41
Fla. L. Weekly S415aTop of Form
Fla. L. Weekly S415aTop of Form
Insurance
— Homeowners — Sinkhole claims — The statutory presumption of correctness
afforded to an insurer’s internal report during the investigation process in
the sinkhole statutes does not extend to later trial proceedings — Attorney’s
fees — Insured prevailing in action against insurer — A prevailing insured’s
recovery of attorney’s fees under section 627.428, Florida Statutes, requires
only an incorrect denial of benefits, not a showing of bad faith on the part of
the insurer — Insurer’s payment of policy proceeds after suit has been filed
constitutes the functional equivalent of a confession of judgment, thereby
entitling insured to an award of attorney’s fees
— Homeowners — Sinkhole claims — The statutory presumption of correctness
afforded to an insurer’s internal report during the investigation process in
the sinkhole statutes does not extend to later trial proceedings — Attorney’s
fees — Insured prevailing in action against insurer — A prevailing insured’s
recovery of attorney’s fees under section 627.428, Florida Statutes, requires
only an incorrect denial of benefits, not a showing of bad faith on the part of
the insurer — Insurer’s payment of policy proceeds after suit has been filed
constitutes the functional equivalent of a confession of judgment, thereby
entitling insured to an award of attorney’s fees
KATHY
JOHNSON, Petitioner, v. OMEGA INSURANCE COMPANY, Respondent. Supreme Court of
Florida. Case No. SC14-2124. September 29, 2016. Application for Review of the
Decision of the District Court of Appeal – Direct Conflict of Decisions. Fifth
District – Case No. 5D13-1701 (Marion County). Counsel: Timothy Wayne Weber and
Joseph Patrick Kenny of Weber, Crabb & Wein, P.A., Saint Petersburg; and
Morgan Barfield of Corless Barfield Trial Group, Tampa, for Petitioner. Anthony
John Russo and Ezequiel Lugo of Butler Weihmuller Katz Craig LLP, Tampa, for
Respondent.
JOHNSON, Petitioner, v. OMEGA INSURANCE COMPANY, Respondent. Supreme Court of
Florida. Case No. SC14-2124. September 29, 2016. Application for Review of the
Decision of the District Court of Appeal – Direct Conflict of Decisions. Fifth
District – Case No. 5D13-1701 (Marion County). Counsel: Timothy Wayne Weber and
Joseph Patrick Kenny of Weber, Crabb & Wein, P.A., Saint Petersburg; and
Morgan Barfield of Corless Barfield Trial Group, Tampa, for Petitioner. Anthony
John Russo and Ezequiel Lugo of Butler Weihmuller Katz Craig LLP, Tampa, for
Respondent.
(LEWIS,
J.) This case is before the Court to review the decision of the Fifth District
Court of Appeal in Omega Insurance Co. v. Johnson, 39 Fla. L. Weekly
D1911 (Fla. 5th DCA Sept. 5, 2014), which arose from a claim for insurance
benefits by Kathy Johnson, the insured, submitted to Omega, her homeowner’s
insurance provider. The decision is in conflict with both Universal
Insurance Co. of North America v. Warfel, 82 So. 3d 47 (Fla. 2012), and Ivey
v. Allstate Insurance Co., 774 So. 2d 679, 683-84 (Fla. 2000). In conflict
with our decision in Warfel, the court below improperly applied a
presumption of correctness that is limited to an initial process for an
investigative report during the litigation proceedings. In conflict with Ivey,
the district court incorrectly interpreted section 627.428, Florida Statutes,
which provides for an award of attorney’s fees when an insured recovers
benefits from an insurer. Therefore, the two issues we address today are (1)
consideration of whether the statutory presumption of correctness afforded to
an insurer’s internal report during the investigation process in the sinkhole
statutes extends to later trial proceedings, and (2) whether an insured’s
recovery of attorney’s fees under section 627.428, Florida Statutes, requires
that there be bad faith on the part of an insurance company in the denial of a
valid claim, or simply an incorrect denial of benefits. We have jurisdiction.
Art. V, § 3(b)(3), Fla. Const. We conclude that the decision below is in
conflict with both Warfel and Ivey.
J.) This case is before the Court to review the decision of the Fifth District
Court of Appeal in Omega Insurance Co. v. Johnson, 39 Fla. L. Weekly
D1911 (Fla. 5th DCA Sept. 5, 2014), which arose from a claim for insurance
benefits by Kathy Johnson, the insured, submitted to Omega, her homeowner’s
insurance provider. The decision is in conflict with both Universal
Insurance Co. of North America v. Warfel, 82 So. 3d 47 (Fla. 2012), and Ivey
v. Allstate Insurance Co., 774 So. 2d 679, 683-84 (Fla. 2000). In conflict
with our decision in Warfel, the court below improperly applied a
presumption of correctness that is limited to an initial process for an
investigative report during the litigation proceedings. In conflict with Ivey,
the district court incorrectly interpreted section 627.428, Florida Statutes,
which provides for an award of attorney’s fees when an insured recovers
benefits from an insurer. Therefore, the two issues we address today are (1)
consideration of whether the statutory presumption of correctness afforded to
an insurer’s internal report during the investigation process in the sinkhole
statutes extends to later trial proceedings, and (2) whether an insured’s
recovery of attorney’s fees under section 627.428, Florida Statutes, requires
that there be bad faith on the part of an insurance company in the denial of a
valid claim, or simply an incorrect denial of benefits. We have jurisdiction.
Art. V, § 3(b)(3), Fla. Const. We conclude that the decision below is in
conflict with both Warfel and Ivey.
FACTUAL
& PROCEDURAL BACKGROUND
& PROCEDURAL BACKGROUND
Section
627.428, Florida Statutes, outlines the provision under which an insured may
recover attorney’s fees incurred as a result of recovering on a valid claim for
insurance benefits. See § 627.428, Fla. Stat. (2015). Today we address
the interpretation of section 627.428, and we begin with a review of the actual
text of the statute:
627.428, Florida Statutes, outlines the provision under which an insured may
recover attorney’s fees incurred as a result of recovering on a valid claim for
insurance benefits. See § 627.428, Fla. Stat. (2015). Today we address
the interpretation of section 627.428, and we begin with a review of the actual
text of the statute:
(1) Upon the rendition of a
judgment or decree by any of the courts of this state against an insurer and in
favor of any named or omnibus insured or the named beneficiary under a policy
or contract executed by the insurer, the trial court or, in the event of an
appeal in which the insured or beneficiary prevails, the appellate court shall
adjudge or decree against the insurer and in favor of the insured or
beneficiary a reasonable sum as fees or compensation for the insured’s or
beneficiary’s attorney prosecuting the suit in which the recovery is had.
judgment or decree by any of the courts of this state against an insurer and in
favor of any named or omnibus insured or the named beneficiary under a policy
or contract executed by the insurer, the trial court or, in the event of an
appeal in which the insured or beneficiary prevails, the appellate court shall
adjudge or decree against the insurer and in favor of the insured or
beneficiary a reasonable sum as fees or compensation for the insured’s or
beneficiary’s attorney prosecuting the suit in which the recovery is had.
. . . .
(3) When so awarded,
compensation or fees of the attorney shall be included in the judgment or
decree rendered in the case.
compensation or fees of the attorney shall be included in the judgment or
decree rendered in the case.
§
627.428, Fla. Stat. (2015).1 We have consistently explained that
the purpose of this statute is to provide an adequate means to afford a level
process and make an already financially burdened insured whole again, and to
also discourage insurance companies from withholding benefits on valid claims. See
Ivey, 774 So. 2d at 683-84; Bell v. U.S.B. Acquisition Co., Inc.,
734 So. 2d 403, 410-11 n.10 (Fla. 1999). This statutory provision is of
significant importance to the citizens of Florida.
627.428, Fla. Stat. (2015).1 We have consistently explained that
the purpose of this statute is to provide an adequate means to afford a level
process and make an already financially burdened insured whole again, and to
also discourage insurance companies from withholding benefits on valid claims. See
Ivey, 774 So. 2d at 683-84; Bell v. U.S.B. Acquisition Co., Inc.,
734 So. 2d 403, 410-11 n.10 (Fla. 1999). This statutory provision is of
significant importance to the citizens of Florida.
Florida
law also includes several statutory provisions which specifically address
claims for sinkhole damage, commonly referred to as the “sinkhole statutes.” In
part, the sinkhole statutes require insurers to provide policyholders the option
of paying an additional premium for sinkhole coverage. § 627.706(1)(b), Fla.
Stat. (2015). In this context, a sinkhole is described as “a landform created
by subsidence of soil, sediment, or rock as underlying strata are dissolved by
groundwater.” § 627.706(2)(h), Fla. Stat. Sinkhole “activity” is defined as a
“settlement or systematic weakening of the earth supporting the covered
building” resulting from “contemporaneous movement or raveling of soils,
sediments, or rock materials into subterranean voids.” § 627.706(2)(i), Fla.
Stat. An insurer may require an inspection of the property prior to issuing a
policy which provides sinkhole coverage benefits. § 627.706(1)(b), Fla. Stat.
Upon submission of a claim for sinkhole damage, a professional engineer or
geologist selected exclusively by the insurer may examine the property to
determine whether a sinkhole loss covered under the insurance policy exists and
make recommendations regarding building stabilization and foundation repair. §
627.7072, Fla. Stat. Thereafter, the engineer or geologist exclusively selected
by the insurer tenders a report and certification to the insurer and the
insured that outlines the analyses, any test methods, damages, and
recommendations for repair. § 627.7073(1), Fla. Stat. During this initial
claims process, these findings and recommendations by the insurer’s experts
receive a statutory presumption of correctness. § 627.7073(1)(c), Fla. Stat
(2015).
law also includes several statutory provisions which specifically address
claims for sinkhole damage, commonly referred to as the “sinkhole statutes.” In
part, the sinkhole statutes require insurers to provide policyholders the option
of paying an additional premium for sinkhole coverage. § 627.706(1)(b), Fla.
