Attacking Those That Help Policyholders Rebuild, Make Claims, and Battle Insurance Companies

Chip Merlin | Property Insurance Coverage Law Blog | November 4, 2019

The Tampa Bay Times published an article yesterday which should be of concern to all policyholders. Florida’s elected official who then overseas the Department of Financial Services is calling for a 30-day time period for policyholders to cancel public adjusting contracts.

One can imagine what is going to happen. Insurance companies delay and deny claims. Their policyholders get upset and hire a public adjuster. Those that hire public adjusters then get calls directly from the insurance company promising better service and more payments if they will just fire their public adjuster saving 10 percent. The public adjuster gets terminated. The insurer does a little better, but not enough. The pattern repeats itself over and over. Delays and under payments are even more rampant.

The elected official making this suggestion owns a seafood restaurant. I wonder if he would be willing to allow his customers to pay only a portion of their bill if they did not like their meal or a portion of it?

I can understand an insurance company officer blaming anybody but his claims department for taking too long to pay a claim or wrongfully denying it. I can understand why those that run insurance companies do not like those in academia writing books—like Professor Feinman, who wrote Delay, Deny, Defend—which expose the systemic wrongful claims practices which many insurance companies engage. It does not take a rocket scientist to figure out that taking premiums and not fully and promptly paying claims is a lot more profitable than playing by the rules and doing so. What wrongful acting insurance company wants all that pointed out?

So, maybe those insurance executives can work with government officials overseeing insurance to blame those helping the policyholders rebuild, make their claims and enforce the insurance contract so they cannot do so? I can imagine those insurance executives and their lobbyists can make up a strategy to find some bad apples in the ranks of those helping policyholders as examples and make laws that shut up those troublemakers and keep them from helping the policyholders.

The elected Florida official had this to say about public adjusters:

I’ve seen PAs that sign people, and then they sit back there on Facebook all day long, because they know that they have got an airtight contract, and they will leave you twisting in the wind.

It is hard to deal with this logic. Who are all these public adjusters? I am aware of one panhandle public adjusting firm with hundreds of clients that has a huge backlog of pending cases and has an immense presence on Facebook in Panama City—everybody in Panama City knows the firm I am talking about. But virtually all public adjusters I know want the claims they are working on paid quickly so they can make money and move to other work.

Which leads to the big question—why aren’t Florida government officials suggesting laws and regulations to the entities not fully and promptly paying the claims? Policyholders do not want to hire people like me to sue their insurance companies or help get the claims payments fairly made for the full amount owed. They are forced to do so because their own insurers have let them down.

Just as academia has noted, policyholders and society need strong unfair claims practice laws which are enforceable and which the insurers are afraid enough of that they will stop underpaying and delaying the payment of their customers’ claims.

Florida Court Holds It Was “Miscarriage of Justice” to Deny Insurer Award of Appellate Fees

Daniel G. Enriquez | Property Casualty Focus | September 18, 2019

Florida’s offer of judgment statute, Florida Statutes section 768.79, is a common technique for any litigator who wants to place additional risk on the plaintiff. The statute provides that if a defendant in a civil suit files an offer of judgment that is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable attorneys’ fees and costs from the date of filing if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer. A Florida appellate court has affirmed that this statute applies with equal force to an insurer’s request for appellate fees.

In State Farm Mutual Automobile Insurance Co. v. Caribbean Rehabilitation Center, Inc., No. 3D19-366, 2019 WL 3675137 (Fla. 3d DCA Aug. 7, 2019), Florida’s Third District Court of Appeal held that the Eleventh Judicial Circuit “departed from the essential requirements of law” by denying State Farm’s motion for appellate attorneys’ fees under Florida Statutes section 768.79. In Caribbean, an individual was injured in an automobile crash and sought treatment from Caribbean Rehabilitation Center Inc. The insured then assigned his rights to personal injury protection benefits to Caribbean, who in turn sought relief from State Farm. State Farm denied coverage due to the patient’s failure to attend numerous scheduled examinations under oath. Caribbean sued, and State Farm prevailed on the merits and won an award of fees and costs under section 768.79.

The Circuit Court of the Eleventh Judicial Circuit, sitting in its appellate capacity, affirmed the judgment. However, the court denied State Farm’s motion for appellate attorneys’ fees pursuant to section 768.79 without elaboration. State Farm sought a writ of certiorari from the Third District Court of Appeal quashing the decision.

The Third District Court of Appeal granted the writ and quashed the Eleventh Judicial Circuit’s order. The appellate court held that the circuit court “departed from the essential requirements of law in not conditionally granting State Farm’s motion for appellate attorney’s fees based on the same statute” it used to award trial court fees. The Third District Court of Appeal stated that “[i]n so doing, the Circuit Court violated procedural due process, resulting in a miscarriage of justice.”

