Insurer’s Appeal Was Barred Because it Failed to Properly Preserve Appellate Issue in Court Below

Advanced Chiropractic & Rehab. Center, Corp. v. United Auto. Ins. Co. (Fla. 4th DCA 2012)

In a county court action, a chiropractic center sued an insurance company for PIP benefits, resulting in a settlement. When the center moved for attorney’s fees, a dispute arose over whether the center knew about an order of dismissal that had been entered in the case. The court held a hearing on the center’s subsequent 1.540(b) motion to vacate the order of dismissal. The hearing was held, without objection, in an informal fashion and without the swearing of witnesses.

After the county court granted the 1.540(b) motion and awarded the center attorney’s fees, the insurer appealed. The insurer’s claim on appeal was that the county court had abused its discretion in finding (1) that the motion for attorney’s fees was timely and (2) that excusable neglect existed sufficient to support rule 1.540(b) relief. The one-judge appellate panel of the circuit court reversed the county court order on the ground that there had been incompetent record evidence, a ground different from those raised by the insurer.

The Fourth District Court of Appeals granted the center’s second-tier petition for writ of certiorari and quashed the appellate decision of the circuit court, explaining that the circuit court had improperly reversed the county court since its reversal had been improperly premised on an issue that was neither preserved in the county court nor raised on appeal.

Court Dismissed Claims for Negligence Per Se and Breach of the Covenant of Good Faith and Fair Dealing

Resnick et al. v. AvMed, Inc., (11th Cir. 2012)

This case involved a class action suit filed against AvMed, a Florida corporation that delivers health care services, on behalf of AvMed customers whose sensitive information had been compromised and identifies stolen as a result of the theft of some AvMed laptops. The complaint alleged seven counts: negligence in protecting sensitive information; negligence per se in violating Florida statute § 395.3025; breach of contract; breach of implied contract; restitution/unjust enrichment; breach of implied covenant of good faith and fair dealing; and breach of fiduciary duties. The district court granted AvMed’s motion to dismiss, noting that the complaint “fail[ed] to allege any cognizable injury.”

On appeal, the Eleventh Circuit reversed in part, affirmed in part, and remanded the case. The Court first ruled that because the complaint specifically alleged monetary loss and because the complaint’s contention that the theft of the AvMed laptops caused the plaintiffs’ identity thefts was plausible under the facts pled, the plaintiffs had met the pleading standards for their allegations and had adequately alleged a cognizable injury under Florida law.

The Court ruled, however, that two of the pled causes of action failed to adequately allege entitlement to relief. The first such count, negligence per se, failed because it was premised on application of Florida statute § 395.3025(4), a statute that regulates hospitals, ambulatory surgical centers, and mobile surgical facilities. The Court found that because AvMed was an integrated managed-care organization and not a hospital, ambulatory surgical center, or mobile surgical facility, its failure to comply with § 395.3025 could not serve as a basis for a negligence per se claim.

The second count to fail was the count alleging breach of the covenant of good faith and fair dealing. The Court explained that in order to properly assert such a cause of action, a plaintiff must allege a conscious and deliberate failure or refusal to discharge contractual responsibilities. The Court held that the count failed in this case since the plaintiffs had not alleged that AvMed’s shortcomings were conscious or deliberate acts. As to the remaining counts, the dismissals were reversed and the case was remanded for further proceedings.

Insurer Was Entitled to Electronic Discovery of Insured’s Entire Computer System

Wynmoor Community Council, Inc., et al. v. QBE Ins. Corp., (S.D. Fla. 2012) – Court granted insurer’s discovery of electronically stored information (“ESI”) by a full mirror image of insured’s computer system. The court reasoned that this extreme request was warranted by plaintiffs’ suspicious document shredding and unwillingness or inability to comply with defendant’s requests for production.

Merly Nuñez v. Geico Gen. Ins. Co., (11th Cir. 2012) – Due to a split among Florida courts, the Eleventh Circuit certified the following question to the Florida supreme court: May an insurer require an insured to attend an examination under oath as a condition precedent to recovery of personal injury protection benefits?

 

Notice Requirements under Florida Statute 627.7015 Did Not Apply Where Insured Initiated Litigation

Am. Integrity Ins. Co. v. Gainey (Fla. 2d DCA 2012)

A claim was brought under a homeowner’s insurance policy for damage caused by a water leak. The insurer issued a check to its insured as partial payment of the damages, indicating that additional funds may be issued following further investigation. The insured responded by filing a sworn proof of loss statement and a breach of contract complaint. The insurer advised its insured that it disagreed with her estimate of loss, provided the statutory notice of mediation under section 527.7015, and then moved to dismiss the complaint, urging the trial court to abate litigation in favor of appraisal.

