Court Opinion

ID: 4652974
Source: CourtListenerOpinion
Date Created: 2021-01-21 16:02:41.112367+00
Date Added: 2024-06-11T08:01:51.095378
License: Public Domain

Supreme Court of Florida
                                  ____________

                                  No. SC19-1394
                                  ____________

          CITIZENS PROPERTY INSURANCE CORPORATION,
                           Petitioner,

                                        vs.

                           MANOR HOUSE, LLC, et al.,
                                Respondents.

                                 January 21, 2021

POLSTON, J.

      We review the decision of the Fifth District Court of Appeal in Manor

House, LLC v. Citizens Property Insurance Corp., 277 So. 3d 658, 662-63 (Fla. 5th

DCA 2019), a case in which the Fifth District certified the following question of

great public importance:

      IN A FIRST-PARTY BREACH OF INSURANCE CONTRACT
      ACTION BROUGHT BY AN INSURED AGAINST ITS INSURER,
      NOT INVOLVING SUIT UNDER SECTION 624.155, FLORIDA
      STATUTES, DOES FLORIDA LAW ALLOW THE INSURED TO
      RECOVER EXTRA-CONTRACTUAL, CONSEQUENTIAL
      DAMAGES?
For the reasons that follow, we answer the certified question in the negative. 1

                                I. BACKGROUND

      This case involves a first-party breach of insurance contract claim where the

insureds, Manor House, LLC, Ocean View, LLC, and Merritt, LLC (collectively

Manor House), seek to recover extra-contractual, consequential damages for lost

rental income totaling approximately $2.5 million from the insurer, Citizens

Property Insurance Corporation (Citizens). The Fifth District set forth the facts as

follows:

             Citizens insured nine apartment buildings owned by Manor
      House that were damaged in September 2004 when Hurricane Frances
      struck. Manor House presented its claims under the Citizens
      insurance policy; following an inspection of the property, Citizens
      issued payments totaling $1,927,747. In April 2006, Manor House’s
      public adjuster, Dietz International, asked Citizens to reopen the
      claim. In June 2006, Manor House presented another claim, this time
      for $10,000,000. After reopening the claim and assigning a new
      adjuster, Citizens made additional payments in September 2006
      totaling $345,192. Then, in December 2006, Citizens’ field adjuster
      informally estimated the “actual cash value” of the loss at $5,489,062
      and the “replacement cost value” of the loss at $6,410,456.
      Meanwhile, Manor House’s public adjuster estimated the replacement
      cost value at $10,027,087.
             In an effort to resolve the dispute over costs, in March 2007
      Jeffrey Wells, the apartment complex’s new owner and Manor
      House’s litigation agent, sent Citizens a letter requesting payment of
      the “undisputed” amount of $6.4 million, i.e. the field adjustor’s
      informal estimate of replacement costs, and demanding an appraisal.
      Citizens responded by challenging Mr. Wells’ authority to act on
      behalf of Manor House and asked for documentary proof of his
      authority. Citizens also asked Mr. Wells to supply documentation it

      1. We have jurisdiction. See art. V, § 3(b)(4), Fla. Const.

                                         -2-
      said was necessary to consider the requests for appraisal and payment,
      including articles of incorporation, certified ownership records,
      invoices for actual costs of replacement, and contracts for the work in
      progress. Mr. Wells responded with a letter denying that the invoices
      and other documents requested by Citizens were necessary to trigger
      an appraisal; however, he provided the insurer with a copy of his
      appointment as Manor House’s agent.
             In August 2007, Manor House filed suit demanding prompt
      payment of the allegedly “undisputed” amount of $6.4 million and
      seeking the court to compel Citizens to engage in the policy-provided
      appraisal procedures. The trial court granted serial motions to abate
      the action based upon the failure of Manor House to provide all
      necessary documents to Citizens. In June 2009, the trial court ordered
      the action stayed and directed the parties to go forward with the
      appraisal process. In November 2009, the appraisal panel awarded
      Manor House $8,649,816 in replacement cost value and $8,388,752 in
      actual cash value. In January 2010, Citizens paid an additional
      $5,502,022 to Manor House.
             Manor House later filed suit against Citizens alleging, inter alia,
      breach of contract and fraud. On the breach claim, Manor House
      alleged that Citizens failed to: properly adjust the loss, pay the
      undisputed amount after estimates, honor Manor House’s demand for
      appraisal, provide Manor House with documents it needed to adjust
      the loss, and timely pay the appraisal award. Manor House sought to
      recover extra-contractual damages related to rental income that it
      allegedly lost due to the delay in repairing the apartment complex
      based on Citizens’ procrastination in adjusting and paying the Manor
      House claims.

Manor House, 277 So. 3d at 660-61 (footnote omitted). The trial court granted

Citizens’ motion for partial summary judgment regarding the breach of contract

claim for lost rental income. Id. at 661. Specifically, the trial court’s order

granting Citizens’ motion for partial summary judgment regarding lost rental

income stated that “[n]othing in the insurance contract provides coverage for lost

                                         -3-
rents,” and “there is no coverage as a matter of law for these damages sought by

[Manor House].”

