TALLAHASSEE – The Florida Supreme Court has blocked a request by apartment building owners to recover lost rental income resulting from litigation over hurricane damage in a ruling that holds the line on insurance damages awards.
In the case of Citizens Property Insurance Corp. vs. Manor House LLC et al., the high court reversed an appeals court decision that opened the door to apartment owners to receive rental income that was lost due to legal battles over hurricane repairs. That ruling was limited, however, to state-supported Citizens, which has immunity from claims involving so-called bad-faith actions.
Under Florida’s “bad-faith” law, an insured party can recover damages if the insurer fails to settle a claim in good faith when it could and should have done so. The Manor House case stemmed from damage sustained to buildings in 2004 as a result of Hurricane Frances and the years-long litigation between the parties over how much was owed to restore and repair the apartments.
“Citizens welcomes this much-anticipated Florida Supreme Court ruling,” Michael Peltier, the Citizens spokesman, told the Florida Record in an email. “The unanimous opinion benefits policyholders who would have been on the hook for higher premiums had the high court not reviewed this case and issued this decision.”
Manor House had filed a lawsuit against Citizens alleging a breach of contract due to the insurer failing to pay the “undisputed” cost of the hurricane damage and not providing the building owners with needed records to determine the losses sustained. The litigation sought to recover rental income that was lost due to delays in resolving the dispute, even though rental income was not specifically mentioned in the insurance contract, according to the Jan. 21 opinion.
Such consequential damages might be recoverable in instances of bad-faith actions, but Citizens, as the state’s insurer of last resort, is statutorily immune from such claims, the court said.
“The contractual amount due to the insured is the amount owed pursuant to the express terms and conditions of the policy,” the opinion states.
Had the court sided with the apartment building owners, the court would have established a means for a petitioner to recover damages that go beyond what’s outlined in the policy even when the insurer is immune from bad-faith claims, according to a recent legal analysis on the JD Supra website.