Stat. (2015). In this context, a sinkhole is described as “a landform created
by subsidence of soil, sediment, or rock as underlying strata are dissolved by
groundwater.” § 627.706(2)(h), Fla. Stat. Sinkhole “activity” is defined as a
“settlement or systematic weakening of the earth supporting the covered
building” resulting from “contemporaneous movement or raveling of soils,
sediments, or rock materials into subterranean voids.” § 627.706(2)(i), Fla.
Stat. An insurer may require an inspection of the property prior to issuing a
policy which provides sinkhole coverage benefits. § 627.706(1)(b), Fla. Stat.
Upon submission of a claim for sinkhole damage, a professional engineer or
geologist selected exclusively by the insurer may examine the property to
determine whether a sinkhole loss covered under the insurance policy exists and
make recommendations regarding building stabilization and foundation repair. §
627.7072, Fla. Stat. Thereafter, the engineer or geologist exclusively selected
by the insurer tenders a report and certification to the insurer and the
insured that outlines the analyses, any test methods, damages, and
recommendations for repair. § 627.7073(1), Fla. Stat. During this initial
claims process, these findings and recommendations by the insurer’s experts
receive a statutory presumption of correctness. § 627.7073(1)(c), Fla. Stat
(2015).
If
the insured disputes whether the insurance company’s report is correct, the sinkhole
statutes also provide for a neutral evaluation procedure. § 627.7074, Fla.
Stat. (2015). Neutral evaluation is mandatory if requested by either party,
section 627.7074(4), Fla. Stat. (2015), but the insurer bears the cost for the
neutral evaluation. § 627.7074(6), Fla. Stat. Court proceedings are stayed
pending the completion of any neutral evaluation. § 627.7074(10), Fla. Stat.
Once the neutral evaluation is completed, the neutral evaluator prepares an
independent report to address whether there was damage to the insured property
caused by sinkhole activity, and an estimated cost for repairs. § 627.7074(12),
Fla. Stat. Significantly, the results of the neutral, independent evaluation
are not binding in any subsequent legal proceedings. § 627.7074(4), Fla. Stat.
the insured disputes whether the insurance company’s report is correct, the sinkhole
statutes also provide for a neutral evaluation procedure. § 627.7074, Fla.
Stat. (2015). Neutral evaluation is mandatory if requested by either party,
section 627.7074(4), Fla. Stat. (2015), but the insurer bears the cost for the
neutral evaluation. § 627.7074(6), Fla. Stat. Court proceedings are stayed
pending the completion of any neutral evaluation. § 627.7074(10), Fla. Stat.
Once the neutral evaluation is completed, the neutral evaluator prepares an
independent report to address whether there was damage to the insured property
caused by sinkhole activity, and an estimated cost for repairs. § 627.7074(12),
Fla. Stat. Significantly, the results of the neutral, independent evaluation
are not binding in any subsequent legal proceedings. § 627.7074(4), Fla. Stat.
At
the time of the events material to this case, Johnson was covered under a
homeowner’s insurance policy issued by Omega, which included sinkhole coverage.
On January 13, 2010, Johnson filed a claim with Omega to recover damages
resulting from conditions which Johnson believed to be sinkhole activity.
Specifically, Omega was alerted that there were cracks in the walls, as well as
separations between the walls and ceilings of the kitchen, dinette, bathrooms,
family room, bedrooms, foyer, windows, and garage of Johnson’s home. Cracks
were additionally found in the closets and floorboards. The extent of the
cracking was such that several of the doors inside the home were difficult to
open. As a result, Johnson was forced to hire a drywall company to repair the
cracks in the drywall and a carpenter to reset the doors. The fireplace and
kitchen cabinets were also displaced by separation, and cracks were
additionally observed on the exterior walls of the home and driveway. Moreover,
in the utility room, a sag was observed along the top of the cabinet that
housed Johnson’s washing machine and dryer. As a result, Johnson had been
unable to perform routine maintenance on these appliances because the sag
prevented these appliances from being moved.
the time of the events material to this case, Johnson was covered under a
homeowner’s insurance policy issued by Omega, which included sinkhole coverage.
On January 13, 2010, Johnson filed a claim with Omega to recover damages
resulting from conditions which Johnson believed to be sinkhole activity.
Specifically, Omega was alerted that there were cracks in the walls, as well as
separations between the walls and ceilings of the kitchen, dinette, bathrooms,
family room, bedrooms, foyer, windows, and garage of Johnson’s home. Cracks
were additionally found in the closets and floorboards. The extent of the
cracking was such that several of the doors inside the home were difficult to
open. As a result, Johnson was forced to hire a drywall company to repair the
cracks in the drywall and a carpenter to reset the doors. The fireplace and
kitchen cabinets were also displaced by separation, and cracks were
additionally observed on the exterior walls of the home and driveway. Moreover,
in the utility room, a sag was observed along the top of the cabinet that
housed Johnson’s washing machine and dryer. As a result, Johnson had been
unable to perform routine maintenance on these appliances because the sag
prevented these appliances from being moved.
Omega
selected and retained Rimkus Consulting Group to perform an initial sinkhole
investigation. After performing three Standard Penetration Test borings, Rimkus
concluded that there was no sinkhole activity present on Johnson’s property.
Although Rimkus conceded that the property was damaged, it attributed the
damage to causes that were not covered under the policy, such as volumetric
changes of clay-based soil underlying the site, concrete shrinkage, and
defective construction processes. As the insurance company’s initial report,
these conclusions received the initial statutory presumption of correctness
pursuant to section 627.7073(1)(c). Based on its report, Omega totally denied
Johnson’s claim for insurance coverage.
selected and retained Rimkus Consulting Group to perform an initial sinkhole
investigation. After performing three Standard Penetration Test borings, Rimkus
concluded that there was no sinkhole activity present on Johnson’s property.
Although Rimkus conceded that the property was damaged, it attributed the
damage to causes that were not covered under the policy, such as volumetric
changes of clay-based soil underlying the site, concrete shrinkage, and
defective construction processes. As the insurance company’s initial report,
these conclusions received the initial statutory presumption of correctness
pursuant to section 627.7073(1)(c). Based on its report, Omega totally denied
Johnson’s claim for insurance coverage.
Upon
receiving the denial of benefits from Omega to cover potentially hundreds of
thousands of dollars in damages to her home, Johnson retained the law firm of
Corless Barfield Trial Group. Corless Barfield in turn retained a local expert,
Bay Area Sinkhole Investigation & Civil Engineering (BASIC), to perform an
independent investigation, examination, and report to determine the cause of
the damage to Johnson’s home. In its report, BASIC noted that the insurance
company’s report was a very minimal, incomplete investigation with regard to
the loss because it failed to perform a particle size analysis. The BASIC
engineer opined that the exclusion of this required analysis rendered “an
acceptable evaluation of the laboratory testing results to be questionable.”
After performing a more extensive investigation, however, BASIC concluded that
the damage to Johnson’s home was, in fact, due to sinkhole activity.
receiving the denial of benefits from Omega to cover potentially hundreds of
thousands of dollars in damages to her home, Johnson retained the law firm of
Corless Barfield Trial Group. Corless Barfield in turn retained a local expert,
Bay Area Sinkhole Investigation & Civil Engineering (BASIC), to perform an
independent investigation, examination, and report to determine the cause of
the damage to Johnson’s home. In its report, BASIC noted that the insurance
company’s report was a very minimal, incomplete investigation with regard to
the loss because it failed to perform a particle size analysis. The BASIC
engineer opined that the exclusion of this required analysis rendered “an
acceptable evaluation of the laboratory testing results to be questionable.”
After performing a more extensive investigation, however, BASIC concluded that
the damage to Johnson’s home was, in fact, due to sinkhole activity.
Johnson
also incurred the additional expert fee expense of $15,000 to retain BASIC.
With the expenses looming larger and larger, Johnson attempted to save her
rapidly dilapidating home and filed a legal action against Omega for breach of
contract. In her complaint, Johnson requested the benefits to which she was
entitled under her policy, along with the accompanying attorney’s fees under
section 627.428. During the discovery process, Omega considered the BASIC
report, which had found sinkhole damage on Johnson’s property. Thereafter,
Omega continued to refuse payment and proceeded to request a neutral evaluation
process pursuant to section 627.7074. The parties agreed to stay litigation
pending the results of the neutral evaluation.
also incurred the additional expert fee expense of $15,000 to retain BASIC.
With the expenses looming larger and larger, Johnson attempted to save her
rapidly dilapidating home and filed a legal action against Omega for breach of
contract. In her complaint, Johnson requested the benefits to which she was
entitled under her policy, along with the accompanying attorney’s fees under
section 627.428. During the discovery process, Omega considered the BASIC
report, which had found sinkhole damage on Johnson’s property. Thereafter,
Omega continued to refuse payment and proceeded to request a neutral evaluation
process pursuant to section 627.7074. The parties agreed to stay litigation
pending the results of the neutral evaluation.
Omega
continued to reject the BASIC opinions and failed to pay any policy benefits.
Instead, Omega hired WRS Consulting Engineers (WRS) to perform an additional
evaluation. Following the WRS investigation, WRS agreed with BASIC that
sinkhole activity was present on Johnson’s property. Based on the extensive
damage observed, the WRS engineer recommended grouting, underpinning, and
remediation programs to stabilize the land and home, as well as repairs to the
foundation. The total cost of repairs was estimated to be in excess of
$200,000. After this second adverse report, Omega finally advised Johnson that
it would abide by the WRS evaluation report and provide payment for the damages
pursuant to section 627.707(5)(b). Johnson was additionally advised that
payment for the damages to her property was conditioned upon her executing a
contract with a remediation company. In cooperation with that condition,
Johnson entered into a contract with Foundation Services for building
stabilization and foundation repairs. The cost of these repairs totaled
$213,465.
continued to reject the BASIC opinions and failed to pay any policy benefits.
Instead, Omega hired WRS Consulting Engineers (WRS) to perform an additional
evaluation. Following the WRS investigation, WRS agreed with BASIC that
sinkhole activity was present on Johnson’s property. Based on the extensive
damage observed, the WRS engineer recommended grouting, underpinning, and
remediation programs to stabilize the land and home, as well as repairs to the
foundation. The total cost of repairs was estimated to be in excess of
$200,000. After this second adverse report, Omega finally advised Johnson that
it would abide by the WRS evaluation report and provide payment for the damages
pursuant to section 627.707(5)(b). Johnson was additionally advised that
payment for the damages to her property was conditioned upon her executing a
contract with a remediation company. In cooperation with that condition,
Johnson entered into a contract with Foundation Services for building
stabilization and foundation repairs. The cost of these repairs totaled
$213,465.
