Dismissal Order in Bad Faith Case Reversed

Following a water loss causing extensive water damage to the floors, walls, baseboards, and other building components from a failed shower pan in the master bathroom, Yuval Lugassy and Susan Lugassy (“the Homeowners”) submitted a claim to United Property and Casualty Insurance Company (“United”). United acknowledged coverage for the loss and paid $140.08 after application of the $2,500.00 deductible.

The Homeowners disputed this valuation, arguing United significantly undervalued the loss. This will later be proven true. They submitted two estimates for damages: one for $277.800.28 and another, months later, at the reduced amount of $216,892.47. United ultimately issued a supplemental payment of $5,642.67 for the loss, but a dispute remained.

In March 2020, the Homeowners filed a Civil Remedy Notice (“CRN”) alleging violations of sections 624.155 and 626.9541, Florida Statutes (2020). The CRN listed in detail the alleged wrongful conduct and omissions by United and outlined how United could cure the defects. Later, United would complain that the CRN did not include a specific damages amount, only that the estimated damage was “more than $50,000.00”, though United confirmed in its response to the Homeowners’ CRN that the first estimate was in the amount of $277,800.28 and the second estimate in the amount of $216,892.47.

The matter went to appraisal in August 2020 where the loss was appraised at $142,010.97 replacement cost value and $136,958.19 actual cash value. The Homeowners pursued their bad faith action, and the insurer moved to dismiss on the grounds that the pre-suit CRN did not meet the statutory requirements. The trial court agreed, specifically finding the cure terms unclear because “the CRN provided ‘partial specificity’ and ‘conclusory allegations’; the Homeowners failed to state the policy language at issue with requisite specificity; and the amount listed in the CRN was different from the amounts demanded by the Homeowners in the estimates.”

The Fourth District reversed, finding that the CRN met the statutory specificity requirements.  It determined the appraisal award satisfied the first two requirements to filing a bad faith claim and turned its focus on whether the Homeowners satisfied the third requirement of filing a valid CRN. The Fourth District determined the CRN sufficiently complied with section 624.155(3)(b)’s specificity requirements and “sufficiently put [United] on notice of the facts and circumstances giving rise to the violations and the corrective action required to remedy the violations.” citing Zaleski v. State Farm Florida Ins. Co., 315 So. 3d 7 (Fla. 4th DCA 2021) (reversing summary judgment in favor of the insurer, and finding the CRN filed by STRUBLE, P.A. explained the facts and circumstances of the violation with specificity).

As to the “cure” amount, this determination was rejected because “Florida law does not require a CRN to include a specific cure amount.” The Fourth went on to explain United “clearly knew how to cure the alleged violation notwithstanding the fact that the CRN did not contain a specific cure amount…” and that common sense would suggest increasing the amount offered to settle the claim.

You can read more here: Lugassy v. United Prop. & Cas. Ins. Co. No. 4D21-2929

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