12 Fla. L. Weekly Supp. 1057a

Insurance — Disability — Wrongful termination of disability benefits and waiver of premium benefits — Motion to file second amended complaint to add count for repudiation of disability insurance contracts and violation of implied covenant of good faith and fair dealing is denied — Record refutes plaintiff’s assertions that amendment is necessitated by defendant’s having changed its position immediately prior to court-ordered nonbinding arbitration to assert that plaintiff’s cause of action was solely for “breach of contract” — Not only does record reveal that defendant asserted from the onset of litigation that action was one for breach of insurance contract, plaintiff’s own documents filed in this matter state that this is breach of contract again against disability insurer as result of insurer’s unjustified termination of benefits — Plaintiff offered no other grounds for seeking leave to amend, and permitting such an amendment would severely prejudice defendant — Moreover, amendment would be futile, as proposed second amended complaint fails to state cause of action — Insurer’s refusal to pay benefits on grounds that an insured is not totally disabled under the policy is not a repudiation of the insurance contract — Claim that defendant violated implied covenant of good faith and fair dealing is nothing more than bad faith claim against defendant, and bad faith claim is premature — Under Florida law, first-party bad faith claim can only be brought after an insured prevails on first-party coverage claim

DEBRAH L. BOYD, Plaintiff, vs. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY, Defendant. Circuit Court, 17th Judicial Circuit in and for Broward County. Case No. 97-18095 (09). September 7, 2005. Robert Lance Andrews, Judge.

ORDER

THIS CAUSE having come before the Court on Plaintiff’s Motion to Amend Complaint and the Court having considered same, having heard argument of counsel, and being otherwise duly advised in premises, finds and decides as follows:

This action, which has been pending since 1997, arises out of Defendant’s ceasing to pay disability benefits to Plaintiff under two disabilities insurance policies. On February 10, 2004, this Court ordered the parties into non-binding arbitration pursuant to §44.103, Fla. Stat., which arbitration took place on May 20, 1995. On or about June 14, 2005, Defendant served its request for Trial De Novo. On or about June 15, 2005, Plaintiff filed her request for Trial De Novo. On or about June 16, 2005, Plaintiff filed the instant Motion to file a Second Amended Complaint. The proposed Second Amended Complaint alleges wrongful termination of disability benefits; wrongful termination of waiver of premium benefits, and adds a count for repudiation of disability insurance contracts and violation of implied covenant of good faith and fair dealing.

Pursuant to Rule 1.190(a), Florida Rules of Civil Procedure, leave to amend a pleading shall be freely given when justice so requires. In determining whether a motion for leave to amend should be granted, a test of prejudice is the primary consideration under the rule. New River Yachting Center, Inc. v. Bacchiocchi, 407 So.2d 607 (Fla. 4th DCA 1981). “Leave to amend should not be denied unless the privilege has been abused or the complaint is clearly not amendable.” Id. At 609. The decision to permit or refuse amendment to pleadings is within the court’s exercise of sound discretion. Life General Security Insurance Company v. Horal, 667 So.2d 967 (Fla. 4th DCA 1996); Alvarez v. DeAguirre, 395 So.2d 213 (Fla. 3d DCA 1981); Casas v. Rosell, 359 So.2d 491 (Fla. 3d DCA 1978). While the policy in Florida is to liberally allow amendments to pleadings, a trial judge in the exercise of discretion many deny further amendments “where a case has progressed to a point that liberality ordinarily to be indulged has diminished.” Alvarez, 395 So.2d at 216. However, leave to amend should not be denied unless the privilege has been abused, there is prejudice to the opposing party, or amendment would be futile. Thompson v. Bank of New York, 862 So.2d 768 (Fla. 4th DCA 2003). A proposed amendment is futile where it is insufficiently pled. Id.

