INSURANCE: HOMEOWNER’S INSURANCE: SINKHOLE COVERAGE: CONDITION PRECEDENT: CONTRACT FOR REPAIRS; CIVIL PROCEDURE: SANCTIONS: PERJURY: DISMISSAL WITH PREJUDICE TOO EXTREME

Pena v. Citizens Property Insurance Co.,  ___ So. 3d ___, 37 Fla. L. Weekly D946 (Fla. 2d DCA April 20, 2012)

The insureds sued the insurer when the parties disagreed over the value of the insureds’ sinkhole claim.  When the insurer moved for summary judgment on the ground that the lawsuit was premature because the insureds failed to perform a condition precedent –entering into a contract to repair the sinkhole damage — the insureds submitted false testimony in depositions and affidavits to defeat the insurer’s motion.  As a result, the trial court dismissed the insureds’ action with prejudice for perpetrating a fraud on the court.  Although the appellate court agreed that a fraud had been committed, it concluded that dismissal with prejudice was too harsh a sanction under the circumstances.  Although the insureds’ lawsuit was premature, their claim was meritorious:  “[The insurer] conceded that the [insureds] suffered a covered injury and that it was required to pay substantial damages.  Only the amount for full remediation of the property was contested.”  On remand, the trial court was instructed to “[1] consider evidence on the amount of fees and costs necessarily expended by [the insurer] from the filing of the premature complaint through the dismissal for its efforts in establishing the [insureds’] fraud  and . . . [2] enter a judgment for the lodestar amount.” The trial court was given the option of (1) “reinstat[ing] the suit and abat[ing] it until such time as all conditions precedent are satisfied,”  (2) “dismiss[ing] the suit with leave to amend the complaint,” or (3) fashioning a different method to effectuate [the insurer’s] sanction award reimbursement.”  The first option would entitle the insurer “to deduct the amount of the sanction award from any final judgment for damages in favor of the [insureds].”  The second option would entitle the insurer “to an immediate judgment for attorney’s fees and costs.”