60-DAY CLOCK FOR STATUTORY BAD FAITH “CURE PERIOD” STARTS WHEN CIVIL REMEDY NOTICE ELECTRONICALLY FILED

The Second District Court of Appeal in Harper v. Geico General Insurance Company, 44 Fla.L.Weekly D618c (Fla. 2d DCA 2019) explained that the 60-day clock for a statutory bad faith cure period STARTS when the civil remedy notice is electronically filed with Florida’s Department of Financial Services:

 

 

Subsection 624.155(3)(d) plainly states that no action shall lie if the damages are paid or corrective action is taken within sixty days after the insured files the CRN [Civil Remedy Notice]. Under current procedures, an insured files a CRN with the Department electronically. See Fla. Admin. Code R. 69J-123.002(1). And while the Department also requires the insured to print a copy of the completed CRN from the Department’s website and send it to the insurer, the Department nevertheless considers the form to be “filed” when the insured clicks the “submit” button at the end of the electronic form. See Civil Remedy Notice of Insurer Violations FAQ, https://apps.fldfs.com/CivilRemedy/Help.aspx (follow “Continue” hyperlink; then follow “How do I file a Civil Remedy Notice?” hyperlink) (last visited Dec. 20, 2018). At that time, the CRN is assigned a “filing number” and any changes must be made by clicking on “edit filing.” Hence, the requirements of section 624.155(3)(d) are met when the insured electronically files the CRN with the Department, and that action starts the sixty-day cure period for the insurer. Therefore, we hold that the sixty-day cure period under section 624.155 begins when the CRN is electronically filed with the Department, and to avoid a bad faith action, the insurer must pay the claim or take corrective action within sixty days from the date the CRN is electronically filed.

 

This is important because the insurer must fail to cure within this 60-day period to trigger the requirements of a statutory bad faith claim.  If the insurer fails to cure within this 60-day cure period, the insured has preserved an argument for a statutory bad faith claim.  See Harper, supra (“Therefore, because GEICO did not pay Harper’s claim within sixty days of the date the CRN was electronically filed with the Department, it did not pay the claim within the sixty-day cure period, and Harper was entitled to pursue her action for GEICO’s alleged bad faith.”).

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

PROPERTY INSURER INVOKING APPRAISAL UNDER PROPERTY INSURANCE POLICY

shutterstock_398442106Property insurance policies routinely contain an appraisal provision.   The provision may read something to the effect:

 

 

 

If you and we fail to agree on the amount of loss, either may request an appraisal of the loss. However, both parties must agree to the appraisal. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. . . . If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of the loss.

 

Safepoint Insur. Co. v. Gomez, 44 Fla.L.Weekly D239b (Fla. 3d DCA 2019).

 

In Safepoint, the Third District Court of Appeal maintained if the property insurer invokes appraisal, it waives the right to subsequently demand compliance with post-loss conditions in the policy as a condition precedent to that appraisal.  (“‘Appraisal exists for a limited purpose – the determination of the amount of loss.’” By invoking appraisal pursuant to the terms of the insurance policy, Safepoint [insurer] waived the requirement of compliance with post-loss obligations as a condition precedent to that appraisal.”)  Safepoint, supra (internal citation omitted). 

 

In Safepoint, the insured (policyholder) submitted a property insurance claim.  The insurer sent payment for the covered loss, but the amount of payment was disputed.  As a result, the insurer invoked the appraisal process in the property insurance policy, and the insured agreed.  As the appraisal process was underway and an umpire selected, the insurer sent a letter to the insured demanding a sworn statement in proof of loss, examinations under oath, and additional documentation—post-loss requirements of the insured in the insurance policy.  The insured did not comply and the insurer used this non-compliance as an excuse to deny the claim.  This prompted the insured to file a breach of contract lawsuit against the insurer and move to compel the insurer to complete the appraisal process that it invoked. The trial court agreed, as affirmed by the Third District.  The insurer could not refuse to complete the appraisal process that it invoked by thereafter requiring the insured to comply with post-loss conditions in the policy.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

DEFERENCE GIVEN TO PROCURING PUBLIC AGENCY REGARDING MATERIAL DEVIATION

shutterstock_1088217212Deference will be given to a procuring public agency in a bid protest, particularly when the issue involves whether a bid is non-responsive and constitutes a material deviation from the solicitation.  You do not believe me? Perhaps you will after this holding in Biscayne Marine Partners, LLC v. City of Miami, Florida, 44 Fla.L.Weekly D467a (Fla. 3d DCA 2019):

 

Consequently, no principle of law is clearly established…as to any obligation of the trial court (and, by analogy, an administrative hearing officer) [in a bid protest] to decide or to defer [whether a bid constitutes a material deviation from the solicitation]. If anything, the existing and clearly established principle of law inclines toward judicial deference in public agency competitive bidding disputes when the agency has exercised it discretion absent illegality, fraud, oppression or misconduct.

 

 

I do not know about you, but that last underlined sentence is pretty strong language regarding judicial deference!

 

In this case, Miami (the procuring public agency) issued a Request for Proposals (RFP) for the redevelopment and lease of waterfront property, for the operation of a marina, boatyard, restaurant, wet slips, and a dry storage facility on the property.  Miami issued five addenda to the RFP.  There were three bidders. 

 

On a boundary survey attached to the RFP applicable to the redevelopment, there was a rectangular location designated “Not a Part.” All three bidders made some use of the location designated “Not a Part” in their proposals.  Apparently, there was nothing specific as to what this “Not a Part” meant; it could have reasonably meant it was not included in the boundary survey or it could have reasonably meant it was not to be included for purposes of redevelopment. 

