[co-author: Guzel Sadykova]
Bryant v. GeoVera Specialty Insurance Company, No. 4D18-189 (Fla. Dist. Ct. App. May 8, 2019)
Hershel and Betty Bryant’s residence sustained damage caused by a pipe leak. The Bryants subsequently reported the loss to their homeowner’s insurer, GeoVera. The policy covering the Bryants’ residence contained a combined $1,000 sublimit for a covered loss caused by water seepage or leakage that occurs over a period of 14 days or more. GeoVera’s adjuster inspected the property and issued a repair estimate of $21,372.31. Before expiration of the period for providing the proof of loss under the policy, GeoVera sent the Bryants a formal response stating that based on its inspection of the damages, it had determined that the conditions for applying the policy sublimit were satisfied, and that coverage was limited according to the sublimit. The Bryants filed suit against GeoVera asserting, among other things, a claim for statutory bad faith. During litigation, the parties agreed to proceed with appraisal. The subsequently issued appraisal award did not identify any damages as being subject to the $1,000 leakage sublimit. Instead of continuing to litigate the coverage issue of whether the $1,000 leakage sublimit applied to the loss, GeoVera paid the Bryants in accordance with the appraisal award. The Bryants then moved to continue with their claims, including their bad faith claim, and GeoVera moved for summary judgment. The trial court granted the motion for summary judgment, and the Bryants appealed.
The District Court of Appeal reversed the entry of summary judgment on the bad faith count. The court held that genuine issues of material fact remained as to whether GeoVera exercised good faith when it incorrectly invoked the $1,000 leakage sublimit in its formal response to the claim. The court also concluded that the issue of bad faith was ripe. Under Florida law, a statutory bad faith action is ripe when: (1) the insurer raises no defense which would defeat coverage, or any such defense has been adjudicated adversely to the insurer; and (2) the actual extent of the insured’s loss has been determined. Based on these conditions, the court concluded that the Bryants’ bad faith claim was ripe because GeoVera’s liability for coverage and the extent of the damages had been established. The court added that “GeoVera’s payment of the appraisal award, which included amounts in excess of the $1,000 leakage sublimit, constituted a waiver of GeoVera’s previous coverage defense based on that limit.” Thus, according to the court, GeoVera had not shown that it acted in good faith, which defeated the summary judgment motion. The court concluded that GeoVera’s liability for bad faith would turn on whether GeoVera’s denial of coverage above the $1,000 leakage sublimit was made in good faith.