          Supreme Court of Florida
                                   ____________

                                   No. SC14-2124
                                   ____________

                               KATHY JOHNSON,
                                  Petitioner,

                                          vs.

                      OMEGA INSURANCE COMPANY,
                              Respondent.

                                [September 29, 2016]

LEWIS, J.

      This case is before the Court to review the decision of the Fifth District

Court of Appeal in Omega Insurance Co. v. Johnson, 39 Fla. L. Weekly D1911

(Fla. 5th DCA Sept. 5, 2014), which arose from a claim for insurance benefits by

Kathy Johnson, the insured, submitted to Omega, her homeowner’s insurance

provider. The decision is in conflict with both Universal Insurance Co. of North

America v. Warfel, 82 So. 3d 47 (Fla. 2012), and Ivey v. Allstate Insurance Co.,

774 So. 2d 679, 683-84 (Fla. 2000). In conflict with our decision in Warfel, the

court below improperly applied a presumption of correctness that is limited to an

initial process for an investigative report during the litigation proceedings. In
conflict with Ivey, the district court incorrectly interpreted section 627.428, Florida

Statutes, which provides for an award of attorney’s fees when an insured recovers

benefits from an insurer. Therefore, the two issues we address today are (1)

consideration of whether the statutory presumption of correctness afforded to an

insurer’s internal report during the investigation process in the sinkhole statutes

extends to later trial proceedings, and (2) whether an insured’s recovery of

attorney’s fees under section 627.428, Florida Statutes, requires that there be bad

faith on the part of an insurance company in the denial of a valid claim, or simply

an incorrect denial of benefits. We have jurisdiction. Art. V, § 3(b)(3), Fla. Const.

We conclude that the decision below is in conflict with both Warfel and Ivey.

                   FACTUAL & PROCEDURAL BACKGROUND

       Section 627.428, Florida Statutes, outlines the provision under which an

insured may recover attorney’s fees incurred as a result of recovering on a valid

claim for insurance benefits. See § 627.428, Fla. Stat. (2015). Today we address

the interpretation of section 627.428, and we begin with a review of the actual text

of the statute:

             (1) Upon the rendition of a judgment or decree by any of the
       courts of this state against an insurer and in favor of any named or
       omnibus insured or the named beneficiary under a policy or contract
       executed by the insurer, the trial court or, in the event of an appeal in
       which the insured or beneficiary prevails, the appellate court shall
       adjudge or decree against the insurer and in favor of the insured or
       beneficiary a reasonable sum as fees or compensation for the insured’s


                                         -2-
      or beneficiary’s attorney prosecuting the suit in which the recovery is
      had.

      ....

             (3) When so awarded, compensation or fees of the attorney
      shall be included in the judgment or decree rendered in the case.

§ 627.428, Fla. Stat. (2015).1 We have consistently explained that the purpose of

this statute is to provide an adequate means to afford a level process and make an

already financially burdened insured whole again, and to also discourage insurance

companies from withholding benefits on valid claims. See Ivey, 774 So. 2d at 683-

84; Bell v. U.S.B. Acquisition Co., Inc., 734 So. 2d 403, 410-11 n.10 (Fla. 1999).

This statutory provision is of significant importance to the citizens of Florida.

      Florida law also includes several statutory provisions which specifically

address claims for sinkhole damage, commonly referred to as the “sinkhole

statutes.” In part, the sinkhole statutes require insurers to provide policyholders

the option of paying an additional premium for sinkhole coverage. §

627.706(1)(b), Fla. Stat. (2015). In this context, a sinkhole is described as “a

landform created by subsidence of soil, sediment, or rock as underlying strata are

dissolved by groundwater.” § 627.706(2)(h), Fla. Stat. Sinkhole “activity” is

defined as a “settlement or systematic weakening of the earth supporting the



       1. There has been no change in section 627.428, Florida Statutes, since the
year litigation was initiated.


                                         -3-
covered building” resulting from “contemporaneous movement or raveling of soils,

sediments, or rock materials into subterranean voids.” § 627.706(2)(i), Fla. Stat.

An insurer may require an inspection of the property prior to issuing a policy

which provides sinkhole coverage benefits. § 627.706(1)(b), Fla. Stat. Upon

submission of a claim for sinkhole damage, a professional engineer or geologist

selected exclusively by the insurer may examine the property to determine whether

a sinkhole loss covered under the insurance policy exists and make

recommendations regarding building stabilization and foundation repair. §

627.7072, Fla. Stat. Thereafter, the engineer or geologist exclusively selected by

the insurer tenders a report and certification to the insurer and the insured that

outlines the analyses, any test methods, damages, and recommendations for repair.

§ 627.7073(1), Fla. Stat. During this initial claims process, these findings and

recommendations by the insurer’s experts receive a statutory presumption of

correctness. § 627.7073(1)(c), Fla. Stat (2015).

      If the insured disputes whether the insurance company’s report is correct, the

sinkhole statutes also provide for a neutral evaluation procedure. § 627.7074, Fla.