      On appeal, Manor House challenged, among other orders, the trial court’s

order granting Citizens’ motion for partial summary judgment to prevent Manor

House from pursuing a claim for extra-contractual, consequential damages. Id. at

659-60. The Fifth District reversed the partial summary judgment regarding the

consequential damages claim. Id. at 660. The Fifth District acknowledged that the

trial court granted Citizens’ motion “based on the fact that the insurance policy

essentially provided for property damage coverage, but did not provide coverage

for lost rent.” Id. at 661. The Fifth District explained that “[w]hile that is an

accurate reading of the insurance policy, the trial court’s ruling ignores the more

general proposition that ‘the injured party in a breach of contract action is entitled

to recover monetary damages that will put it in the same position it would have

been had the other party not breached the contract.’ ” Id. (quoting Capitol Envtl.

Servs., Inc. v. Earth Tech, Inc., 25 So. 3d 593, 596 (Fla. 1st DCA 2009)). The

Fifth District concluded that “when an insurer breaches an insurance contract, the

insured ‘is entitled to recover more than the pecuniary loss involved in the balance

of the payments due under the policy’ in consequential damages, provided the

damages ‘were in contemplation of the parties at the inception of the contract.’ ”

Id. (quoting Life Inv’rs Ins. Co. of Am. v. Johnson, 422 So. 2d 32, 34 (Fla. 4th

                                         -4-
DCA 1982)). The Fifth District explained that “[i]n granting summary judgment,

the trial court denied Manor House the opportunity to prove whether the parties

contemplated that Manor House, an apartment complex, would suffer

consequential damages in the form of lost rental income if Citizens breached its

contractual duties to timely adjust and pay covered damages, which in this case

allegedly resulted in a significant delay in completing repairs so that units could

once again be rented.” Id.

      The Fifth District further concluded that while Citizens “is immune from bad

faith claims . . . the consequential damages Manor House seeks are based squarely

on breach of contract claims requiring no allegation or proof that Citizens acted in

bad faith.” Id. at 662. Accordingly, the Fifth District concluded that “Citizens is

not statutorily immune from this aspect of Manor House’s claim.” Id.

                                  II. ANALYSIS

      The certified question asks whether Florida law allows the insured to recover

extra-contractual, consequential damages in a first-party breach of insurance

contract action brought by an insured against its insurer, not involving suit under

section 624.155, Florida Statutes (2019). 2 We answer the certified question in the

negative, quash the Fifth District’s decision, and remand. In doing so, we conclude

      2. This Court reviews questions of law de novo. See Ruiz v. Tenet Hialeah
Healthsystem, Inc., 260 So. 3d 977, 981 (Fla. 2018).

                                         -5-
that extra-contractual, consequential damages are not available in a first-party

breach of insurance contract action because the contractual amount due to the

insured is the amount owed pursuant to the express terms and conditions of the

policy. Extra-contractual damages are available in a separate bad faith action

pursuant to section 624.155 but are not recoverable in this action against Citizens

because Citizens is statutorily immune from first-party bad faith claims. See

§ 627.351(6)(s)1., Fla. Stat. (2019); see also Citizens Prop. Ins. Corp. v. Perdido

Sun Condo. Ass’n, 164 So. 3d 663, 664, 668 (Fla. 2015).

      In the context of a first-party insurance claim, this Court has explained that

“the contractual amount due the insured is the amount owed pursuant to the

express terms and conditions of the policy.” Talat Enters., Inc. v. Aetna Cas. &

Sur. Co., 753 So. 2d 1278, 1283 (Fla. 2000). Further, “the only common law

action available to the insured was a breach of contract action against the insurer in

which damages were limited to those contemplated by the parties in the insurance

policy.” Macola v. Gov’t Emps. Ins. Co., 953 So. 2d 451, 455-56 (Fla. 2006); see

also Talat Enters., Inc., 753 So. 2d at 1281 (explaining that a cause of action for

first-party bad faith did not exist at common law).

      In this case, the trial court and the Fifth District below both recognized that

the express terms of the subject insurance policy did not include coverage for lost

rental income. Specifically, the trial court concluded that “[n]othing in the

                                         -6-
insurance contract provides coverage for lost rents,” and “there is no coverage as a

matter of law for these damages sought by [Manor House].” The Fifth District in

Manor House acknowledged that the trial court read the policy accurately when it

concluded that the policy provided coverage for property damage but not for lost

rental income. However, the Fifth District reversed the trial court, concluding that

“the insured ‘is entitled to recover more than the pecuniary loss involved in the

balance of the payments due under the policy’ in consequential damages, provided

the damages ‘were in contemplation of the parties at the inception of the

contract.’ ” Manor House, 277 So. 3d at 661 (quoting Johnson, 422 So. 2d at 34).

The Fifth District further concluded that the trial court “denied Manor House the

opportunity to prove whether the parties contemplated that Manor House, an

apartment complex, would suffer consequential damages in the form of lost rental

income if Citizens breached its contractual duties to timely adjust and pay covered

damages.” Id. The Fifth District’s conclusion is based on the premise that parties

can “contemplate” remedies outside the insurance policy’s express terms.

