QBE Insurance Corp. v. Chalfonte Condominium Apartment Association, Inc.

Chalfonte Condominium Apartment Association, Incorporated (defendant) sued its insurer, QBE Insurance Corporation (plaintiff), in federal district court for failure to investigate and assess its hurricane-damage claim in a reasonable time. Chalfonte argued that QBE’s failure constituted a breach of the implied warranty of good faith and fair dealing. The state did not have a statutory first-party bad-faith cause of action at the time. A jury ultimately found in Chalfonte’s favor. However, the court reduced Chalfonte’s damages by $1,605,653 after applying the policy’s hurricane deductible, despite Chalfonte’s argument that the deductible provision was void and unenforceable because it did not strictly comply with statutory notice requirements pertaining to font size and wording. The jury found QBE’s policy noncompliant; however, the court dismissed Chalfonte’s statutory-notice claim, concluding that the legislature had not authorized a private cause of action for noncompliance. QBE appealed. On appeal, Chalfonte argued that the hurricane-deductible provision should not have been applied because it was noncompliant with the statutory notice requirements. The federal appellate court certified five questions to the Florida Supreme Court to help resolve the issues on appeal. Two of the questions regarded whether the state recognized a common-law first-party claim for breach of the implied warranty of good faith and fair dealing in investigating and assessing an insured’s claim. Two others regarded whether an insured could bring a first-party claim against the insurer for noncompliance with statutory notice requirements and whether the insurer’s noncompliance with those requirements rendered the hurricane-deductible provision void and unenforceable.