On May 14, 2015, the Florida Supreme Court held that a government-created insurance company, Citizens Property Insurance Corporation, was immune from statutory first-party bad faith claims. The Florida Legislature created Citizens to bridge an insurance gap for entities that were unable to find coverage in the private market. Traditional government entities have long enjoyed immunity from suit, and as the government expands into traditionally private areas, such as property insurance, immunity may follow.
After sustaining hurricane damage to its property, one of Citizens’ insureds, Perdido Sun Condominium Association, sued Citizens for breach of contract. Perdido Sun prevailed in the breach of contract suit. Then, Perdido Sun sued Citizens again – this time for first-party bad faith, pursuant to section 624.155(1), Florida Statutes (2009).
In the second action, Perdido Sun claimed a right to relief under Florida statute allowing recovery against an insurer for “[n]ot attempting in good faith to settle claims when, under all the circumstances, it could and should have done so.” Specifically, Perdido Sun alleged that Citizens refused to pay the amount owed under the policy and to take part in the appraisal process; that it delayed payment to leverage a release; and that it engaged in a pattern and practice of seeking to avoid or delay full settlement of claims. Citizens moved to dismiss, citing immunity under Florida Statutes section 627.351(6)(s)1. Perdido Sun claimed that Citizens’ conduct qualified as an exception to immunity because its bad faith equated the commission of a “willful tort.”
The Florida high court disagreed, holding that immunity applied under the statute. The court found that Perdido Sun’s allegations that Citizens’ conduct was “intentional, willful, wanton and malicious or done in a reckless disregard for Perdido Sun’s rights” were used to preserve Perdido Sun’s claim for punitive damages and not to allege a separate willful tort. The court analyzed the statutory language and found that, if the Legislature wanted to exempt first-party bad faith claims from immunity, it could have. The Florida Supreme Court remanded the case to the First District with instructions to reinstate the trial court’s order of dismissal.