Case Note Assignment

PERDIDO SUN CONDOMINIUM ASSOCIATION, INC.

v.
CITIZENS PROPERTY INSURANCE CORPORATION

for
Professor Stephen Davis, Esquire
Legal Environment in Business (BUL-6810)
Florida International University

by
Jose A. Mata
MBA Candidate
Florida International University

28 September 2014

Order Date: March 26, 2014.

Case Description: Perdido Sun Condominium Assoc., Inc. v. Citizens Property Ins.
Corp.
Case Citation: 129 So.3d 1210, 39 Fla. L. Weekly D213a (Fla. 1DCA 2014)
1st FL DCA Case No. 1D13-1951 (Perdido Sun Condominium Assoc.,
Inc. v. Citizens Property Ins. Corp.)
Appellant: Perdido Sun Condominium Association, Inc.
Appellee: Citizens Property Insurance Corporation
Plaintiff Below: Perdido Sun Condominium Association, Inc
Defendant below: Citizens Property Insurance Corporation
Appellant Attorney Firm: Liberis Law Firm, P.A. (Pensacola, FL)
Appellant Attorney who argued the case: Richard M. Beckish, Jr. (FBN: 738395)
Appellee Attorney Firm: Methe & Rockenbach, P.A. (West Palm Beach, FL) & Butler,
Pappas, Weihmuller, Katz & Craig, LLP (Tallahassee, FL)
Appellee Attorney who argued the case: Kara Berard Rockenbach (FBN: 0044903)
Synopsis of the Case:

According to court records, Perdido Sun suffered catastrophic damage from

Hurricane Ivan in 2004. Citizens, Floridas government created, insurer of last
resort, insured the property. Citizens refused to pay Perdido Suns claim and after
over four years of litigation and appeals, the Escambia County Circuit Court found
that Citizens breached its contract with Perdido Sun, multiple times. Perdido Sun
Condominium Assoc., Inc. v Citizens Prop Ins. Corp., Escambia County Case No.
2005-CA-000831.

Perdido Sun filed the current lawsuit in Escambia County, seeking to hold Citizens
liable for bad faith, which according to Floridas Bad Faith Statute is defined as,
Not attempting in good faith to settle claims when, under all the circumstances, it
should have done so, had it acted fairly and honestly toward its insured and with
due regard for his or her interests. Perdido Sun (and another Perdido Key
Condominium, San Perdido in a sister case) has alleged that, Citizens purposely

engaged in a pattern of obstruction, delay and avoidance in order to avoid its

obligation to pay Perdido Suns claim.

This case centers around argument over whether the Florida Legislature intended to
grant Citizens blanket immunity to bad faith or whether exceptions to the limited
immunity built into Citizens enabling statute allow Perdido Sun, and others
similarly situated, to sue Citizens for bad faith. In briefs to the Court, Citizens has
claimed that it is a government agency and thus is immune to bad faith liability,
regardless of its behavior. Perdido Sun has alleged that without the threat of bad
faith liability that Citizens has no incentive whatsoever to settle claims promptly and
fairly and can drag the claims process out nearly indefinitely, at worst facing the
prospect of paying policyholders only what it should have paid under the policy in
the first place.

Brief synopsis of what happened at the trial court:

The trial court dismissed with prejudice Perdido Suns complaint for damages
against Citizens Property Insurance Corporations failure to attempt in good faith to
settle Perdido Suns property insurance claim. While Florida provides a civil
remedy for persons damaged by an insurers failure to settle claims in good faith,
the circuit court found that Citizens was immune from suit because it had immunity.

Brief synopsis of appellant issues

Appellants Argument

What were the main points they were trying to make?

1. The trial court erred in dismissing their lawsuit because it considered Citizens
to have sovereign immunity as a State of Florida government agency.
2. That a bad faith claim is a willful tort
3. That this issue is of great public importance
4. Wants the Court to reverse and remand for a re-trial with a jury to determine
the element of bad faith and the willful nature of the tort.

At least 2 questions asked by the Court and the attorneys response.

1. Can bad faith rise to the level of an intentional or willful tort?

Answer: Yes it can. The analysis begins with what is a tort which is a
breech of a duty supplied by law which causes an injury or harm,. The
duty is supplied by the bad faith statute (624.155) which says that any
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person can bring a claim against an insurance company when that

person is damaged by the failure of that company to act in accordance
to the terms of the policy. (Beckish)
2. When the State (legislature) creates an agency or a part of the State
government does it specifically have to grant them sovereign immunity or do
they have it under the Florida Constitution?

