DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

HERSHEL BRYANT and BETTY BRYANT,

Appellants,

v.

GEOVERA SPECIALTY INSURANCE COMPANY,

Appellee.

No. 4D18-189

[ May 8, 2019 ]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit, 

Broward County; Jeffrey R. Levenson, Judge; L.T. Case No. CACE14-

022553.

David P. Pakula of David P. Pakula, P.A., Pembroke Pines, and David 

A. Neblett and James M. Mahaffey of Perry & Neblett, P.A., Miami, for 

appellants.

Maureen G. Pearcy and Andrew E. Grigsby of Hinshaw & Culbertson 

LLP, Coral Gables, for appellee.

TAYLOR, J.

The insureds, Hershel and Betty Bryant, appeal a final summary 

judgment in favor of GeoVera Specialty Insurance Company (“GeoVera”) in 

the insureds’ suit for breach of contract and bad faith. The trial court 

ruled that the insurance company complied with the homeowner’s 

insurance policy, as a matter of law, by asserting coverage defenses presuit and paying an appraisal award during suit. We reverse, because the 

insurance company’s post-suit payment of the appraisal award 

constituted a confession that it incorrectly denied benefits by erroneously 

invoking the $1,000 leakage sublimit in its formal response to the claim 

before the lawsuit. We also reverse summary judgment as to the insureds’ 

bad faith claim. Genuine issues of material fact remain.

I. Facts

A. The Policy
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In February 2014, the insureds purchased a surplus lines homeowner’s 

insurance policy from GeoVera with a policy term of 12 months. The policy 

requires the insureds to provide GeoVera with a sworn proof of loss within 

60 days of GeoVera’s request. The policy conditions further provide: “No 

action can be brought against us [GeoVera] unless there has been full 

compliance with all of the terms under Section I of this policy.” The policy 

also contains an appraisal clause that allows either party to demand an 

appraisal of the loss “[i]f you and we fail to agree on the amount of the 

loss.” The policy’s loss-payment provision states that loss is payable “60 

days after we receive your proof of loss” and there is either “an agreement 

with you,” “an entry of a final judgment,” or “a filing of an appraisal award 

with us.”

A policy endorsement contains a combined $5,000 sublimit for smog, 

rust, mold, rot, or bacteria coverage and a combined $1,000 sublimit for a 

covered loss caused by water seepage or leakage that occurs over a period 

of 14 days or more.

B. The Loss

On April 28, 2014, a pipe leak in the insureds’ residence resulted in 

damage to their home. The insureds hired a company to perform 

emergency water-remediation services at a cost of $6,600. The insureds 

reported the loss to GeoVera on May 13, 2014. On May 15, 2014, 

GeoVera’s adjuster inspected the property and issued a repair estimate of 

$21,372.31, allocating $3,597.11 as subject to the ensuing water loss 

endorsement and $17,775.20 as subject to the mold endorsement.

On May 16, 2014, GeoVera requested a sworn proof of loss. The 

insureds did not provide a sworn proof of loss within 60 days of the 

request.

However, on June 19, 2014, before the 60 days for providing the proof 

of loss had expired, GeoVera sent the insureds a formal response to their 

claim. In the letter, GeoVera stated that the policy provided “limited 

coverage for the ensuing water and rot/rust/mold damages.” GeoVera 

stated that, based on its inspection of the damages, it had determined that 

the water leakage had been ongoing for 14 days or more. GeoVera asserted 

that coverage was limited to the $1,000 sublimit for water leakage and the 

$5,000 sublimit for mold, rust, and rot damages. Accordingly, GeoVera 

issued payment in the amount of $6,000. GeoVera also stated: “Unless 

additional information is provided to us and we notify you that we are 

agreeing to reopen your claims and consider the matter further, you 
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should treat this correspondence as being our formal notification to you of 

our position.” The letter was copied to the insureds’ public adjuster.

On June 20, 2014, the insureds’ public adjuster conducted its own 

inspection of the property and issued a repair estimate of $44,731.49. 

However, there is no record evidence as to whether this estimate was 

submitted to GeoVera before the insureds filed suit.

C. The Pleadings

In November 2014, the insureds filed suit against GeoVera. They later 

filed a Verified Amended Complaint, asserting three counts: (1) breach of 

contract; (2) petition for appraisal; and (3) statutory bad faith in violation 

of section 624.155, Florida Statutes.

