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Professional Liability

Defense Digest

Florida’s New Property Insurance Statute Changes Entitlement to Attorney’s Fees and Costs in First Party Homeowner’s Insurance Cases

Defense Digest, Vol. 27, No. 5, December 2021

December 1, 2021

by Corey K. Setterlund

Key Points:

  • Prior to enactment of Florida Statute § 627.70152, insureds’ attorneys obtained attorney’s fees under Florida Statute § 627.428. 
  • The entitlement to fees for either party is dependent on the insurer’s presuit offer and the insured’s judgment. 
  • It is unclear if Proposals for Settlement are still available to insurers to obtain attorney’s fees in first party homeowner’s insurance cases.

Prior to July 1, 2021, insureds suing their homeowners property insurance carriers simply obtained attorney’s fees under Florida Statute § 627.428, which states:

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

This system of obtaining attorney’s fees emboldened insureds to sue their property insurance carriers because they only needed to obtain $1 in a judgment to have all of their attorney’s fees paid for, and it increased the risk for the carrier to take cases to trial. However, the system began to change in 2019 when the Florida legislature amended Florida Statute § 627.7152, which changed the ability of assignees of insureds to get attorney’s fees when they would sue the insured’s carrier for insurance benefits under an assignment. Florida Statute § 627.7152 requires assignees to provide to carriers a written notice of intent to litigate and allows carriers the ability to make a presuit settlement offer. Subsection 10, which specifically addressed attorney’s fees, states:

Notwithstanding any other provision of law, in a suit related to an assignment agreement for post-loss claims arising under a residential or commercial property insurance policy, attorney fees and costs may be recovered by an assignee only under s. 57.105 and this subsection.

(a)       If the difference between the judgment obtained by the assignee and the presuit settlement offer is:

1.          Less than 25 percent of the disputed amount, the insurer is entitled to an award of reasonable attorney fees.

2.         At least 25 percent but less than 50 percent of the disputed amount, no party is entitled to an award of attorney fees.

3.         At least 50 percent of the disputed amount, the assignee is entitled to an award of reasonable attorney fees.

Enactment of these changes appeared to greatly reduce litigation brought by assignees as it more evenly applied the risk of trial between the parties. In 2021, the Florida legislature enacted F.S. § 627.70152, which provides a similar system of notice of intent to litigate and for entitlement to attorney’s fees and costs. F.S. § 627.70152(8) states:

(a)       In a suit arising under a residential or commercial property insurance policy not brought by an assignee, the amount of reasonable attorney fees and costs under s. 626.9373(1) or s. 627.428(1) shall be calculated and awarded as follows:

1.          If the difference between the amount obtained by the claimant and the presuit settlement offer, excluding reasonable attorney fees and costs, is less than 20 percent of the disputed amount, each party pays its own attorney fees and costs and a claimant may not be awarded attorney fees under … s. 627.428(1).

2.         If the difference between the amount obtained by the claimant and the presuit settlement offer, excluding reasonable attorney fees and costs, is at least 20 percent but less than 50 percent of the disputed amount, the insurer pays the claimant’s attorney fees and costs under … s. 627.428(1) equal to the percentage of the disputed amount obtained times the total attorney fees and costs.

3.         If the difference between the amount obtained by the claimant and the presuit settlement offer, excluding reasonable attorney fees and costs, is at least 50 percent of the disputed amount, the insurer pays the claimant’s full attorney fees and costs under … s. 627.428(1).

While § 627.70152 is not as restrictive as § 627.7152, it does force insureds to at least take a harder look at their case because, if insureds are unable to beat the 20% threshold, they will have to pay their own attorney’s fees. Further, attorneys have to consider not obtaining their full fees if an insured’s case does not result in 50% more of the pre-suit settlement offer.

One issue not addressed in § 627.70152 that was addressed in the assignee statute was the availability of Proposals for Settlement to protect attorney’s fees for carriers. Section 627.7152 specifically states that the only way to obtain attorney’s fees is under 57.105 (sanctions) or the instant statute. However, § 627.70152 does not specifically state such a restriction on attorney’s fees. Yet, the Senate Summary Committee states:

The bill provides that … attorney fees may only be awarded using the methodology created by the bill or when the court imposes sanctions under s. 57.105, F.S. Accordingly, claimants may no longer obtain attorney fees under s. 627.428, F.S., or s. 626.9373, F.S., nor may insurers recover attorney fees using an offer of judgment under s. 768.79, F.S.

