Rowland v. Safeco Ins. Co. of America

• Decision Date: 04 March 1986
• Docket Number: No. 85-123-Civ-Oc-12.,85-123-Civ-Oc-12.
• Citation: 634 F. Supp. 613
• Parties: Seymour H. ROWLAND and Jan Rowland, Plaintiffs, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — Middle District of Florida

634 F. Supp. 613

Seymour H. ROWLAND and Jan Rowland, Plaintiffs, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant.

No. 85-123-Civ-Oc-12.

United States District Court, M.D. Florida, Ocala Division.

March 4, 1986.

L. Edward McClellan, Jr., Ocala, Fla., for plaintiffs.

William E. Lawton, Orlando, Fla., for defendant.

ORDER

MELTON, District Judge.

This matter is before the Court on the motion to dismiss of defendant Safeco Insurance Company of America ("Safeco"). Having carefully considered the matter,¹ the Court is of the opinion that the motion should be denied.

Plaintiffs are holders of an insurance policy issued by Safeco. The policy included bodily injury liability limits of $50,000 for each person and $100,000 for each occurrence. It also limited uninsured motorist coverage to $10,000 for each person and $20,000 for each occurrence. Plaintiff Jan Rowland suffered injuries in an automobile accident in October of 1980. In August 1983, plaintiffs demanded uninsured motorist coverage equal to the $50/$100,000 limits for bodily injury. Safeco allegedly failed to respond in a timely manner to plaintiffs' demands. Plaintiffs thereafter filed a declaratory judgment action. The state circuit court found in favor of plaintiffs and this judgment was affirmed on appeal.

Plaintiffs filed this action, contending that Safeco's actions in failing to pay their claim amounted to a bad faith refusal to settle in violation of Fla.Stat. § 624.155(1)(b)1 (1985). Safeco moved to dismiss the amended complaint on the following grounds: (1) that plaintiffs failed to state a cause of action for violation of Fla.Stat. § 624.155; (2) that plaintiffs failed to state a cause of action for bad faith refusal to pay a first party insurance claim; and (3) that plaintiffs failed to state a cause of action for certain damages.

Safeco first argues that Fla.Stat. § 624.155 may not be applied retroactively to this case. The statute became effective in 1982. Safeco apparently contends that the instant cause of action arose in 1980 when the accident occurred or before 1980 when the policy was issued. The Court need not decide whether the statute can be applied retroactively because a cause of action for bad faith refusal to pay first party claims arises when the alleged bad faith actions occur, not when the policy was issued or the accident occurred. See Couch on Insurance 2d, § 58.7 (1983). In this case, plaintiffs sent the first demand letter in August of 1983. Plaintiffs allege that Safeco's actions in handling the demand, occurring between 1983 and 1985, constituted bad faith refusal to pay. Therefore, the cause of action arose sometime between 1983 and 1985 when, allegedly, the insurer unreasonably failed to pay the claim.

Safeco next argues that plaintiffs fail to state a claim for bad faith refusal to pay because they have not alleged that Safeco's actions amounted to an independent tort. Prior to the enactment of Fla. Stat. § 624.155, Florida law did not recognize a cause of action for a bad faith refusal to pay the claim of a first party. T.D.S., Inc. v. Shelby Mutual Insurance Co., 760 F.2d 1520, 1529 (11th Cir.1985); Kent Insurance Co. v. Hassan, 447 So.2d 323, 324 (Fla. 4th DCA 1984); Industrial Fire & Casualty Insurance Co. v. Romer, 432 So.2d 66, 67 (Fla. 4th DCA 1983). Bad faith refusal to pay would give rise to a claim only if the actions constituted a separate tort such as fraud or intentional infliction of emotional distress. Romer, 432 So.2d at 67.

The enactment of Fla.Stat. § 624.155(1)(b)1., however, created an independent cause of action for bad faith refusal to pay. That section provides that "any person" may sue an insurer when it has not attempted "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 his interests." As of this date, there have been no cases interpreting Fla.Stat. § 624.155.² A Florida intermediate appellate court, in dicta, recognized that the statute apparently does change the law regarding first party refusal to settle cases. Romer, 432 So.2d at 67 n. 2, 69 n. 5. The concurring opinion noted "although it need not be decided here, it is arguable that with the passage of Fla.Stat. § 624.155, Florida has joined the ranks of those states which impose an implied covenant of good faith and fair dealing in insurance contracts." Id. at 69 n. 5.

In addition to the language of the statute, its legislative history indicates an intent to provide a cause of action for insureds who sue their insurers for bad faith refusal to settle...