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Florida Supreme Court Issues a Favorable Ruling for Homeowners Involved in an Insurance Dispute


The Florida Supreme Court issued a favorable ruling for homeowners involved in an insurance dispute.  In John Robert Sebo v. American Home Assurance Company, the Florida Supreme Court was asked to determine whether coverage existed under an all-risk policy when multiple perils combined to create a loss and at least one of the perils is excluded by the terms of the policy.   The court concluded that coverage did exist in such a scenario.  In other words, the Florida Supreme Court decided that insurance companies should not deny coverage for property damage just because it had more than one concurrent cause so long as the policy covers one of the causes.

To decide whether coverage existed under the policy, the Florida Supreme Court first had to determine which was the proper theory to apply, the Concurrent Causation Doctrine (“CCD”) or the Efficient Proximate Cause theory (“EPC”). Under the EPC, coverage exists for a covered peril setting into motion an uncovered peril, but not visa versa.  Under the CCD, coverage exists where an insured risk constitutes a concurrent cause of the loss even where the insured risk is not the prime or efficient cause of the accident.

In this case, Sebos, an insured homeowner, had a policy which covered rain and hurricane damage but not damage from construction defects.  His house was damaged during Hurricane Wilma because of the rain and construction defects.

The Court found that there was no reasonable way to distinguish the probable cause of Sebos’ property loss since the rain and construction defects acted in concert to create the destruction.  It further stated that EPC should not be used because no efficient cause could be determined.  Finally, the Court looked at the plain language of the policy and found that the Insurers did not write into the policy any clauses to explicitly avoid applying CCD.  The policy’s plain language did not preclude recovery.

The Court also stated that the trial court can consider the amount of settlement as a post-judgement offset.

The dissent argued that the question of whether to apply CCD or EPC was not raised at the trial court or the Second District Court and so, the issue should not have been addressed.


Consumers Prevail in Fight Over Assignment of Benefits

AdobeStock_66625883State lawmakers have been appointed the task of deciding on the controversial issue of what is known as “assignment of benefits.” An appeals court decided that lawmakers rather than the court system would have the ultimate say on this issue. The appeals court also declined to certify the question to the Florida Supreme Court.  Consequently, Florida Consumers have prevailed in their fight with insurance companies over assignment of benefits

An “assignment of benefits” involves homeowners signing over their insurance policy benefits to contractors in return for repair services. This comes up a lot in cases which involve water damage, in which contractors fix the homeowners water issue and in turn seek payments from the insurance company.

The insurance industry feels that this practice causes inflated prices and fraud on the part of the contractor. Contractors, on the other hand, feel that the practice helps homeowners in choosing a contractor quicker when in need of emergency repairs.

The three Judge panel in Florida’s First District Court of Appeal concluded that, “it is for the legislative branch to consider this public policy problem, not the courts, at this juncture.” Additionally, Judge Makar wrote, “Legislative review provides a more detailed inquiry into the current situation in the industry and greater flexibility in achieving meaning reforms, if deemed necessary.”

As we previously discussed, earlier court decisions such as in One Call Property Services, Inc. v. Security First Insurance Company, ruled that post-loss assignments of a claim are allowed even when the insureds policy has anti assignment and loss payment clauses. The appeals court in One Call also stated that an insurance policy does not preclude an assignment of post-loss claims even when payment is due. Additionally, standard loss payment provisions merely address the timing of the payment and in fact contemplate a lawsuit before payment is due.

One Call seems to shed light on the First District Court of Appeals ruling. The First District Court of Appeals seems to deal with homeowners assigning over benefits to the contractor upon hiring and before payment is due or services are rendered. One Call has ruled post-loss claim assignment can survive even in opposition to anti-assignment clauses and loss payment clauses. The legislature will likely have to tackle the question of whether or not contractor can get into an assignment of benefits agreement prior to the work being performed or payment being due. It seems as though the court has deemed this as a public policy issue rather than a question for the courts, which will now be in the hands of the legislature.

Appellate Court Rules that Post Loss Assignment of Benefits are Permissible

court houseA Florida appellate court ruled that post loss assignment of benefits are permissible.  The 4th District Court of Appeal of Florida was tasked with deciding whether or not payment must be due under the loss payment provision before an insured may assign a post-loss claim under the policy. This ruling will have an impact on contractors and homeowners dealing with their insurance company.

