In Pin-Pon Corp. v. Landmark American Insurance Company, 2020 U.S.Dist. LEXIS 100072 June 5, 2020), Pin-Pon had brought a single cause of action against Landmark for Statutory Bad Faith in violation of Fla. Stat. § 624.155(1)(b)(1), after years of litigation and a judgment in its favor.
Landmark moved to dismiss the bad faith complaint on the grounds that Pin-Pon failed to comply with the notice requirements set forth in Fla. Stat. § 624.155(3), a condition precedent to bringing an action under Fla. Stat. § 624.155(1)(a)–(b). Landmark argued that the three Civil Remedy Notices (“CRN”) that Pin-Pon filed over the course of eight years were defective.
On June 5, 2020, U.S Southern District Court Judge Donald M. Middlebrooks granted the Motion to Dismiss, finding that Pin-Pon had failed to satisfy the condition precedent to filing a statutory bad faith action.
The court noted § 624.155(3) sets forth five (5) pieces of information which must be included in a CRN along with fifteen (15) requirements noted on the Department of Financial Services (“DFS”) created form. As these requirements are all information required by the Department, according to § 624.155, they must be stated with specificity.
The court found the basic identifying information in each CRN deficient because the Plaintiff either failed to include the email for the complainant, listed the same email and address for both complainant and attorney, and omitted the address for the insurer. The court held that the statute requires that all fields on the CRN form must be stated with specificity, and as this statute is strictly construed, none of the three CRNs complied with the statute. Further, the court noted that since the statute is to be strictly construed, equitable concerns or substantial compliance will not be considered. As a result, the Plaintiff had not met the condition precedent to filing a bad faith case.
Pin-Pon moved for reconsideration arguing that: Fla. Stat. § 624.155 is remedial in nature and therefore entitled to liberal construction; Pin-Pon substantially complied with the statute thereby satisfying its purpose; Landmark waived any technical defects in the CRNs by substantively responding to the notices; the defective information is optional on DFS Form 10-363 and thus not required by the statute; and that until 2019, DFS’s acceptance of CRNs established their statutory compliance.
Although the court maintained its prior conclusion that Section 624.155 is to be strictly construed, the court acknowledged that statutory construction and statutory compliance are distinct exercises. Citing to QBE Ins. Corp. v. Chalfonte Condominium Apartment Ass’n, Inc., 94 So. 3d 541 (Fla. 2012), the court reasoned that where the party seeking to comply with a notice statute fails to meet the requisite level of compliance, a court may allow an action to proceed if the defect was of a purely technical nature, the party substantially complied, the notice purpose of the statute has been fulfilled, and the opposing party has not been prejudiced by the error. Although Chalfonte did not interpret § 624.155, it construed another mandatory provision of the Florida Insurance Code involving technical notice requirements with which a party failed to strictly comply and the opposing party argued that such noncompliance rendered the notice a nullity.
The court held that, like in Chalfonte, Pin-Pon substantially complied with the technical notice requirements of § 624.155 by filing three CRNs with nearly complete and accurate identifying information. Moreover, Landmark did not assert it was prejudiced by Pin-Pon’s substantial compliance with the notice requirements.
Further, the court reasoned that its ruling does not contradict the legislature’s intent in enacting § 624.155 stating:
[T]he legislature intended for the statute to provide a remedy to aggrieved insureds and that the notice requirement was not meant to hinder such a remedy but rather to encourage the early resolution of statutory bad faith claims, to avoid unnecessary litigation, and to facilitate the Department’s monitoring of the industry. To foreclose an insured’s opportunity to recover damages for alleged bad faith conduct by an insurer on purely technical grounds where the insurer unquestionably had notice of the insured’s intent to bring the action and where the insurer was not prejudiced by the technical defects would seem to run counter to the legislature’s purpose behind enacting this remedial statute with its pre-suit notice requirement.
In addition, the court found Landmark waived any technical defect challenges by not raising them in its responses to the CRNs. The court relied on Bay v. United Services Automobile Association, No. 4D19-3332, 2020 WL 6154256 (Fla. 4th DCA Oct. 21, 2020) which was decided while Pin-Pon’s motion to reconsider was pending. In that case, the CRN listed the insurer as “USAA Casualty Insurance Company,” instead of its correct name, “United States Automobile Association” or “USAA.” USAA responded to the CRN, but failed to argue that the CRN was defective because it did not identify the correct insurer. The Fourth District Court of Appeal concluded that while the misidentification failed to strictly comply with the notice statute, USAA waived the argument by not raising it in its initial response to the CRN.
The key takeaway for policyholders is that although technical errors may not render a CRN legally insufficient such that it would foreclose a statutory bad faith action, it is best practice to be as specific as possible and include all the correct information when filing CRNs. Carriers will now look for every potential defect and argue that it renders the CRN legally insufficient. Even if the carrier substantively responds to the CRN, it would be advantageous to address and correct any and all defects raised before proceeding with a bad faith lawsuit.
As always, should you have any questions, need any additional information, or wish to discuss these, or other, issues in further detail, please do not hesitate to contact our office.