Name: Lime Bay Condominium Inc. v. State Farm Florida Insurance Co.
Date: September 15, 2012
Court: Court of Appeals of Florida, Fourth District
Citation: 2012 Fla. App. LEXIS 13563; 37 Fla. L. Weekly D 1965
Factual Summary:
Lime Bay had an insurance policy from State Farm and filed a claim after suffering property damage during Hurricane Wilma. State Farm concluded that the property suffered damage in the amount of $281,731.46 and paid Lime Bay $6,940.46, which represented the amount remaining after the deductible. Lime Bay disagreed with State Farm’s determination and retained its own experts who estimated that Lime Bay would incur $1.4 million in repairing the property, mostly due to roof damage. Lime Bay filed a Civil Remedy Notice of Insurer Violation with the Florida Department of Financial Services, alleging that State Farm acted in bad faith in handling its claim. State Farm denied Lime Bay’s allegations. Lime Bay then filed a complaint for breach of contract against State Farm.
Two years later, the parties engaged in the appraisal process, resulting in an appraisal award in the amount of $1,051,251.41. The breach of contract case was abated during the appraisal process. State Farm paid the appraisal award to Lime Bay. Based on these events, Lime Bay alleged that State Farm acted in bad faith and alleged numerous violations of the bad faith statute. State Farm filed a motion to dismiss the bad faith complaint, arguing that there had not yet been a final determination of liability and maintaining that it intended to dispute liability in the breach of contract case. The trial court agreed with State Farm and dismissed the bad faith complaint.
Legal Holding:
The court dismissed the bad faith complaint. When a plaintiff cannot allege that there has been a final determination of both the insurer’s liability and the amount of damages owed by the insurer, the plaintiff’s bad faith claim is premature and should be either dismissed without prejudice or abated.
Lime Bay could not allege that there had been a final determination of liability since the breach of contract case was still pending. The court held that an insured’s bad faith claim does not accrue “before the conclusion of the underlying litigation for the contractual . . . insurance benefits”. The trial court must first resolve the issue of State Farm’s liability for breach of contract and the appraisal award.
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