Following
Omega’s acceptance of the WRS evaluation report and tender of payment to
Johnson, Omega filed an Answer and Affirmative Defenses, in which Omega finally
admitted that: (1) sinkhole damage was covered under the policy; (2) Johnson
had applied for benefits to cover her sinkhole damage; (3) Omega had denied
that claim; (4) sinkhole damage was, in fact, the cause of the damage; and (5)
Johnson was therefore entitled to benefits to cover the damages. Johnson
subsequently filed a motion for confession of judgment and a motion for
attorney’s fees, costs, and interest, contending that Omega’s admissions
amounted to a confession of judgment. Omega then changed its position and
countered that Johnson had failed to provide adequate notice of the dispute,
suggesting that Johnson was manipulating the dispute. Further, Omega asserted
that Johnson was absolutely required to show that Omega had acted wrongfully or
in bad faith to be eligible for any fees under section 627.428. Johnson,
however, argued that the only facts necessary to recover fees under section
627.428 were those facts which were already admitted by Omega: that Johnson had
properly reported sinkhole damage and made a claim for benefits, Omega denied
the claim, and Omega ultimately conceded that Johnson was entitled to benefits
for sinkhole damage to her home. In other words, Johnson’s position was that a
finding of bad faith conduct on Omega’s part was not required as a
prerequisite to entitle her to an award of statutory attorney’s fees.
Omega’s acceptance of the WRS evaluation report and tender of payment to
Johnson, Omega filed an Answer and Affirmative Defenses, in which Omega finally
admitted that: (1) sinkhole damage was covered under the policy; (2) Johnson
had applied for benefits to cover her sinkhole damage; (3) Omega had denied
that claim; (4) sinkhole damage was, in fact, the cause of the damage; and (5)
Johnson was therefore entitled to benefits to cover the damages. Johnson
subsequently filed a motion for confession of judgment and a motion for
attorney’s fees, costs, and interest, contending that Omega’s admissions
amounted to a confession of judgment. Omega then changed its position and
countered that Johnson had failed to provide adequate notice of the dispute,
suggesting that Johnson was manipulating the dispute. Further, Omega asserted
that Johnson was absolutely required to show that Omega had acted wrongfully or
in bad faith to be eligible for any fees under section 627.428. Johnson,
however, argued that the only facts necessary to recover fees under section
627.428 were those facts which were already admitted by Omega: that Johnson had
properly reported sinkhole damage and made a claim for benefits, Omega denied
the claim, and Omega ultimately conceded that Johnson was entitled to benefits
for sinkhole damage to her home. In other words, Johnson’s position was that a
finding of bad faith conduct on Omega’s part was not required as a
prerequisite to entitle her to an award of statutory attorney’s fees.
Before
determining the motion for attorney’s fees, the trial court scheduled a full
hearing. After hearing the parties’ arguments, the trial court rejected Omega’s
contention that Johnson was abusing Florida law under section 627.428, and
determined that the admissions of record constituted a confession of judgment:
determining the motion for attorney’s fees, the trial court scheduled a full
hearing. After hearing the parties’ arguments, the trial court rejected Omega’s
contention that Johnson was abusing Florida law under section 627.428, and
determined that the admissions of record constituted a confession of judgment:
THE COURT: I can’t find that
there was a race to the courthouse here or that there was no real dispute. Of
course, there was a real dispute. The policyholder made a claim, the claim was
denied. They think that their property was damaged. The insurance company hired
somebody of their own choosing, and, based on that, they said, any damage you
may have is excluded, and we don’t owe you a nickel. And it wasn’t until
after suit was brought that it turned out that, yes, we do owe you some money,
and they agreed to pay it. That amounts to a confession of judgment, and you
didn’t have to race to the courthouse. There’s no indication that you were
doing that.
there was a race to the courthouse here or that there was no real dispute. Of
course, there was a real dispute. The policyholder made a claim, the claim was
denied. They think that their property was damaged. The insurance company hired
somebody of their own choosing, and, based on that, they said, any damage you
may have is excluded, and we don’t owe you a nickel. And it wasn’t until
after suit was brought that it turned out that, yes, we do owe you some money,
and they agreed to pay it. That amounts to a confession of judgment, and you
didn’t have to race to the courthouse. There’s no indication that you were
doing that.
(Emphasis
supplied.) Therefore, the trial court granted Johnson’s motion for confession
of judgment and attorney’s fees, and thereafter entered an order for Omega to
pay attorney’s fees, taxable costs, and prejudgment interest to continue to
accrue at the statutory interest rate until paid in full.
supplied.) Therefore, the trial court granted Johnson’s motion for confession
of judgment and attorney’s fees, and thereafter entered an order for Omega to
pay attorney’s fees, taxable costs, and prejudgment interest to continue to
accrue at the statutory interest rate until paid in full.
Omega
subsequently sought review in the Fifth District Court of Appeal. From the
beginning of its opinion, the district court below framed the issue before it
with the presumption that section 627.428 requires some type of bad faith
conduct on the part of the insurance company before fees can be awarded. See
Johnson, 39 Fla. L. Weekly D1911. More specifically, in addressing that
precedent has required a “wrongful” denial of benefits to recover attorney’s
fees under section 627.428, the district court incorrectly understood
“wrongful” in this context to mean that the insurer must have denied the valid
claim in bad faith. Id. The court rejected Johnson’s contention that bad
faith conduct is not relevant to whether an insured is entitled to attorney’s
fees under application of section 627.428 and the confession of judgment
doctrine:
subsequently sought review in the Fifth District Court of Appeal. From the
beginning of its opinion, the district court below framed the issue before it
with the presumption that section 627.428 requires some type of bad faith
conduct on the part of the insurance company before fees can be awarded. See
Johnson, 39 Fla. L. Weekly D1911. More specifically, in addressing that
precedent has required a “wrongful” denial of benefits to recover attorney’s
fees under section 627.428, the district court incorrectly understood
“wrongful” in this context to mean that the insurer must have denied the valid
claim in bad faith. Id. The court rejected Johnson’s contention that bad
faith conduct is not relevant to whether an insured is entitled to attorney’s
fees under application of section 627.428 and the confession of judgment
doctrine:
Johnson claims that it does
not matter whether Omega wrongfully withheld the policy benefits and forced her
to file suit. The simple facts asserted by Johnson are that Omega denied her
claim, she filed suit, and Omega paid the policy benefits thereafter. Johnson
argues that is all she must show to entitle her to fees under the statute. The
trial court was persuaded by Johnson’s argument and rendered the order awarding
fees that we now review. Analyses of section 627.428 and the confession of
judgment doctrine reveal that Omega is correct, not Johnson.
not matter whether Omega wrongfully withheld the policy benefits and forced her
to file suit. The simple facts asserted by Johnson are that Omega denied her
claim, she filed suit, and Omega paid the policy benefits thereafter. Johnson
argues that is all she must show to entitle her to fees under the statute. The
trial court was persuaded by Johnson’s argument and rendered the order awarding
fees that we now review. Analyses of section 627.428 and the confession of
judgment doctrine reveal that Omega is correct, not Johnson.
Id.
Relying primarily on State Farm Florida Insurance Co. v. Colella, 95 So.
3d 891 (Fla. 2d DCA 2012), the district court reasoned that the confession of
judgment doctrine is only applicable when the insurance provider wrongfully
forces an insured to pursue litigation to obtain proceeds. Johnson, 39
Fla. L. Weekly D1911. The court further stated that Johnson had not rebutted
the statutory presumption of correctness afforded to the original report
performed by Omega’s expert, which failed to find sinkhole activity. Id.
Because the district court determined that Omega did not act wrongfully or in
bad faith, the court ultimately held that section 627.428 and the confession of
judgment doctrine did not apply, and thus reversed the trial court’s order
granting the attorney’s fees and cost award. Id.
Relying primarily on State Farm Florida Insurance Co. v. Colella, 95 So.
3d 891 (Fla. 2d DCA 2012), the district court reasoned that the confession of
judgment doctrine is only applicable when the insurance provider wrongfully
forces an insured to pursue litigation to obtain proceeds. Johnson, 39
Fla. L. Weekly D1911. The court further stated that Johnson had not rebutted
the statutory presumption of correctness afforded to the original report
performed by Omega’s expert, which failed to find sinkhole activity. Id.
Because the district court determined that Omega did not act wrongfully or in
bad faith, the court ultimately held that section 627.428 and the confession of
judgment doctrine did not apply, and thus reversed the trial court’s order
granting the attorney’s fees and cost award. Id.
This
review follows.
review follows.
ANALYSIS
Statutory
Presumption of Correctness
Presumption of Correctness
This
question presents a pure question of law and is, therefore, subject to de novo
review. See Jackson-Shaw Co. v. Jacksonville Aviation Auth., 8 So. 3d
1076, 1084-85 (Fla. 2008). The conflict between the case below and Warfel
is generated by a misapplication of the statutory presumption of correctness
afforded to insurer reports in the initial claims process under the sinkhole
statutes, and the separate and independent statutory provision that provides
for the award of attorney’s fees to insureds who recover benefits when an
insurance company has denied benefits due to insureds. Today, we resolve this
conflict by separating the provisions that have been misapplied by the Fifth
District and Respondent, Omega. Specifically, because we explicitly held in Warfel
that the statutory presumption of correctness described in the sinkhole
statutes does not extend to the litigation context, Johnson did not have
the burden of separately rebutting that initial presumption to recover
attorney’s fees under the terms of section 627.428, Florida Statutes, even
though all subsequent expert reports refuted the initial insurance company
report.
question presents a pure question of law and is, therefore, subject to de novo
review. See Jackson-Shaw Co. v. Jacksonville Aviation Auth., 8 So. 3d
1076, 1084-85 (Fla. 2008). The conflict between the case below and Warfel
is generated by a misapplication of the statutory presumption of correctness
afforded to insurer reports in the initial claims process under the sinkhole
statutes, and the separate and independent statutory provision that provides
for the award of attorney’s fees to insureds who recover benefits when an
insurance company has denied benefits due to insureds. Today, we resolve this
conflict by separating the provisions that have been misapplied by the Fifth
District and Respondent, Omega. Specifically, because we explicitly held in Warfel
that the statutory presumption of correctness described in the sinkhole
statutes does not extend to the litigation context, Johnson did not have
the burden of separately rebutting that initial presumption to recover
attorney’s fees under the terms of section 627.428, Florida Statutes, even
though all subsequent expert reports refuted the initial insurance company
report.