This case illustrates the value of Florida Statutes section 768.79 as a tool for insurers to discourage unnecessary litigation and promote settlement.

New Florida Case Alert: Retained Public Adjuster Was Not “Disinterested” Appraiser

James Chin and Jocelyn Demars | Zelle LLP | August 29, 2019

First-party property policies typically include appraisal provisions requiring each party to appoint a “disinterested” or “impartial” appraiser. A Florida appellate court recently addressed the question of what makes a potential appraiser “disinterested” in a case involving a Hurricane Irma claim.

Florida’s Third District Court of Appeals held that a fiduciary, like a public adjuster who is in a contractual agent-principal relationship with a policyholder, cannot serve as a “disinterested” appraiser, as a matter of law. State Farm Fla. Ins. Co. v. Sanders, No. 3D19-927, — So. 3d —-, 2019 WL 3309217, at *4 (Fla. 3d DCA July 24, 2019).

Underlying Facts and Procedural Background 

Sanders involved a Hurricane Irma claim under a State Farm homeowners policy. Id. at *1. Appraisal was invoked. Id. The policy’s appraisal provision stated, “Each party will select a qualified, disinterested appraiser.” Id.

The policyholders appointed Gian Debernardi of 911 Claims Corporation as appraiser. Id. A contract between the policyholders and 911 Claims Corporation stated that Debernardi would serve as an agent and representative of the policyholders “to adjust, appraise, advise and assist in the settlement of the loss.” Id. The contract assigned 10% of the amount recovered to 911 Claims Corporation.Id.

Pre-appraisal, Debernardi inspected the subject property, notified State Farm of the claim, and prepared a damage estimate. Id.

State Farm challenged Debernardi’s appointment, arguing he was not “disinterested” because of (1) the agent/principal relationship with the policyholders, (2) the continency fee arrangement, and (3) his earlier issued estimate. Id.

The trial court disagreed and ordered that the appointment was permitted. Id. The appellate court reversed. Id.

Appellate Court’s Legal Analysis

The appellate court held that allowing Debernardi to serve as appraiser would give rise to a harm that could not be remedied on appeal, due to the binding nature of appraisals. Id., at *2. (citing State Farm Fire & Cas. Co. v. Licea, 685 So. 2d 1285, 1287-88 (Fla. 1996)).

Next, the appellate court considered the issue of whether Debernardi could qualify as a “disinterested” appraiser. Id., at *2. Citing Fla. Ins. Guar. Ass’n v. Branco, 148 So. 3d 488, 491 (Fla. 5th DCA 2014), the appellate court explained that a “disinterested” appraiser requirement in an insurance policy conveys a “clear intention to restrict appraisers to people who are, in fact, disinterested.” Id., at *2. “Disinterested” has been defined as “[f]ree from bias, prejudice, or partiality; not having a pecuniary interest.” Id., at *2 (citations omitted). The Branco court held that attorneys cannot serve as their clients’ “disinterested” appraisers due to the fiduciary and confidential relationship between attorneys and clients. Id., at *3.
Likewise, the appellate court in Sanders determined Debernardi could not serve as the policyholders’ “disinterested appraiser” because he was their agent and public adjuster. Id.

Notably, the appellate court also held that, based upon his continency fee arrangement with the policyholders, Debernardi could not serve as a “disinterested” appraiser because he had a “financial interest in whether or not the [policyholders] recover from State Farm and how much they recover.” Id.

Evolving Collapse Coverage in Florida is Not Defined by the Prominent Hip-Hop/Rap Artist Eminem

Chip Merlin | Property Insurance Coverage Law Blog | July 26, 2019

As a younger member of the Merlin Law Group team, my generation is more likely to appreciate the lyrical ingenuity of the Eminem song, ’Till I Collapse. Homeowners of all generations, however, should appreciate how collapse coverage is defined in Florida.

Your homeowner’s insurance policy may include an additional coverage for “collapse.” Collapse may be covered for a variety of causes depending on the policy, such as hidden decay, insect/vermin damage, weight of rain, weight of contents, defective material/construction and others. But what does “collapse” even mean? Does my house need to be reduced to an unrecognizable pile of rubble to allow insurance coverage?

Defining “collapse” and whether your home insurance policy will cover a loss is something that the courts, policyholders, and insurance companies often grapple with. For an excellent background on collapse coverage, see previous MLG blog post, Court Defines “Collapse” by Shane Smith, or for how collapse coverage is applied under California law, see, What Constitutes an “Abrupt Collapse”? by Edward Eshoo.

