when “ Shall ” afigaauTomaTiCSTayaPPly ?
Construction law Section Chairs : DebbieCrockett – CheffyPassidomo , P . A . & AdamBild – BildLawallproceedingsinwhichthe insolventinsurerisobligated todefendapartyshallbe stayedfor6months .
When shall “ shall ” mean what it means ? Litigators have raised variations of this question in courtrooms across the State since September 27 , 2022 — when the Florida Department of Financial Services was appointed Receiver of FedNat Insurance Company (“ FedNat ”) for purposes of liquidation .
Nearly all construction litigation includes at least one named party whose property insurer defends it from the claims asserted pursuant to the terms of their respective insurance policy . FedNat insures contractors across the State of Florida , and it has regularly defended its insureds in litigation
and arbitration based upon FedNat ’ s duty to defend those contractors .
The Florida Insurance Guarantee Act (“ FIGA ”) provides , in part : All proceedings in which the insolvent insurer is a party or is obligated to defend a party in any court or before any quasi-judicial body or administrative board in this state shall be stayed for 6 months . § 631.67 , Fla . Stat . ( 2022 ) ( emphasis added ).
The above language may appear straightforward to some and provide that FedNat ’ s liquidation triggers an automatic 6-month stay in all proceedings in which FedNat is obligated to defend its named insured . Indeed , Florida District Courts of Appeal agree , and hold that “[ a ] FIGA automatic stay applies not
just to an individual party , but to the proceeding itself .” 1 “ The stay is required in order to allow FIGA , who must step in to replace the insolvent insurer , time to investigate , evaluate and defend the claims . [ FIGA ’ s ] ability to do so would be seriously impaired without the sixmonth stay . In addition , [ insureds ] are protected by the stay since FIGA will be in a better position to determine whether to settle a claim , without incurring expensive litigation .” 2 The above decisions are not incongruous with decisions in other districts , and thus are binding on all trial courts . 3
“ Not so fast , my friend !” 4 Several trial courts have interpreted Section
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