Fox et al v. Starr Indemnity & Liability Company
Filing
11
ORDER granting-in-part 4 --motion to dismiss; dismissing bad-faith claims; reserving ruling on motion to dismiss for notice's failure to comply with Section 624.155(3)(b); amended complaint due 1/27/2017. Signed by Judge Steven D. Merryday on 1/9/2017. (BK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
FRED FOX, et al.,
Plaintiffs,
v.
CASE NO. 8:16-cv-3254-T-23MAP
STARR INDEMNITY &
LIABILITY COMPANY,
Defendant.
____________________________________/
ORDER
On April 19, 2014, a vagrant torched a building co-owned by Robert and Fred
Fox. The Foxes submitted a claim to Starr Indemnity & Liability Company, which
insured the building under a policy that covered “fire loss.” (See Doc. 2 at 41–90, the
insurance policy) Dissatisfied with Starr’s purported tardiness in tendering
$1,057,192.56 (the building’s estimated damage, according to the Foxes’ contractor),
on September 9, 2014, Fred Fox filed a “Civil Remedy Notice” with the Florida
Department of Financial Services. (Doc. 2 at 93–95, the notice) In a response to the
department, Starr argues that the notice fails to identify with specificity a violation of
Florida law and fails to identify with specificity a policy term breached by Starr.
(Doc. 2 at 96–97, Starr’s response)
In accord with the contract’s appraisal provision (Doc. 2 at 62), each party
selected an appraiser, and the two appraisers selected an umpire. (Doc. 2 at ¶ 14)
On May 12, 2016, the appraisal panel awarded the Foxes $930,041.36 for the
building’s damage. (Doc. 2 at ¶ 15)
Claiming that Starr violated fourteen duties imposed by Florida law, the Foxes
sue (Doc. 2) Starr under Section 624.155 for bad faith.1 Starr moves (Doc. 4) to
dismiss the bad-faith claims for failure to state a claim for relief and for the lack of
particularity in a fraud allegation.2
DISCUSSION
1. To state a bad-faith claim, the plaintiff first must prevail on a breach-of-contract
claim.
Although Florida common law provides no cause of action for an insured’s
bad-faith claim against his insurer, Section 624.155 permits a first-party bad-faith
claim. The typical first-party bad-faith claim alleges that the insurer failed to pay
timely the insured’s demand or failed to investigate adequately the insured’s claim.
But no matter how unfair the insurer’s conduct, a respect for the parties’
bargain precludes the judiciary’s rewriting a contract to add a term not agreed by the
parties. As QBE Ins. Corp. v. Chalfonte Condo. Ass’n, Inc., 94 So. 3d 541, 548
(Fla. 2012), explains:
A duty of good faith must “relate to the performance of an express
term of the contract and is not an abstract and independent term of a
1
Although unclear, the complaint appears to violate Rule 10(b), which bars asserting more
than one claim in a single count. See Kennedy v. Bell South Telecomm., 546 Fed. Appx. 817, 819–20
(11th Cir. 2013) (explaining that Rule 10(b)’s “one-claim-per-count” requirement reduces confusion
and permits a defendant to answer specifically each claim).
2
Also, Starr moves to dismiss the action because the notice fails to comply with Section
624.155(3)(b).
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contract which may be asserted as a source of breach when all other
terms have been performed pursuant to the contract requirements.”
94 So. 3d at 548 (quoting Ins. Concepts and Design, Inc. v. Healthplan Serv’s, Inc.,
785 So. 2d 1232, 1235 (Fla. 4th DCA 2001) (per curiam) (internal citation omitted)).
If an insured cannot allege success on a breach-of-contract claim, the insured’s
bad-faith claim must fail.3 See, e.g., QBE Ins. Corp., 94 So. 3d at 548; Progressive Am.
Ins. Co. v. Rural/Metro Corp. of Florida, 994 So. 2d 1202, 1207–08 (Fla. 5th DCA 2008)
(Pleus, J.) (“There can be no cause of action for a breach of the implied covenant [of
good faith] absent an allegation that an express term of the contract has been
breached.”) (citing Snow v. Ruden et al., 896 So. 2d 787, 791–92 (Fla. 2d DCA 2005)
(Casanueva, J.)).