In Warfel,
we considered the proper application of an insurance statute in the sinkhole
claim context. See 82 So. 3d at 57. The plaintiff in Warfel filed
an action for breach of contract after the insurer had denied the claim based
on the report of the engineer selected and hired exclusively by the insurance
company. Id. at 50. Relevant here, section 627.7073(1)(c) had been
amended to provide that the findings and recommendations made by an engineer
selected and hired by an insurer during the initial claim investigation process
are statutorily presumed correct. Id. at 49-50. Based on this provision,
and after the claim for benefits had proceeded into a legal action, the trial
court instructed the jury that Warfel had the burden to overcome the statutory
presumption of correctness afforded to the insurer’s expert report, which was
also the reasoning of the court below. Id. at 50-51. The Second District
Court of Appeal reversed and remanded for new trial, reasoning that the
Legislature did not intend to create a burden-shifting presumption in
section 627.7073(1)(c). Id. at 51. This Court affirmed. Id. at
65.
we considered the proper application of an insurance statute in the sinkhole
claim context. See 82 So. 3d at 57. The plaintiff in Warfel filed
an action for breach of contract after the insurer had denied the claim based
on the report of the engineer selected and hired exclusively by the insurance
company. Id. at 50. Relevant here, section 627.7073(1)(c) had been
amended to provide that the findings and recommendations made by an engineer
selected and hired by an insurer during the initial claim investigation process
are statutorily presumed correct. Id. at 49-50. Based on this provision,
and after the claim for benefits had proceeded into a legal action, the trial
court instructed the jury that Warfel had the burden to overcome the statutory
presumption of correctness afforded to the insurer’s expert report, which was
also the reasoning of the court below. Id. at 50-51. The Second District
Court of Appeal reversed and remanded for new trial, reasoning that the
Legislature did not intend to create a burden-shifting presumption in
section 627.7073(1)(c). Id. at 51. This Court affirmed. Id. at
65.
On
appeal, the issue before this Court was whether the presumption of correctness
afforded to the insurer-engineer report during the initial claim process in
section 627.7073(1)(c) extended to trial proceedings. See id. at 51.
There, we examined both the plain language and legislative history of section
627.7073(1)(c). With respect to the plain wording of the statute itself, this
Court recognized that when the Legislature intends to incorporate a
burden-shifting provision into a statute, overwhelming precedent indicates that
it does so explicitly. See id. at 58. However, no such explicit language
exists in section 627.7073(1)(c). See id. We thus concluded that to
apply such a presumption absent direction in the statute would render section
627.7073(1)(c) unconstitutional. Id. After a review of the legislative
history of the statute, the Court likewise concluded that “the legislation is
specifically designed to protect the public during the claims
process,” not the insurance company during litigation. Id. at 62
(emphasis supplied). “If at all,” we explained, “the statutory plan is designed
to require that insurance companies have expert reports in the [initial] claims
process before denying a request for benefits.” Id. at 63 (emphasis
supplied). Ultimately, we held that the presumption of correctness in section
627.7073(1)(c) is specific and limited to the initial claim adjustment process,
and should not be applied to the trial process. Id. at 57-58 (“[B]ecause
the sinkhole statutes do not apply to the litigation context, the trial court’s
. . . treatment of this statute as evidentiary in nature in this case was
incorrect.”).
appeal, the issue before this Court was whether the presumption of correctness
afforded to the insurer-engineer report during the initial claim process in
section 627.7073(1)(c) extended to trial proceedings. See id. at 51.
There, we examined both the plain language and legislative history of section
627.7073(1)(c). With respect to the plain wording of the statute itself, this
Court recognized that when the Legislature intends to incorporate a
burden-shifting provision into a statute, overwhelming precedent indicates that
it does so explicitly. See id. at 58. However, no such explicit language
exists in section 627.7073(1)(c). See id. We thus concluded that to
apply such a presumption absent direction in the statute would render section
627.7073(1)(c) unconstitutional. Id. After a review of the legislative
history of the statute, the Court likewise concluded that “the legislation is
specifically designed to protect the public during the claims
process,” not the insurance company during litigation. Id. at 62
(emphasis supplied). “If at all,” we explained, “the statutory plan is designed
to require that insurance companies have expert reports in the [initial] claims
process before denying a request for benefits.” Id. at 63 (emphasis
supplied). Ultimately, we held that the presumption of correctness in section
627.7073(1)(c) is specific and limited to the initial claim adjustment process,
and should not be applied to the trial process. Id. at 57-58 (“[B]ecause
the sinkhole statutes do not apply to the litigation context, the trial court’s
. . . treatment of this statute as evidentiary in nature in this case was
incorrect.”).
Notwithstanding
our explicit holding in Warfel, the Fifth District in the case below
applied the presumption in 627.7073(1)(c) to the litigation between Johnson and
Omega. Johnson, 39 Fla. L. Weekly D1911 (footnote omitted). Strangely
enough, the Fifth District specifically acknowledged our holding in Warfel.
Notably, however, the court below selected the following phrase from Warfel
to support its application of the presumption: “[T]he presumption of
correctness attached to the [professional engineer’s or geologist’s] report
appears to be aimed at shielding the . . . insurance companies from claims of
improper denials of claims.” Id. (quoting Warfel, 82 So. 3d at
57). Yet, the court below failed to acknowledge the topic sentence of the same
paragraph, where we plainly stated, “Nothing in section 627.7073, the
statute in question here, justifies application of that statute to the
litigation context.” Warfel, 82 So. 3d at 57 (emphasis supplied).
our explicit holding in Warfel, the Fifth District in the case below
applied the presumption in 627.7073(1)(c) to the litigation between Johnson and
Omega. Johnson, 39 Fla. L. Weekly D1911 (footnote omitted). Strangely
enough, the Fifth District specifically acknowledged our holding in Warfel.
Notably, however, the court below selected the following phrase from Warfel
to support its application of the presumption: “[T]he presumption of
correctness attached to the [professional engineer’s or geologist’s] report
appears to be aimed at shielding the . . . insurance companies from claims of
improper denials of claims.” Id. (quoting Warfel, 82 So. 3d at
57). Yet, the court below failed to acknowledge the topic sentence of the same
paragraph, where we plainly stated, “Nothing in section 627.7073, the
statute in question here, justifies application of that statute to the
litigation context.” Warfel, 82 So. 3d at 57 (emphasis supplied).
Given
that we explicitly declined to extend the statutory presumption of
correctness in the sinkhole statutes to the trial process, it is clear that the
court below acted in conflict with our decision in Warfel when it
extended the presumption of correctness to the initial insurance company
report, which was incorrect, during litigation and placed a burden on Johnson
to further rebut it. The court below and Omega mistakenly blur the lines
between the reliance on reports of insurance company experts made during the
initial claims process pursuant to the sinkhole statutes and the attorney’s
fees to which insureds are entitled under section 627.428 when the insured
prevails. Consistent with Warfel, we reiterate that the initial claims
process in the sinkhole statutes does not supersede or justify an incorrect
denial of benefits under section 627.428. We thus hold that the presumption of
correctness granted to the insurer’s investigative report in section
627.7073(1)(c) of the sinkhole statutes is only applicable to the
sinkhole initial claims process, and does not continue to apply during the
trial stage. Nor does it preclude an award of attorney’s fees under section
627.428 when an insured ultimately prevails by recovering benefits.
that we explicitly declined to extend the statutory presumption of
correctness in the sinkhole statutes to the trial process, it is clear that the
court below acted in conflict with our decision in Warfel when it
extended the presumption of correctness to the initial insurance company
report, which was incorrect, during litigation and placed a burden on Johnson
to further rebut it. The court below and Omega mistakenly blur the lines
between the reliance on reports of insurance company experts made during the
initial claims process pursuant to the sinkhole statutes and the attorney’s
fees to which insureds are entitled under section 627.428 when the insured
prevails. Consistent with Warfel, we reiterate that the initial claims
process in the sinkhole statutes does not supersede or justify an incorrect
denial of benefits under section 627.428. We thus hold that the presumption of
correctness granted to the insurer’s investigative report in section
627.7073(1)(c) of the sinkhole statutes is only applicable to the
sinkhole initial claims process, and does not continue to apply during the
trial stage. Nor does it preclude an award of attorney’s fees under section
627.428 when an insured ultimately prevails by recovering benefits.
Johnson’s
Entitlement to Fees
Entitlement to Fees
We
next address the conflict between the case below and Ivey. Specifically,
the reasoning in the case below indicates that there is confusion in the Fifth District
as to whether a recovery of attorney’s fees under section 627.428, Florida
Statutes, requires bad faith or malicious conduct on the part of the insurance
carrier as a prerequisite for such an award. Because the precedent in this area
of law clearly rejects a bad faith or maliciousness requirement and the court
below relied on distinguishable jurisprudence, we decline to construct an
additional hurdle of bad faith for insureds to overcome. Therefore, consistent
with the opinions of this Court and others, we make abundantly clear today that
in the context of section 627.428, a denial of benefits simply means an
incorrect denial.
next address the conflict between the case below and Ivey. Specifically,
the reasoning in the case below indicates that there is confusion in the Fifth District
as to whether a recovery of attorney’s fees under section 627.428, Florida
Statutes, requires bad faith or malicious conduct on the part of the insurance
carrier as a prerequisite for such an award. Because the precedent in this area
of law clearly rejects a bad faith or maliciousness requirement and the court
below relied on distinguishable jurisprudence, we decline to construct an
additional hurdle of bad faith for insureds to overcome. Therefore, consistent
with the opinions of this Court and others, we make abundantly clear today that
in the context of section 627.428, a denial of benefits simply means an
incorrect denial.