Stat. (2015). Neutral evaluation is mandatory if requested by either party, section

627.7074(4), Fla. Stat. (2015), but the insurer bears the cost for the neutral

evaluation. § 627.7074(6), Fla. Stat. Court proceedings are stayed pending the

completion of any neutral evaluation. § 627.7074(10), Fla. Stat. Once the neutral


                                         -4-
evaluation is completed, the neutral evaluator prepares an independent report to

address whether there was damage to the insured property caused by sinkhole

activity, and an estimated cost for repairs. § 627.7074(12), Fla. Stat. Significantly,

the results of the neutral, independent evaluation are not binding in any subsequent

legal proceedings. § 627.7074(4), Fla. Stat.

      At the time of the events material to this case, Johnson was covered under a

homeowner’s insurance policy issued by Omega, which included sinkhole

coverage. On January 13, 2010, Johnson filed a claim with Omega to recover

damages resulting from conditions which Johnson believed to be sinkhole activity.

Specifically, Omega was alerted that there were cracks in the walls, as well as

separations between the walls and ceilings of the kitchen, dinette, bathrooms,

family room, bedrooms, foyer, windows, and garage of Johnson’s home. Cracks

were additionally found in the closets and floorboards. The extent of the cracking

was such that several of the doors inside the home were difficult to open. As a

result, Johnson was forced to hire a drywall company to repair the cracks in the

drywall and a carpenter to reset the doors. The fireplace and kitchen cabinets were

also displaced by separation, and cracks were additionally observed on the exterior

walls of the home and driveway. Moreover, in the utility room, a sag was

observed along the top of the cabinet that housed Johnson’s washing machine and




                                        -5-
dryer. As a result, Johnson had been unable to perform routine maintenance on

these appliances because the sag prevented these appliances from being moved.

      Omega selected and retained Rimkus Consulting Group to perform an initial

sinkhole investigation. After performing three Standard Penetration Test borings,

Rimkus concluded that there was no sinkhole activity present on Johnson’s

property. Although Rimkus conceded that the property was damaged, it attributed

the damage to causes that were not covered under the policy, such as volumetric

changes of clay-based soil underlying the site, concrete shrinkage, and defective

construction processes. As the insurance company’s initial report, these

conclusions received the initial statutory presumption of correctness pursuant to

section 627.7073(1)(c). Based on its report, Omega totally denied Johnson’s claim

for insurance coverage.

      Upon receiving the denial of benefits from Omega to cover potentially

hundreds of thousands of dollars in damages to her home, Johnson retained the law

firm of Corless Barfield Trial Group. Corless Barfield in turn retained a local

expert, Bay Area Sinkhole Investigation & Civil Engineering (BASIC), to perform

an independent investigation, examination, and report to determine the cause of the

damage to Johnson’s home. In its report, BASIC noted that the insurance

company’s report was a very minimal, incomplete investigation with regard to the

loss because it failed to perform a particle size analysis. The BASIC engineer


                                        -6-
opined that the exclusion of this required analysis rendered “an acceptable

evaluation of the laboratory testing results to be questionable.” After performing a

more extensive investigation, however, BASIC concluded that the damage to

Johnson’s home was, in fact, due to sinkhole activity.

      Johnson also incurred the additional expert fee expense of $15,000 to retain

BASIC. With the expenses looming larger and larger, Johnson attempted to save

her rapidly dilapidating home and filed a legal action against Omega for breach of

contract. In her complaint, Johnson requested the benefits to which she was

entitled under her policy, along with the accompanying attorney’s fees under

section 627.428. During the discovery process, Omega considered the BASIC

report, which had found sinkhole damage on Johnson’s property. Thereafter,

Omega continued to refuse payment and proceeded to request a neutral evaluation

process pursuant to section 627.7074. The parties agreed to stay litigation pending

the results of the neutral evaluation.

      Omega continued to reject the BASIC opinions and failed to pay any policy

benefits. Instead, Omega hired WRS Consulting Engineers (WRS) to perform an

additional evaluation. Following the WRS investigation, WRS agreed with BASIC

that sinkhole activity was present on Johnson’s property. Based on the extensive

damage observed, the WRS engineer recommended grouting, underpinning, and

remediation programs to stabilize the land and home, as well as repairs to the


                                         -7-
foundation. The total cost of repairs was estimated to be in excess of $200,000.

After this second adverse report, Omega finally advised Johnson that it would

abide by the WRS evaluation report and provide payment for the damages pursuant

to section 627.707(5)(b). Johnson was additionally advised that payment for the

damages to her property was conditioned upon her executing a contract with a

remediation company. In cooperation with that condition, Johnson entered into a

contract with Foundation Services for building stabilization and foundation repairs.

The cost of these repairs totaled $213,465.

      Following Omega’s acceptance of the WRS evaluation report and tender of

payment to Johnson, Omega filed an Answer and Affirmative Defenses, in which

Omega finally admitted that: (1) sinkhole damage was covered under the policy;

(2) Johnson had applied for benefits to cover her sinkhole damage; (3) Omega had

denied that claim; (4) sinkhole damage was, in fact, the cause of the damage; and

(5) Johnson was therefore entitled to benefits to cover the damages. Johnson

subsequently filed a motion for confession of judgment and a motion for attorney’s

fees, costs, and interest, contending that Omega’s admissions amounted to a

confession of judgment. Omega then changed its position and countered that

Johnson had failed to provide adequate notice of the dispute, suggesting that

Johnson was manipulating the dispute. Further, Omega asserted that Johnson was

absolutely required to show that Omega had acted wrongfully or in bad faith to be


                                        -8-
eligible for any fees under section 627.428. Johnson, however, argued that the

only facts necessary to recover fees under section 627.428 were those facts which

were already admitted by Omega: that Johnson had properly reported sinkhole

damage and made a claim for benefits, Omega denied the claim, and Omega

ultimately conceded that Johnson was entitled to benefits for sinkhole damage to

her home. In other words, Johnson’s position was that a finding of bad faith

conduct on Omega’s part was not required as a prerequisite to entitle her to an

award of statutory attorney’s fees.

