Citizens Prop. Ins. Corp. v. Garfinkel, No. 5D09-1641, ___ So. 3d ___ (Fla. 5th DCA, December 18, 2009)

Citizens sought a writ of prohibition directed to prevent the trial court from taking any further action regarding a first-party bad faith claim brought by Alan Garfinkel.

Citizens sought a writ of prohibition directed to prevent the trial court from taking any further action regarding a first-party bad faith claim brought by Alan Garfinkel. Garfinkel purchased a windstorm insurance policy from Citizens which was in effect when his home was damaged by the multiple 2004 hurricanes. After some litigation, the parties agreed to appraisal, and an appraisal award was eventually entered in Garfinkel’s favor. When Garfinkel moved to confirm the award, he sought an amount in excess of the policy limits, arguing three distinct claims resulting from three separate occurrences. The trial court confirmed the award, but limited the amount awarded to the policy limits for a single occurrence. Garfinkel then amended his complaint, arguing the right to a final judgment on the breach of contract claim, and adding a bad faith claim against Citizens under sections 624.155(1)(b)(1) and 626.954(1)(i)(3), Florida Statutes (2008). Citizens moved to dismiss the bad faith claim on the basis of sovereign immunity, but the trial court denied the motion, and Citizens sought the writ from the Fifth District Court of Appeal.

The issue specifically before the Court was whether Citizens is shielded by sovereign immunity from bad faith claims.

The enabling statute that created Citizens made it clear that Citizens is a government entity and not a private insurer. The Legislature made Citizens immune from all liability and suit with five exceptions; bad faith was not an exception. However, paragraph following the exceptions from immunity, section 627.351(6)(r)(2), provides:

2. The corporation shall manage its claim employees, independent adjusters, and others who handle claims to ensure they carry out the corporation's duty to its policyholders to handle claims carefully, timely, diligently, and in good faith, balanced against the corporation's duty to the state to man-age its assets responsibly to minimize its assessment potential.

Citizens argued that the plain meaning of the statute is that there are only five exceptions to its immunity and bad faith was not one of them. Garfinkel argued the requirement to act in good faith immediately following the exceptions from immunity suggests the Legislature intended a bad faith exception as well.

To resolve the issue, the Court applied standard principles of statutory construction. First, when a statute articulates exceptions, no other exceptions may be implied. As the Legislature specified only five exceptions to its grant of immunity, it would not be reasonable to think another grant would show up, unidentified as such, in a nearby but separate paragraph. Second, in construing statutes involving sovereign immunity, any waiver of that immunity must be clear and unequivocal. The paragraph explaining Citizens’ duty of good faith does not contain a clear waiver.

Garfinkel argued his claim existed under section 624.155, Florida Statutes, which provides that any person may bring a civil action against an insurer when damaged by the insurer’s failure to act in good faith to settle claims. Recognizing that section 624.155 applies to private insurers, Garfinkel argued Citizen’s bad faith liability comes from the above mentioned paragraph in the enabling statute. The Court explained the problem with this argument: “Garfinkel's complaint specifically pleads that bad faith liability is founded on section 624.155(1)(b). If Citizens is not an authorized insurer under section 624.155(1)(b), then it cannot be subject to bad faith claims pursuant to it.”

Additionally, the Court noted that the Legislature specifically declined to subject Citizens to bad faith claims during the 2007 legislative session. A bill before the Senate attempted to add language that would have made a claim arising under Citizens' duty to act in good faith one of the immunity exceptions by adding the word “or” after the five exceptions and before the subparagraph requiring Citizens to act in good faith. That bill was redrafted to exclude the word “or.” Additionally, a House bill that would have subjected Citizens to “all remedies” was not enacted. Accordingly, the Court concluded that recent legislative history suggested the Legislature did not intend for section 627.351(6)(r)2 to create a private right of action by policy holders against Citizens.

The Court further noted that Florida’s other “insurance risk appointment plans,” the Florida Insurance Guarantee Association (“FIGA”), and the Florida Medical Malpractice Joint Under Writing Association (“FMMJUA”), were endowed with similar immunity from bad faith causes of action. Finally, the Court explained that a cause of action for bad faith is not considered to be a willful tort that would give rise to a claim under the specific exceptions from liability.

In sum, the Court granted the writ of prohibition, holding that Citizens is immune from first-party bad faith claims pursuant to section 627.351(6)(r)1 and is not subject to bad faith liability under section 624.155(1)(b)(1).

Court Slip Opinion