FORT MYERS — A Florida court will allow a Naples country club to continue with its lawsuit accusing insurer Zurich American of bad faith in allegedly refusing to completely fund the country club's insurance claims for damage from Hurricane Irma.
According to a March 26 U.S. District Court for the Middle District of Florida opinion and order, the defendant, Zurich American Insurance, asked the court to dismiss the claims by the plaintiff, Grey Oaks Country Club Inc., that the defendant acted in bad faith in violation of Florida's Bad Faith Statute.
In September 2017, Grey Oaks experienced "extensive damage" after Hurricane Irma hit Florida, including damage to Grey Oak's golf course and property, which interrupted its business, according to the court filing. After the plaintiff filed a complaint with Zurich, a dispute arose over the degree of the hurricane damage, but four payments were made by Zurich to Grey Oaks for the claim.
The plaintiff alleges Zurich "withheld additional proceeds" due from the claim over the next several months and even sent a letter to the plaintiff stating that coverage was due and sent an additional payment. Grey Oaks states Zurich "dragged its feet" and withheld proceeds relating to the claim and tried to "negotiate a lower settlement" in violation of the state's bad faith statute.
Zurich argued the "bad faith claim" is premature and claiming that under Florida law, a bad faith claim "does not accrue until there is a determination of both liability and damages in the coverage case." However, Grey Oaks argues Florida courts recognize "insurers partial payment under a policy provides the liability and damages determination necessary" for a bad faith claim.
U.S. District Judge John Steele agreed with the country club stating: "There has been no determination as to the extent of damages suffered by Grey Oaks. Indeed, that is the heart of Grey Oaks’ breach of contract claim, claiming Zurich is liable for additional insurance proceeds. Thus, the court agrees with Zurich that a bad faith claim cannot be litigated simultaneously with a coverage dispute."