In a long awaited opinion, in Citizen Property Insurance Corporation v. Perdido Sun Condominium Association, Inc., 40 FLW S265 (Fla., May 14, 2015), the Florida Supreme Court held that Citizens was immune from first party statutory bad faith claims.
[A] statutory first party bad faith cause of action under 624.155(1)(b) is not an exception to the immunity granted to Citizens by the Legislature.
However, the Court left open two areas where Citizens remains vulnerable to a suit for extra-contractual damages.
First, the Court recognized that Citizens can be sued for committing a “willful tort.” The Court then noted that:
where a plaintiff claims a defendant engaged in egregious and outrageous actions, bad faith can be elevated to a willful tort, an issue that could turn on the facts of the case.
Second, although not mentioned in the opinion, in breach of insurance contract cases, consequential damages in excess of the insurance policy limits are recoverable. In Travelers Ins. Co. v. Wells, 633 So. 2d 457, 461 (Fla. 5th DCA 1993), the court held:
Appellants argue that damage for breach of an insurance contract is limited to paying the loss suffered by the should-have-been insured person, which would have been covered by the insurance policy, had it been issued. ***
Although that is normally the measure of damages for breach of an insurance contract, it is not exclusive. Consequential or resulting collateral damage may also be recovered if it can be sufficiently proved.
See also Carrousel Concessions, Inc. v. Florida Ins. Guar. Ass’n, 483 So. 2d 513, 516-17 (Fla. 3rd DCA 1986) (insurer liable for all damages naturally flowing from the breach, including consequential damages: “If the insurer breaches its duty to defend, it-like any other party who fails to perform its contractual obligations-becomes liable for all damages naturally flowing from the breach.”); Travelers Indemnity Co. v. Parkman, 300 So. 2d 284 (Fla. 4th DCA 1974); St. Paul Fire & Marine Insurance Co. v. Thomas, 273 So.2d 117 (Fla. 4th DCA), cert. denied, 282 So.2d 683 (Fla. 1973); Essex Builders Group, Inc. v. Amerisure Ins. Co., 485 F.Supp.2d 1302, 1306-08 (M.D. Fla. 2006) (applying Florida law); Martin v. Monarch Life Ins. Co., 1995 WL 127157 (M.D. Fla. 1995) (“Plaintiff is entitled to recover extra-contractual consequential damages if she can prove such damages were within the contemplation of the parties when the contract was formed.”) (applying Florida law).
Therefore, Citizens remains liable to its insureds for “consequential damages” naturally flowing from the breach. Although insurance companies routinely state that “consequential damages” are the same as bad faith damages. They are not. I have litigated this issue on numerous occasions, and I have yet to have a court hold that consequential damages are the same as, or are subsumed into, bad faith damages. So, although Citizens may be immune for statutory first party bad faith damages, it remains liable for consequential damages – just like any other party to any other contract.