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Florida Supreme Court Rules State-Sponsored Property Insurer Immune from Bad Faith Claims

Florida-Supreme-Court-Seal-300The Supreme Court of Florida recently held that first-party insurer bad faith is not a ‘willful tort,’ and that, as a government entity that enjoys broad statutory immunity from suit, Citizens Property Insurance Corporation (“Citizens”) is consequentially immune from statutory first-party bad faith causes of action.

In sum, the Supreme Court determined that the Florida Legislature, when it created Citizens as a property ‘insurer of last resort,’ did not expressly waive Citizens’ statutory immunity from first-party lawsuits arising under Fla. Stat. § 624.155(1), more commonly known as statutory bad faith actions.  Florida does not and has never recognized a common law first-party insurance bad faith cause of action, either in tort or otherwise, and the Supreme Court of Florida opined that the First DCA erred in finding that the Legislature’s express waiver of immunity for “willful tort[s]” in Citizens’ Enabling Statute operated as a waiver of Citizens’ immunity from first-party bad faith claims.

The ruling would affect mortgagees to the extent the risk is insured by Citizens, whether the mortgagee is an additional insured or a loss payee of various sorts, as under this ruling Citizens appears as immune from a mortgagee’s first-party bad faith claim.

However, this ruling does not appear to affect Fla. Stat. 627.428, which allows prevailing insureds to recover their attorney’s fees.

A copy of the opinion is available at:

By way of background, the appellee-condo association prevailed in a first-party breach of contract action on the insurance policy against its insurer, Citizens.  Thereafter, the condo association sued Citizens again pursuant to Florida’s bad faith statute, Fla. Stat. § 624.155(1), which creates a private right of action against an insurer who fails to settle an insurance claim “when, under the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests[.]” Fla. Stat. § 624.155(1)(b)1.

Citizens then moved to dismiss the condo association’s complaint, citing its immunity from suit under Fla. Stat § 627.351(6)(s) (“Citizens’ Enabling Statute”).  Citizens’ Enabling Statute provides, in pertinent part, that “there shall be no liability on the part of, and no cause of action of any nature shall arise against … [Citizens] … for any action taken by them in the performance of their duties and responsibilities under [Citizens’ Enabling Statute].”  Fla. Stat § 627.351(6)(s)1.

However, Citizens’ Enabling Statute specifically exempts “any willful tort” from the immunity from suit created by the act.  See Fla. Stat § 627.351(6)(s)1.a.  Because of this, the condo association argued that immunity did not apply and Citizens could properly be sued for its alleged bad faith failure to settle.

The trial court disagreed with the condo association, and dismissed the action with prejudice.  On appeal, the First DCA reversed the trial court, opining that “Citizens immunity does not extend to the ‘willful tort’ of failing to attempt in good faith to settle claims as provided by section 624.155.”  Perdido Sun Condo Ass’n v. Citizens Prop. Ins. Corp., 129 So. 3d 1210 (Fla. 1st DCA 2014).

However, the First DCA certified a district court conflict with the Fifth DCA’s decision in Citizens Prop. Ins. Corp. v. Garfinkel, 25 So. 3d 62 (Fla. 5th DCA 2009), disapproved on other grounds by Citizens Prop. Ins. Corp. v. San Perdido Ass’n, 104 So. 3d. 344 (Fla. 2012), which “held to the contrary that Citizens is statutorily immune.”  Consequentially, the First DCA also certified the following question as being of great public importance:  “[w]hether the immunity of [Citizens], as provided in section 627.351(6)(s), Florida Statutes, shields the Corporation from suit under the cause of action created by section 624.155(1)(b), Florida Statutes, for not attempting in good faith to settle claims?”

In resolving this question in the affirmative, the Supreme Court opined that it found “no support that the Legislature intended for Citizens to be liable for a breach of the duty to act in good faith by allowing its policyholders to bring a statutory first-party bad faith cause of action.”  Simply put, the Supreme Court determined that because the Florida Legislature did not expressly waive Citizens’ immunity from statutory first-party bad faith claims, and further immunized Citizens from “any action taken by [it] in performance of [its] duties … under [Citizens’ Enabling Statute],” it intended for Citizens to be immune from first-party bad faith lawsuits.

The Court quashed the First District Court of Appeal’s opinion below, and noted its approval of the Fifth District Court of Appeal’s decision in Citizens Prop. Ins. Corp. v. Garfinkel.

The Supreme Court also took exception to the First DCA’s determination that “the statutory cause of action for first-party bad faith is a tort, or specifically a “willful tort.”  The Supreme Court expressly noted that unlike common law third-party bad faith, “first-party bad faith actions are purely a creature of statute that did not previously exist at common law.”

Thus, and as the Fifth District stated in Garfinkel, “statutory first-party bad faith causes of action ‘now exist in Florida not because they are torts, but because they are a statutory cause of action.  Accordingly, a first-party bad faith claim cannot be wedged into the statutory exemption for willful torts because it is not a tort of any variety.’”  Garfinkel at 68-69.

As such, the Supreme Court ruled that the condo association’s suit, being a statutory first-party bad faith action was properly dismissed with prejudice by the trial court.  Accordingly, the Supreme Court remanded the case to the First DCA to reinstate the trial court’s order of dismissal.

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Ralph Wutscher's practice focuses primarily on representing consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. He represents the lending and financial services industry as a litigator, and as regulatory compliance counsel. For more information, see