      Before determining the motion for attorney’s fees, the trial court scheduled a

full hearing. After hearing the parties’ arguments, the trial court rejected Omega’s

contention that Johnson was abusing Florida law under section 627.428, and

determined that the admissions of record constituted a confession of judgment:

      THE COURT: I can’t find that there was a race to the courthouse
      here or that there was no real dispute. Of course, there was a real
      dispute. The policyholder made a claim, the claim was denied. They
      think that their property was damaged. The insurance company hired
      somebody of their own choosing, and, based on that, they said, any
      damage you may have is excluded, and we don’t owe you a nickel.
      And it wasn’t until after suit was brought that it turned out that, yes,
      we do owe you some money, and they agreed to pay it. That amounts
      to a confession of judgment, and you didn’t have to race to the
      courthouse. There’s no indication that you were doing that.

(Emphasis supplied.) Therefore, the trial court granted Johnson’s motion for

confession of judgment and attorney’s fees, and thereafter entered an order for




                                        -9-
Omega to pay attorney’s fees, taxable costs, and prejudgment interest to continue

to accrue at the statutory interest rate until paid in full.

       Omega subsequently sought review in the Fifth District Court of Appeal.

From the beginning of its opinion, the district court below framed the issue before

it with the presumption that section 627.428 requires some type of bad faith

conduct on the part of the insurance company before fees can be awarded. See

Johnson, 39 Fla. L. Weekly D1911. More specifically, in addressing that

precedent has required a “wrongful” denial of benefits to recover attorney’s fees

under section 627.428, the district court incorrectly understood “wrongful” in this

context to mean that the insurer must have denied the valid claim in bad faith. Id.

The court rejected Johnson’s contention that bad faith conduct is not relevant to

whether an insured is entitled to attorney’s fees under application of section

627.428 and the confession of judgment doctrine:

       Johnson claims that it does not matter whether Omega wrongfully
       withheld the policy benefits and forced her to file suit. The simple
       facts asserted by Johnson are that Omega denied her claim, she filed
       suit, and Omega paid the policy benefits thereafter. Johnson argues
       that is all she must show to entitle her to fees under the statute. The
       trial court was persuaded by Johnson’s argument and rendered the
       order awarding fees that we now review. Analyses of section 627.428
       and the confession of judgment doctrine reveal that Omega is correct,
       not Johnson.

Id. Relying primarily on State Farm Florida Insurance Co. v. Colella, 95 So. 3d

891 (Fla. 2d DCA 2012), the district court reasoned that the confession of



                                           - 10 -
judgment doctrine is only applicable when the insurance provider wrongfully

forces an insured to pursue litigation to obtain proceeds. Johnson, 39 Fla. L.

Weekly D1911. The court further stated that Johnson had not rebutted the

statutory presumption of correctness afforded to the original report performed by

Omega’s expert, which failed to find sinkhole activity. Id. Because the district

court determined that Omega did not act wrongfully or in bad faith, the court

ultimately held that section 627.428 and the confession of judgment doctrine did

not apply, and thus reversed the trial court’s order granting the attorney’s fees and

cost award. Id.

      This review follows.

                                     ANALYSIS

                      Statutory Presumption of Correctness

      This question presents a pure question of law and is, therefore, subject to de

novo review. See Jackson-Shaw Co. v. Jacksonville Aviation Auth., 8 So. 3d

1076, 1084-85 (Fla. 2008). The conflict between the case below and Warfel is

generated by a misapplication of the statutory presumption of correctness afforded

to insurer reports in the initial claims process under the sinkhole statutes, and the

separate and independent statutory provision that provides for the award of

attorney’s fees to insureds who recover benefits when an insurance company has

denied benefits due to insureds. Today, we resolve this conflict by separating the


                                         - 11 -
provisions that have been misapplied by the Fifth District and Respondent, Omega.

Specifically, because we explicitly held in Warfel that the statutory presumption of

correctness described in the sinkhole statutes does not extend to the litigation

context, Johnson did not have the burden of separately rebutting that initial

presumption to recover attorney’s fees under the terms of section 627.428, Florida

Statutes, even though all subsequent expert reports refuted the initial insurance

company report.

      In Warfel, we considered the proper application of an insurance statute in the

sinkhole claim context. See 82 So. 3d at 57. The plaintiff in Warfel filed an action

for breach of contract after the insurer had denied the claim based on the report of

the engineer selected and hired exclusively by the insurance company. Id. at 50.

