I n recent years, assignment of benefits claims have become one of the biggest problems facing homeowners’ insurance carriers in Florida. This is evident from the substantial rise in the number of lawsuits filed in these types of claims each year. In fact, in some instances, there may be multiple assignments for a single occurrence and several lawsuits per claim. The practical result is that insurers are forced to defend distinct lawsuits against numerous plaintiffs, with the corresponding exposure to an attorney’s fee judgment in each,1 all arising from the same claim or event.
So far, insurers have had little success in Florida courts putting an end to this abuse of the claims process. For example, in Accident Cleaners, Inc. v. Universal Ins. Co., the Fifth District Court of Appeal held that as long as a homeowner has an insurable interest in the property at the time of the loss, then the postloss assignment is valid.2 In another case, One Call Prop. Servs. v. Sec. First Ins. Co., the Fourth District Court of Appeal held that standard antiassignment and loss payment provisions in an insurance policy do not preclude an assignment of post-loss benefits, even when payment is not yet due.3 Then, in Security First Ins. Co. v. Dep’t of Fin. Servs., the First District Court of Appeal upheld Florida’s Office of Insurance Regulation’s refusal to allow a carrier to revise its policy forms to explicitly prohibit the post-loss assignment of benefits.4
Despite these setbacks, however, a recent decision of the Fourth District Court of Appeal in One Call Property Services, Inc. v. St. Johns Ins. Co., Inc. 5 may point to potential new defense strategies in some cases. Specifically, in cases in which the assignor experiences a loss to a homestead property, Florida’s Constitution may afford a defense.6 The Florida Constitution defines a “homestead property” as the principal place of residence consisting of up to onehalf acre within a municipality and up to 160 contiguous acres outside a municipality that are owned by a natural person.7 This definition is construed liberally in favor of finding that a particular property is, in fact, a homestead property.8 Second homes, income property, and property owned by corporations are not considered homestead.9 Therefore, insurers can only assert this potential defense in breach of assignment of benefits claims that involve a homestead property.
In One Call, the Fourth District Court of Appeal affirmed the trial court’s finding that an assignment of benefits for insurance proceeds was unenforceable because it inappropriately attempted to divest the insured’s constitutionally-protected homestead property rights.10 One Call Property Services performed water mitigation services at the insureds’ home.11 The insureds submitted a claim under their homeowner’s insurance policy to St. Johns Insurance Company, but St. Johns denied the claim.12 One Call then filed suit against St. Johns, under an assignment of benefits, for the payment of its outstanding invoice.13 The trial court ultimately granted summary judgment in favor of St. Johns, finding that the assignment of benefits was invalid as it sought to divest the insureds of constitutionally-protected proceeds from homestead property through an unsecured agreement signed by only one of the insureds.14
Citing the decision of the Third District Court of Appeal in Quiroga v. Citizens Prop. Ins. Co. 15, the trial court ruled that an unsecured agreement cannot divest a homeowner of homeowner’s insurance proceeds. The trial court also noted that only one insured/homeowner executed the assignment of benefits.16 In addition, it found that the assignment of benefits and One Call’s actions in attempting to adjust the loss on behalf of the insureds violated Florida’s public adjuster statute, § 626.854(1), Florida Statutes.17 Ultimately, the Fourth District Court of Appeal agreed that the assignment of benefits was invalid; therefore, the company did not have standing to maintain the lawsuit.18
However, it is important to note limitations in the One Call decision. Importantly, the Fourth District Court of Appeal’s decision was per curiam affirmed (or without a written opinion).19 Moreover, to date, only one of Florida’s five District Courts of Appeal has directly ruled on the issue. Also, in cases in which the insurer has made partial payment of claims, the argument that the assignment is an unsecured agreement and invalid is not as strong. In partial payment cases, the insurer has arguably accepted the assignment of benefits as valid and enforceable. Therefore, a defense based upon the assignment being unsecured and invalid is potentially waived in partial payment cases.
It is likely that assignees of such agreements will argue that finding some assignment of benefits enforceable, while finding others unconstitutional, is inconsistent and inequitable. However, Florida courts have consistently held that the homestead protection is not based upon principles of equity.20 The public policy in favor of protecting homestead property rights extends not only to the property itself, but also to any insurance proceeds resulting from a covered loss.21 As such, in defending its case, an insurer should look to rely on the homestead status of the property at the time of loss. The fact that the definition of homestead property is liberally construed in favor of finding that a particular property is a homestead will also assist insurers in making this argument.
