Another interesting turn of events has taken place with Florida’s legislative-created insurer, Citizens Property Insurance Corporation, and the issue of whether it is immune from bad faith claims handling lawsuits. Recently, the First District Court of Appeals rejected Citizens’ request to stop a bad faith action against it from proceeding in the trial court. Citizens Property Insurance Corporation v. San Perdido Association, Inc., 2010 WL 3894497 (Fla. 1st DCA October 6, 2010).
The case involved a Hurricane Ivan claim under San Perdido’s windstorm insurance policy with Citizens. The policyholder filed an initial lawsuit, alleging that Citizens failed to fully pay for the loss sustained from the hurricane damages. After a favorable ruling, San Perdido filed the bad faith complaint. Citizens filed a motion to dismiss, arguing that the statute that created Citizens (Florida Statute §627.351(6)—Citizens’ enabling statute) gave it sovereign immunity from such lawsuits. In fact, the statute grants Citizens a limited immunity related to the performance of its duties. However, the statute provides that the immunity does not apply to a willful tort or for breach of contract pertaining to insurance coverage.
San Perdido alleged that Citizens engaged in a series of bad faith practices in handling its insurance claim and that it was both a breach of contract and a willful tort. In its denial of Citizens’ motion to dismiss the bad faith lawsuit, the trial court reasoned that San Perdido’s lawsuit was within the exceptions to Citizens’ statutory immunity. Citizens filed a Petition for Writ of Prohibition or Certiorari with the First District Court of Appeal, asking the appellate court to preclude any further proceedings in the trial court. The First District Court of Appeals ruled that it did not have jurisdiction since the denial of a motion to dismiss, even in cases where immunity is asserted, is not the type of ruling that ordinarily qualifies for certiorari review by an appellate court.
The First District Court of Appeals certified conflict with the recent decisions from the Fifth District Court of Appeals in Citizens v. Garfinkel, 25 So.3d 62 (Fla. 5th DCA 2009) and Citizens v. La Mer Condo. Assoc., 37 So. 3d 988 (Fla. 5th DCA 2010), both of which overruled the trial courts’ denial of motions to dismiss bad faith lawsuits against Citizens and granted writs of prohibition precluding any further litigation against Citizens for bad faith.
Citizens’ immunity from bad faith lawsuits has been a topic of discussion for some time, given the recent rulings by the Fifth District Court of Appeals in Garfinkel and La Mer. The difference between the Fifth and First Districts involves their application of different standards for whether there is irreparable harm, which is required for certiorari jurisdiction, by allowing the case to proceed through trial before considering the sovereign immunity claim. The First District may have to consider Citizens’ sovereign immunity claim from bad faith lawsuits, it will just decide the issue after the San Perdido case proceeds through trial and final judgment is entered. This is a procedural nuance, and it should be noted that there is a strong dissenting opinion within the case. The dissenting opinion states that allowing the lawsuit to proceed all the way to trial before deciding the issue of whether Citizens is immune from such lawsuits will cause irreparable injury to Citizens.
However, a dissenting opinion has no precedential value, although it can be persuasive. The majority in San Perdido certified a question to the Florida Supreme Court: “Whether review of the denial of a motion to dismiss based on a claim of sovereign immunity should await the entry of a final judgment in the trial court?”
We will keep you posted on the outcome of the case and will also follow the certified question for the Florida Supreme Court’s response. In the meantime, it is interesting to note the different approaches between the First and Fifth District Courts of Appeal.