Relevant here, section 627.7073(1)(c) had been amended to provide that the

findings and recommendations made by an engineer selected and hired by an

insurer during the initial claim investigation process are statutorily presumed

correct. Id. at 49-50. Based on this provision, and after the claim for benefits had

proceeded into a legal action, the trial court instructed the jury that Warfel had the

burden to overcome the statutory presumption of correctness afforded to the

insurer’s expert report, which was also the reasoning of the court below. Id. at 50-

51. The Second District Court of Appeal reversed and remanded for new trial,




                                        - 12 -
reasoning that the Legislature did not intend to create a burden-shifting

presumption in section 627.7073(1)(c). Id. at 51. This Court affirmed. Id. at 65.

      On appeal, the issue before this Court was whether the presumption of

correctness afforded to the insurer-engineer report during the initial claim process

in section 627.7073(1)(c) extended to trial proceedings. See id. at 51. There, we

examined both the plain language and legislative history of section 627.7073(1)(c).

With respect to the plain wording of the statute itself, this Court recognized that

when the Legislature intends to incorporate a burden-shifting provision into a

statute, overwhelming precedent indicates that it does so explicitly. See id. at 58.

However, no such explicit language exists in section 627.7073(1)(c). See id. We

thus concluded that to apply such a presumption absent direction in the statute

would render section 627.7073(1)(c) unconstitutional. Id. After a review of the

legislative history of the statute, the Court likewise concluded that “the legislation

is specifically designed to protect the public during the claims process,” not the

insurance company during litigation. Id. at 62 (emphasis supplied). “If at all,” we

explained, “the statutory plan is designed to require that insurance companies have

expert reports in the [initial] claims process before denying a request for benefits.”

Id. at 63 (emphasis supplied). Ultimately, we held that the presumption of

correctness in section 627.7073(1)(c) is specific and limited to the initial claim

adjustment process, and should not be applied to the trial process. Id. at 57-58


                                        - 13 -
(“[B]ecause the sinkhole statutes do not apply to the litigation context, the trial

court’s . . . treatment of this statute as evidentiary in nature in this case was

incorrect.”).

       Notwithstanding our explicit holding in Warfel, the Fifth District in the case

below applied the presumption in 627.7073(1)(c) to the litigation between Johnson

and Omega. Johnson, 39 Fla. L. Weekly D1911 (footnote omitted). Strangely

enough, the Fifth District specifically acknowledged our holding in Warfel.

Notably, however, the court below selected the following phrase from Warfel to

support its application of the presumption: “[T]he presumption of correctness

attached to the [professional engineer’s or geologist’s] report appears to be aimed

at shielding the . . . insurance companies from claims of improper denials of

claims.” Id. (quoting Warfel, 82 So. 3d at 57). Yet, the court below failed to

acknowledge the topic sentence of the same paragraph, where we plainly stated,

“Nothing in section 627.7073, the statute in question here, justifies application of

that statute to the litigation context.” Warfel, 82 So. 3d at 57 (emphasis supplied).

       Given that we explicitly declined to extend the statutory presumption of

correctness in the sinkhole statutes to the trial process, it is clear that the court

below acted in conflict with our decision in Warfel when it extended the

presumption of correctness to the initial insurance company report, which was

incorrect, during litigation and placed a burden on Johnson to further rebut it. The


                                          - 14 -
court below and Omega mistakenly blur the lines between the reliance on reports

of insurance company experts made during the initial claims process pursuant to

the sinkhole statutes and the attorney’s fees to which insureds are entitled under

section 627.428 when the insured prevails. Consistent with Warfel, we reiterate

that the initial claims process in the sinkhole statutes does not supersede or justify

an incorrect denial of benefits under section 627.428. We thus hold that the

presumption of correctness granted to the insurer’s investigative report in section

627.7073(1)(c) of the sinkhole statutes is only applicable to the sinkhole initial

claims process, and does not continue to apply during the trial stage. Nor does it

preclude an award of attorney’s fees under section 627.428 when an insured

ultimately prevails by recovering benefits.

                           Johnson’s Entitlement to Fees

      We next address the conflict between the case below and Ivey. Specifically,

the reasoning in the case below indicates that there is confusion in the Fifth District

as to whether a recovery of attorney’s fees under section 627.428, Florida Statutes,

requires bad faith or malicious conduct on the part of the insurance carrier as a

prerequisite for such an award. Because the precedent in this area of law clearly

rejects a bad faith or maliciousness requirement and the court below relied on

distinguishable jurisprudence, we decline to construct an additional hurdle of bad

faith for insureds to overcome. Therefore, consistent with the opinions of this


                                         - 15 -
Court and others, we make abundantly clear today that in the context of section

627.428, a denial of benefits simply means an incorrect denial.

      Generally, the custom in American law is that each party is responsible for

his or her own attorney’s fees, regardless of the outcome of the action. See State

Farm Fire & Cas. Co. v. Palma, 629 So. 2d 830, 832 (Fla. 1993). An exception,

however, arises when an agreement of the parties or a statute states otherwise. Id.

The Legislature created such a statutory provision in section 627.428, Florida

Statutes, which allows insureds who prevail against an insurance company to

recover attorney’s fees. § 627.428, Fla. Stat. Furthermore, it is well settled that

the payment of a previously denied claim following the initiation of an action for

recovery, but prior to the issuance of a final judgment, constitutes the functional

equivalent of a confession of judgment. See, e.g., Pepper’s Steel & Alloys, Inc. v.

