What Do Florida Courts Think About Throwing In the Kitchen Sink?

Florida’s Fifth District Court of Appeal has spoken on the hot topic of CRN sufficiency and the requisite level of specificity. On November 14, 2022, it decided whether the trial court’s entry of final summary judgment in favor of State Farm Florida Insurance Company (“State Farm”) in a first-party bad faith action was proper. The issue on appeal involved this: Whether the Homeowners’ Civil Remedy Notice, or CRN, satisfied the requirements of section 624.155, Florida Statutes (2014).

Before we dive into the Fifth District’s opinion, you may benefit from a brief background on the civil remedy statute of the Florida Insurance Code. The civil remedy statute was adopted by the Legislature in 1982 and permits, among other things, civil actions against an insurer under certain circumstances, commonly known as first-party bad faith insurance claims. It authorizes any person to file a civil action against an insurer when the person is damaged by certain acts by the insurer. Prior to filing this civil action, Section 624.155(3)(a) requires the insured to first give the insurer written notice of the insurer’s alleged statutory violations. This written notice is called the CRN.

The CRN must include specified information. Section 624.155(3)(b) requires the insured to “state with specificity” information in the notice; to include “the specific language of the statute, which the authorized insurer allegedly violated;” and to “[r]eference … specific policy language that is relevant to the violation, if any.” 

In the recent case Thomas Demase and Joanne Demase v. State Farm Florida Insurance Co., case number 5D21-2078, in the District Court of Appeal of the State of Florida Fifth District, the Fifth District analyzed the Demases’ CRN. The Demases’ case involved a sinkhole claim. They filed a single count complaint against State Farm for statutory bad faith pursuant to section 624.155, Florida Statutes predicated on a CRN that listed virtually every statutory and policy provision available to them. The Demases alleged that State Farm violated fifteen statutes and twenty-two administrative regulations and did not refer to “specific policy language” in their CRN, rather, they listed the headings of various policy sections with a general reference to “all policy provisions.” In her concurring opinion, Judge Meredith L. Sasso referred to this as the “kitchen sink” approach.

Why not throw in the kitchen sink, you ask? Because the Fifth District reviewed the Demases’ CRN and determined it lacked the requisite level of specificity after applying the plain language of section 624.155.

The Fifth District affirmed the trial court in all respects. The opinion explains, “[E]ven under the more lenient substantial compliance test, the Demases’ claim fails. Our sister court analyzed a remarkably similar CRN applying a substantial compliance test in Julien… The same reasoning applies to the Demases’ CRN. As a result, the trial court correctly determined that the Demases’ CRN was legally insufficient.”

In 2021, the Fourth District analyzed a similar CRN in Julien v. United Prop. & Cas. Ins. Co., 311 So. 3d 875, 878 (Fla. 4th DCA 2021). There, the insured filed three prior claims including a fire claim with a previous insurer that allegedly was not repaired before he filed a fire claim with United Property and Casualty. Id. The insured eventually filed a CRN that listed nearly all policy sections available to him as the insured and cited thirty-five statutory provisions including twenty-one sections of the Florida Administrative Code. Id.

The “kitchen sink” approach failed there, too.

Compare the CRNs in Demase and Julien to the CRN filed by STRUBLE, P.A. in Zaleski v. State Farm Florida Ins. Co., 315 So. 3d 7 (Fla. 4th DCA 2021). There, like the Demases, Stanley Zaleski and Denise Zaleski (“the Homeowners”) also appealed the trial court’s entry of final summary judgment in favor of State Farm in their first-party bad faith action. Unlike the case of the Demases, though, STRUBLE, P.A. obtained a reversal of the trial court order because their CRN met the level of specificity required by the Statute.

The Fourth District held STRUBLE, P.A.’s CRN sufficiently put State Farm on notice of the facts and circumstances giving rise to the violations and the corrective action required to remedy the violations. Specifically, the CRN alleged violations of sections 624.155 and 626.9541, Florida Statutes (2017), and one of those allegations was that State Farm failed to comply with the policy’s loss settlement provision because it “performed a cursory inspection of the property, failing to retain experts necessary to identify the repairs necessary to restore the property to its pre-loss condition” and gave a “low-ball estimate” that “failed to encompass all covered damages.” The CRN also asserted that State Farm could cure the violations alleged “by issuing a payment for all contractual damages owed.”

The Fourth District determined STRUBLE, P.A.’s CRN listed the specific statutory provisions that State Farm allegedly violated and gave a detailed recitation of the facts surrounding the violation. In relevant part, the CRN stated that State Farm performed a cursory inspection of the property, failed to retain experts necessary to identify the repairs necessary to restore the property to its pre-loss condition, and gave a “lowball” estimate that failed to encompass all covered damages. The Fourth District noted that in neither its letter to the Homeowners nor its official response to the CRN did State Farm object to the sufficiency of the CRN, and that prior to State Farm invoking appraisal, the Homeowners provided State Farm with their detailed estimate. The Fourth District determined STRUBLE, P.A.’s CRN sufficiently put State Farm on notice of the facts and circumstances giving rise to the violations and the corrective action required to remedy the violations and reversed the final summary judgment entered and remanded for further proceedings in which the Homeowners could pursue their bad faith action. It also explained that the insurer’s initial low-ball adjustment of the claim was evidence of statutory violations.

Next time, think before you throw in the kitchen sink.

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