Opinion
Case No. 3:23cv12248-TKW-ZCB
2023-07-26
RICOL HOLDINGS, LLC, as assignee of the Estate of Richard K. Woodard, Plaintiff, v. WESTCHESTER SURPLUS LINES INSURANCE COMPANY, Defendant.
Garrett William Haakon Clifford, Vishio Forry LLC, Naples, FL, for Plaintiff. Chad A. Pasternack, Cozen O'Connor, Boca Raton, FL, for Defendant.
Garrett William Haakon Clifford, Vishio Forry LLC, Naples, FL, for Plaintiff. Chad A. Pasternack, Cozen O'Connor, Boca Raton, FL, for Defendant. ORDER GRANTING MOTION TO DISMISS T. KENT WETHERELL, II, UNITED STATES DISTRICT JUDGE
This case is before the Court based on Defendant's motion to dismiss (Doc. 8). Upon due consideration of the motion, Plaintiff's response in opposition (Doc. 11), Defendant's reply (Doc. 18), and the complaint and its attachments (Doc. 1-1 at 10-167), the Court finds for the reasons that follow that the motion is due to be granted.
I. Facts and Procedural Background
As reflected in the complaint and its attachments.
The Estate of Richard K. Woodard owned commercial property in Pensacola that was insured under a surplus lines policy issued by Defendant. The property suffered damage from rain and wind during Hurricane Sally in September 2020 while the policy was in effect. Thereafter, the Estate sold the property to Plaintiff and assigned its rights and benefits under the policy to Plaintiff.
In February 2021, Plaintiff reported the loss to Defendant and requested coverage under the policy. In March and April 2021, Defendant inspected the property, and in May 2021, Defendant's adjuster estimated that the property suffered $22,843.25 in damages. Defendant did not pay that amount, and according to Plaintiff, Defendant failed to communicate further with Plaintiff about the claim until March 2022 when it denied coverage for the loss in its entirety.
In May 2022, Plaintiff filed a civil remedy notice (CRN) with the Florida Department of Financial Services alleging multiple statutory violations arising out of Defendant's denial of coverage. Defendant did nothing in response to the CRN.
Plaintiff also demanded an appraisal under the policy, and in October 2022, an appraisal award was entered determining that the actual cash value (ACV) of the covered loss was $93,750 and that replacement cost value (RCV) was $125,000.
Defendant paid the ACV, but according to Plaintiff, Defendant has not paid "all the money due and owing" under the appraisal award—namely the $31,250 difference between the ACV and RCV, which the complaint refers to as "recoverable depreciation"—even though Plaintiff has repaired the damaged property.
The policy provides that Defendant "will not pay on a replacement cost basis for any loss of damage (1) [u]ntil the lost or damaged property is actually repaired or replaced; and (2) [u]nless the repair or replacement is made as soon as reasonably possible after the loss or damage." Doc. 1-1 at 75.
In March 2023, Plaintiff filed a Notice of Intent to Initiate Litigation, to which Defendant responded with a nominal settlement offer. Plaintiff rejected the offer and thereafter filed a complaint against Defendant in state court. The complaint asserts three counts—breach of contract (Count I); bad faith under § 624.155(1)(b)1., Fla. Stat. (Count II); and bad faith/unfair claim settlement practices under §§ 624.155(1)(a) and 626.9541(1)(i), Fla. Stat. (Count III)—and it seeks money damages, attorney's fees, and disgorgement of certain monies related to Defendant's handling of Plaintiff's claim.
Defendant removed the case to this Court based on diversity jurisdiction under 28 U.S.C. § 1332(a) and responded to the complaint with a motion to dismiss under Fed. R. Civ. P. 12(b)(6). The motion is fully briefed and is ripe for a ruling. No hearing is needed to rule on the motion.
II. Analysis
Defendant argues in the motion to dismiss that (1) the complaint should be dismissed in its entirety as a "shotgun pleading"; (2) that each count should be dismissed or re-pled for one reason or another; and (3) that some of the relief requested in the complaint is improper and should be stricken. Each argument will be discussed in turn.