On the same day they filed their amended complaint, the insureds 

provided GeoVera with a sworn proof of loss.

GeoVera answered the amended complaint and asserted affirmative 

defenses, including the defense that coverage was limited to the $1,000 

water leakage sublimit and the $5,000 mold sublimit. In its answer, 

GeoVera denied the insureds’ allegation that the public adjuster 

demanded an appraisal, but admitted the insureds’ allegation that 

“[GeoVera] refused to begin the appraisal process, notwithstanding the 

language of the subject policy.” GeoVera also admitted that a sworn proof 

of loss had been filed, but denied that it was timely.

D. Agreed Order Staying Counts I and II and Abating Count III

GeoVera moved to stay Counts I and II and to abate Count III. The trial 

court entered an agreed order on the motion, directing that: (1) the parties 

were to comply with the policy’s appraisal provision; (2) the appraisal 

award would include an itemization of any damages coming within the 

leakage sublimit, any damages coming within the mold sublimit, and any 

covered damages that did not fall within those sublimits; (3) Counts I and 

II would be stayed until the appraisal award had been issued and GeoVera 

had sufficient time to pay the award; and (4) Count III would be abated 

until Counts I and II had been adjudicated.

E. The Appraisal

The appraisal award was issued in January 2016. It itemized the 

damages as follows: $30,963.62 for “dwelling,” $14,477.99 for “mold,” and 

$6,600 for “EMS.” The appraisal award did not identify any damages as 
4

being subject to the $1,000 leakage sublimit. Nonetheless, GeoVera could 

have continued to litigate the coverage issue of whether the $1,000 leakage 

sublimit applied to the loss. See Johnson v. Nationwide Mut. Ins. Co., 828 

So. 2d 1021, 1025 (Fla. 2002) (holding that coverage issues are to be 

“judicially determined by the court” and are “not subject to a 

determination by appraisers”).

Instead, in February 2016, GeoVera paid $29,963.62 to the insureds 

and $6,600 to the water mitigation company. The total amount paid 

represented the balance due under the appraisal award after taking into 

account the $6,000 prior payment and the $5,000 sublimit for mold.

F. The Lifting of the Stay 

In March 2017, over a year after the appraisal award, the insureds 

moved to lift the stay and the trial court granted the motion.

G. Summary Judgment Proceedings and Final Judgment

GeoVera then moved for summary judgment, arguing that it was not 

liable for breach of contract or bad faith because: (1) the insureds never 

disputed GeoVera’s adjustment of the loss pre-suit, either with regard to 

the coverage sublimits or the amount of the loss; (2) the insureds failed to 

comply with GeoVera’s demand for a sworn proof of loss; and (3) GeoVera 

acted in good faith by participating in the appraisal process and timely 

paying the appraisal award. In support of its motion, GeoVera submitted 

the affidavit of one of its managers, who attested that “[n]o estimate or 

sworn proof of loss was received.” The insureds filed a response in 

opposition to summary judgment.

The trial court granted the motion for summary judgment, ruling that 

there was no evidence the insureds had disputed GeoVera’s adjustment of 

the loss pre-suit. However, the trial court allowed the insureds to file a 

motion for rehearing to provide additional evidence showing that their 

public adjuster had disputed GeoVera’s adjustment of the claim.

After the trial court entered final summary judgment, the insureds 

moved for rehearing, arguing that there were genuine issues of material 

fact remaining. They filed the affidavits of their public adjuster and Ms. 

Bryant.

The insureds filed a notice of appeal. We stayed the appeal pending a 

ruling on the motion for rehearing. The trial court denied the motion for 

rehearing, allowing this appeal to proceed.
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II. Arguments and Analysis

A. Parties’ Arguments

On appeal, the insureds argue that the trial court reversibly erred in 

concluding that GeoVera complied with the insurance policy as a matter 

of law. The insureds contend that GeoVera’s payment of the appraisal 

award constituted a confession that it breached the policy by erroneously 

invoking the $1,000 leakage sublimit. Furthermore, the insureds argue 

that GeoVera’s payment of $1,000 towards the water loss and its denial of 

coverage above that amount constituted a waiver of the proof-of-loss 

requirement. Similarly, the insureds maintain that GeoVera’s notification 

that it was limiting the coverage on the water loss to $1,000 constituted 

an anticipatory breach of contract, giving rise to an immediate right to sue 

and rendering it unnecessary for the insureds to contest GeoVera’s 

erroneous position before filing suit. Finally, the insureds argue that 

GeoVera’s confession of judgment entitles them to an award of attorney’s 

fees and also serves as the necessary predicate to allow their bad faith 

claim to proceed.