In One Call Property Services, Inc. v. Security First Insurance Company, One Call performed emergency water removal services to an insured homeowner. The insured homeowner assigned their rights to insurance proceeds to One Call as payment.

One Call then filed a complaint for breach of contract against the insurer Security First who refused to reimburse One Call for its services. Security First reasoned that the assignment was invalid pursuant to the policy’s anti assignment and loss payment clauses, and thus the insured sought to assign unaccrued rights under the policy.

While the trial court dismissed the complaint, the appeals court reversed. The appeals court maintained that in ruling on a motion to dismiss, a trial court is limited to the four corners of the complaint and its incorporated attachments, not other cases.

On the merits of the issue, the appeals court found that even when an insurance policy contains an anti-assignment clause, an insured may assign a post-loss claim. The court based this ruling upon well settled case law.

Moreover, the court held that a standard loss payment provision in an insurance policy does not preclude an assignment of a post-loss claim even when payment is due. The appeals court followed the opinion of the Second District and maintained that the language did not create a contractual bar to assignment. Standard loss payment provisions merely address the timing of the payment and in fact contemplate a lawsuit before payment is due.

However, the appeals court declined to decide on whether the post-loss assignment violated the public adjuster statute, the statute governing insurable interests, or whether partial assignment needed the consent of the insurer.

This ruling reaffirms well settled case law that an anti assignment clause nor a loss payment clause will bar assignment of a post-loss insurance claim.  In short, as long as the insured complies with all policy conditions, a third-party assignee may recover benefits on a covered loss.

Insurance Claims: Coverage Defense Waived by the Insurance Company because they Waited too Long to Assert it

Fire DamageA Florida appellate court recently concluded an Insurance Company’s coverage defense had been waived because the insurance company waited too long to assert them.

Axis Surplus Insurance Company vs. Caribbean Beach Club Association, Inc., 2014 WL 2900930, (2nd DCA 2014), involved a fire loss.  In April of 2003, a fire swept through the time share condominium in Ft. Myers Beach causing extensive damage to the property.  The insured had purchased an insurance policy that included coverage for fire damage.  The insured had also purchased Law and Ordinance coverage for an additional premium.

The insured made a claim for fire damage.  Both the insurance company and the insured knew that Lee County might enforce the “50% rule” contained in its ordinances. The 50% rule mandates that if a building is more than 50% damaged, any reconstruction or repair must comply with current building codes. If Lee County enforced the 50% rule, the insured would have to raise the entire building to meet existing flood elevation requirements.

Both the insurance company and the insured cooperated in a common goal of repairing, not replacing, the damaged building; they tried to convince Lee County not to enforce the 50% rule. Unfortunately, in November 2004, some nineteen months after the fire, Lee County informed both the insurance company and the insured that it would enforce the 50% rule. Therefore, the insured would be required to replace its building to satisfy current flood elevation codes.

After receipt of this news, the insured continued to cooperate with the insurance company.  But things changed some 19 months later when the insurance company, for the first time, informed the insured that it would rely on the two year clause in the Law and Ordinance Coverage endorsement to deny payment for the increased construction cost because the replacement was not completed.  Except for the general, non-specific, reservation of rights letter, the insurance company had never raised the two year clause previously with its insured.

Litigation between the insurance company and the insured followed.  The trial court granted summary judgment in the insured’s favor, and an appeal followed.  On appeal, the appellate court sided with the insured.  In so doing, the appellate court reasoned that the insurance company waited too long to assert the coverage defense.

The Appellate court concluded that the insurance company’s conduct had in fact waived the coverage defense it attempted to assert later.  It noted that that if an insurance company intends to rely on a reservation of rights, that it should specifically inform the insured of all the valid coverage defenses as soon as practicable.  In this instance, the insurance company simply waited too long.  In this case, the insurance company’s failure to bring the coverage defense to the insured’s attention, even though the insured expected the entire claim to be paid and the insurance company continued to adjust the entire claim after the two-year expiration, were unequivocal acts inconsistent with invoking the forfeiture. In other words, when an insurance company acquiesces to an insured’s failure to strictly adhere to a timetable of payment or performance, courts are inhospitable to the insurer’s sudden invocation of strict enforcement of forfeiture provisions.