After a mediation proved unsuccessful, the trial court initially granted the insurer’s request for appraisal. However, the insured successfully moved to enjoin the appraisal and lift the stay of litigation by contending that the insurer had waived its right of appraisal by failing to provide timely notice of mediation under section 627.7015.

The second district reversed, explaining that section 627.7015 merely describes mediation as a viable option before an insured resorts to litigation and that the notice requirement was inapplicable since the insured had first initiated the breach of contract action: “[S]ection 627.7015 permits insureds and insurers to use the mediation process to encourage an inexpensive and speedy resolution of insurance claims prior to commencing the appraisal process, or commencing litigation. Here, because Gainey prematurely commenced litigation against American, we conclude that the notice requirement under section 627.7015(7) does not apply. Accordingly, Gainey cannot rely on the statute to avoid appraisal proceedings where her filing of the lawsuit rendered the statute inapplicable.”

The Number of Exclusions in a Policy Do Not Render Coverage Illusory

Colony Ins. Co. v. Total Contracting & Roofing, Inc. (U.S. District Court S.D. Fla. 2011)

In this insurance coverage dispute, the Southern District of Florida was faced with cross-motions for summary judgment as to an insurer’s duty to indemnify its insured for damages arising out of the insured’s installation of defective drywall.

Before turning to the insurer’s motion, the court first summarily denied the plaintiff-claimants’ cross-motion for summary judgment, explaining that they were mere third-parties to the insurance contract at issue and thus had “no basis … to assume the role of the insured here and litigate this case as if they were [the insured].”

The court then turned to the insurer’s motion for summary judgment and noted that the parties were all in agreement that the defective drywall claims fell completely within a “hazardous materials exclusion” to the operative policy. The court considered the claimants’ argument that, based on all of the exclusions and limitations cited by the insurer in its declaratory judgment complaint, coverage under the policy was rendered illusory. The court rejected this argument explaining (i) that the “hazardous materials exclusion” did not render the policy illusory as a matter of law because it did not completely contradict the policy’s insuring provisions, and (ii) that the sheer number of exclusions cited in a declaratory complaint could not, standing alone, establish illusory coverage. The court accordingly entered the insurer’s motion for summary judgment.

Late Notice of Insurance Claim that was Twenty Nine Months Late Did Not Necessarily Equate to Prejudice

Kings Bay Condo. Ass’n, Inc. v. Citizens Prop. Ins. Corp. (Fla. 4th DCA 2012)

A circuit court entered final summary judgment in favor of an insurer, summarily finding that the insured’s twenty-nine month belated notice of claim barred its claim as a matter of law. The insured appealed and the fourth district reversed and remanded for the court to reconsider the summary judgment motion, emphasizing that belated notice of a claim bars the claim as a matter of law only when the insured fails to come forward with evidence sufficient to reveal a genuine issue as to whether or not the belated notice prejudiced the insurer.

An Insurance Claim That Was Over Three Years Late Was Barred From Recovery

Slominski v. Citizens Prop. Ins. Corp. (Fla. 4th DCA 2012)

Insureds filed a claim with their insurer for wind and water damage purportedly caused by Hurricane Wilma three and a half years prior. The insureds claimed that they delayed filing the claim because they originally believed the damage sustained fell below their policy’s deductible. After an investigation, the claim was denied on the basis that, due to the lapse of time since the purported date of loss, the reported damages could not be attributed to Hurricane Wilma.

After the insureds filed suit, the insurer moved for summary judgment, which was granted on the basis that the insureds’ failure to provide prompt notice of their claim prejudiced the insurer and relieved it of its duty to provide coverage. On appeal, the insureds presented depositions and affidavits of two witnesses. Both affidavits indicated that the damage was caused by Hurricane Wilma, but the depositions, which were taken prior to the affidavits, contradicted those opinions.

The fourth district noted that “a party may not file his or her own affidavit, or that of another, baldly repudiating his or her own deposition testimony to avoid the entry of a summary judgment.” It thus affirmed the trial court, observing that without the affidavits, the insureds failed to meet their burden of proving lack of prejudice to the insurer.