Citing Porcelli v. Onebeacon Insurance Co., 635 F.Supp.2d 1312 (M.D. Fla. 2008)
(Porcelli II ) and Canales v. Am. Sec. Ins. Co., 2011 WL 5358753 (M.D. Fla. 2011), the
Foxes argue that a bad-faith claim need not allege a breach of contract. But Porcelli II
(on which Canales relies) “take[s] judicial notice” of Porcelli I, which holds that
Onebeacon breached a contract with Porcelli. Porcelli II, 635 F.Supp.2d at 1315
(noticing the judgment in Porcelli I, 2:02-cv-303 (M.D. Fla. Sept. 20, 2005)). Porcelli II
subverts the Foxes’ argument.
Also, the Foxes cite Cammarata v. State Farm Florida Ins. Co., 152 So. 3d 606
(Fla. 4th DCA 2014) (per curiam), which holds that an appraisal award entered
3
Also, a bad-faith claim fails if the application of bad-faith “contravene[s] the express terms
of the agreement.” QBE Ins. Corp., 94 So. 3d at 548 (internal citation omitted). Here, the policy
provides that a party may demand an appraisal if the parties disagree about damages. (Doc. 2 at 62)
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under an insurance policy might establish “liability.” But Cammarata misapplies
Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So. 2d 1289 (Fla. 1991), which states
that “a determination of . . . liability” must precede a bad-faith claim. Blanchard’s
statement that a bad-faith claim must allege the earlier determination of liability
means the earlier determination of liability for the defendant’s breach of contract.
And an award entered in accord with an appraisal provision fails to establish liability
for a breach of contract. See Hill v. State Farm Florida Ins. Co., 35 So. 3d 956, 959 (Fla.
2d DCA 2008) (Altenbernd, J.) (“[A]ppraisal is not a process to resolve a breach of
contract claim . . . [a]ppraisal is a method of adjusting a claim within the terms of the
insurance contract.”). Rather than show a breach of contract, the payment of an
appraisal award shows a defendant’s compliance with a contract.
Without citing an earlier action or an arbitration that establishes Starr’s
liability for breach of contract, the complaint alleges that Starr’s violation of fourteen
duties purportedly imposed by Florida law “demonstrates Defendant’s failure to
comply in good faith with the terms and conditions of the [p]olicy.” (Doc. 2 at ¶ 23)
Because no facts support the conclusory allegation that Starr breached the contract,
the bad-faith claims warrant dismissal under Rule 12(b)(6).
Also, the complaint fails to allege facts that show the violations of Florida law
in ¶ 23. See Bell Atlantic Corp v. Twombly, 550 U.S. 544, 555 (2007) (explaining that a
claim must allege facts that effectively show the pleader’s entitlement to relief).
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2. The fraud allegation violates Rule 9(b).
A party must plead fraud with particularity. The Foxes allege that Starr
“misrepresent[ed] and/or omi[tted] pertinent facts relating to the coverages” (Doc. 2
at ¶ 23) and argue that an attachment to the complaint “provide[s] the requisite
particularity” (Doc. 7 at 11). But an attachment to a complaint is not a pleading.
Unsupported by facts in the complaint, the conclusory allegation of fraud violates
Rule 9(b).
CONCLUSION
To state a bad-faith claim under Florida law, the plaintiff must allege success
on a breach-of-contract claim. Because the complaint fails to allege that the Foxes
prevailed on a breach-of-contract claim against Starr, the motion (Doc. 4) to dismiss
is GRANTED-IN-PART and RESERVED-IN-PART. The bad-faith claims are
DISMISSED for failing to state a claim for relief under Rule 12(b)(6) and for
violating Rule 9(b)’s particularity requirement. Starr’s request to dismiss the action
because the notice fails to comply with Section 624.155(3)(b) is RESERVED.
No later than JANUARY 27, 2017, the plaintiffs may amend the complaint to
resolve the defects identified by this order. Failure to amend timely will result in the
dismissal of this action without further notice.
ORDERED in Tampa, Florida, on January 9, 2017.
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