GeoVera responds that the trial court correctly entered summary 

judgment in its favor, arguing that: (1) GeoVera’s payment of the appraisal 

award was pursuant to the policy and cannot constitute a breach of 

contract or a confession of judgment where the insureds prematurely filed 

suit before they complied with their post-loss duty to provide a sworn proof 

of loss; (2) GeoVera’s pre-suit application of the policy sublimits did not 

establish a breach or an anticipatory breach where the insureds “never 

disputed the payment” pre-suit; (3) GeoVera’s pre-suit payment of the 

policy sublimits did not constitute a waiver of the proof-of-loss

requirement; and (4) summary judgment was proper on the bad faith 

count because GeoVera complied with the terms of the insurance contract 

by participating in the appraisal process and paying in a timely manner.

B. Standard of Review

A summary judgment is reviewed de novo. Haber v. Deutsche Bank 

Nat’l Tr. Co., 81 So. 3d 565, 566 (Fla. 4th DCA 2012).

C. Whether GeoVera’s Post-Suit Payment was a Confession of Judgment

The first issue we address is whether GeoVera’s payment of the 

appraisal award constituted a confession that it breached the policy by 

applying the $1,000 leakage sublimit in its formal response to the claim.
6

“[I]t is well settled that the payment of a previously denied claim 

following the initiation of an action for recovery, but prior to the issuance 

of a final judgment, constitutes the functional equivalent of a confession 

of judgment.” Johnson v. Omega Ins. Co., 200 So. 3d 1207, 1215 (Fla. 

2016). The confession-of-judgment doctrine “applies where the insurer 

has denied benefits the insured was entitled to, forcing the insured to file 

suit, resulting in the insurer’s change of heart and payment before 

judgment.” State Farm Fla. Ins. Co. v. Lorenzo, 969 So. 2d 393, 397 (Fla. 

5th DCA 2007).

The confession-of-judgment doctrine is limited to situations where the 

filing of the lawsuit “acted as a necessary catalyst to resolve the dispute 

and force the insurer to satisfy its obligations under the insurance 

contract.” See, e.g., State Farm Fla. Ins. Co. v. Lime Bay Condo., Inc., 187 

So. 3d 932, 935 (Fla. 4th DCA 2016). However, “[i]t is the incorrect denial 

of benefits, not the presence of some sinister concept of ‘wrongfulness,’ 

that generates the basic entitlement to the fees if such denial is incorrect.” 

Ivey v. Allstate Ins. Co., 774 So. 2d 679, 684 (Fla. 2000). Thus, “an 

incorrect denial of benefits, followed by a judgment or its equivalent of 

payment in favor of the insured, is sufficient” to constitute a confession of 

judgment and to allow the insured to recover attorney’s fees.1 Johnson, 

200 So. 3d at 1219.

An attorney’s fees award is also appropriate “where, following some 

dispute as to the amount owed by the insurer, the insured files suit and, 

thereafter, the insurer invokes its right to an appraisal and, as a 

consequence of the appraisal, the insured recovers substantial additional 

sums.” Lewis v. Universal Prop. & Cas. Ins. Co., 13 So. 3d 1079, 1081 (Fla. 

4th DCA 2009).

1 Most of the cases addressing the confession-of-judgment doctrine involved the 

application of section 627.428, Florida Statutes. As a surplus lines carrier, 

however, GeoVera is exempt from the provisions of Chapter 627, including 

section 627.428, Florida Statutes. See § 626.913(4), Fla. Stat. (2014) (providing 

that “[e]xcept as may be specifically stated to apply to surplus lines insurers, the 

provisions of chapter 627 do not apply to surplus lines insurance”). Nonetheless, 