U.S., 850 So. 2d 462, 465 (Fla. 2003) (“[Section 627.428] clearly provides that

attorneys’ fees shall be awarded against the insurer when judgment is rendered in

favor of an insured. In Florida, the payment of a settlement claim is the functional

equivalent of a confession of judgment or a verdict in favor of the insured.”)

(citation omitted); Ivey, 774 So. 2d at 684-85 (“[W]here an insurer pays policy

proceeds after suit has been filed but before judgment has been rendered, the

payment of the claim constitutes the functional equivalent of a confession of

judgment or verdict in favor of the insured, thereby entitling the insured to


                                        - 16 -
attorney’s fees.”); Wollard v. Lloyd’s & Cos. of Lloyd’s, 439 So. 2d 217, 218 (Fla.

1983) (“When the insurance company has agreed to settle a disputed case, it has, in

effect, declined to defend its position in the pending suit. Thus, the payment of the

claim is, indeed, the functional equivalent of a confession of judgment or a verdict

in favor of the insured.”); Barreto v. United Servs. Auto. Ass’n, 82 So. 3d 159, 162

(Fla. 4th DCA 2012) (“Here, because the insurer paid the full amounts claimed

only after suit was filed, it essentially confessed judgment.”) (emphasis supplied);

De Leon v. Great Am. Assur. Co., 78 So. 3d 585, 591-92 (Fla. 3d DCA 2011)

(“[A]ny success in an action on an insurance policy, let alone the full payment of

the asserted claim, requires an award of fees.”); Goff v. State Farm Fla. Ins. Co.,

999 So. 2d 684, 688 (Fla. 2d DCA 2008) (policyholder was entitled to attorney’s

fees because the insurer only agreed to grant benefits after the action was filed).

      Moreover, we have held that the bad faith or degree of “wrongfulness” of

the insurance company is not relevant to a recovery of attorney’s fees under section

627.428. See Ivey, 774 So. 2d at 684 (rejecting a bad faith requirement for section

627.428 attorney’s fees); Ins. Co. of N. Am. v. Lexow, 602 So. 2d 528, 531 (Fla.

1992) (“[The insurance company’s] good faith in bringing this suit is irrelevant. If

the dispute is within the scope of section 627.428 and the insurer loses, the insurer

is always obligated for attorney’s fees.”).




                                        - 17 -
      The need for fee and cost reimbursement in the realm of insurance litigation

is deeply rooted in public policy. Namely, the Legislature recognized that it was

essential to “level the playing field” between the economically-advantaged and

sophisticated insurance companies and the individual citizen. Ivey, 774 So. 2d at

684. Most assuredly, the average policyholder has neither the finances nor the

expertise to single-handedly take on an insurance carrier. Without the funds

necessary to compete with an insurance carrier, often a concerned policyholder’s

only means to take protective action is to hire that expertise in the form of legal

counsel. Counsel then have the ability and knowledge to hire an independent

engineer or other expert to prepare a report that either confirms or denies the

policyholder’s view of the cause of damages. For this reason, the Legislature

recognized that an insured is not made whole when an insurer simply grants the

previously denied benefits without fees. See id. The reality is that once the

benefits have been denied and the plaintiff retains counsel to dispute that denial,

additional costs that require relief have been incurred. Section 627.428 takes these

additional costs into consideration and levels the scales of justice for policyholders

by providing that the insurer pay the attorney’s fees resulting from incorrectly

denied benefits. Without this approach, we would leave the insured to foot the bill

not only for attorney’s fees, but also for experts to overcome the denial, which

would render insurance payments insufficient to cover the loss.


                                        - 18 -
       We directly addressed the issue of whether a wrongful denial of benefits in

the context of section 627.428 encompasses a requirement of bad faith conduct in

Ivey. The insured in Ivey applied for personal injury protection benefits after

having been hit by a car that was insured by Allstate Insurance Company. 774 So.

2d at 681. Allstate failed to conduct a proper investigation and only covered one

of the two injuries suffered by the insured. Id. The insured thereafter filed an

action seeking proper payment for the additional injury, and Allstate subsequently

agreed to pay the proceeds. Id. Because Allstate conceded that it had initially

denied the benefits in error, the insured then requested attorney’s fees pursuant to

sections 627.736 and 627.428. Id. The county court denied the fees because,

pursuant to section 627.736, the insurance company paid the balance within thirty

days of learning it had denied coverage in error. Id. The circuit court, sitting in its

appellate capacity, reversed and granted the fees. Id. However, the Third District

granted certiorari and reversed the circuit court’s grant of fees to the insured

because Allstate’s failure to pay the entire claim was due to an error in the doctor’s

bill. Id.