A. Shotgun Pleading
A shotgun pleading is one that "fail[s] to one degree or another, and in one way or another, to give the defendants adequate notice of the claims against them and the grounds upon which each claim rests." Weiland v. Palm Beach Cnty. Sheriff's Off., 792 F.3d 1313, 1323 (11th Cir. 2015). The Eleventh Circuit has identified four general types of shotgun pleadings:
The first is a complaint containing multiple counts where each count adopts the allegations of all preceding counts, causing each successive count to carry all that came before and the last count to be a combination of the entire complaint. The second is a complaint that is replete with conclusory, vague, and immaterial facts not obviously connected to any particular cause of action. The third is a complaint that does not separate each cause of action or claim for relief into a different count. And the final type of shotgun pleading is a complaint that asserts multiple claims against multiple
defendants without specifying which of the defendants are responsible for which acts or omissions, or which of the defendants the claim is brought against.Barmapov v. Amuial, 986 F.3d 1321, 1324-25 (11th Cir. 2021) (cleaned up).
Here, Defendant argues that the complaint falls into the first category because each count incorporates all of the paragraphs of the preceding counts. Plaintiff responds that the complaint needed to incorporate the allegations in each prior count into the subsequent counts because the allegations "are material to the later counts" and "are necessary for a full understanding of the counts that come afterwards."
The Court disagrees with Plaintiff that it was necessary to incorporate all of the allegations in the prior counts into the subsequent counts, but that does not mean that it must be dismissed as a shotgun pleading. Indeed, even though the compliant is far from a model pleading, it still provides Defendant fair notice of the claims against it and the grounds upon which the claims rest. Thus, the complaint will not be dismissed in its entirety on shotgun pleading grounds. Accord T-12 Ent., LLC v. Young Kings Enters., Inc., 36 F. Supp. 3d 1380, 1388 (N.D. Ga. 2014) (concluding that even though the complaint bore one hallmark of a shotgun pleading—repeated incorporation by reference—dismissal was not warranted because that shortcoming would not prevent the defendant from preparing an answer or the court from deciphering the claims); Laney v. Malone, 2019 WL 4538520, at *5 (N.D. Ala. Sept. 19, 2019) (same).
B. Sufficiency of Claims
Defendant argues that the breach of contract claim in Count I is insufficiently pled and that the bad faith claims in Counts II and III are not ripe and are insufficiently pled. Each argument will be discussed in turn.
1. Standard of Review
"To survive a motion to dismiss [under Rule 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A claim is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. When reviewing a motion to dismiss, the Court "must view the allegations of the complaint in the light most favorable to Plaintiff, consider the allegations of the complaint as true, and accept all reasonable inferences therefrom." Karantsalis v. City of Mia. Springs, Fla., 17 F.4th 1316, 1319 (11th Cir. 2021) (quoting Omar ex rel. Cannon v. Lindsey, 334 F.3d 1246, 1247 (11th Cir. 2003)).
2. Breach of Contract Claim (Count I)
To state a claim for breach of contract, Plaintiff must allege "(1) a valid contract; (2) a material breach; and (3) damages." Friedman v. N.Y. Life Ins. Co., 985 So. 2d 56, 58 (Fla. 4th DCA 2008).
Here, Defendant argues that the complaint should be dismissed because it does not allege what provision of the policy it is alleged to have breached. The Court disagrees because even though the complaint does not refer directly to the RCV provision of the policy, it is apparent from the complaint as a whole that Plaintiff is claiming that Defendant breached that provision by not paying the difference between ACV and RCV (i.e., "recoverable depreciation") even though the property damage has been repaired. See Complaint at ¶¶34, 35, 97-99.
That said, the allegations about the repairs having been completed (paragraphs 98 and 99) are in Count II of the complaint and they are not incorporated by reference into the breach of contract count. Thus, the breach of contract claim needs to be re-pled to properly frame the issue in dispute.
Based on this disposition, the Court need not consider Defendant's argument that the allegations about improper claim adjustment in the breach of contract count (e.g., paragraphs 15, 18, 30, 31) should be stricken because they are not relevant to that claim. However, when the breach of contract claim is re-pled, it should only include the facts that are relevant to that claim or that provide background necessary to understand the claim.
3. Bad Faith Claims (Counts II and III)
"There are three prerequisites to filing a statutory bad-faith claim: (1) determination of the insurer's liability for coverage; (2) determination of the extent of the insured's damages; and (3) the required [CRN] must be filed under section 624.155(3)(a)[, Fla. Stat.]." Landers v. State Farm Fla. Ins. Co., 234 So. 3d 856, 859 (Fla. 5th DCA 2018).
Here, because it is undisputed that a CRN was filed, the parties' dispute over the ripeness of the bad faith claims turns on whether the appraisal award was a determination of Defendant's liability and the extent of Plaintiff's damages under the policy. If it was, then the bad faith claims are ripe; if it wasn't, then the bad faith claims are premature. See Blanchard v. State Farm Mut. Auto. Ins. Co., 575 So. 2d 1289, 1291 (Fla. 1991) (holding that a bad faith claim against an insurer does not become ripe until the extent of the insurer's coverage liability is determined); Keating v. Underwriters at Lloyds of London Syndicate 1458, 2020 WL 6385322, at *2 (N.D. Fla. May 11, 2020) ("[U]nless and until the underlying insurance dispute is resolved in Plaintiff's favor, she cannot show that she is 'entitled to relief' on the bad faith claim.").
