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Florida Second DCA rules that statute of limitations period for filing bad faith action did not begin running until trial Court approved stipulation based on modified Cunningham agreement between the parties

On August 11, 2021, in Wright Insurance Agency, Inc. et. al, v. Nationwide Mutual Fire Insurance Company, No. 2D19-1068, the Florida Second DCA reversed a trial court’s summary judgment for the defendant insurance company regarding a bad faith claim brought by its insured. The trial court granted the summary judgment on statute of limitations grounds. The actual motor vehicle accident on which the case was premised and in which the insured was the alleged at-fault driver occurred more than twenty years ago. In April 2011, approximately six years after the injured party filed her lawsuit against the at fault driver, Nationwide agreed to settle the lawsuit by entering in to a “stipulation and joint motion to stay.” The agreement was essentially what is known as a modified Cunningham agreement, see Cunningham v. Standard Guaranty Insurance Co., 630 So. 2d 179 (Fla. 1994), under which Nationwide agreed to pay the $100,000 policy limits, stipulate that the value of the overall damages claim was $550,000, and stay payment of the $450,000 balance until the insured obtained a bad faith judgment through a declaratory judgment action. The trial court approved the stipulation and stayed the case on April 16, 2012. However, the insured did not file the declaratory judgment action until May 2015. The trial court subsequently dismissed the case on statute of limitations grounds, after Nationwide argued in its motion to dismiss that the agreement became the functional equivalent of an excess judgment in April 2011 when the last party signed it, that the applicable statute of limitations period for the filing of the bad faith case was four years, and that May 2015 filing of the case was consequently untimely. The Second DCA disagreed, finding that the statute of limitations clock did not begin running until the trial court approved the agreement in April 2012, less than four years before the filing of the declaratory judgment action.