Professional Liability

After receiving a homeowner’s claim for hurricane damage, the defendant investigated the claim and sent the insured its estimate and coverage determination letter. However, since the cost of the covered repairs did not exceed the applicable deductible, no payment was made. Despite failing to provide the defendant with a competing estimate or a sworn proof of loss, two years later the insured filed a suit for breach of insurance contract. In response, the defendant moved to compel appraisal. The policy issued by the defendant required the parties to participate in appraisal to resolve a dispute as to the amount of the claim when requested by either party. An appraisal award was entered in favor of the insured, which included the cost of replacing the roof and repairing the interior water damage. The insured then moved for the trial court to confirm the appraisal award and award attorney’s fees. The trial court awarded attorney’s fees, finding that the insured was forced to file suit because the defendant wrongly denied coverage for the roof. As such, the appraisal award was a direct result of the lawsuit.  

The defendant appealed the ruling to the Fourth District Court of Appeals, which found the trial court incorrectly analyzed the homeowner’s entitlement to attorneys’ fees and costs. In reversing the trial court’s ruling, the appellate court held, the trial court erred in awarding attorney’s fees incurred by the insured because there was no dispute before the insured filed his breach of insurance contract suit. While the insured argued that suit was necessary for recovery, the court disagreed, stating that whether suit is filed before or after the invocation of the appraisal process is not determinative of the insured’s right to fees. Rather, the right to fees is determined by whether the filing of the suit served a legitimate purpose. Because the insured did not inform the defendant that he disputed its estimate or coverage letter, they were not given the opportunity to compel appraisal until after suit was filed
 

_{Case Law Alerts, 1st Quarter, January 2023 is prepared by Marshall Dennehey to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2032 Marshall Dennehey, all rights reserved. This article may not be reprinted without the express written permission of our firm.}