NEW CASE ALLOWS FOR BAD FAITH TYPE DAMAGES FROM CITIZENS
NEW CASE ALLOWS FOR BAD FAITH TYPE DAMAGES FROM CITIZENS
The Fifth District Court of Appeals held that you can get bad faith type damages from Citizens in the case of Manor House, LLC v. Citizens Prop. Ins. Corp., 2019 Fla.App. LEXIS 8460 (Fla. 5th DCA 2019). In this case, Citizens insured nine apartment buildings that were damaged in 2004 by Hurricane Frances. An initial payment was made but Manor House later retained a public adjuster who asked that the claim be re-opened. Citizens made additional payments but the payment was still not up to the amount claimed by the public adjuster so the public adjuster demanded an appraisal. After the appraisal process, Manor House filed suit alleging breach of contract and fraud seeking extra-contractual damages related to loss of rental income due to the delay in repairing the apartment complex. The trial court granted Citizens’ motion saying they do not owe loss rental income because that was not property damage. The appeals court reversed that ruling stating that the general proposition is that an injured party in a breach of contract action is entitled to recover monetary damages that will put it in the same position it would have been had the other party not breached the contract.
Normally Citizens is immune from bad faith claims under Florida Statute Section 627.351(6)(s)(1). However, the loss of rents sought by Manor House are consequential damages based solely in the breach of contract claim and therefore Citizens is not immune from this aspect of the claim. Manor House should have been allowed the opportunity to prove whether the parties contemplated that Manor House, an apartment complex, would suffer consequential damages in the form of loss of rental income if Citizens failed to timely adjust the claim and pay the damages.
The takeaways from this case are as follows:
- Citizens is immune from bad faith under Fla. Stat. 627.351
- Citizens is not immune from consequential damages resulting from a breach
- If Citizens breaches the policy, they could owe more than the contractual damages
- Citizens may owe loss of rents, loss of use, loss of profits, or other types of damages that are like bad faith damages
- Depending on your loss, try to think of any damages that would flow from a delayed adjustment of the claim, a delayed payment, or an underpayment that caused the insured more damages than usual
If you have any questions regarding this case or don’t know if the consequential damages you are contemplating are covered, call Christopher Ligori & Associates for a free claims review.