       Observing that the Third District was wrong, however, this Court accepted

jurisdiction and addressed the burden of insureds under the provisions in section

627.428 and the confession of judgment doctrine. There, we flatly rejected the

notion that some type of bad faith or menacing conduct was required for an insurer


                                         - 19 -
to have acted “wrongfully” under section 627.428. Id. at 684. Rather, we clearly

set forth that the existence of a dispute between the insurer and the policyholder

coupled with a favorable judgment or payment without judgment for the insured is

what justifies an award of attorney’s fees. Id. In other words, a “wrongful” denial

in this context means an incorrect denial, not one made in bad faith. As we said in

Ivey, “It is the incorrect denial of benefits, not the presence of some sinister

concept of ‘wrongfulness,’ that generates the basic entitlement to the fees if such

denial is incorrect.” Id. (emphasis supplied).

      Notwithstanding our rejection of the bad faith requirement in Ivey, the court

below and Omega continue to assert that Omega must have acted in bad faith or

maliciously to allow Johnson to recover fees under section 627.428. This position,

however, ignores clear binding legal precedent to the contrary. The language in

Ivey makes clear that the insurer’s intentions do not factor into a policyholder’s

recovery of fees; it is the fact that the denial of benefits was ultimately incorrect

that triggers the statute. Here, the facts are undisputed that Johnson submitted a

claim, Omega denied that claim, Johnson filed an action seeking recovery, and

Omega subsequently conceded that it had incorrectly denied the benefits based on

an inaccurate report. These facts alone warrant an award of attorney’s fees to

Johnson under section 627.428.




                                         - 20 -
      In avoiding our holding in Ivey, the court below primarily relies on an

incorrect interpretation of Colella, 95 So. 3d 891, to support its conclusion that the

confession of judgment doctrine should not be applied in this situation.

Specifically, the court below and Omega place tremendous weight on the Colella

court’s statement, “we are inclined to believe that ‘compliance with the sinkhole

statute’ goes a long way toward fulfilling State Farm’s obligations under its

contract.” See Johnson, 39 Fla. L. Weekly D1911 (quoting Colella, 95 So. 3d at

895). In simpler terms, Omega clings to that language and asks us to hold that

Omega is sheltered from liability for attorney’s fees simply because it performed

the minimum investigation required by law before erroneously denying Johnson’s

claim—despite the fact that subsequent reports confirmed that Omega was wrong

in denying the proceeds. However, this holding would not be justified under this

Court’s prior rulings, or Colella for that matter. The insurance company controls

the selection and hiring of its experts.

      While the initial facts of Colella may appear similar to those in the current

case, a full picture of the events that occurred in Colella separate the case from

Johnson’s situation here. As in this case, Colella also involved an insured who

made a claim for sinkhole damages. 95 So. 3d at 892. The insured was notified by

letter that her claim was denied because the investigation performed by the

insurer’s engineer indicated that sinkhole damage was not present. Id. The insured


                                           - 21 -
did not reply to the letter, and subsequently filed an action. Id. at 893. The

similarities, however, end there. Unlike the instant case, Colella was wrought with

indications of foul play by the insured. To begin with, Colella filed a civil remedy

notice with multiple allegations, but could not explain or describe the practices and

procedures that the insurer failed to perform. Id. at 893. Over Collela’s

objections, State Farm successfully sought a stay of proceedings pending the

outcome of a neutral evaluation. Id. Colella’s counsel refused to cooperate with

the neutral evaluator, which rendered the neutral evaluator unable to access the

inside of Colella’s home. Id. at 893-94. Based on the neutral evaluator’s limited

ability to investigate, he ultimately recommended that a third party be retained to

perform additional testing. Id. at 894. Rather than hire the additional engineer,

State Farm decided to simply pay the insurance proceeds to Colella and sent her a

letter conceding her entitlement to benefits. Id. At that point, the district court

noted that State Farm likely paid the claim to cut its losses and avoid the additional

cost and expense of litigating a case with an uncooperative insured. See id.

      The questionable conduct by the insured did not end there. Following State

Farm’s payment of the claim, Colella moved for partial summary judgment,

contending that the payment of the proceeds and the letter conceding her

entitlement to those benefits constituted a confession of judgment. Id. She further

alleged a claim under section 626.9541(1), Florida Statutes (2006), or Florida’s


                                         - 22 -
Unfair Insurance Trade Practice Act, in which wrongfulness or bad faith is an

issue. Id. In addition, Colella alleged that State Farm acted in “bad faith” as

defined in section 624.11, Florida Statutes (2006). Id. Under these counts, Colella

made several unfounded accusations against State Farm, including that it issued

unusable checks, conspired with the first engineer to certify a false report, and

improperly sought a neutral evaluation. Id. Moreover, in spite of her allegation

that State Farm refused to pay her damages, the record revealed that State Farm

had in fact offered to pay Colella’s attorneys fees and costs prior to the filing of the

amended complaint. Id. at 896. Ultimately, the district court concluded that

Colella’s complaint offered many legal conclusions with little to no factual detail

to support them, and thus held there was no breach of contract under these facts.

Id.

      Although the Colella court expressed that it considered the insurer’s

compliance with the sinkhole statutes, the full context of the opinion reveals that

the court’s primary concern was with the questionable actions of the insured, not

the insurer. Specifically, the district court’s repeated usage of the phrases “under

the undisputed facts of this case” and “in this context” to qualify its reasoning

indicated that the court was disturbed by the particular facts related to the insured

in that case. Indeed, implicit throughout Colella is a concern with allowing an

insured who litigates in bad faith to profit from a technicality. However, there is


                                         - 23 -
nothing in Colella to imply that an outcome in favor of the insurance company

should apply beyond those facts. We make no such assumption today.