surplus lines carriers are subject to an attorney’s fees statute that is nearly 

identical to section 627.428. See § 626.9373, Fla. Stat. (2014). Because section 

626.9373 is patterned after section 627.428, the confession-of-judgment doctrine 

applicable to section 627.428 applies equally to section 626.9373. See Capitol 

Specialty Ins. Corp. v. Ortiz, No. 17-23329-Civ-SCOLA/TORRES, 2019 WL 

383868, at *3 (S.D. Fla. Jan. 15, 2019) (explaining that sections 627.428 and 

626.9373 “are nearly identical” and that “courts apply the two fee provisions in 

the same way”).
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Even after Johnson, not all post-suit payments by an insurer will 

constitute a confession of judgment. We recently held that where an 

insurer valued a loss, issued payment, and was unaware of the insured’s 

disagreement with the damage valuation until the filing of the complaint, 

the insurer’s timely payment of an appraisal award during the litigation 

did not constitute a confession that the insurer breached the insurance 

policy. See Goldman v. United Servs. Auto. Ass’n, 244 So. 3d 310, 311–12 

(Fla. 4th DCA 2018).

In Goldman, we explained that “[t]here was never a breakdown in the 

claims adjusting or communications process, nor was there a refusal to 

pay the claim.” Id. at 311. Furthermore, we characterized the situation 

as one where “the insured never gave the insurer the opportunity to 

incorrectly deny the benefits before filing a lawsuit.” Id. at 312.

The present case is more like Johnson than Goldman. Here, although 

GeoVera did not completely deny coverage for the loss, GeoVera did deny 

coverage above the $1,000 leakage sublimit and the $5,000 mold sublimit. 

GeoVera’s formal response to the claim was not merely a valuation of the 

loss—it was a partial denial of coverage.

Before the lawsuit, GeoVera knew that the water-loss damages other 

than mold were at least $10,000,2 but GeoVera’s response was a refusal 

to pay part of the claim due to a coverage issue. While Johnson involved 

a total denial of coverage, we conclude that an incorrect partial denial of 

benefits also suffices to give rise to a confession of judgment. See Ivey, 

774 So. 2d at 684 (holding that insurer’s payment after suit was filed 

operated as a confession of judgment where the insurer incorrectly 

reduced benefits before suit based on its erroneous assumption that 

treatment covered only one of two injuries).

Under Johnson, “[o]nce an insurer has incorrectly denied benefits and 

the policyholder files an action in dispute of that denial, the insurer cannot 

then abandon its position without repercussion.” 200 So. 3d at 1218. 

Here, the insurer’s payment of the appraisal award of $37,563.62 

demonstrated that GeoVera had abandoned its pre-suit coverage position 

that the claim was subject to the $1,000 sublimit for long-term water 

leakage.

In this case, unlike in Goldman, GeoVera’s response to the claim 

invoked coverage defenses. And there was a pre-suit refusal by the insurer 

2 This $10,000 figure consists of the $6,600 water-remediation bill plus the 

$3,597.11 repair estimate by GeoVera’s adjuster for the ensuing water loss.
8

to pay a portion of the claim—that is, any amount of water damage (aside 

from mold) that exceeded the $1,000 leakage sublimit. By invoking the 

$1,000 leakage sublimit, GeoVera raised a coverage issue that only a court 

could resolve. This coverage issue went beyond a mere dispute about the 

valuation of the loss, so the insureds could not have simply invoked the 

policy’s appraisal provision before filing suit.

Because GeoVera invoked the $1,000 leakage sublimit to deny coverage 

for a portion of the claim, it was of no consequence whether the insureds 

notified GeoVera pre-suit that they were disputing GeoVera’s coverage 

position or damage valuation. Once GeoVera incorrectly invoked the 

$1,000 leakage sublimit and notified the insureds that it would not pay 

any non-mold-related water damage above that amount, GeoVera 

committed an anticipatory breach of the policy and created an immediate 

right of action for the insureds, even though GeoVera’s repudiation took 

place before the time prescribed for the promised performance under the 

policy’s loss-payment provision.3 See Peachtree Cas. Ins. Co. v. Walden, 

759 So. 2d 7, 8 (Fla. 5th DCA 2000) (holding that an insurer’s notice that 

it would no longer pay benefits constituted an anticipatory breach of its 

agreement to provide those benefits).

In short, GeoVera’s payment of the appraisal award constituted a 

confession that it incorrectly denied benefits by erroneously invoking the 

$1,000 leakage sublimit in its formal response to the claim before the 

lawsuit.