In defending against an assignment of benefits claim that involves homestead property, an insurer should consider the facts of each case and the applicability of these three potential arguments that the assignment of benefits: 1) is an unsecured agreement divesting the insured of his/her homestead property rights; 2) was not executed by all insureds; and, 3) violated Florida’s public adjuster statute.
In light of One Call, an insurer may now not only defend assignment of benefits claims in cases that involve homestead property, but may also seek early resolution of claims by moving for summary judgment. If an insurer is able to unequivocally show that the loss occurred to homestead property, then there is a strong argument that the assignment of benefits is an unsecured agreement.22 As such, Florida’s right to own property as homestead may ultimately offer carriers some relief from the deluge of assignment of benefits claims and the multiple exposures to attorney’s fee judgments insurers now face for the same occurrence.
1 See § 627.428(1), Fla. Stat. (“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…the trial court or… 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 or beneficiary’s attorney prosecuting the suit….”).
2 186 So. 3d 1 (Fla. 5th DCA 2015).
3 165 So. 3d 749 (Fla. 4th DCA 2015).
4 177 So.3d 627 (Fla. 1st DCA 2015).
5 183 So. 3d 364 (Fla. 4th DCA 2016) (hereinafter “One Call”).
6 Fla. Const. Art. X, § 4(a) reads in part: “There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement or repair thereof, or obligations contracted for house, field or other labor performed on the realty, the following property owned by a natural person: (1) a homestead.”
8 Synder v. Davis, 699 So. 2d 999, 1002 (Fla. 1997).
9 See, e.g., In re Tucker, 22 Fla. L. Weekly Fed. B 37 (Bank. S.D. Fla. Apr. 21, 2009) (finding that property held by a corporation could not be considered homestead).
10 One Call Property Services, Inc. v. St. Johns Ins. Co., Inc., Case No. 13-000868-CA, 2014 WL 7496474 (Fla. 19th Cir. Ct. 2014), aff’d by One Call., 183 So. 3d 364.
15 34 So. 3d. 101 (Fla. 3d DCA 2010) (holding that an attorney’s motion to impress charging lien on insurance proceeds was correctly denied).
16 One Call Property Services, Inc., 2014 WL 7496474.
17 Defining a “public adjuster” as “any person, except a duly licensed attorney at law as exempted under s. 626.860, who, for money, commission, or any other thing of value, prepares, completes, or files an insurance claim form for an insured or third-party claimant or who, for money, commission, or any other thing of value, acts on behalf of, or aids an insured or third-party claimant in negotiating for or effecting the settlement of a claim or claims for loss or damage covered by an insurance contract or who advertises for employment as an adjuster of such claims. The term also includes any person who, for money, commission, or any other thing of value, solicits, investigates, or adjusts such claims on behalf of a public adjuster.” § 626.854(1), Fla. Stat.
18 One Call Property Services, Inc., 2014 WL 7496474.
19 A per curiam affirmance or “PCA” is an affirmation of a lower court’s ruling without the preparation of a written opinion and which does not carry with it any binding authority. See Dep’t of Legal Affairs v. Dist. Ct. of Appeal, 5th Dist., 434 So. 2d 310, 311 (Fla. 1983).
20 See Pub. Health Trust of Dade County v. Lopez, 531 So. 2d 946, 951 (Fla. 1990) (citing Bigelow v. Dunphe, 143 Fla. 603 (Fla. 1940)); Pierrepont v. Humphreys (In re Newman’s Estate), 413 So. 2d 140, 142 (Fla. 5th DCA 1982) (“The homestead character of a piece of property . . . arises and attaches from the mere existence of certain facts in combination in place and time.”).
21 See Cutler v. Cutler, 994 So. 2d 341, 343 (Fla. 3d DCA 2008).
22 Arguing a violation of section 626.854(1) would likely be a more difficult argument to make as in most instances, a company traveling under a purported assignment of benefits would likely be able to produce some evidence showing that they were not acting as a public adjuster in order to overcome summary judgment.
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