Generally,
the custom in American law is that each party is responsible for his or her own
attorney’s fees, regardless of the outcome of the action. See State Farm
Fire & Cas. Co. v. Palma, 629 So. 2d 830, 832 (Fla. 1993). An
exception, however, arises when an agreement of the parties or a statute states
otherwise. Id. The Legislature created such a statutory provision in
section 627.428, Florida Statutes, which allows insureds who prevail against an
insurance company to recover attorney’s fees. § 627.428, Fla. Stat.
Furthermore, it is well settled that the payment of a previously denied claim
following the initiation of an action for recovery, but prior to the issuance
of a final judgment, constitutes the functional equivalent of a confession of
judgment. See, e.g., Pepper’s Steel & Alloys, Inc. v. U.S., 850 So.
2d 462, 465 (Fla. 2003) (“[Section 627.428] clearly provides that attorneys’
fees shall be awarded against the insurer when judgment is rendered in favor of
an insured. In Florida, the payment of a settlement claim is the functional
equivalent of a confession of judgment or a verdict in favor of the insured.”)
(citation omitted); Ivey, 774 So. 2d at 684-85 (“[W]here an insurer pays
policy proceeds after suit has been filed but before judgment has been
rendered, the payment of the claim constitutes the functional equivalent of a
confession of judgment or verdict in favor of the insured, thereby entitling
the insured to attorney’s fees.”); Wollard v. Lloyd’s & Cos. of Lloyd’s,
439 So. 2d 217, 218 (Fla. 1983) (“When the insurance company has agreed to
settle a disputed case, it has, in effect, declined to defend its position in
the pending suit. Thus, the payment of the claim is, indeed, the functional
equivalent of a confession of judgment or a verdict in favor of the insured.”);
Barreto v. United Servs. Auto. Ass’n, 82 So. 3d 159, 162 (Fla. 4th DCA
2012) (“Here, because the insurer paid the full amounts claimed only after
suit was filed, it essentially confessed judgment.”) (emphasis supplied); De
Leon v. Great Am. Assur. Co., 78 So. 3d 585, 591-92 (Fla. 3d DCA 2011)
(“[A]ny success in an action on an insurance policy, let alone the full payment
of the asserted claim, requires an award of fees.”); Goff v. State Farm Fla.
Ins. Co., 999 So. 2d 684, 688 (Fla. 2d DCA 2008) (policyholder was entitled
to attorney’s fees because the insurer only agreed to grant benefits after the
action was filed).
the custom in American law is that each party is responsible for his or her own
attorney’s fees, regardless of the outcome of the action. See State Farm
Fire & Cas. Co. v. Palma, 629 So. 2d 830, 832 (Fla. 1993). An
exception, however, arises when an agreement of the parties or a statute states
otherwise. Id. The Legislature created such a statutory provision in
section 627.428, Florida Statutes, which allows insureds who prevail against an
insurance company to recover attorney’s fees. § 627.428, Fla. Stat.
Furthermore, it is well settled that the payment of a previously denied claim
following the initiation of an action for recovery, but prior to the issuance
of a final judgment, constitutes the functional equivalent of a confession of
judgment. See, e.g., Pepper’s Steel & Alloys, Inc. v. U.S., 850 So.
2d 462, 465 (Fla. 2003) (“[Section 627.428] clearly provides that attorneys’
fees shall be awarded against the insurer when judgment is rendered in favor of
an insured. In Florida, the payment of a settlement claim is the functional
equivalent of a confession of judgment or a verdict in favor of the insured.”)
(citation omitted); Ivey, 774 So. 2d at 684-85 (“[W]here an insurer pays
policy proceeds after suit has been filed but before judgment has been
rendered, the payment of the claim constitutes the functional equivalent of a
confession of judgment or verdict in favor of the insured, thereby entitling
the insured to attorney’s fees.”); Wollard v. Lloyd’s & Cos. of Lloyd’s,
439 So. 2d 217, 218 (Fla. 1983) (“When the insurance company has agreed to
settle a disputed case, it has, in effect, declined to defend its position in
the pending suit. Thus, the payment of the claim is, indeed, the functional
equivalent of a confession of judgment or a verdict in favor of the insured.”);
Barreto v. United Servs. Auto. Ass’n, 82 So. 3d 159, 162 (Fla. 4th DCA
2012) (“Here, because the insurer paid the full amounts claimed only after
suit was filed, it essentially confessed judgment.”) (emphasis supplied); De
Leon v. Great Am. Assur. Co., 78 So. 3d 585, 591-92 (Fla. 3d DCA 2011)
(“[A]ny success in an action on an insurance policy, let alone the full payment
of the asserted claim, requires an award of fees.”); Goff v. State Farm Fla.
Ins. Co., 999 So. 2d 684, 688 (Fla. 2d DCA 2008) (policyholder was entitled
to attorney’s fees because the insurer only agreed to grant benefits after the
action was filed).
Moreover,
we have held that the bad faith or degree of “wrongfulness” of the insurance
company is not relevant to a recovery of attorney’s fees under section
627.428. See Ivey, 774 So. 2d at 684 (rejecting a bad faith requirement
for section 627.428 attorney’s fees); Ins. Co. of N. Am. v. Lexow, 602
So. 2d 528, 531 (Fla. 1992) (“[The insurance company’s] good faith in bringing
this suit is irrelevant. If the dispute is within the scope of section 627.428
and the insurer loses, the insurer is always obligated for attorney’s fees.”).
we have held that the bad faith or degree of “wrongfulness” of the insurance
company is not relevant to a recovery of attorney’s fees under section
627.428. See Ivey, 774 So. 2d at 684 (rejecting a bad faith requirement
for section 627.428 attorney’s fees); Ins. Co. of N. Am. v. Lexow, 602
So. 2d 528, 531 (Fla. 1992) (“[The insurance company’s] good faith in bringing
this suit is irrelevant. If the dispute is within the scope of section 627.428
and the insurer loses, the insurer is always obligated for attorney’s fees.”).
The
need for fee and cost reimbursement in the realm of insurance litigation is
deeply rooted in public policy. Namely, the Legislature recognized that it was
essential to “level the playing field” between the economically-advantaged and
sophisticated insurance companies and the individual citizen. Ivey, 774
So. 2d at 684. Most assuredly, the average policyholder has neither the
finances nor the expertise to single-handedly take on an insurance carrier.
Without the funds necessary to compete with an insurance carrier, often a
concerned policyholder’s only means to take protective action is to hire that
expertise in the form of legal counsel. Counsel then have the ability and
knowledge to hire an independent engineer or other expert to prepare a report
that either confirms or denies the policyholder’s view of the cause of damages.
For this reason, the Legislature recognized that an insured is not made whole
when an insurer simply grants the previously denied benefits without fees. See
id. The reality is that once the benefits have been denied and the
plaintiff retains counsel to dispute that denial, additional costs that require
relief have been incurred. Section 627.428 takes these additional costs into
consideration and levels the scales of justice for policyholders by providing
that the insurer pay the attorney’s fees resulting from incorrectly denied
benefits. Without this approach, we would leave the insured to foot the bill
not only for attorney’s fees, but also for experts to overcome the denial,
which would render insurance payments insufficient to cover the loss.
need for fee and cost reimbursement in the realm of insurance litigation is
deeply rooted in public policy. Namely, the Legislature recognized that it was
essential to “level the playing field” between the economically-advantaged and
sophisticated insurance companies and the individual citizen. Ivey, 774
So. 2d at 684. Most assuredly, the average policyholder has neither the
finances nor the expertise to single-handedly take on an insurance carrier.
Without the funds necessary to compete with an insurance carrier, often a
concerned policyholder’s only means to take protective action is to hire that
expertise in the form of legal counsel. Counsel then have the ability and
knowledge to hire an independent engineer or other expert to prepare a report
that either confirms or denies the policyholder’s view of the cause of damages.
For this reason, the Legislature recognized that an insured is not made whole
when an insurer simply grants the previously denied benefits without fees. See
id. The reality is that once the benefits have been denied and the
plaintiff retains counsel to dispute that denial, additional costs that require
relief have been incurred. Section 627.428 takes these additional costs into
consideration and levels the scales of justice for policyholders by providing
that the insurer pay the attorney’s fees resulting from incorrectly denied
benefits. Without this approach, we would leave the insured to foot the bill
not only for attorney’s fees, but also for experts to overcome the denial,
which would render insurance payments insufficient to cover the loss.
We
directly addressed the issue of whether a wrongful denial of benefits in the
context of section 627.428 encompasses a requirement of bad faith conduct in Ivey.
The insured in Ivey applied for personal injury protection benefits
after having been hit by a car that was insured by Allstate Insurance Company.
774 So. 2d at 681. Allstate failed to conduct a proper investigation and only
covered one of the two injuries suffered by the insured. Id. The insured
thereafter filed an action seeking proper payment for the additional injury,
and Allstate subsequently agreed to pay the proceeds. Id. Because
Allstate conceded that it had initially denied the benefits in error, the
insured then requested attorney’s fees pursuant to sections 627.736 and
627.428. Id. The county court denied the fees because, pursuant to
section 627.736, the insurance company paid the balance within thirty days of
learning it had denied coverage in error. Id. The circuit court, sitting
in its appellate capacity, reversed and granted the fees. Id. However,
the Third District granted certiorari and reversed the circuit court’s grant of
fees to the insured because Allstate’s failure to pay the entire claim was due
to an error in the doctor’s bill. Id.
directly addressed the issue of whether a wrongful denial of benefits in the
context of section 627.428 encompasses a requirement of bad faith conduct in Ivey.
The insured in Ivey applied for personal injury protection benefits
after having been hit by a car that was insured by Allstate Insurance Company.