Who Determines if the Examination Under Oath was Meaningful?

examination under oathExaminations Under Oath are an important part of an insurance company’s investigation of an insurance claim.  We have previously discussed the importance of EUO’s and how they impact your insurance claim.  But who determines  if the examination under oath (EUO) was meaningful?

We have previously discussed the importance of not only fully cooperating with an insurance company’s investigation of the claim, but to ensure that you attend an EUO when requested to do so.  Indeed, failure to sit for an EUO may result in the denial of the insurance claim.  On the other hand, however, EUO’s do have their limits.  They are not open ended expeditions for an insurance company to inquire on topics that go beyond the insurance claim at issue.

But what happens when an insured sits for an EUO and the information provided is less than “perfect.”  Is an “inadequate” EUO grounds for an insurance company to deny the claim?

That was the issue the issue the Fourth District Court of Appeal was confronted with him in Solano v. State Farm, 2014 WL 1908827 (4th DCA 2014).  In Solano, State Farm was initially presented with a Hurricane Wilma claim.  State Farm initially agreed to pay Solano for the damage.  After the initial payment was made by State Farm, Solano requested that the claim be re-opened in order to seek greater compensation.

Once the claim was re-opened, State Farm requested that Solano appear for an EUO.  Solano appeared for the EUO, and answered questions.  However, his wife failed to appear for an EUO.  State Farm requested that Solano’s public adjuster also appear for an EUO, but the public adjuster took the position that State Farm could not compel him to appear for an EUO.

Solano eventually filed a lawsuit against State Farm.  At the trial level, the trial judge granted summary judgment in State Farm’s favor on grounds that the Solano’s wife and public adjuster’s failure to appear for the EUO barred the claim.  On appeal, however, the Fourth District Court of Appeal reversed.

The appellate court noted that there was not a total failure to comply with the EUO request made by State Farm.  Indeed, Solano had appeared and answered questions during his EUO.  The appellate court also noted that State Farm could not demonstrate that it could compel the public adjuster to appear for an EUO.  Moreover, the appellate court also noted that while the public adjuster could not be compelled to the EUO, the public adjuster had nonetheless provided documentation to State Farm and even met with State Farm, at the property, to discuss the claim.  The appellate court noted that State Farm should have had enough information to either settle this claim with Solano or go to appraisal.

Why Won’t Your Insurance Company Pay You If Your Boat Sank?

Sunken BoatYour boat sank.  You timely paid all of your insurance premiums.  Yet the insurance company does not want to pay you for your loss.  The question becomes, why won’t your insurance pay you if your boat sank?

It should come as no surprise, but insurance companies will argue that that the claim is either not covered or excluded based on the wording of the subject insurance policy.  Therefore, if your boat has sunk, and you are in doubt regarding the scope of your insurance coverage, then you should contact our office today to discuss your claim.

It is not uncommon for an insurance company to argue that the loss was not covered because an “accidental physical loss” had not occurred.  The basic requirement that there be some evidence of an “accident” in order for coverage to exist under a policy of marine insurance, termed the “fortuity rule,” is a basic and well established principle of federal maritime law.

In Great Lakes Reinsurance v. Soveral, 2007 A.M.C. 672 (S.D. Fla. 2007) the boat sank at its mooring located at the insured’s weekend home in the Bahamas.  The boat had been left uncovered by the insured so that rainwater accumulated and eventually sank the vessel when the batteries that powered the bilge pumps gave out.  Given those facts, the court concluded that the water entering an uncovered vessel during rainy season was not fortuitous that would call for the existence of insurance coverage.  The court reasoned that since nothing of an accidental nature had occurred that there could be no insurance coverage.

Moreover, a warranty of seaworthiness by the owner of the boat is implied in every policy of insurance insuring a boat.  A breach of this duty will result in the denial of liability for loss or damage caused by the proximity of such unseaworthiness.  So when a boat sinks, for instance, at its mooring in calm waters, a presumption often arises that the vessel was unseaworthy.  That unseaworthiness will often lead to a denial of the claim.