D. Whether GeoVera Waived the Proof-of-Loss Requirement

The next issue we address is whether GeoVera waived the proof-of-loss 

requirement by its payment of the policy sublimits and its denial of 

coverage above those amounts.

A policy provision requiring an insured to submit a sworn proof of loss 

is a condition precedent to a suit against an insurer. Soronson v. State 

Farm Fla. Ins. Co., 96 So. 3d 949, 952 (Fla. 4th DCA 2012). But where an 

insurer’s “denial of liability is based upon grounds other than failure to 

furnish a notice or proof of loss, such denial is tantamount to a waiver of 

the policy requirements.” Keel v. Indep. Life & Acc. Ins. Co., 99 So. 2d 225, 

227 (Fla. 1957). “When the insurer denies in advance that it has any 

liability under the policy coverage, the formal filing of a proof of loss 

3 In light of this conclusion, we need not reach the insureds’ alternative argument 

that the affidavits they filed on rehearing created a genuine issue of material fact 

as to whether they contested GeoVera’s adjustment of the claim pre-suit.
9

becomes, in the eyes of the law, a useless and unnecessary thing that 

would accomplish nothing.” Id. Thus, the effect of an insurer’s improper 

repudiation of coverage is “to waive any right to insist upon the insureds’ 

necessarily-thus-futile compliance” with policy conditions. Wegener v. Int’l 

Bankers Ins. Co., 494 So. 2d 259, 259 (Fla. 3d DCA 1986).

In this case, GeoVera’s denial of liability above the sublimits was “based 

upon grounds other than failure to furnish a notice or proof of loss,” which 

is tantamount to a waiver of a formal proof of loss. Keel, 99 So. 2d at 227. 

Although Keel involved a complete denial of coverage, we conclude that its 

reasoning applies equally to the partial denial of coverage in this case.

Once GeoVera denied in advance that it had any liability above the 

policy sublimits, “the formal filing of a proof of loss [became], in the eyes 

of the law, a useless and unnecessary thing that would accomplish 

nothing.” Id. Here, a sworn proof of loss would have done nothing to 

resolve the coverage issues raised in GeoVera’s formal response to the 

claim—for example, it would not have resolved whether the water leakage 

had been occurring for more than 14 days so as to trigger application of 

the $1,000 leakage sublimit.

Moreover, because GeoVera had raised coverage defenses, the insureds 

had no right to demand an appraisal under the policy until the coverage 

issues had been resolved.4 See Citizens Prop. Ins. Corp. v. Demetrescu, 137 

So. 3d 500, 502–03 (Fla. 4th DCA 2014) (holding that insureds could not 

compel an appraisal until all underlying coverage disputes had been 

resolved); see also Johnson v. Nationwide Mut. Ins. Co., 828 So. 2d 1021, 

1025 (Fla. 2002) (holding that coverage issues are to be “judicially 

determined by the court” and are “not subject to a determination by 

appraisers”). Under the circumstances here, a sworn proof of loss would 

have been a useless act.

We conclude that GeoVera waived the proof-of-loss requirement by

denying coverage above the sublimits based upon grounds other than the 

insureds’ failure to furnish a notice or proof of loss. We need not decide 

whether GeoVera waived the proof-of-loss requirement for the additional 

4 The only reason the claim eventually proceeded to appraisal here was because 

the parties agreed to a line-item appraisal during the litigation to assist in 

resolving the coverage dispute. However, the coverage questions ultimately 

would have been questions for the court—not the appraisers.
10

reason that it admitted liability in some amount when it paid the coverage 

sublimits.5

E. Whether Summary Judgment was Proper on the Bad Faith Count

Finally, we address whether summary judgment was proper on the bad 

faith count.

“[A] claim for bad faith pursuant to section 624.155(1)(b)1 is founded 

upon the obligation of the insurer to pay when all conditions under the 

policy would require an insurer exercising good faith and fair dealing 

towards its insured to pay.” Vest v. Travelers Ins. Co., 753 So. 2d 1270, 

1275 (Fla. 2000). “A duty of good faith must relate to the performance of 

an express term of the contract and is not an abstract and independent 

term of a contract which may be asserted as a source of breach when all 

other terms have been performed pursuant to the contract requirements.” 

QBE Ins. Corp. v. Chalfonte Condo. Apartment Ass’n, Inc., 94 So. 3d 541, 

548 (Fla. 2012) (internal quotation marks omitted). The obligation of good 

faith “on the part of an insurer requires the insurer to timely evaluate and 

pay benefits owed on the insurance policy.” Vest, 753 So. 2d at 1275.