       Contrary to the understanding of the court below and Omega, Colella does

not support a requirement of bad faith or malicious conduct under section 627.428.

The manipulation and foul play by the insured evinced in Colella is simply not

present in the case below.

       Unlike Colella, Johnson did nothing to indicate that she was acting

improperly or in bad faith. In fact, were it not for Johnson’s action in obtaining an

independent evaluator, she would have been denied hundreds of thousands of

dollars in benefits due to an apparently inadequate and incorrect investigation

performed by and on behalf of Omega. If anything, Johnson was the one who

made steps to correct a wrongful situation. All inspectors here, including an

independent expert, had the full cooperation of Johnson and not only performed a

full investigation, but admittedly performed a more thorough investigation than

that originally performed by the insurance company’s expert. Johnson did not

present her dispute with frivolous claims; she proceeded with cold, hard facts. We

therefore cannot endorse the Fifth District’s reasoning that the outcome in Colella

is justified in the case at hand.

       The court below similarly relies upon several cases in attempt to support its

assertion that the “wrongful” denial of a claim required by section 627.428 must be


                                        - 24 -
accompanied by the insurer’s bad faith; yet, a review of the facts of these cases

also indicate that it was the policyholder’s misleading conduct—not the

insurer’s—that was relevant to an award of attorney’s fees. See State Farm Fla.

Ins. Co. v. Lorenzo, 969 So. 2d 393, 398 (Fla. 5th DCA 2007); Liberty Nat. Life

Ins. Co. v. Bailey ex rel. Bailey, 944 So. 2d 1028, 1029-30 (Fla. 2d DCA 2006);

Gov’t Emps. Ins. Co. v. Battaglia, 503 So. 2d 358, 360-61 (Fla. 5th DCA 1987).

      As we have discussed, the overwhelming case law on the subject dictates

that both Omega and the court below were incorrect on the question of attorney’s

fees. Once an insurer has incorrectly denied benefits and the policyholder files an

action in dispute of that denial, the insurer cannot then abandon its position without

repercussion. To allow the insurer to backtrack after the legal action has been filed

without consequence would “essentially eliminate the insurer’s burden of

investigating a claim.” Ivey, 774 So. 2d at 684. We therefore disagree with the

hypothetical reasoning in Clifton v. United Casualty Insurance Co. of America, 31

So. 3d 826 (Fla. 2d DCA 2010), and disapprove of the suggestion that section

627.428 requires a finding of bad faith on the part of the insurance company. 2




      2. Since the issuance of the decision below, the Fifth District has similarly
denied attorney’s fees to a claimant who was originally denied coverage by his
insurer, but received benefits after filing suit. Explorer Ins. Co. v. Cajusma, et. al.,
No. 5D14-2608, 2015 WL 6757612 (Fla. 5th DCA Nov. 6, 2015). Like the
decision below, the denial in Cajusma contradicts well-established insurance

                                         - 25 -
      In sum, the law is clear. Section 627.428 provides that an incorrect denial of

benefits, followed by a judgment or its equivalent of payment in favor of the

insured, is sufficient for an insured to recover attorney’s fees. Extensive case law

further provides that an insurer’s concession that the insured was entitled to

benefits after a legal action has been initiated is the functional equivalent of a

confession of judgment. Here, it is undisputed that Omega did not admit its error

in denying benefits until after Johnson filed the action. Thus, there is no question

that Johnson is entitled to attorney’s fees in this situation.

      We cannot, as the court below held and Omega requests here, discourage

insureds from seeking to correct the incorrect denials of valid claims and allow

insurers to deny benefits to which insureds are entitled without ramifications.

Johnson proceeded with the only action that a non-expert claimant in conflict with

a major insurance company could take: she retained counsel and thus obtained

access to an independent expert. After performing a more thorough investigation

than that of the insurance carrier, the independent expert did find sinkhole damage

and confirmed that Johnson was right. These findings led to the hiring of a neutral

evaluator, who also performed a more thorough investigation than Omega’s initial

evaluator, and ultimately confirmed that Johnson’s claim for sinkhole damage was



jurisprudence, and we thus disapprove of it to the extent that it conflicts with this
opinion.


                                          - 26 -
incorrectly denied. We will not punish Johnson for actively seeking a solution to

the immense financial burden placed on her and the very real property damage to

her home. Thus, consistent with our decision in Ivey, we hold that a recovery for

attorney’s fees under section 627.428 requires an incorrect denial of benefits by the

insurance company, not a bad faith denial.

                                     CONCLUSION

      In light of the express and direct conflict between the decision below and our

decisions in Warfel and Ivey, we quash the decision below and remand to the trial

court for further proceedings consistent with this opinion.

      It is so ordered.

LABARGA, C.J., and PARIENTE, QUINCE, and PERRY, JJ., concur.
POLSTON, J., concurs in result.
CANADY, J., dissents with an opinion.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.

CANADY, J., dissenting.

