In May 2019, a decision by a panel of Florida's Fifth District Court sparked an important debate that could have consequences for policyholders and their insurers throughout the state of Florida. The Florida Supreme Court will soon conclude that debate, and its decision may affect how attorneys choose to approach policyholders' advocates when delays in payment directly lead to lost income for insureds.
The two parties to the action are Citizens Insurance Corp. Insurer) and mansion (policyholder). Manor House was unable to make the necessary repairs due to Citizen's delay in payment, which led to a breach of contractual measures to recover lost revenue. In that decision, the Board of Appeal overruled the Court of Justice's grant of a summary judgment in favor of Citizens Insurance Corp. and against Manor House, which considered that Manor House's bid for consequential damages due to lost rental income under a breach of contract theory was not covered. according to the policy.
The panel's decision was based mainly on the well-established principle that the injured party in breach of contractual measures is entitled to damages that would put him or her in the same position if the infringing party had complied. The panel reasoned that the trial court's decision ignored this "more general proposal" and concluded that the estate's claim for consequential damages "was based entirely on breach of contract which did not require any allegation or evidence that Citizen acted in bad faith." 1
Citizens claims that allowing policyholders to incur consequential damages due to late payment under a breach of contract theory would "drastically" increase first-party disputes and lead to "unfair leverage" for policyholders in settlement decision. Citizens will try to persuade the Florida Supreme Court to rule that consequential damages resulting from late payment may only be brought in a disloyal action, assuring policyholders of the stricter conditions within the unfaithful legal framework. Despite the courts' conclusions and the arguments that such damages are not covered by the policy, Citizens has now tried to avoid this very situation by specifically excluding consequential damages (including lost income) in future policies, which indicates that Citizens are aware that such damages are typical remedies. in violation of contractual measures.
The mansion's response to these allegations has been simple and effective: The action is based on three separate violations of the insurance policy, and Florida has long recognized the right to recover consequential damages in the event of a crime. of contract suit. As stated by Manor House representatives, "the absence of an exemption from consequential damages prevents Florida's rules for interpreting the policies of citizens from limiting Manor House & # 39 ;s violation of contractual measures." Based on Citizen's recent attempts to exclude precisely these types of measures in the future, it seems that they can agree. In the coming weeks, we'll see if Florida's Supreme Court also agrees.
1 Manor House et al. v. Citizens Property Ins. Corp., Case No. 5D17-2841 (Fla. 5th DCA 2019).