Citizens Property Ins. v. Manor House – July 2020

On October 4, 2019, the Florida Supreme Court granted petition to decide whether an insured, in a first-party breach of contract suit, can recover extra-contractual, consequential damages due to an insurer’s alleged failure to timely investigate and pay a claim. The insured in Citizens Property Insurance Corp. v. Manor House, LLC, et al., (Case No. SC19-1394) sought to recover lost rental income resulting from damage caused by Hurricane Frances in 2004. The trial court granted summary judgment in favor of the insurer on the basis that the insurance policy did not provide coverage for lost rent. On appeal, the Fifth District Court of Appeal reversed , holding that an insured may recover consequential damages on a breach of contract claim if the parties contemplated such damages. In so doing, the Fifth DCA employed the doctrine of “reasonable expectations” in interpreting the insurance policy. This doctrine has long been rejected by Florida courts in breach of insurance contract actions on the proposition that each parties’ obligations and remedies must be derived from the language of the policy. It should be noted that the Florida Legislature gave the insurer, Citizens Property Insurance Corp., immunity from bad faith claims when it created Citizens as Florida’s insurer of last resort. The insured contends that payments for the lost rents are contract-based “consequential damages” rather than damages for bad faith. The Florida Supreme Court will hear oral arguments on September 8, 2020.