11 Fla. L. Weekly Supp. 722a
Insurance — Uninsured motorist — Motion to dismiss complaint seeking declaration that insurer cannot avoid potential bad faith liability by belated payment of UM policy limits and damages for insurance fraud — Bad faith — Amendment to uninsured motorist statute regarding bad faith claims expands insured’s potential recoverable damages but does not do away with statutory condition precedent to file sixty-day civil remedy notice — Where insurer paid insured UM policy limits prior to sixty-day civil remedy notice being filed, no action for bad faith lies and there is no bona fide dispute giving rise to action for declaratory relief — Insurance fraud — Section 817.234 requires criminal adjudication of guilt as prerequisite to recovery in civil cause of action for insurance fraud whether action is brought against insured or insurer — There can by no cause of action against insurer under statute where there has been no adjudication of guilt — Complaint dismissed with prejudice
JOSEPH PATRICK CAPALDI, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, and JOANNE MINIMI, Individually, Defendants. Circuit Court, 17th Judicial Circuit in and for Broward County. Case No. 02-12648 (09). May 3, 2004. Robert Lance Andrews, Judge.ORDER
THIS CAUSE having come before the Court on Defendants’ Motion to Dismiss, and the Court having considered same, having heard argument of counsel and being duly advised in premises, finds and decides as follows:
Plaintiff has filed a two count Complaint against the Defendants herein. Count I of the Complaint is an action for Declaratory Relief against State Farm. Count II is an action based on an alleged violation of Florida Statute §817.234(7) against both Defendants. The Defendants now move to dismiss the Complaint.
The facts of this case can be summarized as follows: On or about February 2, 1991, Plaintiff was involved in a accident involving an uninsured motorist. Plaintiff filed a claim with his insurer State Farm, the Defendant herein, for the policy limits of $300,000.00. In February of 1994, Plaintiff commenced an action against State Farm in the Circuit Court in the State of Michigan. Pursuant to a stipulation, the action was dismissed without prejudice to permit arbitration of the claim. At Plaintiff’s request, the arbitration was transferred to Florida. On October 24, 1997, Plaintiff filed a Civil Remedy Notice of Insurer Violation with the Florida Department of Insurance. Subsequently, arbitration of the claim took place from April 17, 2000 through April 20, 2000, resulting in an arbitration award of damages in favor of the Plaintiff in the net amount of $350,000.00 inclusive of all allowable and applicable set offs. On June 20, 2000, State Farm filed a Notice of Administrative Appeal, based on their position that the Arbitrators exceeded their jurisdiction in issuing an Arbitration Award beyond the limits of the policy.
On October 17, 2000, State Farm paid the sum of $300,000.00 to Plaintiff and requested execution of a Satisfaction of Judgment. On October 24, 2000, Plaintiff filed a Civil Remedy Notice of Insurer Violation with the Department of Insurance. On November 7, 2000, the Hon. Nikki Ann Clark entered a Final Judgment in the matters entitled In the Matter of the Arbitration between Joseph Partick Capaldi and State Farm Mutual Automobile Insurance Company. The Final Judgment awarded Plaintiff the sum of $300,000.00, the amount of the policy limits. On November 7, 2000, counsel for Plaintiff executed the Plaintiff’s Satisfaction of Judgment.
Count I of Plaintiff’s Complaint seeking declaratory relief, requests this Court to enter an Order declaring that State Farm could not avoid potential liability for bad faith by belated payment of the UM policy limits; and to retain jurisdiction so that Plaintiffs may pursue a statutory bad faith claim, pursuant to §624.155, Fla. Stat. Defendants argue that the Complaint fails to set forth legitimate grounds supporting the existence of a bona fide dispute. Plaintiff, in turn, argues that the Complaint sufficiently alleges that Plaintiff is in doubt regarding the applicability of the two statutes addressing damages, 624.155, Fla. Stat. and §627.727, Fla. Stat.
Section 624.155 provides a cause of action by any person damaged as a result of an insurer “[n]ot attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for his interest.” §624.155(2)(d), Fla. Stat. (1993). Section 624.155(2)(d) further provides that as a precedent to the filing of a claim for this cause of action in court that “[n]o action shall lie if, within 60 days after filing notice, the damages are paid or the circumstances giving rise to the violation are corrected.” This sixty day period operates as a cure period during which the insurer may avoid bad faith litigation by paying the contractual damages owed within the sixty day window. Talat Enterprises, Inc. v. Aetna Casualty and Surety Co., 753 So.2d 1278, 1282 (Fla. 2000). As the Talat court stated, “[i]n the context of a first-party insurance claim, the contractual amount due the insured is the amount owed pursuant to the express terms and conditions of the policy after all of the conditions precedent of the insurance policy in respect to payment are fulfilled.” Talat, 753 So.2d at 1283. “Section 624.155(1)(b), Florida Statutes (1993), then, is correctly read to authorize a civil remedy for extra contractual damages if a first-party insurer does not pay the contractual amount due the insure after all the policy conditions have been fulfilled within sixty days after a valid notice has been filed under section 624.55(2)(a), Florida Statutes (1993).” Id.; see also Lane v. Westfield Insurance Co., 862 So.2d 774, 779 (purpose of the civil remedy notice is to give the insurer one last chance to settle a claim with its insured and avoid unnecessary bad faith litigation — not to give the insured a right of action to proceed against the insurer even after the insured’s claim has been paid or resolved). The statute “cannot reasonably be construed to require payment of extra-contractual damages to avoid bad-faith litigation until the conditions for payment under the policy have been fulfilled and the insurer has failed to cure within the sixty-day statutory period for cure after notice is filed in accord with the statute.” Id.
