23 Fla. L. Weekly Supp. 961a

Online Reference: FLWSUPP 2309MALUInsurance — Automobile — Windshield replacement — Where repair shop has not identified any statutory or contractual provision with which insurer failed to comply in processing its claims for windshield replacement and has failed to put forth any evidence that it was engaged in dispute with insurer over payment prior to filing suit, trial court cannot determine that post-suit payments made by insurer were wrongful as matter of law and constitute confession of judgment — Motion for summary judgment is denied

MARK LUSNIA d/b/a ATLAS AUTO GLASS, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. County Court, 9th Judicial Circuit in and for Orange County. Case Nos. 2013-SC-161-O, 2013-SC-2280-O, 2013-SC-4866-O, 2012-SC-12027-O, and 2012-SC-6871-O. November 30, 2015. Clarified January 6, 2016. Tina L. Caraballo, Judge. Counsel: Lee Jacobson, for Plaintiff. William Kebler and Brendan McKay, Banker Lopez Gassler PA, St. Petersburg, for Defendant.

AMENDED¹ ORDER ON PLAINTIFF’SMOTION FOR SUMMARY JUDGMENT

THIS CAUSE is before the Court on October 30, 2015, upon Plaintiff’s Motion for Summary Judgment. Plaintiff asks this Court to grant summary judgment in its favor following State Farm Mutual Automobile Insurance Company’s (“State Farm”) post-suit payment. The following assignee’s are at issue:

Name of Assignee	Date of Service	Amount Demanded	Case Number	Date Invoice Submitted	Date Suit Filed	State Farm Check Date*	Amount Paid
James McLaurin	11/29/12	$694.87	2013-SC-161-O	11/29/12	1/7/13	1/28/13	$392.45
Carol Forman	1/2/13	$894.91	2013-SC-2280-O	1/2/13	3/6/13	3/8/13	$573.56
Martha Tyson	4/22/13	$545.24	2013-SC-4866-O	4/22/13	6/3/13	7/3/13	$320.79
Brooke Scott	10/9/12	$794.23	2012-SC-12027-O	10/30/12	12/14/12	1/7/13	$505.80
Helen Perry	6/21/12	$878.38	2012-SC-6871-O	6/22/12	8/10/12	9/4/12	$537.49

I. CONTRACTUAL PROVISIONS

The insurance contract provisions related to auto glass coverage in relevant part are set forth below:

The Insured’s Duties in relevant part include the following:

II. SUMMARY OF THE ARGUMENT

Plaintiff seeks summary judgment in these cases contending State Farm’s post-suit payment is a confession of judgment. Plaintiff also argues that the post-suit payment results in State Farm’s waiver of any defenses it might have to the lawsuit. Finally, Plaintiff argues it should be paid in full for the cost of the repairs (due to waiver of defenses) and be awarded attorney’s fees in having to file suit.

State Farm rejects all of Plaintiff’s arguments. State Farm maintains the insurance contract has no specified time for payment.² As such, the lawsuit was not the catalyst for payment and Plaintiff has no cause of action for failure to pay within any set time frame.

State Farm was not notified of the claim, repair or price until after Plaintiff performed the repairs. Indeed, State Farm’s first notification of any issue related to its insured was receipt of an invoice from Plaintiff. However, the amount of payment it ultimately made and the manner in which it determined the amount is not currently at issue. State Farm has not set forth any evidence regarding its determination of the amount due and owing or which of the three options under the insurance contract it utilized in making payment.

