Disciplined in Sophisticated Defense and Insurance Litigation

August 16, 2018 | Blog Post| Not so Fast! The Confession of Judgment Doctrine in Dispute-Over-Amount Cases

Florida law allows an insured to recover attorney’s fees if the insured prevails in a lawsuit against the insurer for insurance benefits.  See § 627.428, Florida Statutes. The plain text of the statute requires a “judgment” against the insurer.  In Wollard v. Lloyd's & Companies of Lloyd's, 439 So. 2d 217 (Fla. 1983), however, the Florida Supreme Court held that an insurer’s post-suit payment of a claim may be the “functional equivalent of a confession of judgment or a verdict in favor of the insured”, thus, triggering the fee-shifting statute. 

This, predictably, led to a “rush to the courthouse.” Insureds and their attorneys would (and do) file lawsuits for the sole purpose of making a claim for attorney’s fees. Courts, in turn, pushed back against claims for attorney’s fees when the lawsuit was not necessary to force the insurer to adjust or pay the claim. In Hill v. State Farm Florida Ins. Co., 35 So. 3d 956 (Fla. 2d DCA 2010), the Second District Court of Appeal explained:

The law does not provide any general mechanism to impose attorneys' fees against one party or the other merely because the negotiation process is difficult. It is only when the claims adjusting process breaks down and the parties are no longer working to resolve the claim within the contract, but are actually taking steps that breach the contract, that the insured may be entitled to an award fees under section 627.428.

Fast forward to the Florida Supreme Court’s opinion in Johnson v. Omega Ins. Co., 200 So. 3d 1207 (Fla. 2016). That case involved a claim for attorney’s fees following a post-suit payment of a denied sinkhole claim.  In Johnson, the Supreme Court held that “an incorrect denial of benefits, followed by a judgment or its equivalent of payment in favor of the insured, is sufficient for an insured to recover attorney's fees.” The Court explained it is the “incorrect denial” not some “sinister concept of wrongfulness” that triggers entitlement to attorney’s fees.  Based on Johnson, some attorneys have begun to argue that attorney’s fees must be awarded under § 627.428 in every case where the insurer makes a post-suit payment. Recently, two courts have rejected that argument and the reliance on Johnson.

Goldman v. United Services Auto. Ass'n, 244 So. 3d 310 (Fla. 4th DCA 2018), involved a property insurance claim for a plumbing line leak.  The insurer investigated the claim and made payment.  Without informing the insurer that they disputed the amount of the payment, the insureds sued for breach of contract. The insurer immediately moved to compel appraisal under the insurance policy. When the appraisal came back, the insurer timely paid it. The trial court then granted summary judgment to the insurer.

On appeal, the insureds spent “nearly eight pages of their briefing discussing” Johnson. The Fourth District Court of Appeal rejected the insureds’ reliance on Johnson

In Johnson, the insurer denied the homeowner's claim in its entirety, leaving the homeowner with few options other than a lawsuit. Here, the insurer valued the loss and paid the claim based on that valuation. The homeowners did not object. Until the filing of the complaint, the insurer was unaware of a disagreement with the damage valuation. Once informed, the insurer demanded appraisal and paid the appraisal.

The Fourth District in Goldman relied largely on Hill. The Fourth District affirmed the denial of attorney’s fees based on the trial court’s finding that “the exact reason the lawsuit was filed” was to “obtain attorneys’ fees for the usual efforts in negotiating an insurance claim.” 

J.P.F.D. Inv. Corp. v. United Specialty Ins. Co., 617CV1415ORL40GJK, 2018 WL 3640829 (M.D. Fla. Aug. 1, 2018) also involved a property insurance claim for water damage. Based on a continuing disagreement, the insurer invoked appraisal under the insurance policy.  A week later, the insured served the insurer with a lawsuit it had filed a week or two prior. The court directed the parties to move forward with the appraisal.  The insurer timely paid the appraisal award. The insured then filed a motion asking the court to award attorney’s fees under § 627.428. The court denied the motion.

The court distinguished Johnson because Johnson involved a “denial of coverage.”  In J.P.F.D. Inv. Corp., the insurer did not deny coverage. Instead, it hired an appraiser before the complaint was filed and formally demanded appraisal prior to being served with the complaint.  Under these facts, the court concluded that awarding attorney fees “would not be consistent with the purpose of Section 627.428.” The court noted that “Courts have recognized that confirmation of an appraisal award and an award of attorneys' fees are not appropriate if the insurer was taking steps to resolve the dispute without court intervention.”

Goldman and J.P.F.D. Inv. Corp. confirm that cases like Hill remain good law, even after Johnson. The courts in Goldman and J.P.F.D. Inv. Corp. appear to limit Johnson to denials of coverage as opposed to disputes over the amount of a loss. With the onslaught of insurance litigation in Florida following Hurricane Irma courts undoubtedly will be presented with claims for attorney’s fees in dispute-over-amount cases where the insurer did not deny coverage. Goldman and J.P.F.D. Inv. Corp. will help push back against those claims where the insurer was working to resolve the claim or did not know of a dispute before the insured filed suit.

A profile photo of Matthew J. LaviskyMatthew J. Lavisky

A Partner at Butler Weihmuller Katz Craig LLP, in Tampa, FL. Matthew practices in our Extra-Contractual  and First-Party Coverage department.

June 04, 2020 Blog PostButler's Thursday Tips #7 | Civil Remedy Notices

Join us for this week's Thursday Tip as Partner James Shaw, Jr. discusses Civil Remedy Notices.

Read More »
May 21, 2020 Blog PostCan a Post-Suit Civil Remedy Notice Trigger Removal to Federal Court?