In Florida, collapse coverage has evolved due to changes in policy language and judicial interpretation. If no definition is provided in the policy language, courts since 1978 have defined “collapse” quite liberally as “a material and substantial impairment of the basic structure of a building or part of a building.”1 However, since contract law allows parties to determine their own definitions, insurance companies soon began to write more precise definitions into the policy language to constrict their collapse coverage.

For example, one policy I recently read covers only losses of an “abrupt collapse,” defined more specifically as “an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose.”2However, a policy like this one still leaves words such as “abrupt,” “cave-in,”3 and “fall down”4open to interpretation.

Luckily, an ambiguous provision is construed in favor of the insured and strictly against the drafter. In Kings Ridge Community Association, Inc. v. Sagamore Insurance Company,5 the court picked up a Merriam–Webster’s dictionary to settle the ambiguity. Here “abrupt” was defined as an “action or change without preparation or warning: unexpected.” Thus, the court held a clubhouse roof that suddenly buckled when the trusses failed, leaving it sagging inward about 12-inches, may constitute an “abrupt collapse” under the policy.6

Last year, the Southern District of Florida decided another “abrupt collapse” case under Florida law.7 Despite a similar structural “sagging” as the caved-in roof in Kings Ridge, this collapse seemed to be less “abrupt.” Often a factor is whether the owner knew or should have known the damage was threatening the structural integrity of the property prior to the collapse. The property owner here likely knew the building was steadily collapsing over time, since the structural defects had existed for years and the building admittedly had “gradually deteriorated.” In fact, the property owner submitted several conflicting dates as to when the building actually “collapsed.” The case therefore did not make it to the jury to determine the factual issues. However, this case is currently on appeal to the U.S. Court of Appeals for the Eleventh Circuit.

In the words of rap artist Eminem, no collapse occurs “’till the roof comes off, ’till the lights go out.” Insurance companies and Florida courts have clearly taken a different approach to define collapse and determine whether a loss is covered under your homeowner’s policy.

(Note: This guest blog is by Sean Cornell, a law student clerking in our Tampa, Florida, office)
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1 Auto Owners Ins. Co. v. Allen, 362 So.2d 176 (Fla. 2d DCA 1978).
2 For a different policy language example, see Sandalwood Condominium Ass’n at Wildwood, Inc. v. Allstate Ins. Co., 294 F.Supp.2d 1315, 1319 (M.D.Fla.2003) (involving a policy that mandates a collapse be “direct, sudden and accidental physical damage”).
3 Kings Ridge Cmty. Ass’n, Inc. v. Sagamore Ins. Co., 98 So.3d 74, 78 (Fla. 5th DCA 2012)(defining “Cave-in” as “to fall down or inward…”).
4 Kings Ridge, 294 F.Supp.2d at 78 (defining “Fall” as “to descend freely by the force of gravity … to hang freely … to drop oneself to a lower position … to become lower in degree or level.”).
5 Id.
6 Id.
7 S.O. Beach Corp., et al. v. Great American Ins. Co., 305 F.Supp.3d 1359 (S.D.Fla.2018).

Release of “Unknown” Claim Does Not Bar Release of “Unaccrued” Claim: Fair or Unfair?

David Adelstein | Florida Construction Legal Updates | May 27, 2019

A general release of “unknown” claims through the effective date of the release does NOT bar “unaccrued” claims.   This is especially important when it comes to fraud claims where the facts giving rise to the fraud may have occurred prior to the effective date in the release, but a party did  not learn of the fraud until well after the effective date in the release.  A recent opinion maintained that a general release that bars unknown claims does NOT mean a fraud claim will be barred since the last element to prove a fraud had not occurred, and thus, the fraud claim had not accrued until after the effective date in the release.  See Falsetto v. Liss, Fla. L. Weekly D1340D (Fla. 3d DCA 2019) (“The 2014 [Settlement] Agreement’s plain language released the parties only from “known or unknown” claims, not future or unaccrued claims. Because there is a genuine issue of material fact as to whether the fraud claim had accrued — that is, whether Falsetto [party to Settlement Agreement] knew or through the exercise of due diligence should have known about the alleged fraud at the time the 2014 Agreement was executed — the trial court erred in granting summary judgment on those fraud claims.”).  

Fair or unfair?  In certain contexts, perhaps fair — such as when the facts giving rise to the fraud took place after the effective date of the release.   In other contexts, perhaps unfair — such as when the facts giving rise to the fraud occurred prior to the effective date in the release but were unknown.  

What are your thoughts?    However, modifying a release to now include “unaccrued” claims may not be the answer as this could have broad implications relating to future claims, which a party may be cautious about releasing in light of current or future relations between the parties.