Florida Courts: Insurer’s Request For Appraisal Does Not Toll Civil Remedy Notice Cure Period

By Anna P. Jiménez

Florida’s Fourth District Court of Appeals joined other Florida appellate courts in determining that a bad faith action cannot be dismissed on the grounds that appraisal was awarded and paid because the insurer’s request for appraisal did not toll the 60-day cure period reflected in §624.155 of Florida Statutes for a Civil Remedy Notice (“CRN”). Zaleski v. State Farm Fla. Ins. Co., No. 4D19-2478, 2021 LEXIS 2712 (Fla. 4th DCA, 2021).

A CRN is a condition precedent to bringing a bad faith lawsuit under §624.155 of Florida Statutes. The statute requires that a claimant must file a notice with the Florida Department of Financial Service. Once the notice is filed, the insurer can cure the alleged bad faith by paying what is requested in the CRN. If the insurer does not cure, then the policyholder has the right to file a bad faith lawsuit in the future.

Facts

The Insureds reported a water supply line claim to State Farm (“Insurer”). The Insurer inspected, acknowledged coverage, and tendered payment to the Insureds. Shortly thereafter, the Insureds filed a CRN alleging bad faith. Specifically, the Insureds alleged that the Insurer performed a cursory inspection and provided a “low-ball” estimate and requested that the Insurer provide additional payment. In response and exactly one month after the filing of the CRN, the Insurer invoked appraisal pursuant to the policy and approximately three months thereafter, paid the appraisal award.

The Insureds responded by filing a bad faith lawsuit against the Insurer. The Insurer defended by stating that appraisal and the timely payment of the appraisal award cured the Insureds’ Civil Remedy Notice, thus obviating their right to a bad faith lawsuit pursuant to the Civil Remedy Notice statute. Further, the Insurer argued that the CRN’s lack of requisite specificity precluded the Insurer from an opportunity to cure. The lower court sided with the Insurer and granted summary judgment. This appeal followed.

Analysis

The Fourth DCA examined two issues: (1) whether appraisal—and timely payment of the appraisal award—tolled the 60-day cure period reflected in section §624.155 of Florida Statutes; and (2) whether the Insureds’ CRN lacked the requisite specificity to provide the Insurer with an opportunity to cure. It answered both in the negative.

First, the Appellate Court found that the lower court’s reliance on the Florida Supreme Court case Talat Enterprises, Inc. v. Aetna Casualty & Surety Co., 753 So. 2d 1278 (Fla. 2000), was misplaced as Talat did not address tolling of the CRN 60-day cure period when appraisal is invoked. It then discussed a Second DCA case, Fortune v. Protective Ins. Co., 302 So. 3d 485 (Fla. 2d DCA 2020). In Fortune, the court held that invocation of the appraisal process did not toll the 60-day CRN cure period until appraisal was completed. In doing so, the court stated that:

Even if a policy requires the mediation or appraisal process to occur prior to suit being filed, an appraisal is not a condition precedent to the insurer fulfilling its obligation to fairly evaluate the claim and to either deny coverage or to offer an appropriate amount based on that fair evaluation. Id. at 490 (Fla. 2d DCA 2020) (quoting Landers v. State Farm Fla. Ins. Co., 234 So. 3d 856, 859-60 (Fla. 5th DCA).

Following Fortune, the Fourth DCA agreed that the plain language in section §624.155(3)(d) of Florida Statutes does not toll the CRN cure period until an appraisal is completed because the appraisal award is not a

condition precedent to the Insurer’s obligation to pay the fair amount due under the policy.

The Court also considered the 2019 amendment to §624.155 of Florida Statutes. The amendment reinforces the position that seeking appraisal is not a cure to an insurer’s failure to attempt to timely settle a claim in good faith. Specifically, the amendment states that: “[a] notice required under this subsection may not be filed within 60 days after appraisal is invoked by any party in a residential property insurance claim.” Fla. Stat. §626.155(3)(f). Therefore, the Fortune court reasoned that the amendment affects the time when an insured can file a CRN but does not treat an appraisal or payment of an appraisal award as a cure for any violation alleged in the CRN.

Consistent with Fortune, the Fourth DCA here held that invocation of the appraisal process and payment of the appraisal award after the cure period expired did not cure, as a matter of law, a bad faith claim. Although the Insurer paid the appraisal award six days after it was entered, it did so over two months after the CRN’s 60-day cure expired. Notably, the concurring opinion made a crucial distinction regarding the tolling of the 60-day cure period: §624.155 tolls the 60-day cure period if the insurer requests appraisal before the CRN is filed. However, if the insured files the CRN before the insurer invokes appraisal, no tolling occurs.

Turning to the second issue regarding the Insureds’ alleged lack of specificity in the CRN, the Appellate Court evaluated section §624.155 of the Florida Statutes, which mandates that a CRN must set forth “the facts and circumstances giving rise to the violation.” §624.155(3)(b)(2). The Court concluded that the subject CRN sufficiently put the Insurer on notice because the Insureds provided the specific statutory language, described the facts and circumstances leading to the submission of the CRN, and provided the Insurer with a copy of the estimate prior to filing the CRN.

Learning Point:  Invoking appraisal and timely paying the appraisal does not toll the 60-day CRN cure period reflected in §624.155 of Florida Statutes.