The Second District Rules That A Civil Remedy Notice Is Not Required To Allege A Specific Cure Amount

By: Candy L. Messersmith and David B. Shelton

04.05.13

In Hunt v. State Farm Florida Ins. Co., 112 So. 3d 547 (Fla. 2d DCA April 5, 2013), Mr. Hunt’s home sustained sinkhole damage, and he disagreed with the amount State Farm offered to pay under his homeowner’s policy.  Based on this disagreement, Mr. Hunt filed a Civil Remedy Notice of Insurer Violation with the Department of Financial Services in April 2007.  The sinkhole claim went to appraisal which resulted in an award of $162,571.61 to Mr. Hunt in October 2008.  State Farm paid the appraisal award, and Mr. Hunt later filed a first-party bad faith lawsuit in 2010.  The trial court dismissed the bad faith lawsuit because (1) Mr. Hunt had not previously obtained a judgment against State Farm for breach of contract and (2) the Civil Remedy Notice was defective since it did not assert a specific cure amount sought from State Farm.  The Second District Court of Appeal reversed, rejecting both of State Farm’s arguments.

Initially, the Second District held that Mr. Hunt was not required to obtain a judgment for breach of contract before pursuing his bad faith lawsuit.  Florida law requires that the underlying insurance claim must be resolved in the insured’s favor before a first-party bad faith claim accrues.  The Second District agreed with the Fourth District that an appraisal award in favor of an insured satisfies the condition precedent to the accrual of a bad faith claim, in that the appraisal award was a resolution of the sinkhole claim in Mr. Hunt’s favor.

More notable, however, was the Second District’s conclusion that Mr. Hunt did not need to state an amount of damages being demanded in his Civil Remedy Notice.  The Second District noted that Florida’s bad faith statute requires the insured to file a Civil Remedy Notice as a condition precedent to a bad faith claim. See section 624.155(3)(a), Florida Statutes.  But it concluded that the statute does not require the insured to specify a demand in the Notice.  The Second District held that “the statute does not require a specific cure amount.”  Although the statute does not use the terms “cure amount,” its language can and should be reasonably read to include a “specific cure amount.”

The statute generally outlines the required contents of the Civil Remedy Notice such as requiring the insured to state “with specificity” the “facts and circumstances giving rise to the violation” alleged in the Notice.  The statute provides immunity from a bad faith lawsuit to the insurer “if, within 60 days after filing notice, the damages are paid or the circumstances giving rise to the violation are corrected.”  See section 624.155(3)(a), Florida Statutes.

If the insured files a Notice because the insurer is not paying a claim, the amount sought but unpaid is a necessary part of the “facts and circumstances” of the dispute.  As a result, the statutory language reasonably requires the Notice to state the amount of damages claimed.

Other courts have dismissed Civil Remedy Notices that are not sufficiently specific.  See, e.g., Fenderson v. United Auto Ins. Co., 31 So. 3d 915 (Fla. 4th DCA 2010).  Consistent with those cases, a Notice should not be considered sufficiently specific if it does not allege the amount of the desired cure.

Moreover, the Second District’s decision fails to read the statute in light of the intended purpose of the Civil Remedy Notice.  The requirement of a Civil Remedy Notice is intended to create a cure period that is “designed to encourage payment of the underlying claim, and avoid unnecessary bad faith litigation.”  Talat Enterprises, Inc. v. Aetna Cas. and Sur. Co., 753 So. 2d 1278, 1282 (Fla. 2000).  That purpose – of encouraging settlement – is thwarted if the Notice does not outline specifically what is needed to achieve a settlement.  The insurer can “pay the damages” only if it knows the amount of damages claimed.

The Second District’s decision does not encourage settlement; in fact, it has the opposite effect.  Because the decision tolerates vagueness in the Civil Remedy Notice, it requires insurers to guess as to the amount necessary to cure the alleged violation.  Certainly, the statute was not intended to create guesswork.