Can an insured’s post-suit Civil Remedy Notice demanding over $75,000 satisfy the amount-in-controversy diversity jurisdiction requirement and trigger the thirty-day removal period for an insurer? It depends...

Read More »

Florida courts continue to refine the roles and limitations of appraisers in Florida property claims.  Florida’s Fifth District Court of Appeal recently held that a public adjuster cannot serve as a disinterested appraiser where the public adjuster is retained on a contingency fee basis...

Read More »
August 13, 2019 Blog PostThe Evolving Limitations on Appraisers in Florida: Analyzing State Farm Florida Ins. Co. v. Sanders

Appraisers are frequently involved in Florida property claims.  Accordingly, Florida courts continue to refine the roles and limitations with respect to appraisers and the appraisal process as a whole...

Read More »

Recently, Florida’s First District Court of Appeal held that for purposes of determining the timeliness of a proposal for settlement, the complaint is considered served on the insurer when process is served upon the statutory agent, Florida’s Chief Financial Officer, and not when process is forwarded by the Chief Financial Officer to the insurer.  Markovits v. State Farm Mutual Automobile Ins. Co., 235 So. 3d 1018 (Fla. 1st DCA 2018) rehr’g denied (Feb. 5, 2018).

Read More »
February 21, 2019 Blog PostNot Off the Hook...Trouble in Paradise for Puerto Rico Insurers

Recent legislative and judicial developments in Puerto Rico may very well have revived thousands of claims that insurers believed to be time-barred, per the terms of the Suit Against Us provisions of their Policies. Until the February 14, 2019, ruling issued by a San Juan court, residential property damage claims that had not escalated to suit within a year of the date of loss, had been considered time-barred. It would seem that it may not be the case anymore, and insurers should be prepared for a potential flurry of new litigation, even involving prior Hurricane Irma and Maria claims.

Read More »
January 14, 2019 Blog PostChecking the Vitals of Hospital Liens

Claims adjusters, plaintiffs’ attorneys and defense attorneys all deal with the headaches of hospital liens.  And recent case law and inconsistent recording of liens by clerks in different counties makes matters worse.

Read More »
January 22, 2018 Blog PostButler Wins Dismissal of a First-Party Bad Faith Claim Involving a Civil Remedy Notice That Listed a Different Household Policy

In Florida, an insured cannot bring a first-party bad faith claim based on a claim for UM coverage unless the insured first files a Civil Remedy Notice (CRN) with the Florida Department of Financial Services. In Mathurin v. State Farm, Butler recently vindicated the importance of this step by winning a dismissal of a first-party bad faith action where the CRN did not match up with the Complaint.  

Read More »
March 07, 2017 Blog PostFederal Diversity Jurisdiction: Proving Citizenship of Limited Liability Companies

Jurisdiction gives a federal court the power to hear a case. Jurisdiction matters at the outset of a lawsuit. It matters during discovery. It even matters after summary judgment. Jurisdiction matters because federal courts are courts of limited jurisdiction.

Read More »
April 01, 2016 Blog PostSouthern District Applies Fridman v. Safeco to Preclude Bifurcation

However, the Levesque case points out the down-side of GEICO’s strategy to preclude the jury in the UIM case from determining the insured’s full damages.  If the insured is precluded from proving its damages in the UIM case, it must necessarily be entitled to prove them in the subsequent bad faith case.

Read More »
March 31, 2016 Blog PostInsured is Entitled to a Determination of Liability and Damages in a UIM Case Despite the Insurer's Confession of Judgment

Ultimately, the Supreme Court held that the trial court was correct (disagreeing with the intermediate court’s decision to the contrary).

Read More »
June 02, 2015 Blog PostThe Florida Supreme Court Endorses Citizens' Immunity

The high court declared that Citizens is shielded from statutory bad-faith suits, and that bad faith is not a “willful tort,” which is a statutory exception to the immunity granted by the Florida Legislature.  The vindication was a long time coming for Citizens.  The Legislature created Citizens with a broad immunity that seemed clearly intended to shield it from bad-faith actions...

Read More »
February 10, 2015 Blog PostDoes Florida's statutory duty to disclose insurance information apply to out-of-state policies?

One of the most common questions I get from insurers of out-of-state policyholders is whether they are required to honor a Florida claimant’s request for disclosure of insurance information under Florida Statute 627.4137. If the applicable policy was not delivered in Florida or issued for delivery in Florida, the short answer is “No.” Nonetheless, sometimes an insurer can best protect both its insured and itself by voluntarily providing at least some of the information outlined in the statute.

Read More »
January 20, 2015 Blog PostThe Season of Giving: Pennsylvania Supreme Court Finds Bad Faith Claims to be Assignable

Rejecting the holdings of two recent decisions by the Eastern District of Pennsylvania, the Supreme Court of Pennsylvania held in a 5-to-1 ruling that claims under Pennsylvania’s Bad Faith Statute (42 Pa.C.S. § 8371) are assignable to injured third parties. The decision, Allstate Prop. & Cas. Ins. Co. v. Wolfe, 2014 Pa. LEXIS 3309 (Pa. Dec. 15, 2014), considered the case of Jared Wolfe, who was injured in a car accident after being struck by Karl Zierle’s vehicle. 

Read More »
August 26, 2014 Blog PostBad Faith: Turns Out, Abnormal in Alabama Really Is Normal

A few years ago, I published an article that questioned whether Alabama’s tort of bad faith was becoming more prevalent on a theory referred to by Alabama courts as an “abnormal bad faith” action. See, “Is Abnormal Becoming the New Normal in Alabama?” Mealey’s Litigation Report: Insurance Bad Faith, Vol. 22, #20 (February 26, 2009).

Read More »

Key Points