CLAIMS HANDLING EVIDENCE STILL INADMISSIBLE
In Naze v. Universal Property & Casualty Insurance Company, Florida’s Fourth District Courts of Appeal (“Fourth DCA”) reaffirmed the longstanding rule that evidence of claims handling and bad faith is not admissible in a first party breach of contract action. Naze related to a water leak claim where the claim was denied due to the insured’s failure to produce documents as required by the policy.
During various points of the trial, the insured’s counsel made arguments and elicited testimony from witnesses that attempted to put Universal Property & Casualty Insurance Company (“Universal”) in an unfavorable light. For instance, the insured’s attorney during opening statement indicated the insurer was “flailing around” and not waiting for documents. The insured’s public adjuster made an off-hand comment that after reaching out to the insurer and receiving a response back from the insurer that it was working on the claim, the public adjuster stated that “of course, that turned into no response; after that, we never heard from them.”
The public adjuster went on to indicate that he requested an emergency action to assign a claims examiner when he learned that Universal had not assigned the claim to a claims examiner. He also indicated that once the claim was assigned to a claims examiner, he told the assigned claims examiner that it was not the claims examiner’s fault, “but intake really dropped the ball on this one…” Universal’s Corporate Representative testified that Universal had requested certain documents from the insured which it did not receive. In closing argument, the insured’s counsel argued that there could be no prejudice to the insurer since “there was no investigation”.
Throughout the trial, Universal’s moved for several mistrials regarding the admission of claims handling and bad faith argument and evidence. Subsequent to an unfavorable verdict, Universal moved for a new trial which was denied. Universal appealed to the Fourth DCA, which reversed and remanded the case for a new trial. The Fourth DCA re-iterated that a bad faith action does not accrue until the underlying lawsuit is resolved in the insured’s favor. The Fourth DCA found the admitted evidence was irrelevant to the issues pled and concluded the insured was able to paint Universal in a bad light and suggest its bad faith in handling the claim.
Joseph A. Matera, Esq.