Supreme Court Confirms Citizens Bad Faith Immunity
The Florida Supreme Court has concluded that Citizens Property Insurance Corporation is not liable under section 624.155 for statutory first-party bad faith actions. The court in Citizens Property Insurance Corporation v. Perdido Sun Condominium Association, Case No. SC14-185, reasoned that the Florida legislature gave Citizens broad immunity from legal actions, with limited exceptions. Statutory bad faith actions are not among the listed exceptions, meaning that Citizens’ general immunity applies.
The case arose when Perdido Sun prevailed in a breach of contract claim against Citizens arising from damage it sustained in Hurricane Ivan in 2004. After its victory on the contract claim, Perdido Sun sued Citizens under section 624.155 for its bad faith refusal to settle. Citizens moved to dismiss the action, claiming that section 627.351(6)(s)1. gives it immunity from bad faith suits. The statute provides that Citizens is immune from liability for actions taken in the performance of its duties, with limited exceptions. Among the exceptions, Citizens remains liable for “willful torts.”
The trial court agreed with Citizens, but the appellate court reversed and held that Citizens could be liable in a bad faith action because Citizens’ statutory immunity does not extend to the willful tort of failing to settle when it reasonably should have. However, in reaching this conclusion, the appellate court also certified the question to the Florida Supreme Court.
The Florida Supreme Court disagreed with the appellate court and found that Citizens indeed is immune from statutory bad faith actions. The Supreme Court reasoned that if the legislature intended for statutory bad faith actions to constitute an exception to Citizens’ broad immunity from liability it would have specifically said so. The Supreme Court was not persuaded that the legislature meant for the general reference to “willful torts” to encompass actions under section 624.155 when there are other examples of the legislature’s specifically referring to section 624.155 when it means to do so.
Perdido Sun’s lawyers argued that granting Citizens immunity from bad faith suits is poor public policy because it results in Citizens’ having no incentive to timely settle claims. Citizens’ lawyers countered that given Citizens’ unique role in the market, exposing it to bad faith claims only reduces the claims-paying resources that are available to other policyholders. Ultimately, however, the Supreme Court noted that its role is not to decide upon the best policy position for the state but instead to construe the Citizens statute as written. In doing so, the Supreme Court found that statutory bad faith claims are not an exception of the broad immunity afforded to Citizens under section 627.351.