      Because I conclude that the decision of the Fifth District in Omega

Insurance Co. v. Johnson, 39 Fla. L. Weekly D1911 (Fla. 5th DCA Sept. 5, 2014),

does not expressly and directly conflict with the decisions of this Court in

Universal Insurance Co. of North America v. Warfel, 82 So. 3d 47 (Fla. 2012), or

Ivey v. Allstate Insurance Co., 774 So. 2d 679 (Fla. 2000), I would dismiss this




                                        - 27 -
case for lack of jurisdiction under article V, section 3(b)(3) of the Florida

Constitution.

      Johnson and Warfel both deal with the same statutory presumption, but they

address the application of that presumption in different contexts. In Johnson, the

Fifth District addressed “whether Omega wrongfully withheld policy benefits to its

insured, Kathy Johnson, after she filed a claim for sinkhole damage under the

policy Omega issued to her, thereby forcing her to file suit to collect her policy

benefits.” Johnson, 39 Fla. L. Weekly D1911. The Fifth District considered

Omega’s actions under the detailed statutory process for investigating and

obtaining a neutral evaluation of sinkhole claims. The court held that the statutory

presumption of correctness in section 627.7073(1)(c), Florida Statutes (2009),

applied in circumstances that occurred before any trial proceedings were

conducted, and held that “application of the confession of judgment doctrine as a

basis to award fees under section 627.428 was error.” Id. The court also

recognized that “[t]his presumption is not an evidentiary presumption, but a pre-

trial ‘vanishing’ presumption requiring the production of some countervailing

evidence.” Id. (citation omitted).

      Warfel—in contrast to Johnson—considered the insurer’s assertion of the

statutory presumption at trial. We held in Warfel that “because the sinkhole

statutes do not apply to the litigation context, the trial court’s application of section


                                         - 28 -
90.304 to section 627.7073(1)(c) and the treatment of this statute as evidentiary in

nature in this case was incorrect.” Warfel, 82 So. 3d at 57-58. We further stated

that “[t]he presumption applies to the initial claim process and investigation that

insurance companies are required to follow in accepting or denying claims.” Id. at

58.

      Warfel thus concluded that the statutory presumption does not apply at trial,

but Johnson did not apply the presumption in the context of trial proceedings.

Rather, in determining whether Omega’s conduct forced Johnson to file suit,

Johnson applied the presumption to “the initial claim process and investigation,”

which Warfel expressly recognized is the proper context for application of the

presumption. Warfel does not suggest that the statutory neutral evaluation process

is excluded from the pre-litigation context in which the presumption is applicable.

Nothing in Warfel addresses the application of the confession of judgment doctrine

as a basis to award fees under section 627.428. And both cases are in agreement

that the presumption is not an evidentiary presumption. Warfel thus provides no

basis for the Court to exercise conflict jurisdiction over Johnson.

      Nor does Johnson expressly and directly conflict with Ivey. The two cases

deal with dissimilar statutory schemes. As explained previously, Johnson

addressed whether Omega wrongfully withheld sinkhole policy benefits due to

Johnson and thereby forced her to file suit to collect her policy benefits, and the


                                        - 29 -
Fifth District held that application of the confession of judgment doctrine as a basis

to award fees under section 627.428 was error in the context of the statutory

process established for the investigation and neutral evaluation of sinkhole claims.

Johnson, 39 Fla. L. Weekly D1911.

      In contrast, this Court in Ivey addressed the insurer’s burden of investigating

and paying a claim under the requirements of Florida’s no-fault insurance

scheme—specifically, the requirement to pay benefits within thirty days after

receipt of notice of the claim—in conjunction with section 627.428. Ivey, 774 So.

2d at 684. We held that

      under PIP law, the focus is outcome-oriented. If a dispute arises
      between an insurer and an insured, and judgment is entered in favor of
      the insured, he or she is entitled to attorney’s fees. It is the incorrect
      denial of benefits, not the presence of some sinister concept of
      “wrongfulness,” that generates the basic entitlement to the fees if such
      denial is incorrect.

Id. Ivey concluded that the “wrongfulness” of an insurer’s denial of a PIP claim is

irrelevant when determining whether an insured is entitled to attorney’s fees under

section 627.428. Id. In contrast, Johnson concluded that in the context of the

specific statutory process established for the investigation and neutral evaluation of

sinkhole claims that the wrongfulness or unreasonableness of an insurer’s denial of

a sinkhole claim is relevant when determining whether an insured is entitled to

attorney’s fees under section 627.428. Although Ivey held that the insurer’s

“payment after suit was filed operates as a confession of judgment,” nothing in

                                        - 30 -
Ivey suggests that its holding should be extended beyond the context of the PIP

statute. Id. at 684. There is no express and direct conflict with Johnson.

      This Court lacks jurisdiction under the Florida Constitution to review

Johnson. Accordingly, I dissent.

Application for Review of the Decision of the District Court of Appeal - Direct
Conflict of Decisions

      Fifth District - Case No. 5D13-1701

      (Marion County)

Timothy Wayne Weber and Joseph Patrick Kenny of Weber, Crabb & Wein, P.A.,
Saint Petersburg, Florida; and Morgan Barfield of Corless Barfield Trial Group,
Tampa, Florida,

      for Petitioner

Anthony John Russo and Ezequiel Lugo of Butler Weihmuller Katz Craig LLP,
Tampa, Florida,

      for Respondent




                                       - 31 -