III. CONFESSION OF JUDGMENT ANALYSIS

If State Farm’s post-suit payment is a confession of judgment, it triggers section 627.428, Florida Statutes. The purpose of section 627.428 “is to discourage insurers from contesting valid claims and to reimburse successful policyholders forced to [litigate] to enforce their policies.” Danis Indus. Corp. v. Ground Improvement Techniques, Inc., 645 So. 2d 420, 421 (Fla. 1994). Thus section 627.428 is viewed as a penalty on insurers that wrongfully refused to pay insurance benefits. The Florida Supreme Court long ago recognized that the predecessors to section 627.428 imposed fees as a penalty. Pendas v. Equitable Life Assur. Soc. of U.S., 176 So. 104, 111-12 (Fla. 1937) (quoting U.S. Fire Ins. Co. v. Dickerson, 90 So. 613 (Fla. 1921)). Because section 627.428(1) attorneys’ fees are a penalty, the statute “must be strictly construed in favor of the one against whom the penalty is imposed and is never extended by construction.” Sarkis v. Allstate Ins. Co., 863 So. 2d 210, 223 (Fla. 2003) [28 Fla. L. Weekly S740a]; Nationwide Mut. Ins. Co. v. Nu-Best Diagnostic Labs, Inc., 810 So. 2d 514, 516 (Fla. 5th DCA 2002) [27 Fla. L. Weekly D551e]. Also, strict construction of the statute is required because it authorizes an award of attorneys’ fees in derogation of common law. Brass & Singer v. United Auto. Ins. Co., 944 So. 2d 252, 254 (Fla. 2006) [31 Fla. L. Weekly S762a]; Pepper’s Steel & Alloys, Inc. v. U.S., 850 So. 2d 462, 465 (Fla. 2003) [28 Fla. L. Weekly S455a].

Over 75 years ago, the Florida Supreme Court construed an early predecessor of section 627.428(1) as imposing liability upon an insurer as an incident of the insurer’s wrongful refusal to pay. Pendas, 176 So. at, 112. The Court explained that “the insurance company should not be required to pay fees for complainant’s attorneys in cases where there was no delinquency or wrongful refusal to pay on the part of the insurance company.” Id. In other words, “if there is no wrongful refusal to pay [benefits], then there is no statutory liability to pay” attorneys’ fees. Id.

The Court similarly interpreted a later predecessor to section 627.428 “as authorizing the recovery of attorney’s fees from the insurer only when the insurer has wrongfully withheld payment of the proceeds of the policy.” Equitable Life Assurance Soc’y of U.S. v. Nichols, 84 So. 2d 500, 502 (Fla. 1956). The Court has since held that this interpretation in Nichols applies to section 627.428. Mfs. Life Ins. Co. v. Cave, 295 So. 2d 103, 106 (Fla. 1974). Every Florida appellate court has likewise held that a policyholder is entitled to attorneys’ fees under section 627.428 only where the insurer has wrongfully forced the policyholder to litigate. Time Ins. Co. v. Arnold, 319 So. 2d 638, 640 (Fla. 1st DCA 1975) (section 627.428 “is in the nature of a penalty”); Liberty Nat’l Life Ins. Co. v. Bailey ex rel. Bailey, 944 So. 2d 1028, 1030 (Fla. 2d DCA 2006) [31 Fla. L. Weekly D1643a] (“[W]e recognize that section 627.428 is a penalty in derogation of the common law.”); Mercury Ins. Co. of Fla. v. Anatkov, 929 So. 2d 624,627 (Fla. 3d DCA 2006) [31 Fla. L. Weekly D1315b] (section 627.428 is intended to penalize insurers); Leaf v. State Farm Mut. Auto. Ins. Co., 544 So. 2d 1049, 1050 (Fla. 4th DCA 1989) (purpose of 627.428 is to penalize carrier); Gov’t Emps. Ins. Co. v. Battaglia, 503 So. 2d 358, 360 (Fla. 5th DCA 1987) (purpose of 627.428 is to penalize carrier).