Since it appears there was a change to the bill before it was enacted as § 627.70152, as attorney’s fees are available under 627.428, it would seem this comment is moot; however, challenges to an insurer’s use of the offer of judgment statute may arise in the future.

*Corey is an associate in our Jacksonville, Florida, office. She can be reached at 904.358.4215 or cksetterlund@mdwcg.com.

 

Defense Digest, Vol. 27, No. 5, December 2021 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal 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. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2021 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

Appeals Court Reverses Trial Court Order Awarding Attorney’s Fees Due to Lack of Evidence to Support Fee Awarded

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In December 2019, the plaintiffs filed a claim with Universal for damages caused by a water and sewage back up through the plumbing system and existing through multiple fixtures including the washing machine drain, kitchen sink, dishwasher, bathtub and toilet. Universal investigated the claim, issued payment for resulting water damage totaling $7,000.00 in actual cash value ($12,000.00 in replacement cost value). The plaintiffs sought additional benefits for work needed to access the below-slab cast iron plumbing system due to the failure of the system from rust, deterioration, corrosion and breaks in the line. Universal denied any additional benefits for access. In 2021, the plaintiffs filed suit. During litigation, Universal sent a plumber to inspect the home and the plumber concluded the pipes were clogged but could be cleaned. The plaintiffs’ plumber testified that the plumbing system needed to be replaced due to holes and openings in the pipes. The plaintiffs introduced two estimates prepared by Triad Restoration services totaling $79,680.22 in replacement cost value and $50,219.97 in actual cash value and an executed contract with another company for repairs with the amounts of repair redacted. Since the insurance policy did not provide coverage for repair or replacement of the plumbing system, the jury only had to decide whether the plumbing system needed to be replaced, and if it did, Universal would owe for the access costs; the jury verdict form required the jury to determine both the replacement cost value and actual cash value amounts. The jury asked if it had to rely on the Triad estimates for their amounts. The trial court advised the amount awarded had to be based on the evidence presented at trial and the law given by the trial court. The jury awarded $335,000.00 in replacement cost value or $305,000.00 in actual cash value. Universal motioned for a new trial arguing the amount awarded was unsupported by the evidence and then moved for remittitur. The trial court denied both motions and this appeal followed. The court found that while a jury’s verdict should only be disturbed with caution and discretion, the trial court must give the properly challenged award close scrutiny and determine whether it bears a reasonable relation to the damaged provided, is supported by the evidence, and could have been reached in a logical manner by reasonable means §768.74(3), (5)(d)-(e), Fla. Stat. The court found the trial court did consider the statutory requirements at the hearing on Universal’s remittitur motion and was concerned about a reasonable relation to the amount of damages proved and injury suffered and whether the award was supported by the evidence, but ultimately denied the motion, reasoning that the jury had been properly instructed to fairly and adequately compensate the plaintiffs. The court noted the only evidence providing the basis for the jury verdict was Triad’s estimates and those valued the plaintiffs' claimed loss at $79,680.22 in replacement cost value and $50,219.97 in actual cash value; no valuation evidence reasonably supported the jury verdict. The plaintiffs argued that the jury was entitled to consider more than the estimates, but the court conveyed the evidence provided did not give the jury a way to reach the amounts they awarded. The court was also not swayed by the plaintiffs’ argument regarding inflation and later price increases, but the court noted that no evidence via the contract, nor testimony regarding increase in labor, material, fuel or construction costs were entered into the record.  The court concluded the jury may draw reasonable inferences from the evidence, but it may not supply a damages number by speculation. The court did not find any of the plaintiffs’ remaining argument persuasive either. The court reversed the denial of Universal’s remittitur motion and motion for new trial as to damaged and remanded the case. The court ended its opinion with advising the trial court must determine whether replacement cost value or actual cash value is the property measure of damages under the policy and order remittitur in an amount consistent with that determination and the evidence.

Thought Leadership

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