In the Motion to File Second Amended Complaint, Plaintiff asserts that “[a]fter more than seven (7) years of litigation on the issue, immediately prior to the Mandatory Non-Binding Arbitration hearing required by the Court, Provident took the position that the Plaintiff’s cause of action was solely for a “breach of contract”, albeit the Plaintiff’s Complaint, which was filed by her formal counsel, never once mentions the words “breach of contract”. Plaintiff claims that “in light of the new position recently taken by Provident, Plaintiff requests leave of Court to file the Second Amended Complaint attached hereto.” Defendant is opposing the Motion to Amend, arguing that such an amendment will severely prejudice the Defendant, and that such an amendment would be futile.

With regard to Plaintiff’s assertions that the Amendment is necessitated by Defendant changing its position immediately prior to arbitration, this Court agrees with Defendant’s argument that Plaintiff’s statements are contradicted by the record. A review of the record in this case clearly reveals that Defendant has asserted from the onset of this litigation that this action was one for breach of the insurance contract.¹ In fact, a letter addressed to Plaintiff’s current counsel dated September 6, 2000, contains Defendant’s reference to this in its statement “even if Plaintiff prevails on her underlying breach of contract claim.” Furthermore, a number of Plaintiff’s own documents filed in this matter state that this is a breach of contract action against her disability insurer as a result of its unjustified termination of benefits.² As such, this Court finds that Plaintiff’s reasons for seeking leave of this Court to file a Second Amended Complaint are not supported by the record. As the Plaintiff has offered no other grounds for seeking leave to amend, permitting such an Amendment would severely prejudice the Defendant, as Plaintiff seeks to materially alter the grounds for relief sought.

Moreover, this Court finds that amendment in this matter would be futile as the proposed Second Amended Complaint fails to state a cause of action. Plaintiff seeks to add a third cause of action for Repudiation of Disability Insurance Contracts and Violation of Implied Covenant of Good Faith and Fair Dealing. Florida law provides that “[t]he right of action based upon an insurer’s failure to pay periodic indemnity or benefits is limited to the installments which have accrued at the institution of the action.” Aetna Life Ins. Co. v. Smith, 345 So. 2d 784, 787 (Fla. 4th DCA 1977) (citations omitted). “A recognized exception may be applicable where there is a repudiation of the entire contract by the insurer, but an insurer’s refusal to continue total disability benefits, upon the ground that the insured was not in fact totally disabled, does not amount to a repudiation of the entire contract . . . .” Id. “Repudiation by one party, to be sufficient in any case to entitle the other to treat the contract as absolutely and finally broken and to recover damages as upon total breach, must at least amount to an unqualified refusal, or declaration of inability, substantially to perform according to the terms of his obligation.” Mobley v. New York Life Insurance Co., 295 U.S. 632, 638 (1935) (citations omitted). In the matter herein, Defendant terminated Plaintiff’s disability benefits based on a belief that Plaintiff was not totally disabled under the policy. An insurer’s refusal to pay benefits on the grounds that the insured is not totally disabled under the policy is not repudiation. Mobley, 295 U.S. at 638. Based on the foregoing, Plaintiff’s proposed Second Amended Complaint fails to state a cause of action for repudiation.

Plaintiff’s claim that Defendant violated an implied covenant of good faith and fair dealing, although couched in different terms is nothing more than a bad faith claim against Defendant, which arises under §624.155, Fla. Stat. Talat Enterprises, Inc. v. Aetna Cas. & Surety Co., 753 So. 2d 1278 (Fla. 2000). Pursuant to §624.155, Fla. Stat., a first-party bad faith claim can only be brought after an insured prevails on the first-party coverage claim. Blanchard v. State Farm Mut. Auto. Ins., 575 So. 2d 1289, 1291 (Fla. 1991). Therefore, Plaintiff’s claim for bad faith is premature.

Accordingly, it is hereby

ORDERED AND ADJUDGED that Plaintiff’s Motion for Leave to Amend Complaint is DENIED.

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¹See e.g. Defendant’s Motion for Protective Order; Defendant’s Response and Memorandum of Law in Response to Plaintiff’s Motion for Sanctions; Defendant’s Motion for Reconsideration.

²See e.g. Plaintiff’s Motion for Partial Summary Judgment; Plaintiff’s Motion to Dispense with Arbitration; Plaintiff’s proposed verdict form.

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