Then there are other provisions in the insurance policy that an insurance company will look to in order to attempt to deny the claim.  Some of the most common exclusions include exclusions for wear and tear or gradual deterioration and lack of maintenance.  In short, if you fail to take good care of your boat then the insurance company may use that lack of care to deny your claim.

Court Rules that Homeowner’s Insurance Claim is Not Time Barred

In Linares v. Universal, the Third District Court of Appeal again had to decide whether or not a homeowner’s claim against an insurance company for property damage was time barred.

In this case, the insurance company sought to defend the claim on technicalities.  It argued that the homeowner’s claim failed because the lawsuit was not filed within Florida’s five year statute of limitations.  The trial court agreed, and an appeal ensued.

On appeal, the appellate court reversed the trial court’s ruling.

Specifically, the homeowner had sustained damage to his property following Hurricane Wilma in 2005.  After that the homeowner then submitted a claim to his insurance company seeking payment for his damages.  The insurance company wrote a letter in Feb. of 2006 saying the value of the homeowner’s claim fell within his deductible.  However, the insurance company did not deny the claim.  Rather, the insurance company requested that the homeowner provide the insurance company with more information should the homeowner come up with more information to support his claim.

Some three years later, the homeowner provided the insurance company with a report of a private adjuster estimating the damages to exceed the policy deductible by tenfold.  The insurance company then sought to take the homeowner’s examination under oath and secure a sworn proof of loss from the homeowner.  The homeowner complied.  After that the insurance company denied the claim in August of 2012.  In July of 2012, the homeowner filed suit.

The insurance company fought the claim by arguing that the homeowner’s claim was time barred in that the lawsuit was not filed timely.  The appellate court disagreed and noted that the statute of limitations does not start to run until the last element constituting the cause of action occurs.  This typically occurs at the time the insurance contract is breached.  The appellate court reasoned that the insurance contract was breached at the time the insurance company sent its denial letter in August of 2012.

The appellate court also noted that  Florida’s legislature amended the statute of limitations for property insurance claims in 2011 by specifying that such actions begin to run from the date of loss.  However, that amendment does not apply retroactively and did not apply to this case.

Please feel free to contact us to discuss your property damage claim.

Insurance Coverage Disputes – Appellate Court Rules That Fluids Excreted From a Dead Body Are Not Covered By Insurance

We as lawyers are often see the same type of case over and over again.  But every now and again a strange case leaps off the pages of the law books containing some obscure or bizarre facts.

A case decided by Florida’s Fourth District Court of Appeal is such a case.  In that case, the appellate court was left with the daunting task of deciding an insurance coverage dispute as to whether or not a claimant was entitled to damages caused by the fluids excreted by her neighbor’s dead body.  The appellate court concluded that such a claim was not covered.

The facts of this case are unusual.  A condo owner felt she was entitled to relief as a result of the damages caused by her neighbor’s dead body. The decomposing dead body leaked body fluids that caused damage to the aggrieved condo owner.  The decomposed body leaked bodily fluids, which infiltrated the walls and the apartment causing damage.

That condo owner was then presented with the difficult task of convincing the courts that a dead and decomposing body, which leaks bodily fluids, is considered an explosion under a home insurance policy.

Both the county courts judge and the state’s Fourth District Court of Appeal ruled in favor of the insurance company.

The condo owner tried to claim that the damages caused by the decomposed body constituted an explosion, because an affidavit from a doctor said that the internal contents of the neighbor’s body explosively expanded and leaked. The courts found that this did not fall under the term explosion, although State Farm’s policy does not specifically define the term explosion. The courts decided to define the term explosion as a plain and unambiguous meaning, which could be understood by the ordinary person. They explained that the meaning of explosion “does not include a decomposing body’s cells explosively expanding, causing leakage of bodily fluids.

The insurance company originally offered the condo owner a settlement, which was rejected because the owner felt that it lacked the sufficient amount of money necessary to properly compensate her for her damages. The owner wanted the initial appraisal invalidated and a neutral party to do a second appraisal. Although the owner did suffer losses to her condo, the courts did not see it fit to grant her relief because the decomposing of a body which leaks bodily fluids will not be interpreted as an explosion in the eyes of the courts. Rather, the appellate court reasoned that home insurance policies inclusion of coverage for explosions relates only to the plain meaning of the term explosion.

