On June 1, 2012, Chip Merlin’s post, Policyholders Lose Rights in Florida Courts, addressed the recent decision in QBE Insurance Corporation v. Chalfonte Condominium Association Inc., No. SC09-441 (Fla. May 31, 2012). Although the Supreme Court of Florida reviewed five specific issues in that decision, I am writing only on the following certified question:
Does Florida law recognize a claim for breach of the implied warranty of good faith and fair dealing by an insured against its insurer based on the insurer’s failure to investigate and assess the insured’s claim within a reasonable period of time?
In the underlying case, the complaint against QBE included a claim for breach of the implied warranty of good faith and fair dealing. The court entered a judgment in favor of Chalfonte. QBE appealed the decision, and the appellate court certified the above question to the Florida Supreme Court.
In its analysis, the Florida Supreme Court began with a thorough evaluation of the history of the claim for breach of the implied warranty of good faith and fair dealing. The Court has repeatedly described the statutory bad faith action with reference to the insurance company’s duty of good faith and fair dealing. Good faith and bad faith have been described as two sides of the same coin.
[T]he absence of ‘good faith’ constitutes ‘bad faith,’ and qualitative descriptions of ‘good faith’ conduct are often compared to qualitative descriptions of ‘bad faith’ conduct composed of terms that are simply the anonymous of terms used to describe ‘good faith’.
The Court held that there is no common law cause of action for first party breach of the implied warranty of good faith and fair dealing; policyholders must use the statutory remedy for bad faith in Florida Statute § 624.155.