Discovery Aimed at Producing Evidence of Physician’s Bias in Insurance Case Was Permissible

Steinger, Iscoe & Greene, P.A. & Washington v. GEICO Gen. Ins. Co. (Fla. 4th DCA 2012)

In this case, a law firm and its client petitioned the Fourth District for a writ of certiorari to quash a trial court order that compelled the firm to produce discovery pertaining to the firm’s relationship with treating physicians. The underlying case involved a claim against GEICO for uninsured motorist coverage and the order at issue required the claimant’s firm to produce (1) all records of payment by the firm to the four treating physicians who would be rendering expert opinions; (2) all “Letters of Protection” to those medical providers; and (3) all deposition and trial transcripts of those individuals or entities in the firm’s possession, provided, however, that the firm was able to redact the names of clients in cases that settled or where no lawsuit was filed.

The Fourth District began by noting that because the evidence code allows a party to attack a witness’s credibility based on bias, discovery aimed at producing evidence of a treating physician’s bias is permissible. It then acknowledged that Rule 1.280(b)(5)(A)(iii) limits financial bias discovery from retained experts, but emphasized that those limitations “cannot be used as a shield to prevent discovery of relevant information from a material witness—such as a treating physician.”

The court then balanced the need for the discovery against the burden placed upon the witnesses, concluding that:

“where there is a preliminary showing that the plaintiff was referred to the doctor by the lawyer (whether directly or through a third party) or vice versa, the defendant is entitled to discover information regarding the extent of the relationship between the law firm and the doctor. … Here, the law firm is not a party to the litigation and the record currently before us does not establish that the doctor in this situation has a financially beneficial relationship with the law firm. If there is such a relationship, past or present, the jury is entitled to know the extent of the financial connections between the doctor and the law firm. The existence of referral agreements is clearly a permissible ground for impeachment of a doctor.”

Because the Fourth District was unable to determine whether GEICO established the existence of a referral relationship between the health care providers and the law firm, it granted the petition and remanded the case:

“At the very least, the health care providers must provide financial bias discovery like that permitted by rule 1.280(b)(5)(A)(iii) as well as any history of referrals between the health care providers and the law firm. Beyond that, if GEICO can establish that the law firm or health care providers referred plaintiff to the other, more extensive financial bias discovery from both of them may be appropriate. Accordingly, the trial court should not have required the law firm to produce the discovery at issue, as it is premature at this point.”

Discovery of Insurer’s Claims File Was Improper and Would Result in Irreparable Harm

State Farm Fla. Ins. Co. v. Meir Aloni (Fla. 4th DCA 2012)

Four years after Hurricane Wilma ran its course, an insured filed a claim to its property insurer, alleging damages sustained four years prior. Although the insurer sent a reservation of rights letter rather than disclaiming coverage outright, a coverage dispute nevertheless ensued and the insured sent a request for production. Among the items requested was the insurer’s “complete claims file.” The insured maintained that the claims file materials would be relevant since it had to overcome the presumption that its belated notice of claim prejudiced the insurer.

The insurer argued that its file, and especially its activity log notes, were protected work product that contained personal thoughts, evaluations, mental impressions, and recommendations regarding the claim and the possibility of litigation. The trial court ordered discovery of the activity log notes, emails, and photographs contained in the claims file, and denied to rehear the matter. The court nevertheless granted a stay pending resolution of a petition to the fourth district.

Indeed, the fourth district accepted the petition and quashed the discovery order, explaining that the trial court departed from the essential requirements of the law in compelling the disclosure of the claims file materials since the insurer had demonstrated that such disclosure would result in irreparable harm and the insured had not proven its need and inability to obtain the substantial equivalent of the material without undue hardship.

Insurer Was Entitled To Discovery of Insured’s Entire Computer System Based on Suspicious Document Shredding

Wynmoor Community Council, Inc., et al. v. QBE Ins. Corp., (S.D. Fla. 2012)

Court granted insurer’s discovery of electronically stored information (“ESI”) by a full mirror image of insured’s computer system. The court reasoned that this extreme request was warranted by plaintiffs’ suspicious document shredding and unwillingness or inability to comply with defendant’s requests for production.

Merly Nuñez v. Geico Gen. Ins. Co., (11th Cir. 2012)

Due to a split among Florida courts, the Eleventh Circuit certified the following question to the Florida supreme court: May an insurer require an insured to attend an examination under oath as a condition precedent to recovery of personal injury protection benefits?