Answer: Yes, they do because when the FL legislature created Citizens

Insurance they placed a good faith duty which becomes meaningless if
they have sovereign immunity. Second, the Legislature placed
language such as tax exemption for profits and interest on its debt
which it would not have had it provided immunity. (Beckish)

3. Statutory immunity is waived in the enabling statute?

Answer: Yes because the enabling statute provides for several

considerations and factors would not be there if they had it. If you do
give them immunity then all they are liable is breech of contract and
then Citizens can go into the 3D tactic of Delay, Deny and Defend until
the policyholders efforts are exhausted or accept a significantly
reduced settlement than they are entitled to or paid premiums for.

Appellees Argument

What were the main points they were trying to make?

o Citizens does have sovereign immunity and cannot be liable for bad faith and
has binding evidence. FL does not believe that bad faith is a tort.
o That Citizens is exempt from suit under the bad faith statute because it is not
an authorized insurance company.
o Wants the Court to affirm the lower courts decision to dismiss the claim by
Perdido Sun

Indicate at least 2 questions asked by the court and the attorneys response
1. Cant torts be created by statutes?

Answer: Answered by a threshold issue of whether Citizens meets the

definition of a willful tort against an insurance company. The statute
specifically identifies authorized insurance companies as subject to thei
statute of which Citizens was excluded by the FL legislature from

becoming. It is still a bona fide insurance company, but is not

authorized per the statute. (Rockenbach)
2. If FL does not believe that bad faith is a tort, then why can you still get
punitive damages?

Answer: Only if you are looking for punitive will it apply. The facts of
a bad faith action can rise to the level of a willful tort but only for
assaults and employee misconduct. It also would only apply in the
case of fraud. (Rockenbach)

Appellants Rebuttal

What were the main points they were trying to make.

1. Any willful tort is covered in the enabling statute, not as narrowly defined by
the Appellee.
2. Citizens has committed a willful tort by breech of contract with bad faith.
3. That Citizens is a government agency and granted sovereign immunity
protecting it from suit except in the case of willful tort such as assault but not
from bad faith.
4. That it was ridiculous to consider Citizens argument that it is exempt because
it is not an authorized insurance company because then all the other illegal
insurance provided would be equally exempt.
5. Policy consideration: If they are granted sovereign immunity then the whole
reason they were created, to help FL citizens in the case of property damage,
is virtually void and the citizens of FL will be in fact, unprotected.
6. If you do give them immunity then all they are liable is breech of contract and
then Citizens can go into the 3D tactic of Delay, Deny and Defend until the
policyholders efforts are exhausted or accept a significantly reduced
settlement than they are entitled to or paid premiums for.

Indicate 2 questions asked by the court and the attorneys response

1. Why would one be contract action and the other not?

Answer: Because in a third party action you are collecting for excess
damages as a result of a breech on contract. In the first party case you
are asking for more than damages but the punitive penalty for breech
the fiduciary trust and duty that good faith requires. (Beckish)
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2. N/A: No further questions were asked.

Conclusion

What did the court decide?

o The Court decided that Citizens did NOT have sovereign immunity in this area
and could be held liable by its policy holders for failing to abide by the terms of
the policy.
o The Court further decided that the issue was of great enough public interest that
it certified the question for the Florida Supreme Court to review.

Do you agree or disagree?

o Yes, I agree. Fundamentally the purpose of laws and more importantly that of
jurisprudence dictates fairness. While it sounds over simplistic careful analysis
of court proceedings are the proper application of the law as it pertains to a
particular situation. Given the premise that the law is fair (not always the case),
then the fundamental objective of the court is to reach a fair decision.
o In this case we have a corporation wanting to veil itself under the protection of a
government agency while continuing to behave as a bad-faith, abusive, profit
hoarding unethical corporation.
o Instead of paying bonafide claims by policyholders it began denying, then
delaying and finally when sued defending their position. In the place of last
resort, the Courts, Citizens Insurance then played its trump card of sovereign
immunity when stopped lawsuits.
o In the end Citizens would settle claims and give policyholders whatever it
deemed fair, which was significantly less than the policy promised. By
definition, Citizens is a not for profit corporation, but in this present case it
appears to be acting as a profit making entity.
o This position provided extremely profitable for Citizens and certainly paved the
way for other companies to use as a model for maximizing profits.
o However, in this case the First Circuit Court of Appeals decided that the
immunity that Citizens had was not sufficient to protect it from illegal, bad faith
practices by finding that bad faith CAN be a willful tort.
o The Court certified it so that the Florida Supreme Court will review and decide.
This was done in part because the Court did agree with Perdido Sun that the
matter was of great public importance as well as that it had reached a decision
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which contradicted a similar decision made by the Fifth Circuit Court of Appeal.
In cases of contradiction, then the Florida Supreme Court does have to resolve
the difference so that there can be uniformity in the State.