Following my post on September 8, 2014, I received a comment from Matthew Litsky, Esq., a very experienced attorney from the firm, Phelps Dunbar, LLP. Mr. Litsky posed a great question related to the opinion in Cammarata v. State Farm Florida Insurance Company.1 Here is what he asked:
What is the range for a “favorable resolution”; not in terms of is there substantive bad faith or not, but whether the action can even proceed per this opinion? Is it $5 for the award above the money paid by the Insurer? Is it a percentage above? Is how much the Insured sought relevant? Is it now a separate analysis for whether a bad faith claim can proceed because there was a "favorable resolution" before you ever get to whether there is or is not bad faith?
Mr. Litsky’s inquiry was posted in the comment section to our blog, and I had responded with my thoughts on this topic. Since this is such a hot topic in the insurance industry, I thought it would be interesting to bring this discussion to light before the readers of this blog to see any input that readers may have. I am always interested to hear the thoughts and interpretations of others—considering inquiries from numerous angles or thought processes often educates oneself in crafting a solution or formulating argument.
After my review of the Cammarata opinion, I interpret the reference to "favorable resolution" to be from the discussion by the Florida Supreme Court on the topic. The court is analyzing whether a bad faith case can be ripe and allowed to proceed. Once the elements of (1) liability and (2) extent of the damages have been determined, there is no impediment to a bad faith case proceeding as a matter of law. So an appraisal award of additional proceeds meets that threshold. Then the case proceeds and the factual question of the damages from the bad faith conduct is addressed. I interpret the reference to "favorable resolution" to be toward whether the bad faith case is ripe or allowed to proceed. This opinion made it clear that the court was not taking a position on whether the bad faith case has merit–or that the claimant has proven that they are entitled to damages yet.
It would be interesting to hear thoughts and input from other readers of this blog as to how they interpret the “favorable resolution” portion of the discussion in the bad faith cases in Florida.