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Florida Supreme Court - Boca Insurance Case from Wilma Could Set Precedent |
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Date: March 5, 2010
By Jordana Mishory
The case in dispute involves an $8.1 million federal verdict on by a Boca Raton
condominium association against Sydney, Australia-based QBE Insurance over its
handling of a claim after Hurricane Wilma in 2005.
QBE attorney Raoul Cantero III of White & Case in Miami argued that a trial court
decision allowing the association to dispute the insurer’s response time when it took
about 18 months to assess damages “jaundiced the jury’s view on the extent of the
damages.”
The dispute involves two claims simultaneously pursued by Chalfonte — breach of
contract and breach of implied obligation to act in good faith.
Cantero insisted a breach of good faith claim is the same thing as a bad faith claim. Like
a bad faith claim, he said Chalfonte’s breach of good faith claim should be addressed
after damages are assessed for breach of contract.
“It’s not a bad faith statute. It’s a lack of good faith statute,” said the former Florida
Supreme Court justice.
Chalfonte was “able to argue not just about how much is owed and how much the damages are, but that this case is
about ‘delay, delay, delay,’ and ‘delay and don’t pay,’ ” Cantero said.
Chalfonte’s attorney, Bruce Rogow, countered there was no reason to require a separate review of the issues, especially
because the condo association did not allege bad faith. Chalfonte paid for its repairs with loans while the case was
pending.
The case came before the justices when the 11th U.S. Circuit Court of Appeals certified five questions of state law to the
Florida court.
The biggest issue: Does Florida recognize a claim for breach of implied warranty of good faith and fair dealings? If so,
must the claim be brought after the fact like a bad-faith claim?
The justices did not seem convinced that lack of good faith and bad faith were separate issues.
Justice Charles Canady, who replaced Cantero on the court, said, “What I’m hearing is a distinction without a difference.”
Justice Barbara Pariente told Rogow that it’s “a little disingenuous” to say it’s not a bad faith claim but a lack of good faith
claim.
Chief Justice Peggy Quince questioned allowing a jury to hear the two claims simultaneously.
“You’re really tainting the damages portion under the breach of contract because of all the supposedly bad dealings that
the insurance company had with its insured,” Quince told Rogow. “That’s one of the reasons you shouldn’t bring these
claims together.”
In response, Rogow said: “I don’t want to buy into and accept the notion that this is quote ‘a bad faith claim.’ This is a little
different or a lot different than a bad faith claim.” Rogow, special counsel with Alters Law Firm in Fort
Lauderdale, argued the trial judge could exclude prejudicial arguments and evidence.
Justice R. Fred Lewis pondered whether combining the two issues into one case could be beneficial for the defendant
because it means “a lot of juicy bad stuff” could be blocked.
Cantero disagreed, saying it would be prejudicial. He argued excluding bad faith from the Chalfonte trial would have
produced a lower award.
The justices also were asked whether an insurer’s hurricane deductible provision was void if the contract doesn’t comply
with type-size and language requirements. U.S. District Judge Donald Middlebrooks in West Palm Beach reduced the
jury award to $7.2 million, in part to factor in the deductible.
Cantero argued QBE substantially complied with the statute by having the deductible language in bold type even if it
wasn’t in the required 18-point size.
“There are some 18-point fonts smaller than 16-point fonts,” he said, suggesting a policyholder could take the issue up
with regulators.
Chalfonte claims the law has no meaning if the deductible isn’t at risk for noncompliance. Chalfonte also wants to hold
QBE to another section of the policy requiring the company to pay within 30 days of a final judgment.
Cantero argued once you pay a final judgment, it’s “extremely difficult if not impossible to get back. A judgment is not final
until appeals are exhausted.”
Rogow countered QBE “certainly could have written it a different way.”
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