774 So. 2d at 681. Allstate failed to conduct a proper investigation and only
covered one of the two injuries suffered by the insured. Id. The insured
thereafter filed an action seeking proper payment for the additional injury,
and Allstate subsequently agreed to pay the proceeds. Id. Because
Allstate conceded that it had initially denied the benefits in error, the
insured then requested attorney’s fees pursuant to sections 627.736 and
627.428. Id. The county court denied the fees because, pursuant to
section 627.736, the insurance company paid the balance within thirty days of
learning it had denied coverage in error. Id. The circuit court, sitting
in its appellate capacity, reversed and granted the fees. Id. However,
the Third District granted certiorari and reversed the circuit court’s grant of
fees to the insured because Allstate’s failure to pay the entire claim was due
to an error in the doctor’s bill. Id.
Observing
that the Third District was wrong, however, this Court accepted jurisdiction
and addressed the burden of insureds under the provisions in section 627.428
and the confession of judgment doctrine. There, we flatly rejected the notion
that some type of bad faith or menacing conduct was required for an insurer to
have acted “wrongfully” under section 627.428. Id. at 684. Rather, we
clearly set forth that the existence of a dispute between the insurer and the
policyholder coupled with a favorable judgment or payment without judgment for
the insured is what justifies an award of attorney’s fees. Id. In other
words, a “wrongful” denial in this context means an incorrect denial, not one
made in bad faith. As we said in Ivey, “It is the incorrect denial of
benefits, not the presence of some sinister concept of ‘wrongfulness,’
that generates the basic entitlement to the fees if such denial is incorrect.” Id.
(emphasis supplied).
that the Third District was wrong, however, this Court accepted jurisdiction
and addressed the burden of insureds under the provisions in section 627.428
and the confession of judgment doctrine. There, we flatly rejected the notion
that some type of bad faith or menacing conduct was required for an insurer to
have acted “wrongfully” under section 627.428. Id. at 684. Rather, we
clearly set forth that the existence of a dispute between the insurer and the
policyholder coupled with a favorable judgment or payment without judgment for
the insured is what justifies an award of attorney’s fees. Id. In other
words, a “wrongful” denial in this context means an incorrect denial, not one
made in bad faith. As we said in Ivey, “It is the incorrect denial of
benefits, not the presence of some sinister concept of ‘wrongfulness,’
that generates the basic entitlement to the fees if such denial is incorrect.” Id.
(emphasis supplied).
Notwithstanding
our rejection of the bad faith requirement in Ivey, the court below and
Omega continue to assert that Omega must have acted in bad faith or maliciously
to allow Johnson to recover fees under section 627.428. This position, however,
ignores clear binding legal precedent to the contrary. The language in Ivey
makes clear that the insurer’s intentions do not factor into a policyholder’s
recovery of fees; it is the fact that the denial of benefits was ultimately
incorrect that triggers the statute. Here, the facts are undisputed that
Johnson submitted a claim, Omega denied that claim, Johnson filed an action
seeking recovery, and Omega subsequently conceded that it had incorrectly
denied the benefits based on an inaccurate report. These facts alone warrant an
award of attorney’s fees to Johnson under section 627.428.
our rejection of the bad faith requirement in Ivey, the court below and
Omega continue to assert that Omega must have acted in bad faith or maliciously
to allow Johnson to recover fees under section 627.428. This position, however,
ignores clear binding legal precedent to the contrary. The language in Ivey
makes clear that the insurer’s intentions do not factor into a policyholder’s
recovery of fees; it is the fact that the denial of benefits was ultimately
incorrect that triggers the statute. Here, the facts are undisputed that
Johnson submitted a claim, Omega denied that claim, Johnson filed an action
seeking recovery, and Omega subsequently conceded that it had incorrectly
denied the benefits based on an inaccurate report. These facts alone warrant an
award of attorney’s fees to Johnson under section 627.428.
In
avoiding our holding in Ivey, the court below primarily relies on an
incorrect interpretation of Colella, 95 So. 3d 891, to support its
conclusion that the confession of judgment doctrine should not be applied in
this situation.
avoiding our holding in Ivey, the court below primarily relies on an
incorrect interpretation of Colella, 95 So. 3d 891, to support its
conclusion that the confession of judgment doctrine should not be applied in
this situation.
Specifically,
the court below and Omega place tremendous weight on the Colella court’s
statement, “we are inclined to believe that ‘compliance with the sinkhole
statute’ goes a long way toward fulfilling State Farm’s obligations under its
contract.” See Johnson, 39 Fla. L. Weekly D1911 (quoting Colella,
95 So. 3d at 895). In simpler terms, Omega clings to that language and asks us
to hold that Omega is sheltered from liability for attorney’s fees simply
because it performed the minimum investigation required by law before
erroneously denying Johnson’s claim — despite the fact that subsequent reports
confirmed that Omega was wrong in denying the proceeds. However, this
holding would not be justified under this Court’s prior rulings, or Colella
for that matter. The insurance company controls the selection and hiring of its
experts.
the court below and Omega place tremendous weight on the Colella court’s
statement, “we are inclined to believe that ‘compliance with the sinkhole
statute’ goes a long way toward fulfilling State Farm’s obligations under its
contract.” See Johnson, 39 Fla. L. Weekly D1911 (quoting Colella,
95 So. 3d at 895). In simpler terms, Omega clings to that language and asks us
to hold that Omega is sheltered from liability for attorney’s fees simply
because it performed the minimum investigation required by law before
erroneously denying Johnson’s claim — despite the fact that subsequent reports
confirmed that Omega was wrong in denying the proceeds. However, this
holding would not be justified under this Court’s prior rulings, or Colella
for that matter. The insurance company controls the selection and hiring of its
experts.
While
the initial facts of Colella may appear similar to those in the current
case, a full picture of the events that occurred in Colella separate the
case from Johnson’s situation here. As in this case, Colella also
involved an insured who made a claim for sinkhole damages. 95 So. 3d at 892.
The insured was notified by letter that her claim was denied because the
investigation performed by the insurer’s engineer indicated that sinkhole
damage was not present. Id. The insured did not reply to the letter, and
subsequently filed an action. Id. at 893. The similarities, however, end
there. Unlike the instant case, Colella was wrought with indications of
foul play by the insured. To begin with, Colella filed a civil remedy notice
with multiple allegations, but could not explain or describe the practices and
procedures that the insurer failed to perform. Id. at 893. Over
Colella’s objections, State Farm successfully sought a stay of proceedings
pending the outcome of a neutral evaluation. Id. Colella’s counsel
refused to cooperate with the neutral evaluator, which rendered the neutral
evaluator unable to access the inside of Colella’s home. Id. at 893-94.
Based on the neutral evaluator’s limited ability to investigate, he ultimately
recommended that a third party be retained to perform additional testing. Id.
at 894. Rather than hire the additional engineer, State Farm decided to simply
pay the insurance proceeds to Colella and sent her a letter conceding her
entitlement to benefits. Id. At that point, the district court noted
that State Farm likely paid the claim to cut its losses and avoid the
additional cost and expense of litigating a case with an uncooperative insured.
See id.
the initial facts of Colella may appear similar to those in the current
case, a full picture of the events that occurred in Colella separate the
case from Johnson’s situation here. As in this case, Colella also
involved an insured who made a claim for sinkhole damages. 95 So. 3d at 892.
The insured was notified by letter that her claim was denied because the
investigation performed by the insurer’s engineer indicated that sinkhole
damage was not present. Id. The insured did not reply to the letter, and
subsequently filed an action. Id. at 893. The similarities, however, end
there. Unlike the instant case, Colella was wrought with indications of
foul play by the insured. To begin with, Colella filed a civil remedy notice
with multiple allegations, but could not explain or describe the practices and
procedures that the insurer failed to perform. Id. at 893. Over
Colella’s objections, State Farm successfully sought a stay of proceedings
pending the outcome of a neutral evaluation. Id. Colella’s counsel
refused to cooperate with the neutral evaluator, which rendered the neutral
evaluator unable to access the inside of Colella’s home. Id. at 893-94.
Based on the neutral evaluator’s limited ability to investigate, he ultimately
recommended that a third party be retained to perform additional testing. Id.
at 894. Rather than hire the additional engineer, State Farm decided to simply
pay the insurance proceeds to Colella and sent her a letter conceding her
entitlement to benefits. Id. At that point, the district court noted
that State Farm likely paid the claim to cut its losses and avoid the
additional cost and expense of litigating a case with an uncooperative insured.
See id.
The
questionable conduct by the insured did not end there. Following State Farm’s
payment of the claim, Colella moved for partial summary judgment, contending
that the payment of the proceeds and the letter conceding her entitlement to
those benefits constituted a confession of judgment. Id. She further
alleged a claim under section 626.9541(1), Florida Statutes (2006), or
Florida’s Unfair Insurance Trade Practice Act, in which wrongfulness or bad
faith is an issue. Id. In addition, Colella alleged that State Farm
acted in “bad faith” as defined in section 624.11, Florida Statutes (2006). Id.
Under these counts, Colella made several unfounded accusations against State
Farm, including that it issued unusable checks, conspired with the first engineer
to certify a false report, and improperly sought a neutral evaluation. Id.
Moreover, in spite of her allegation that State Farm refused to pay her
damages, the record revealed that State Farm had in fact offered to pay
Colella’s attorneys fees and costs prior to the filing of the amended
complaint. Id. at 896. Ultimately, the district court concluded that
Colella’s complaint offered many legal conclusions with little to no factual
detail to support them, and thus held there was no breach of contract under
these facts. Id.
questionable conduct by the insured did not end there. Following State Farm’s
payment of the claim, Colella moved for partial summary judgment, contending
that the payment of the proceeds and the letter conceding her entitlement to
those benefits constituted a confession of judgment. Id. She further
alleged a claim under section 626.9541(1), Florida Statutes (2006), or
Florida’s Unfair Insurance Trade Practice Act, in which wrongfulness or bad
faith is an issue. Id. In addition, Colella alleged that State Farm
acted in “bad faith” as defined in section 624.11, Florida Statutes (2006). Id.
Under these counts, Colella made several unfounded accusations against State
Farm, including that it issued unusable checks, conspired with the first engineer
to certify a false report, and improperly sought a neutral evaluation. Id.
