FSC Issues Important First-Party Bad Faith Decision!

The Supreme Rulers of Tally have issued a very interesting opinion on bad faith actions in the first-party insurance context, with a lengthy and well-written history of the doctrine and its development in Florida.

The Court finds that there is no independent cause of action for breach of implied duty of good faith and fair dealing outside the statutory framework:

Specifically, we conclude that under Florida law (1) first-party claims are actually statutory bad-faith claims that must be brought under section 624.155 of the Florida Statutes; (2) an insured cannot bring a claim against an insurer for failure to comply with the language and type-size requirements established by section 627.701(4)(a) of the Florida Statutes; (3) an insurer‟s failure to comply with the language and type-size requirements established in section 627.701(4)(a) does not render a noncompliant hurricane deductible provision in an insurance policy void and unenforceable as the Legislature has not provided for this penalty; and (4) a contractual provision mandating payment of benefits upon “entry of a final judgment” does not waive the insurer‟s procedural right to post a bond and stay the execution of a money judgment pending resolution of appeal.

Congrats Raoul!

11.11.11

Hi there, I assume you're in the office because your kids are home from school and driving you crazy.

Or is that just me?

Rump has a nice post on the reason I got this tweet from @MiamiDadeCourts earlier this morning:

All Miami-Dade Courts and Clerk of Courts' offices closed on Friday, Nov. 11th, in observance of Veteran's Day: http://bit.ly/tG4het

So the Court can tweet but I still have to send a runner downtown to file something?

In other news, the Florida Supreme Court has limited discovery in first-party bad faith actions and held that you can't get at attorney-client privileged materials:

Therefore, although we held in Ruiz that attorney work product in first-party bad faith actions was discoverable, this holding does not extend to attorney-client privileged communications. Consequently, when an insured party brings a bad faith claim against its insurer, the insured may not discover those privileged communications that occurred between the insurer and its counsel during the underlying action.

This seems pretty obvious, no?

The Court, however, does allow for some fightin' space:

Although we conclude that the attorney-client privilege applies, we recognize that cases may arise where an insurer has hired an attorney to both investigate the underlying claim and render legal advice. Thus, the materials requested by the opposing party may implicate both the work product doctrine and the attorney-client privilege. Where a claim of privilege is asserted, the trial court should conduct an in-camera inspection to determine whether the sought-after materials are truly protected by the attorney-client privilege. If the trial court determines that the investigation performed by the attorney resulted in the preparation of materials that are required to be disclosed pursuant to Ruiz and did not involve the rendering of legal advice, then that material is discoverable.

 Have fun with that, trial judges!

Judge Hurley Peers Into His Crystal Ball

hurleycrystalball

And tries to predict how the Florida Supreme Court would rule on discovery of other claim files of an insurer for purposes of evaluating claims procedures in a bad faith action:

While Ruiz addressed the parameters of the discoverability of the insured’s own claim file, as “virtually the only source of direct evidence with regard to the essential issue of the insurance company’s handling of the insured’s claim,” this court finds Ruiz also informs the discoverability of other insured claims files which relate to and illuminate the manner in which the company handles claims of its other policyholders in the general course of its business -- an issue directly bearing on the company’s punitive damage liability exposure under statutory language authorizing recovery of such damages where the company’s bad faith claims practices occur “with such frequency as to indicate a general business practice.” § 624.155 (5), Fla. Stat. (2007).

I like the way Judge Hurley phrases his prediction, too:

Because the Florida Supreme Court has not issued a definitive ruling on this distinct issue, this court must predict how the Florida Supreme Court would rule on the applicability of attorney client privilege to other insured claim file materials sought in effort to establish an insurance company’s general claims handling practices as those practices potentially relate to its statutory punitive damage liability.

Based on the analytical approach outlined in Ruiz, and the considerable relevance of other similarly situated insured claim files on the statutory punitive damage issue discussed infra, this court predicts that the Florida Supreme Court would interpret Ruiz to permit discovery of other insured claim file materials in the insurance bad faith context subject to the same limitations governing discoverability of the insured’s own claim file outlined in Ruiz.

Sounds reasonable, but I always find it amazing that there remain so many unresolved questions of Florida law, with new issues emerging pretty much every day.

Wagers, anyone, on Judge Hurley's prediction?

First I'd want to know the Judge's track record -- for instance, how'd he do on yesterday's game?