Defendant argues that the appraisal award was not a determination of the extent of its liability or Plaintiff's damages because the award explicitly states that it "is made without consideration of other terms, conditions, provisions, or exclusions of the above policy which might affect coverage or the amount of the insurer's liability thereunder" and no determination has been made as to whether Plaintiff complied with the policy conditions necessary to recover RCV. Plaintiff responds that courts have held in similar cases that an appraisal award constitutes a determination of the insurer's liability and the insured's damages and that a bad faith claim can still be ripe even if there exists a dispute over the insured's failure to pay the full appraisal award.
The Court agrees with Defendant. The RCV in the appraisal award determined the potential extent of Plaintiff's damages, but it did not determine that Plaintiff is, in fact, entitled to that amount of damages. Likewise, although Defendant's payment of ACV was akin to a concession of liability and damages in that amount, see, e.g., Bryant v. GeoVera Spec. Ins. Co., 271 So. 3d 1013, 1020-22 (Fla. 4th DCA 2019), there remains a dispute as to Plaintiff's entitlement to the difference between ACV and RCV under the policy. It would be premature to determine whether Defendant acted in bad faith by not paying the RCV (or the difference between ACV and RCV) until it is determined whether Plaintiff satisfied all of the requirements in the policy necessary to recover RCV.
The Court did not overlook that a bad faith claim based only on Defendant's failure to pay up to the ACV sooner than it did might be ripe because Defendant's payment of the ACV is tantamount to a concession of its liability for coverage in that amount. However, even if Florida law allowed bad faith claims to be asserted on a piecemeal basis like that (and it is not clear that it does), there are two problems with allowing the bad faith claims in this case to proceed in this manner. First, it appears from the complaint that Plaintiff's bad faith claims are at least partially premised on Defendant's failure to pay the RCV, not just its failure to pay the ACV sooner than it did. And, second, construing the bad faith claims to be limited to the untimely payment of the ACV and allowing the claims to proceed in that manner contemporaneously with the breach of contract claim based on the failure to pay the difference between ACV and RCV would prejudice Defendant (and not be in the interest of justice) because information in Defendant's claim file that would generally be protected from discovery in a coverage dispute could be subject to discovery in connection with the bad faith claims. See Allstate Indem. Co. v. Ruiz, 899 So. 2d 1121, 1129-30 (Fla. 2005).
For example, in Vanguard Fire and Casualty Co. v. Golmon, 955 So. 2d 591 (Fla. 1st DCA 2006), the court held that the insured could not pursue a bad faith claim simultaneously with a breach of contract claim, even though the insurer conceded that it was liable to the insured in some amount, because the extent of the insured's damages had yet to be determined. Cf. Sammy Sterling Holdings, LLC v. U.S. Aircraft Ins. Grp., 2016 WL 8679130, at *5 (S.D. Fla. June 23, 2016) (explaining that an insurer's partial payment of the claim can satisfy the prerequisite for a stand-alone bad faith claim but not a bad faith claim that is brought simultaneously with a breach-of-contract claim seeking additional amounts under the policy).
For example, multiple paragraphs in the bad faith counts refer to Defendant's failure to pay the RCV (or the difference between the ACV and RCV) as evidence of Defendant's bad faith. See Complaint at ¶¶72, 95, 98, 99, 107. Also, Counts II and III of the complaint incorporate all of the allegations in Count I, which is based on Defendant's alleged failure to pay the difference between the ACV and RCV.
To this point, Plaintiff has already served a discovery request for production of "[a] complete copy of Defendant's claim file (including all electronically stored and paper documents) regarding the loss/claim described in Plaintiff's Complaint." Doc. 1-1 at 178.