How Much Time Do You Have to File an Insurance Claim

How much time do you have to file an insurance claim?  In Florida, all claims are governed by the applicable statute of limitations as well as applicable provisions contained within the insurance policy.  Generally, speaking one has five (5) years from the date of incident to file a breach of contract claim.

Whether or not a lawsuit was filed on time was the issue the Third District Court of Appeal needed to decide recently.

The Third District Court of Appeal overturned a lower court decision, which found that Angela M. Rizo’s insurance claim was time barred due to the statute of limitations.

In October of 2005 Rizo incurred damages to the home due to Hurricane Wilma. The insurance company made payments in January and April of 2006 as a result of the Hurricane Wilma damage. In October of 2010 Rizo submitted an additional claim to State Farm, which had not been adjusted or paid. That claim was not paid and Rizo filed her lawsuit against State Farm in July of 2011.

In defense of these claims State Farm asserted that the five-year limitations had passed and that the lawsuit should be barred.  State Farm argued that the five year statute of limitations on breach of contract claims began to run no later than the last payment (April 2006) and as such the July 2011 was barred. Rizo, however, did not allege any breach of contract until 2010.

State Farm relied on the fact that they insured’s last payment was in April of 2006, which the court found to be correct, although it did not qualify that payment as the last and final payment.

The payment made during April of 2006 was instead considered to be evidence of performance under the insurance policy, which did not constitute a breach. This was because the checks that were sent during this time were not marked with the phrase “full and final payment.”

Due to this there was no breach in the contract and her claim in January of 2011 was still considered to be timely. As a result, the Florida’s Third District Court of Appeal reversed the judgment and remanded for further proceedings.

Did You Receive Notice that Your Insurance Was Cancelled?

insuranceInsurance contracts are agreements between an insurance company and an insured, known as a policy holder, which determines the types of claims an insurance company agrees to either pay, indemnity, or defend.  The policy holder will typically pay the insurance company a premium for that insurance coverage.

For instance, if you want insurance to protect your car, or home, from a loss, one will agree to pay an insurance company a premium in exchange for that protection.

Florida has enacted certain laws governing cancellations of insurance policies.  Insurance companies need to strictly comply with those laws when attempting to cancel an insurance policy.

If your insurance policy was cancelled, it begs the question – did you receive notice that your insurance contract was cancelled?  Our firm has handled improper cancellation claims and if you feel as though your insurance policy was improperly cancelled you should contact us to discuss your claim further.

The Third District Court of Appeal was recently confronted with determining whether or not there was applicable insurance coverage to compensate the Estate of a young man who died in a tragic motorcycle accident.  The issue focused on whether or not the insurance company had properly mailed out its notice of cancellation to the policy holder.

Rodriguez v. Security National Insurance Co., Inc., 2014 WL 1696186 (Fla 3rd DCA 2014) stems from a car accident, which resulted in the death of Mr. Rodriguez’s son.  The accident was caused by a driver insured by Security National Insurance Co (SNIC).

SNIC argued that there was no applicable insurance coverage in place because it had properly cancelled the insurance contract for non-payment.  Rodriguez, on the other hand, argued that that SNIC’s notice was defective.  Specifically, the notice was not mailed to the specific apartment where the policy holder lived as evidenced by the actual notice of cancellation where it was devoid of any apartment number.

The trial judge agreed with SNIC and granted summary judgment in SNIC’s favor and against Mr. Rodriguez for wrongful death, breach of contract, enforcement of judgment, and bad faith in denying coverage. An appeal followed.

On appeal, the appellate court noted that SNIC sent two notices to the insured that his policy was going to expire and also sent a notice to the insured once it had expired.  Rodriguez argues, however, that these notices were never received due to the lack of an apartment number.

The court analyzed Fla. Stat. 627.728 and concluded that the apartment was not listed on the initial application.  Therefore, the insurance company did not have to mail the notice to the apartment since the policy holder never let the insurance company know, during the application process, of his apartment number.

If the policy holder had simply placed his apartment number on the application he would have had coverage.  But since he failed to list his actual apartment number, he jeopardized his insurance coverage since he never received copies of any of the notices of cancellation that SNIC mailed to him.

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