 

Miami issued a recommendation to the top-ranked proposer based on rankings from its evaluation committee.  Another proposer filed a bid protest claiming that the top-ranked proposal should be deemed non-responsive since it proposed a redevelopment outside of the property’s defined boundaries by utilizing the location defined as “Not a Part.”  The protester claimed this constituted a material deviation from Miami’s RFP (solicitation).  

 

I will be the first to tell you that this is confusing since all of the proposers including the protester made some use of the location defined as “Not a Part.”  

 

Notwithstanding, the protest proceeded to a hearing officer pursuant to Miami’s bid protest procedures and the hearing officer claimed that even if the “Not a Part’ location in the boundary survey meant it was not allowed to be considered for the redevelopment, “the City had the ability to determine whether that made a difference to the outcome and whether the deviation was material.”  The hearing officer, in denying the protest, further accepted Miami’s interpretation that nothing in the RFP prohibited the use of the “Not a Part” location for redevelopment purposes. 

 

The protester then filed a petition for writ of certiorari to the appellate division of Miami-Dade’s Circuit Court.  The protester’s writ was denied, with the appellate division giving deference to Miami’s interpretation of “Not a Part” in the boundary survey.  

 

The protester then filed a second-tier petition of writ of certiorari to the Third District Court of Appeal.  The protester’s main argument was that neither the hearing officer nor the appellate division should have given deference to Miami.  Rather, they needed to conduct their own independent determination of the issue and whether the top-ranked proposal constituted a material deviation from the RFP.  

 

However, the Third District held that what the protestor wanted from an “independent determination” standpoint was not the law.  There is no law that precludes a hearing officer or appellate body in a bid protest from deferring to the procuring public agency as to whether a proposal (or bid) constitutes a material deviation from the solicitation and is, therefore, non-responsive.  To the contrary, the law would be inclined to support “judicial deference in public agency competitive bidding disputes when the agency has exercised its discretion absent illegality, fraud, oppression or misconduct.” Biscayne Marine Partners, supra

 

As I mentioned above, this is pretty strong language regarding deference given to a procuring public agency.  Therefore, pick your fights wisely!

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

CGL INSURER’S DUTY TO DEFEND BROADER THAN DUTY TO INDEMNIFY AND BASED ON ALLEGATIONS IN UNDERLYING COMPLAINT

shutterstock_111496388The duty to defend an insured with respect to a third-party claim is broader than the duty to indemnify the insured for that claim.  The duty to defend is triggered by allegations in the underlying complaint. However, an insurer is only required to indemnify its insured for damages covered under the policy.   A recent case example demonstrating the duty to defend is broader than the duty to indemnify can be found in Southern Owners Ins. Co. v. Gallo Building Services, Inc., 2018 WL 6619987 (M.D.Fla. 2019).  

 

In this case, a homebuilder built a 270-unit condominium project where the units were included in 51-buildings.  Upon turnover of the condominium association to the unit owners, the condominium association served a Florida Statutes Chapter 558 Notice of Construction Defects letter. There was numerous nonconforming work spread out among various subcontractor trades including nonconforming stucco work.  The homebuilder incurred significant costs to repair defective work and resulting property damage, and relocated unit owners during repairs.  The homebuilder then filed a lawsuit against implicated subcontractors.  One of the implicated subcontractors was the stucco subcontractor.

 

 

The stucco subcontractor’s insurer filed an action for declaratory relief claiming it had NO duty to defend or indemnify the subcontractor in the underlying action because the subcontractor had a stucco/EIFS exclusion through an endorsement in its policy, referred tp as the “Exterior Finishing System and Stucco Exclusion.”  The subcontractor’s policy also did not contain a subcontractor exception to the “your work” exclusion.

 

Regarding the elimination of the subcontractor exception to the “your work” exclusion, the Court noted that the elimination of the subcontractor exception was largely irrelevant since the stucco subcontractor was a subcontractor so its work was not the entire project (unlike the homebuilder or general contractors’ work). Rather, the stucco subcontractor’s work was its scope of work and the underlying complaint referenced damages beyond the stucco subcontractor’s own work to other building components.  Thus, based on the allegations in the underlying complaint, the “your work” exclusion was not a basis to deny the duty to defend.

 

Regarding the stucco exclusion, the homebuilder argued that the subcontractor performed work outside of stucco work and the underlying complaint contained allegations unrelated to the application of stucco including framing work, miscellaneous work, and wrapping the buildings.  In other words, the Court did not have sufficient evidence that each allegation of nonconforming work related to the stucco subcontractor related to or arose out of the installation of stucco to trigger the full application of the stucco exclusion. Thus, this was not a basis to deny the subcontractor the duty to defend.

 

At this time, it is uncertain the magnitude of covered damages under the policy in light of the stucco exclusion and property damage resulting from the subcontractor’s defective work (certainly an issue to consider).  However, the insurer owed the subcontractor a duty to defend based on the allegations in the underlying complaint demonstrating the importance of crafting allegations in the underlying complaint.   The insurer’s indemnification obligation for covered damages, however, may be a different story and it is uncertain how a stucco subcontractor could have an endorsement that contains a stucco exclusion.  Take a look at your policy and, particularly, endorsements that further restrict coverage to ensure you do not have an exclusion relating to your own scope of work that would negate the value of the policy to you for property damage claims.

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.