Florida high court forecloses recovery for extra-contractual damages in first-party breach of contract actions

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The Florida Supreme Court recently issued its opinion in Citizens Property Ins. Corp. v. Manor House, LLC, --- So. 3d ----, 2021 WL 208455 (Fla. Jan. 21, 2021), in which it reiterated the long-standing principle that extra-contractual consequential damages are not recoverable in first-party breach of contract actions.

Citizens insured nine apartment buildings owned by Manor House that were damaged by Hurricane Frances in the fall of 2004. Manor House presented claims to Citizens and Citizens initially paid close to $2 million. Thereafter, a dispute arose over the scope of damages and Manor House subsequently filed suit seeking prompt payment of the allegedly “undisputed” amount totaling $6.4 million and for Citizens to engage in the policy’s appraisal procedures. The trial court stayed the action and directed the parties to move forward with the appraisal. After completion of the appraisal, Citizens paid an additional $5.5 million to Manor House in accordance with the umpire’s award. 

Manor House then filed suit alleging Citizens breached the policy for failing to properly adjust the loss, pay the undisputed amount, honor Manor House’s appraisal demand, and timely pay the appraisal award. Manor House sought to recover extra-contractual damages related to rental income that it lost due to the delay in repairing the apartment complex as a result of Citizen’s delay. The trial court granted Citizen’s partial motion for summary judgment on the breach of contract claim regarding lost rental income since the policy did not provide coverage for lost rent.

On appeal, the Fifth District reversed the trial court’s ruling, holding that “when an insurer breaches an insurance contract, the insured is entitled to recover more than the pecuniary loss involved in the balance of the payments due under the policy in consequential damages, provided the damages were in contemplation of the parties at the inception of the contract.” The Court found that “[i]n granting summary judgment, the trial court denied Manor House the opportunity to prove whether the parties contemplated that Manor House, an apartment complex, would suffer consequential damages in the form of lost rental income if Citizens breached its contractual duties to timely adjust and pay covered damages.” The Court, however, certified a question to the Florida Supreme Court: In a first-party breach of insurance contract action brought by an insured against its insurer . . . does Florida law allow the insured to recover extra-contractual, consequential damages?

The Florida Supreme Court answered the certified question in the negation and reversed the Fifth District’s ruling, holding that only those damages covered under the express terms of the policy were recoverable in first-party breach of contract actions. Because the policy did not provide coverage for lost rental income, Citizens was entitled to summary judgment. The Supreme Court specifically held that extra-contractual consequential damages can be potentially recovered only through a separate first-party bad faith action.


Citizens re-affirms Florida’s long-standing principles of insurance contract interpretation and reflects the Court’s refusal to allow recovery in first-party breach of contract actions beyond what is expressly permitted by the terms of the policy.

Read others items in Coverage Digest - February 2021