Moreover, in spite of her allegation that State Farm refused to pay her
damages, the record revealed that State Farm had in fact offered to pay
Colella’s attorneys fees and costs prior to the filing of the amended
complaint. Id. at 896. Ultimately, the district court concluded that
Colella’s complaint offered many legal conclusions with little to no factual
detail to support them, and thus held there was no breach of contract under
these facts. Id.
Although
the Colella court expressed that it considered the insurer’s compliance
with the sinkhole statutes, the full context of the opinion reveals that the
court’s primary concern was with the questionable actions of the insured, not
the insurer. Specifically, the district court’s repeated usage of the phrases
“under the undisputed facts of this case” and “in this context” to qualify its
reasoning indicated that the court was disturbed by the particular facts
related to the insured in that case. Indeed, implicit throughout Colella
is a concern with allowing an insured who litigates in bad faith to profit from
a technicality. However, there is nothing in Colella to imply that an
outcome in favor of the insurance company should apply beyond those facts. We
make no such assumption today.
the Colella court expressed that it considered the insurer’s compliance
with the sinkhole statutes, the full context of the opinion reveals that the
court’s primary concern was with the questionable actions of the insured, not
the insurer. Specifically, the district court’s repeated usage of the phrases
“under the undisputed facts of this case” and “in this context” to qualify its
reasoning indicated that the court was disturbed by the particular facts
related to the insured in that case. Indeed, implicit throughout Colella
is a concern with allowing an insured who litigates in bad faith to profit from
a technicality. However, there is nothing in Colella to imply that an
outcome in favor of the insurance company should apply beyond those facts. We
make no such assumption today.
Contrary
to the understanding of the court below and Omega, Colella does not
support a requirement of bad faith or malicious conduct under section 627.428.
The manipulation and foul play by the insured evinced in Colella is
simply not present in the case below.
to the understanding of the court below and Omega, Colella does not
support a requirement of bad faith or malicious conduct under section 627.428.
The manipulation and foul play by the insured evinced in Colella is
simply not present in the case below.
Unlike
Colella, Johnson did nothing to indicate that she was acting improperly or in
bad faith. In fact, were it not for Johnson’s action in obtaining an
independent evaluator, she would have been denied hundreds of thousands of
dollars in benefits due to an apparently inadequate and incorrect investigation
performed by and on behalf of Omega. If anything, Johnson was the one who made
steps to correct a wrongful situation. All inspectors here, including an
independent expert, had the full cooperation of Johnson and not only performed
a full investigation, but admittedly performed a more thorough investigation
than that originally performed by the insurance company’s expert. Johnson did
not present her dispute with frivolous claims; she proceeded with cold, hard
facts. We therefore cannot endorse the Fifth District’s reasoning that the
outcome in Colella is justified in the case at hand.
Colella, Johnson did nothing to indicate that she was acting improperly or in
bad faith. In fact, were it not for Johnson’s action in obtaining an
independent evaluator, she would have been denied hundreds of thousands of
dollars in benefits due to an apparently inadequate and incorrect investigation
performed by and on behalf of Omega. If anything, Johnson was the one who made
steps to correct a wrongful situation. All inspectors here, including an
independent expert, had the full cooperation of Johnson and not only performed
a full investigation, but admittedly performed a more thorough investigation
than that originally performed by the insurance company’s expert. Johnson did
not present her dispute with frivolous claims; she proceeded with cold, hard
facts. We therefore cannot endorse the Fifth District’s reasoning that the
outcome in Colella is justified in the case at hand.
The
court below similarly relies upon several cases in attempt to support its
assertion that the “wrongful” denial of a claim required by section 627.428
must be accompanied by the insurer’s bad faith; yet, a review of the facts of
these cases also indicate that it was the policyholder’s misleading
conduct — not the insurer’s — that was relevant to an award of attorney’s
fees. See State Farm Fla. Ins. Co. v. Lorenzo, 969 So. 2d 393, 398 (Fla.
5th DCA 2007); Liberty Nat. Life Ins. Co. v. Bailey ex rel. Bailey, 944
So. 2d 1028, 1029-30 (Fla. 2d DCA 2006); Gov’t Emps. Ins. Co. v. Battaglia,
503 So. 2d 358, 360-61 (Fla. 5th DCA 1987).
court below similarly relies upon several cases in attempt to support its
assertion that the “wrongful” denial of a claim required by section 627.428
must be accompanied by the insurer’s bad faith; yet, a review of the facts of
these cases also indicate that it was the policyholder’s misleading
conduct — not the insurer’s — that was relevant to an award of attorney’s
fees. See State Farm Fla. Ins. Co. v. Lorenzo, 969 So. 2d 393, 398 (Fla.
5th DCA 2007); Liberty Nat. Life Ins. Co. v. Bailey ex rel. Bailey, 944
So. 2d 1028, 1029-30 (Fla. 2d DCA 2006); Gov’t Emps. Ins. Co. v. Battaglia,
503 So. 2d 358, 360-61 (Fla. 5th DCA 1987).
As
we have discussed, the overwhelming case law on the subject dictates that both
Omega and the court below were incorrect on the question of attorney’s fees.
Once an insurer has incorrectly denied benefits and the policyholder files an
action in dispute of that denial, the insurer cannot then abandon its position
without repercussion. To allow the insurer to backtrack after the legal action
has been filed without consequence would “essentially eliminate the insurer’s
burden of investigating a claim.” Ivey, 774 So. 2d at 684. We therefore
disagree with the hypothetical reasoning in Clifton v. United Casualty
Insurance Co. of America, 31 So. 3d 826 (Fla. 2d DCA 2010), and disapprove
of the suggestion that section 627.428 requires a finding of bad faith on the
part of the insurance company.2
we have discussed, the overwhelming case law on the subject dictates that both
Omega and the court below were incorrect on the question of attorney’s fees.
Once an insurer has incorrectly denied benefits and the policyholder files an
action in dispute of that denial, the insurer cannot then abandon its position
without repercussion. To allow the insurer to backtrack after the legal action
has been filed without consequence would “essentially eliminate the insurer’s
burden of investigating a claim.” Ivey, 774 So. 2d at 684. We therefore
disagree with the hypothetical reasoning in Clifton v. United Casualty
Insurance Co. of America, 31 So. 3d 826 (Fla. 2d DCA 2010), and disapprove
of the suggestion that section 627.428 requires a finding of bad faith on the
part of the insurance company.2
In
sum, the law is clear. Section 627.428 provides that an incorrect denial of
benefits, followed by a judgment or its equivalent of payment in favor of the
insured, is sufficient for an insured to recover attorney’s fees. Extensive
case law further provides that an insurer’s concession that the insured was
entitled to benefits after a legal action has been initiated is the functional
equivalent of a confession of judgment. Here, it is undisputed that Omega did
not admit its error in denying benefits until after Johnson filed the action.
Thus, there is no question that Johnson is entitled to attorney’s fees in this
situation.
sum, the law is clear. Section 627.428 provides that an incorrect denial of
benefits, followed by a judgment or its equivalent of payment in favor of the
insured, is sufficient for an insured to recover attorney’s fees. Extensive
case law further provides that an insurer’s concession that the insured was
entitled to benefits after a legal action has been initiated is the functional
equivalent of a confession of judgment. Here, it is undisputed that Omega did
not admit its error in denying benefits until after Johnson filed the action.
Thus, there is no question that Johnson is entitled to attorney’s fees in this
situation.
We
cannot, as the court below held and Omega requests here, discourage insureds
from seeking to correct the incorrect denials of valid claims and allow
insurers to deny benefits to which insureds are entitled without ramifications.
Johnson proceeded with the only action that a non-expert claimant in conflict
with a major insurance company could take: she retained counsel and thus
obtained access to an independent expert. After performing a more thorough
investigation than that of the insurance carrier, the independent expert did
find sinkhole damage and confirmed that Johnson was right. These findings led
to the hiring of a neutral evaluator, who also performed a more thorough
investigation than Omega’s initial evaluator, and ultimately confirmed that
Johnson’s claim for sinkhole damage was incorrectly denied. We will not punish
Johnson for actively seeking a solution to the immense financial burden placed
on her and the very real property damage to her home. Thus, consistent with our
decision in Ivey, we hold that a recovery for attorney’s fees under
section 627.428 requires an incorrect denial of benefits by the
insurance company, not a bad faith denial.
cannot, as the court below held and Omega requests here, discourage insureds
from seeking to correct the incorrect denials of valid claims and allow
insurers to deny benefits to which insureds are entitled without ramifications.
Johnson proceeded with the only action that a non-expert claimant in conflict
with a major insurance company could take: she retained counsel and thus
obtained access to an independent expert. After performing a more thorough
investigation than that of the insurance carrier, the independent expert did
find sinkhole damage and confirmed that Johnson was right. These findings led
to the hiring of a neutral evaluator, who also performed a more thorough
investigation than Omega’s initial evaluator, and ultimately confirmed that
Johnson’s claim for sinkhole damage was incorrectly denied. We will not punish
Johnson for actively seeking a solution to the immense financial burden placed
on her and the very real property damage to her home. Thus, consistent with our
decision in Ivey, we hold that a recovery for attorney’s fees under
section 627.428 requires an incorrect denial of benefits by the
insurance company, not a bad faith denial.
CONCLUSION
In
light of the express and direct conflict between the decision below and our
decisions in Warfel and Ivey, we quash the decision below and
remand to the trial court for further proceedings consistent with this opinion.
light of the express and direct conflict between the decision below and our
decisions in Warfel and Ivey, we quash the decision below and
remand to the trial court for further proceedings consistent with this opinion.
It
is so ordered. (LABARGA, C.J., and PARIENTE, QUINCE, and PERRY, JJ., concur.
POLSTON, J., concurs in result. CANADY, J., dissents with an opinion.)
is so ordered. (LABARGA, C.J., and PARIENTE, QUINCE, and PERRY, JJ., concur.
POLSTON, J., concurs in result. CANADY, J., dissents with an opinion.)
__________________
1There
has been no change in section 627.428, Florida Statutes, since the year
litigation was initiated.
has been no change in section 627.428, Florida Statutes, since the year
litigation was initiated.
2Since
the issuance of the decision below, the Fifth District has similarly denied
attorney’s fees to a claimant who was originally denied coverage by his
insurer, but received benefits after filing suit. Explorer Ins. Co. v.
