then judgment shall be entered in favor of the insured.
4. If the insurer fails to establish either a sole or efficient proximate cause, and there are no applicable anti-concurrent cause provisions, then the concurrent cause doctrine must be utilized. Applying the concurrent cause doctrine, the insurer has the initial burden of production to present evidence that an excluded risk was a contributing cause of the damage. If it fails to satisfy this burden, judgment shall be entered in favor of the insured.
5. If the insurer does produce evidence that an excluded risk was a concurrent cause of the loss, then the burden shifts to the insured to present evidence that a covered peril was a concurrent cause of the loss. If the insured fails to satisfy that burden, then judgment shall be entered in favor of the insurer.
6. If the insured produces evidence of a covered concurrent cause, the insurer bears the burden of proof to establish the insured's purported concurrent cause was either (a) not a concurrent cause (i.e., it had no (or a de minimis) causal role in the loss), or (b) is excluded from coverage by the insurance policy. If the insurer fails to satisfy this burden, judgment shall be entered in favor of the insured.
Although it may not be the perspective of all that have viewed the rulings related to the Sebo cases in recent years, the one thing that Jones does do is provide some guidance and definition when there are multiple contributing causes that combine to cause a loss in the Fourth District!
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An Insurer’s Claim Payment after the 60 Day ‘Cure Period’ Constitutes a Determination of Liability and Damages under Florida’s Bad Faith Statute
In the recent appellate holding in Demase v. State Farm Insurance Company (5th DCA Fl., March 29, 2018) the Fifth District Court of Appeal found that “an underlying action on the insurance contract is not required for there to be a determination of the insurer’s liability and the extent of the damages as a prerequisite to filing a statutory bad faith action.”
“Instead, an insurer’s payment of an insurance claim after the sixty-day cure period provided by section 624.155(3) constitutes a determination of an insurer’s liability for coverage and extent of damages under section 624.155(1)(b) even when there is no underlying action.”
In Demase, the insureds filed a Civil Remedy Notice (‘CRN’) asserting that State Farm wrongfully failed to extend coverage or pay their claim under its policy for damage to their residence caused by sinkhole activity. The CRN was accepted by the Department of Financial Services on August 27, 2014, which also triggered the “sixty-day period in which State Farm could cure its alleged wrongful conduct.” On April 10, 2015 (after the 60 day limit) State Farm conceded the house could not be repaired and tendered the dwelling coverage limits.
The Demases filed a bad faith lawsuit against State Farm, asserting violations of 624.155(1)(b)1 and 626.954(1)(i), Florida Statutes (2014). State Farm responded with a Motion to Dismiss the action, on the basis that there was no underlying judgment or award entered against State Farm opr in favor of the Plaintiffs. The trial court sided with State Farm and dismissed the bad faith lawsuit, determining that there “was not a favorable resolution of an underlying civil action for insurance benefits against the insurer - whether in the form of a judgment, arbitration, appraisal, or ‘action on the contract.’”
On appeal, the 5th District appellate court reversed the trial court dismissal, reasoning that the insureds were entitled to bring and maintain the bad faith action as State Farm’s payment on the claim after the 60-day cure period allowed by the statute was a ‘functional equivalent’ of admitting damages and liability. The Demase Court stated “[w]e read Blanchard, as clarified by Vest, to require only a determination of liability and a determination of damages before suing for bad faith. (citation omitted)(“Under Trafalgar, Hunt, and Cammarata, a plaintiff insured need not allege success on a breach-of-contract claim to sue the defendant insurer for bad faith.”); “The payment of the full policy limits after the sixty-day cure period provided in section 624.155(3) satisfied the requirement that there has been a final determination of the insurer’s liability and damages.”
The 5th DCA concluded that payment outside the 60 day cure period is a “favorable resolution for insureds even if the amount [is] less than policy limits and amount that insureds initially demanded.” See Barton v. Capitol Preferred Ins. Co., 208 So. 3d 239, 243 (Fla. 5th DCA 2016).
Accordingly, the Demase Court REVERSED the trial court dismissal of the action and remanded the case to the trial court for further proceedings. This holding is consistent with the recent trend in Florida’s appellate Courts that are increasingly recognizing and supporting bad faith litigation by insureds when an insurer resolves a claim with additional payment to an insured after initially contesting the indemnity obligation – whether that subsequent claim payment is the result of the insurer’s re-evaluation of the claim, a compromise resolution, or by alternative dispute forum.
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Homeowners Choice Obtains Awarded in Excess of $80,000 for Fee and Costs
Homeowners Choice recently obtained an Order and Judgment awarding $82,256.23 in fees and costs related to a homeowners claim that it defended through trial in August 2017, prevailing with a defense verdict. A year prior to trial, the Plaintiffs were served with Proposals for Settlement, which were rejected by the insureds and their attorneys.
In enforcing the proposals for settlement and awarding fees and costs to Homeowners Choice, the trial court made several significant rulings. Initially, as to entitlement, Plaintiffs’ counsel argued the proposals for settlement were not made in good faith, as they were only in the amount of $500.00 for each Plaintiff. However, the trial court agreed with Homeowners Choice that, based on information available at the time, Homeowners Choice properly denied plaintiffs’ claim and that it would prevail at trial. The insurer had relied upon the field adjuster’s report and photographs, and a forensic expert report, which all documented a severely rusted and failed water tank, rusted metal framing components, severely swollen and collapsed kitchen cabinetry, and water damaged kitchen cabinets. Further, the policy exclusion for constant and repeated seepage or leakage included an anti-concurrent causation clause, and no ensuing loss provision. Therefore, the Court found the amount of the proposals for settlement to be reasonable.
Plaintiffs’ counsel also asserted the proposal for settlement to one of the co-plaintiffs was untimely because it was served only eleven (11) days after she was joined as a party. However, the trial court agreed with Homeowners Choice that the applicable rule expressly allows for service of a proposal for settlement on a plaintiff 90 days after the commencement of an action and not at a later point when a co-plaintiff is joined to the litigation. Further, the rule expressly provides that an action is commenced when the complaint is filed - not when a co-plaintiff is joined. As the proposals for settlement were served approximately five (5) months after the complaint was filed, the proposals for settlement were both timely.
In determining the amount of the fees to award, the court heard unrefuted testimony of an attorney fee expert offered by Homeowners Choice as to his evaluation of necessary fees and costs, and recommended some deductions. The court accepted his evaluation and, also, agreed that the insurer was entitled attorneys’ travel time as a sanction for plaintiffs’ rejection of the proposals for settlement.
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