Tallahssee, FL – The Florida Supreme Court will decide whether the state's largest property insurer can be sued for acting in bad faith. James Call reports, Citizens Property Insurance Corporation claims the Legislature granted it immunity against such suits.
The case involves a windstorm policy and Hurricane Ivan. The original suit filed by an Escambia County condominium association was put on hold when Citizens claimed statutory immunity. Richard Beckish represents the hundred-member association. He said the condo owners first went to court to force Citizens to perform an appraisal after Ivan ripped off a side of their building in 2004.
"And then when we got the appraisal they wouldn't pay us. And it says clearly in the policy again in the policy language it says after 60 days an appraisal award is entered a check is, you know we get a check. Then what they tried to do is uh, well first I had to go to their attorneys and say hey where's our check and then they sent me the check along with a general universal release. So I can't sue them for bad faith. And I said Nah."
The Florida Legislature created Citizens in 2002 to provide property insurance to homeowners when for profit companies stopped writing policies along the coast. When eight hurricanes came ashore in Florida in 2004 and 2005 many companies pulled out and Citizens grew into the state's largest insurer. It underwrites more than 1.4 million policies; has about $15 billion in reserves and carries more than $240 billion in risk exposure.
Citizen's attorney Barry Richard told the High Court Citizens isn't actually an insurance company, but a funding mechanism to help people rebuild after a storm. He explained the fund is backed by the state and that the Legislature intended for the money to pay claims and nothing else. Not to pay for litigation, or to pay for bad faith, or to be used to pay for anything other than a small list. Justice Fred Lewis interrupted his explanation. Barry Richard speaks first.
"It's not consistent with that purpose to say that Citizens has to defend a lawsuit all the way up to final judgment on something they have been given immunity on."
Judge Lewis: "It is also inconsistent to say that you have no remedy. The Legislature has said you have a duty of good faith. I mean that is inconsistent. So that is what? It is a phantom duty it is there but it is not enforceable. To mean I understand what you are saying I think that is part of it. But I think it needs to operate as an insurer. It seems to me that is what they created an insurance company."
Richard: "Not really. They created a funding mechanism but we don't have to get into--"
Lewis: "You have a policy it looks just like any other insurance policy. That's what you have. It looks identical to a State Farm policy."
The dispute at this time is an argument over procedure. The case is on hold until Citizens' claim of immunity is resolved. If the case makes it to trial it could lead to more litigation against Citizens. The condo association is seeking more than six million dollars in actual damages and its attorney Beckish says if the Supreme Court rules in his favor he would also seek punitive damages.
"But what's really at stake here is for the people of this state now look, if they are allowed to deny claims in bad faith what were they created for? And what happens to the Citizens of this state when the next hurricane rips through here? It's not a question of if, it's when. These guys all they say is that we were created to justify our own existence. You know keep this money together so that we are still here."
However Citizens argues the Legislature directed it to keep the money together to pay claims. Its attorney says irreparable harm would be done to Citizens' immunity rights if it had to go to court and defend decisions regarding the condo associations claim. Whether the case goes to trial is up to the High Court.