      However, as the trial court properly concluded, the parties must rely on what

they actually have pursuant to the express terms and conditions of the insurance

policy. See Prudential Prop. & Cas. Ins. Co. v. Swindal, 622 So. 2d 467, 472 (Fla.

1993) (“Courts are to give effect to the intent of the parties as expressed in the

policy language . . . .”); see also QBE Ins. Corp. v. Chalfonte Condo. Apartment

                                         -7-
Ass’n, 94 So. 3d 541, 549 (Fla. 2012) (declining to adopt the doctrine of reasonable

expectations in the insurance context). Accordingly, we must give effect to the

express terms of the subject insurance policy, which does not provide lost rental

income coverage.

      Manor House seeks to recover extra-contractual, consequential damages in

this case based on Citizens’ alleged failure to timely adjust the loss, wrongful

denial of the claim, and delay and failure to timely pay the claim. These

allegations are found in a first-party bad faith action where an insured sues his or

her own insurance company for improper denial of benefits. See Time Ins. Co. v.

Burger, 712 So. 2d 389, 391 (Fla. 1998). Through the enactment of section

624.155, the Legislature has established the current framework for a first-party bad

faith cause of action, which allows for the recovery of extra-contractual damages

against an insurer. See § 624.155(1)(a) (providing that “[a]ny person may bring a

civil action against an insurer when such person is damaged” by a violation by the

insurer of certain statutory provisions, including section 626.9541(1)(i), Florida

Statutes (2019), which prohibits unfair claim settlement practices);

§ 624.155(1)(b)1., Fla. Stat. (providing a cause of action against an insurer for

“[n]ot attempting in good faith to settle claims when, under all the circumstances, it

could and should have done so, had it acted fairly and honestly toward its insured

and with due regard for her or his interests”); see also Talat Enters., Inc., 753 So.

                                         -8-
2d at 1283 (“Section 624.155(1)(b), Florida Statutes (1993), then, is correctly read

to authorize a civil remedy for extra contractual damages if a first-party insurer

does not pay the contractual amount due the insured after all the policy conditions

have been fulfilled . . . .”). But Citizens is “a government entity that is an integral

part of the state, and that is not a private insurance company,” and this Court has

concluded that Citizens is statutorily immune from first-party bad faith claims. See

§ 627.351(6)(a), (s)1.; see also Perdido Sun Condo. Ass’n, 164 So. 3d at 664 (“[A]

statutory first-party bad faith cause of action under section 624.155(1)(b) is not an

exception to the immunity granted to Citizens by the Legislature.”). Accordingly,

extra-contractual damages are not recoverable in this action against Citizens.

                                III. CONCLUSION

      For the above reasons, we answer the certified question in the negative,

quash the Fifth District’s decision, and remand for proceedings consistent with this

opinion. In doing so, we conclude that extra-contractual, consequential damages

are not available in a first-party breach of insurance contract action because the

contractual amount due to the insured is the amount owed pursuant to the express

terms and conditions of the insurance policy. Extra-contractual damages are

available in a separate bad faith action pursuant to section 624.155 but are not

recoverable in this action against Citizens because Citizens is statutorily immune

from first-party bad faith claims.

                                          -9-
      It is so ordered.

CANADY, C.J., and LABARGA, LAWSON, MUÑIZ, and COURIEL, JJ.,
concur.
GROSSHANS, J., did not participate.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND,
IF FILED, DETERMINED.

Application for Review of the Decision of the District Court of Appeal – Certified
Great Public Importance

      Fifth District - Case No. 5D17-2841

      (Brevard County)

Raoul G. Cantero, David P. Draigh, and Ryan A. Ulloa of White & Case LLP,
Miami, Florida; Kara Rockenbach Link and Daniel Schwarz of Link &
Rockenbach, P.A., West Palm Beach, Florida; and J. Pablo Caceres of Butler
Weihmuller Katz Craig LLP, Tampa, Florida,

      for Petitioners

Alexander Brockmeyer, Molly Brockmeyer, and Mark Boyle of Boyle, Leonard &
Anderson, P.A., Fort Myers, Florida,

      for Respondent

Kansas R. Gooden of Boyd & Jenerette, PA, Miami, Florida; and Derek J. Angell
of Bell & Roper, P.A., Orlando, Florida

      for Amicus Curiae Florida Defense Lawyers Association

Timothy J. Meenan, Thomas P. Crapps, and Kirsten Matthis of Meenan P.A.,
Tallahassee, Florida,

      for Amici Curiae Florida Insurance Council, Personal Insurance Federation
      of Florida, American Property Casualty Insurance Association, and National
      Association of Mutual Insurance Companies

                                      - 10 -
Matthew B. Weaver, R. Hugh Lumpkin, and Noah S. Goldberg of Reed Smith
LLP, Miami, Florida,

     for Amicus Curiae United Policyholders

                                   - 11 -