In the instant matter, as in Talat, supra, the insurer paid the contractual policy limits of $300,000.00 before the Plaintiff filed the Civil Remedy Notice. Plaintiff however, argues that the sixty day cure provisions are inapplicable to a bad faith claim under an uninsured motorist case pursuant to §627.727(10) which provides that:
The damages recoverable from an uninsured motorist carrier in an action brought under S.624.155 shall include the total amount of the claimant’s damages, including the amount in excess of the policy limits, any interest on unpaid benefits, reasonable attorney’s fees and costs, and any damages caused by a violation of a law of the state. The total amount of the claimant’s damages is recoverable whether caused by an insurer or by a third-party tortfeasor.
Plaintiff’s argument is misplaced. The amendment to §627.727 resulting in the addition of subsection (10), expands the insured’s potential recoverable damages; it does not change the nature of the underlying statutory bad faith cause of action set forth in §624.155. Brookins v. Goodson, 640 So.2d 110 (Fla. 4th DCA 1994). Section 627.727(10) does not do away with the statutory condition precedent contained in §624.155. See Allstate Insurance Company v. Clohessy, 32 F. Supp.2d 1328 (M.D. Fla. 1998). In Clohessy, a UM case, the defendants/counter-plaintiffs failed to file the Civil Remedy Notice prior to commencing an action for bad faith. The court found that this failure to comply with the provisions of §624.155, to be a fatal flaw, stating that “[t]he Florida legislature enacted a clear mandate in establishing the condition precedent.” Clohessy, 32 F.Supp.2d at 1333. Clohessy reiterated the settled principle that the condition precedent of §624.155 must be complied with in order for one to perfect the right to sue under that statute, and that no action will lie if, within the sixty days, the damages are paid or the circumstances giving rise to the violation are corrected. Plaintiff, however, argues that this case is inapplicable to the issue before this Court because in this case, it is without question that Plaintiff complied with the condition precedent, and the question is simply one of timing. This Court finds Plaintiff’s argument in this regard to be without merit. Because the insurer paid the insured $300,000.00, the policy limits, prior to the sixty day Civil Remedy Notice being filed, no action for bad faith lies, and there is no bona fide dispute giving rise to an action for declaratory relief.
Defendants next move to dismiss Count II for an alleged violation of §817.234, Fla. Stat. Section 817.234 sets forth liability and penalties for insurance fraud. Subsection (5) of the statute provides that “[a]ny insurer damaged as a result of a violation of any provision of this section when there has been an adjudication of guilt shall have a cause of action to recover compensatory damages. Subsection (7) makes the statute applicable to insurer, providing:
The provisions of this section shall also apply as to any insurer . . . who, with intent, injure, defraud, or deceive any claimant with regard to any claim. The claimant shall have the right to recover the damages provided in this section.
Defendant argues that the statute requires an adjudication of guilt against the insurer in order to proceed with a civil cause of action.
Plaintiff argues that a criminal adjudication of guilt is a prerequisite to recovery only when an insurer seeks damages against an insured, not when an insured seeks damages against an insurer, and if the legislature had intended such a result, they would have specifically stated this in subsection (7). However, Plaintiff does not offer any authority for this argument. Nor could this Court find any such authority. Based upon its reading of the statute, this Court finds that no distinction has been made between insurer and insured with regard to the requirement of an adjudication of guilt.1 Because there had been no adjudication of guilt with respect to the Defendants herein, there can be no cause of action pursuant to §817.234.
Accordingly, it is hereby
ORDERED AND ADJUDGED that the Defendants’ Motion to Dismiss is GRANTED.
It is further ORDERED AND ADJUDGED that the Complaint is DISMISSED WITH PREJUDICE.
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1 Moreover, based on its reading of the statute, this Court has doubts that it, in fact, affords a civil cause of action to an insured. Subsection (5) specifically states that an insurer has a cause of action, which cause of action is set forth in §627.736(12), Fla. Stat. However, subsection (7) does not state that an insured shall have a cause of action, it merely provides that an insured “shall have the right to recover the damages provided in this section.” Nothing in subsection (7) provides for a civil cause of action.
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