“It is well settled that a statutory first-party bad faith action is 

premature until two conditions have been satisfied: (1) the insurer raises 

no defense which would defeat coverage, or any such defense has been 

adjudicated adversely to the insurer; and, (2) the actual extent of the 

insured’s loss must have been determined.” Trafalgar at Greenacres, Ltd. 

v. Zurich Am. Ins. Co., 100 So. 3d 1155, 1157 (Fla. 4th DCA 2012). “[A]n 

insurer’s liability for coverage and the extent of damages, and not an 

insurer’s liability for breach of contract, must be determined before a bad 

5 In a long line of cases, Florida courts have held that an insurer waives the 

requirement of a formal proof of loss when it admits liability in some amount. 

See Bear v. N.J. Ins. Co., 189 So. 252, 252 (Fla. 1939); Cincinnati Ins. Co. v. 

Palmer, 297 So. 2d 96, 98 (Fla. 4th DCA 1974); English & Am. Ins. Co. v. Swain 

Groves, Inc., 218 So. 2d 453, 457 (Fla. 4th DCA 1969); Llerena v. Lumbermens 

Mut. Cas. Co., 379 So. 2d 166, 167 (Fla. 3d DCA 1980). By contrast, in Rodrigo

v. State Farm Florida Insurance Co., 144 So. 3d 690, 692 (Fla. 4th DCA 2014), we 

held that “the insurer did not waive the sworn proof of loss requirement by 

tendering payment because ‘[i]nvestigating any loss or claim under any policy or 

engaging in negotiations looking toward a possible settlement of any such loss or 

claim’ does not constitute a waiver of a ‘sworn proof of loss’ requirement.” (quoting 

§ 627.426(1)(c), Fla. Stat. (2007)). Our resolution of the instant case does not 

require us to address any inconsistency between Rodrigo and the Bear line of 

cases.
11

faith action becomes ripe.” Cammarata v. State Farm Fla. Ins. Co., 152 So. 

3d 606, 610 (Fla. 4th DCA 2014).

“[A]n appraisal award pursuant to an insurance contract constitutes a 

‘favorable resolution’ of an underlying breach of contract dispute for 

purposes of filing a bad faith cause of action.” Trafalgar, 100 So. 3d at 

1156. Moreover, a summary judgment in favor of the insurer on the 

underlying breach of contract action does not preclude an insured’s ability 

to pursue a bad faith claim. Id. at 1158.

Here, the insureds’ bad faith claim is ripe because GeoVera’s liability 

for coverage and the extent of the damages have been established. 

GeoVera’s payment of the appraisal award, which included amounts in 

excess of the $1,000 leakage sublimit, constituted a waiver of GeoVera’s 

previous coverage defense based on that sublimit. Although our case law 

does not require a breach of contract as a prerequisite to a bad faith claim,

we note that GeoVera did breach the policy by erroneously invoking the 

$1,000 leakage sublimit in its formal pre-suit response to the claim.

On this record, GeoVera has not shown that it acted in good faith as a 

matter of law. Genuine issues of material fact remain as to whether 

GeoVera exercised good faith and fair dealing towards the insureds when 

it incorrectly invoked the $1,000 leakage sublimit in its formal response 

to the claim. GeoVera’s liability for bad faith will turn on whether 

GeoVera’s denial of coverage above the $1,000 leakage sublimit was in 

good faith. See Vest, 753 So. 2d at 1275 (“The insurer has a right to deny 

claims that it in good faith believes are not owed on a policy. Even when 

it is later determined . . . that the insurer’s denial was mistaken, there is 

no cause of action if the denial was in good faith.”).

For the above reasons, we reverse the summary judgment on the bad 

faith count.

III. Conclusion

We reverse the final summary judgment and remand with instructions 

for the trial court: (1) to treat GeoVera’s post-suit payment of the appraisal 

award as a confession of judgment that it breached the policy by 

erroneously applying the $1,000 leakage sublimit in its formal response to 

the insureds’ claim; (2) to allow the insureds’ bad faith claim to proceed; 

and (3) to conduct further proceedings consistent with this opinion.

Reversed and Remanded.
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CIKLIN and LEVINE, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.