Clearly, post-suit payment, by itself, is insufficient to find a confession of judgment. Clifton v. United Cas. Ins. Co. of Am., 31 So. 3d 826, 829 (Fla. 2d DCA 2010) [35 Fla. L. Weekly D364e]; State Farm Fla. Ins. Co. v. Lorenzo, 969 So. 2d 393, 397-98 (Fla. 5th DCA 2007) [32 Fla. L. Weekly D1791e]; Tristar Lodging, Inc. v. Arch Specialty Ins. Co., 434 F. Supp. 2d 1286, 1298 (M.D. Fla. 2006), aff’d, 215 F. App’x 879 (11th Cir. 2007). Section 627.428 is triggered in confession of judgment cases only where the insurer wrongfully forced its policyholder to litigate. Clifton, 31 So. 3d at 829; Tristar Lodging, Inc., 434 F. Supp. 2d at 1295. The “wrongfulness” standard “encourage[s] insurance companies to resolve conflicts and claims quickly and efficiently without judicial intervention.” Nationwide Prop. & Cas. Ins. v. Bobinski, 776 So. 2d 1047, 1049 (Fla. 5th DCA 2001) [26 Fla. L. Weekly D368a].

The central issue under the “wrongfulness” standard — whether an insurer has forced a policyholder to file suit — presents a question of fact. See Beverly v. State Farm Fla. Ins. Co., 50 So. 3d 628, 633 (Fla. 2d DCA 2010) [35 Fla. L. Weekly D2373b] (reversing summary judgment based on material question of fact as to whether policyholder had been forced to file suit). The trial court must determine “whether the suit was filed following a dispute with the insurer for the legitimate purpose of resolving that dispute.” Clifton, 31 So. 3d at 830. For this reason, “ ‘the existence of a bona fide dispute and not the mere possibility of a dispute, is a crucial condition precedent to such a holding’ ” that an insurer wrongfully forced a policyholder to sue. Lorenzo, 969 So. 2d at 398 (quoting Tristar Lodging, 434 F. Supp. 2d at 1297-98).

Plaintiff has failed to meet its burden in this case. Plaintiff has not set forth any statutory or contractual provision State Farm failed to comply with in processing the claims set forth above. Plaintiff has failed to put forth any evidence that it was engaged in a dispute with State Farm over payment prior to the lawsuit being filed.³ Plaintiff attempts to use a 30 day standard, however, unlike other types of insurance (PIP, life, property) payments, there is no specified amount of time in which State Farm was required to process and pay the claims at issue in these cases. This Court cannot determine that the payments made in the cases referenced above are wrongful as a matter of law.

IV. RULING OF THE COURT

Whether State Farm’s payment in these cases was wrongful is a disputed issue of fact. Accordingly, Plaintiff’s motion for summary judgment in each of the cases is DENIED.

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¹This amended order corrects the spelling of Plaintiff’s name. The November 24, 2015, order is vacated and this amended order issued in its place.

²State Farm advanced an argument that service of process had not been made before the payments at issue in these cases and therefore the suit could not have been the catalyst for payment. The Court rejects this argument, but it is moot given the necessary wrongfulness analysis set forth below. Stewart v. Midland Life Ins. Co., 899 So. 2d 331 (Fla. 2d DCA 2005) [30 Fla. L. Weekly D552a]

³For example, had Plaintiff believed State Farm was not handling the claim appropriately, it could have filed a civil remedy notice pursuant to §624.155, Fla. Stat. Doing so would have placed State Farm on notice that it had 60 days to resolve the claim and may have avoided this litigation completely.

__________________ORDER ON PLAINTIFF’SMOTION FOR CLARIFICATION

THIS CAUSE came before the Court on December 22, 2015, upon Plaintiff’s Motion for Rehearing and/or Motion for Clarification. The Court grants Plaintiff’s Motion and clarifies the November 30, 2015 Amended Order on Defendant’s Motion for Summary Judgment as to Count I and Plaintiff’s Ore Tenus Motion for Leave to Amend as follows:

1. Plaintiff may not file an amended complaint containing a count for failure to pay in a reasonable amount of time.

2. Plaintiff may file an amended complaint for breach of contract that contains allegations of ultimate fact related to the alleged breach that includes a failure to pay within a reasonable amount of time. Plaintiff’s amended pleading must set forth the alleged basis for the insurer to issue payment within a reasonable time based upon the contract applicable to these claims.

3. The ultimate issue as to whether the insurer was required to pay within any specified time and whether the payments that were actually made in these cases exceeded such time has not been decided by the Court. The parties may file motions directed towards these ultimate issues as they see fit.