Florida Supreme Court justices seemed as bewildered as I when policyholder’s counsel explained last Thursday that he was not arguing a "bad faith" case. I will be the first to say that a "bad faith" case is really a lack of "good faith" case since the standard is whether the insurance company breached the obligation of good faith and fair dealing. While I understand what the very accomplished appellate attorney, Bruce Rogow, was trying to argue, I wish his argument had been more simple and to the point because he confused me. I am afraid he may have alienated the Court with his very esoteric argument about a good faith breach of contract issue in a first party insurance situation.

The National Law Journal picked up on this in Florida Insurance Case Could Set Precedent for Hurricane Claims when it noted:

The case came before the justices when the 11th U.S. Circuit Court of Appeals certified five questions of state law to the Florida court.

The biggest issue: Does Florida recognize a claim for breach of implied warranty of good faith and fair dealing? If so, must the claim be brought after the fact like a bad faith claim?

The justices did not seem convinced that lack of good faith and bad faith were separate issues. Justice Charles Canady, who replaced Cantero on the court, said, "What I’m hearing is a distinction without a difference."

Justice Barbara Pariente told Rogow that it’s "a little disingenuous" to say it’s not a bad faith claim but a lack of good faith claim. (emphasis added)

I agree with the justices. And, it didn’t have to be argued that way. We filed an Amicus brief on behalf of United Policyholders in the case. As indicated in A Common Law Remedy For Lack Of Good Faith And Fair Dealing Is Before The Florida Supreme Court, the simple argument is:

Nowhere is the contractual concept of an "implied warranty of good faith and fair dealing" more important than in the insurance setting, due to the unique nature of the product and the disparate circumstances of the parties to the contract. Although Florida courts have previously and explicitly recognized a common law claim arising from the nature of an insurer’s obligation to its insured in the third party setting, Florida should join the majority of states that recognize a common law remedy for damages caused by first party insurers breaching their recognized obligations of good faith and fair dealing.

Legislation passed in Florida recognizes the obligation of insurers to act in the utmost of good faith and fair dealing to their insureds. § 624.155, Fla. Stat., and § 626.9541, Fla. Stat. These obligations are further evidenced by pertinent portions of the Florida Administrative Code, requiring claims adjusters to provide ethical and good faith treatment to policyholders. The insurance industry recognizes its obligation to act in the utmost of good faith and fair dealing as evidenced in the training and reference textbooks for claims handlers and in internal claims handling documents prepared by individual insurance companies. Since Florida public policy, demonstrated in legislation and regulation, recognize a duty of good faith, and even the insurance industry recognizes such a duty, it would be a strange quirk in Florida common law for it to not to recognize what everybody else is requiring insurers to do-act in accordance of a duty of good faith and fair dealing to its own customers.

Florida should align itself with that majority of states, and allow this important alternative remedy to stand.

Here is the link to the Oral Argument. The relevant argument starts at 1:39.

Here is QBE’s Brief.

Here is Chalfonte’s Brief.