Bryant v. Geovera Specialty Ins. Co.
| Decision Date | 08 May 2019 |
| Docket Number | No. 4D18-189,4D18-189 |
| Citation | 271 So.3d 1013 |
| Parties | Hershel BRYANT and Betty Bryant, Appellants, v. GEOVERA SPECIALTY INSURANCE COMPANY, Appellee. |
| Court | Florida District Court of Appeals |
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.
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 pre-suit 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.
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.
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 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.
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.
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.
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 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) ().
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.
In March 2017, over a year after the appraisal award, the insureds moved to lift the stay and the trial court granted the motion.
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.
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...
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