The Court also did not overlook the state cases cited by Plaintiff for the general proposition that resolution of a claim by way of the appraisal process is sufficient to satisfy the first two elements of a bad faith claim. See Doc. 11 at 4-5 (citing Lugassy v. United Prop. & Cas. Ins. Co., 351 So. 3d 23 (Fla. 4th DCA 2022); Williams v. State Farm Fla. Ins. Co., 346 So. 3d 79 (Fla. 2d DCA 2022); Zaleski v. State Farm Ins. Co., 315 So. 3d 7 (Fla. 4th DCA 2021); Landers, 234 So. 3d 856). However, those cases are distinguishable because (1) they involved stand-alone bad faith claims, not bad faith claims brought contemporaneously with coverage disputes, and (2) the insurers in those cases paid the appraisal award in full, thereby resolving the entire claim and determining the full extent of Defendant's liability and Plaintiff's damages. Here, by contrast, Defendant's payment of the ACV did not resolve the entire claim (at least from Plaintiff's perspective) and the extent of Defendant's liability for the difference between ACV and RCV has not been determined because there is a dispute (in Count I of the complaint) as to whether Plaintiff complied with the policy conditions governing payment of RCV. Cf. Tropical Paradise Resorts, LLC v. Clarendon Am. Ins. Co., 2008 WL 3889577, at *2 (S.D. Fla. Aug. 20, 2008) ("[I]f a plaintiff establishes that the extent of its damages has been determined by an appropriate appraisal process, and the defendant neither contests liability as a whole, nor alleges that plaintiff violated any standard policy condition, an appraisal award may be a sufficient determination of liability and damages for its bad faith claim to proceed.") (emphasis added). Moreover, the fact that the amount of loss determined in the appraisal is "binding" on the parties (see Doc. 1-1 at 70) is immaterial to the ripeness determination because the appraisal did not determine whether Plaintiff satisfied the requirements in the policy that would entitle it to recover RCV rather than ACV—that is the dispute framed by the breach of contract claim in Count I of the complaint.
Finally, the Court did not overlook Vintage Bay Condominium Ass'n, Inc. v. Lexington Insurance Co., 2022 WL 4957004 (M.D. Fla. Oct 4, 2022), which was similar to this case in that it involved an action for breach of contract and bad faith based on the insurer's post-appraisal payment of ACV rather than RCV. However, that decision is not binding precedent and the Court finds it unpersuasive—and, thus, declines to follow it.
The court in Vintage Bay denied the insurer's motion to dismiss or abate the bad faith claim as premature because it concluded that the appraisal was "a determination of the insurer's liability . . . and the extent of the insured's damages" and that "[w]hether full payments have been made is not determinative of the ripeness of the bad faith claim." Id. at *4. Those conclusions were based solely on Williams, supra, which involved a stand-alone bad faith claim brought after the insurer paid an appraisal award in full and, as discussed above, provides no support for the proposition that an appraisal award is a determination of the extent of the insurer's liability that ripens a bad faith claim where the insurer does not pay the award in full (thereby conceding the extent of its liability) and instead disputes the insured's entitlement to the difference between ACV and RCV under the terms of the policy (thereby contesting the extent of its liability).
In sum, until the full extent of Defendant's liability and Plaintiff's damages are determined, the bad faith claims are premature. Thus, those claims are due to be dismissed without prejudice. See Keating, 2020 WL 6385322, at *2-3 (explaining that federal courts are required to dismiss, not abate, unripe bad faith claims).
Based on this disposition, the Court need not decide whether the bad faith claims were sufficiently pled.
C. Relief
Defendant argues that the requests for compensatory damages and disgorgement should be stricken from the prayer for relief in the complaint because those forms of relief are not available in this case.
With respect to consequential damages, Defendant argues that those damages are not available in a first-party insurance coverage dispute. That is correct, see Citizens Prop. Ins. Corp. v. Manor House, LLC, 313 So. 3d 579, 582 (Fla. 2021), but it is irrelevant here because consequential are only requested in the prayer for relief related to the bad faith counts, see Doc. 1-1 at 31, not the prayer for relief related to the breach of contract count, see id. at 15.
With respect to disgorgement, Plaintiff conceded in its response to the motion to dismiss that the request for that relief should be stricken because it is "duplicative" of the other relief sought. However, the dismissal of the bad faith claims renders this issue moot because the request for disgorgement was only made in the prayer for relief in those claims.
III. Conclusion
In sum, for the reasons stated above, it is ORDERED that:
1. Defendant's motion to dismiss (Doc. 8) is GRANTED insofar as the breach of contract claim in Count I of the complaint is DISMISSED without prejudice as insufficiently pled, and the bad faith claims in Counts II and III of the complaint are DISMISSED without prejudice as premature.
2. Plaintiff shall have 14 days from the date of this Order to file an amended complaint repleading the breach of contract claim.
3. Defendant shall answer or otherwise respond to the amended complaint within 14 days after it is filed. See Fed. R. Civ. P. 15(a)(3).
DONE and ORDERED this 26th day of July, 2023.