Cajusma, et. al., No. 5D14-2608, 2015 WL 6757612 (Fla. 5th DCA Nov. 6,
2015). Like the decision below, the denial in Cajusma contradicts
well-established insurance jurisprudence, and we thus disapprove of it to the
extent that it conflicts with this opinion.
the issuance of the decision below, the Fifth District has similarly denied
attorney’s fees to a claimant who was originally denied coverage by his
insurer, but received benefits after filing suit. Explorer Ins. Co. v.
Cajusma, et. al., No. 5D14-2608, 2015 WL 6757612 (Fla. 5th DCA Nov. 6,
2015). Like the decision below, the denial in Cajusma contradicts
well-established insurance jurisprudence, and we thus disapprove of it to the
extent that it conflicts with this opinion.
__________________
(CANADY,
J., dissenting.) Because I conclude that the decision of the Fifth District in Omega
Insurance Co. v. Johnson, 39 Fla. L. Weekly D1911 (Fla. 5th DCA Sept. 5,
2014), does not expressly and directly conflict with the decisions of this
Court in Universal Insurance Co. of North America v. Warfel, 82 So. 3d
47 (Fla. 2012), or Ivey v. Allstate Insurance Co., 774 So. 2d 679 (Fla.
2000), I would dismiss this case for lack of jurisdiction under article V,
section 3(b)(3) of the Florida Constitution.
J., dissenting.) Because I conclude that the decision of the Fifth District in Omega
Insurance Co. v. Johnson, 39 Fla. L. Weekly D1911 (Fla. 5th DCA Sept. 5,
2014), does not expressly and directly conflict with the decisions of this
Court in Universal Insurance Co. of North America v. Warfel, 82 So. 3d
47 (Fla. 2012), or Ivey v. Allstate Insurance Co., 774 So. 2d 679 (Fla.
2000), I would dismiss this case for lack of jurisdiction under article V,
section 3(b)(3) of the Florida Constitution.
Johnson
and Warfel both deal with the same statutory presumption, but they
address the application of that presumption in different contexts. In Johnson,
the Fifth District addressed “whether Omega wrongfully withheld policy benefits
to its insured, Kathy Johnson, after she filed a claim for sinkhole damage
under the policy Omega issued to her, thereby forcing her to file suit to
collect her policy benefits.” Johnson, 39 Fla. L. Weekly D1911. The
Fifth District considered Omega’s actions under the detailed statutory process
for investigating and obtaining a neutral evaluation of sinkhole claims. The
court held that the statutory presumption of correctness in section
627.7073(1)(c), Florida Statutes (2009), applied in circumstances that occurred
before any trial proceedings were conducted, and held that “application
of the confession of judgment doctrine as a basis to award fees under section
627.428 was error.” Id. The court also recognized that “[t]his
presumption is not an evidentiary presumption, but a pre-trial ‘vanishing’
presumption requiring the production of some countervailing evidence.” Id.
(citation omitted).
and Warfel both deal with the same statutory presumption, but they
address the application of that presumption in different contexts. In Johnson,
the Fifth District addressed “whether Omega wrongfully withheld policy benefits
to its insured, Kathy Johnson, after she filed a claim for sinkhole damage
under the policy Omega issued to her, thereby forcing her to file suit to
collect her policy benefits.” Johnson, 39 Fla. L. Weekly D1911. The
Fifth District considered Omega’s actions under the detailed statutory process
for investigating and obtaining a neutral evaluation of sinkhole claims. The
court held that the statutory presumption of correctness in section
627.7073(1)(c), Florida Statutes (2009), applied in circumstances that occurred
before any trial proceedings were conducted, and held that “application
of the confession of judgment doctrine as a basis to award fees under section
627.428 was error.” Id. The court also recognized that “[t]his
presumption is not an evidentiary presumption, but a pre-trial ‘vanishing’
presumption requiring the production of some countervailing evidence.” Id.
(citation omitted).
Warfel —
in contrast to Johnson — considered the insurer’s assertion of the
statutory presumption at trial. We held in Warfel that “because
the sinkhole statutes do not apply to the litigation context, the trial court’s
application of section 90.304 to section 627.7073(1)(c) and the treatment of
this statute as evidentiary in nature in this case was incorrect.” Warfel,
82 So. 3d at 57-58. We further stated that “[t]he presumption applies to the
initial claim process and investigation that insurance companies are required
to follow in accepting or denying claims.” Id. at 58.
in contrast to Johnson — considered the insurer’s assertion of the
statutory presumption at trial. We held in Warfel that “because
the sinkhole statutes do not apply to the litigation context, the trial court’s
application of section 90.304 to section 627.7073(1)(c) and the treatment of
this statute as evidentiary in nature in this case was incorrect.” Warfel,
82 So. 3d at 57-58. We further stated that “[t]he presumption applies to the
initial claim process and investigation that insurance companies are required
to follow in accepting or denying claims.” Id. at 58.
Warfel
thus concluded that the statutory presumption does not apply at trial, but Johnson
did not apply the presumption in the context of trial proceedings. Rather, in
determining whether Omega’s conduct forced Johnson to file suit, Johnson
applied the presumption to “the initial claim process and investigation,” which
Warfel expressly recognized is the proper context for application of the
presumption. Warfel does not suggest that the statutory neutral
evaluation process is excluded from the pre-litigation context in which the
presumption is applicable. Nothing in Warfel addresses the application
of the confession of judgment doctrine as a basis to award fees under section
627.428. And both cases are in agreement that the presumption is not an
evidentiary presumption. Warfel thus provides no basis for the Court to
exercise conflict jurisdiction over Johnson.
thus concluded that the statutory presumption does not apply at trial, but Johnson
did not apply the presumption in the context of trial proceedings. Rather, in
determining whether Omega’s conduct forced Johnson to file suit, Johnson
applied the presumption to “the initial claim process and investigation,” which
Warfel expressly recognized is the proper context for application of the
presumption. Warfel does not suggest that the statutory neutral
evaluation process is excluded from the pre-litigation context in which the
presumption is applicable. Nothing in Warfel addresses the application
of the confession of judgment doctrine as a basis to award fees under section
627.428. And both cases are in agreement that the presumption is not an
evidentiary presumption. Warfel thus provides no basis for the Court to
exercise conflict jurisdiction over Johnson.
Nor
does Johnson expressly and directly conflict with Ivey. The two
cases deal with dissimilar statutory schemes. As explained previously, Johnson
addressed whether Omega wrongfully withheld sinkhole policy benefits due to
Johnson and thereby forced her to file suit to collect her policy benefits, and
the Fifth District held that application of the confession of judgment doctrine
as a basis to award fees under section 627.428 was error in the context of the
statutory process established for the investigation and neutral evaluation of
sinkhole claims. Johnson, 39 Fla. L. Weekly D1911.
does Johnson expressly and directly conflict with Ivey. The two
cases deal with dissimilar statutory schemes. As explained previously, Johnson
addressed whether Omega wrongfully withheld sinkhole policy benefits due to
Johnson and thereby forced her to file suit to collect her policy benefits, and
the Fifth District held that application of the confession of judgment doctrine
as a basis to award fees under section 627.428 was error in the context of the
statutory process established for the investigation and neutral evaluation of
sinkhole claims. Johnson, 39 Fla. L. Weekly D1911.
In
contrast, this Court in Ivey addressed the insurer’s burden of
investigating and paying a claim under the requirements of Florida’s no-fault
insurance scheme — specifically, the requirement to pay benefits within thirty
days after receipt of notice of the claim — in conjunction with section
627.428. Ivey, 774 So. 2d at 684. We held that
contrast, this Court in Ivey addressed the insurer’s burden of
investigating and paying a claim under the requirements of Florida’s no-fault
insurance scheme — specifically, the requirement to pay benefits within thirty
days after receipt of notice of the claim — in conjunction with section
627.428. Ivey, 774 So. 2d at 684. We held that
under PIP law, the focus is
outcome-oriented. If a dispute arises between an insurer and an insured, and
judgment is entered in favor of the insured, he or she is entitled to
attorney’s fees. It is the incorrect denial of benefits, not the presence of
some sinister concept of “wrongfulness,” that generates the basic entitlement
to the fees if such denial is incorrect.
outcome-oriented. If a dispute arises between an insurer and an insured, and
judgment is entered in favor of the insured, he or she is entitled to
attorney’s fees. It is the incorrect denial of benefits, not the presence of
some sinister concept of “wrongfulness,” that generates the basic entitlement
to the fees if such denial is incorrect.
Id.
Ivey concluded that the “wrongfulness” of an insurer’s denial of
a PIP claim is irrelevant when determining whether an insured is entitled to
attorney’s fees under section 627.428. Id. In contrast, Johnson
concluded that in the context of the specific statutory process established for
the investigation and neutral evaluation of sinkhole claims that the
wrongfulness or unreasonableness of an insurer’s denial of a sinkhole claim is
relevant when determining whether an insured is entitled to attorney’s fees
under section 627.428. Although Ivey held that the insurer’s “payment
after suit was filed operates as a confession of judgment,” nothing in Ivey
suggests that its holding should be extended beyond the context of the PIP statute.
Id. at 684. There is no express and direct conflict with Johnson.
Ivey concluded that the “wrongfulness” of an insurer’s denial of
a PIP claim is irrelevant when determining whether an insured is entitled to
attorney’s fees under section 627.428. Id. In contrast, Johnson
concluded that in the context of the specific statutory process established for
the investigation and neutral evaluation of sinkhole claims that the
wrongfulness or unreasonableness of an insurer’s denial of a sinkhole claim is
relevant when determining whether an insured is entitled to attorney’s fees
under section 627.428. Although Ivey held that the insurer’s “payment
after suit was filed operates as a confession of judgment,” nothing in Ivey
suggests that its holding should be extended beyond the context of the PIP statute.
Id. at 684. There is no express and direct conflict with Johnson.
This
Court lacks jurisdiction under the Florida Constitution to review Johnson.
Accordingly, I dissent.
Court lacks jurisdiction under the Florida Constitution to review Johnson.
Accordingly, I dissent.
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