Opinion
Case No. 5:20cv275-TKW-MJF
2021-05-17
Tommy NIX and Donna K. Nix, Plaintiffs, v. KINSALE INSURANCE COMPANY, Defendant.
Vanessa R. Ross, Stockham Law Group, Sarasota, FL, for Plaintiffs. Adrienne Hausser, Joel Ladd McNabney, Clyde & Co. US LLP, Miami, FL, for Defendant.
Vanessa R. Ross, Stockham Law Group, Sarasota, FL, for Plaintiffs.
Adrienne Hausser, Joel Ladd McNabney, Clyde & Co. US LLP, Miami, FL, for Defendant.
ORDER DENYING ATTORNEY'S FEES AND DISMISSING CASE
T. KENT WETHERELL, II, UNITED STATES DISTRICT JUDGE
This case is before the Court based on Plaintiffs' motions for confession of judgment and for entitlement to attorney's fees and costs (Doc. 17) and to confirm appraisal award and for entry of final judgment (Doc. 18), Defendant's response in opposition to these motions and its incorporated motion to dismiss (Doc. 23), and Plaintiffs' reply (Doc. 25). Upon due consideration of these filings, their attachments, and the entire case file, the Court finds that Plaintiffs' motions are due to be denied and Defendant's motion is due to be granted.
Background
In April 2020, Plaintiffs' home was damaged by a tornado. The home was insured under a Manufactured Home Insurance Policy issued by Defendant, and Plaintiffs made a timely claim under the policy.
Defendant retained an independent adjuster and engineering consultant to investigate the claim. The independent adjuster inspected the property with a week after the claim was made and determined that although the home was damaged by wind forces, the home was still structurally sound and most of the observable damage to the home had been caused by events excluded from coverage. The engineering consultant inspected the property within two weeks after the claim was made and prepared a report.
On May 28, 2020, just over a month after the claim was reported, the independent adjuster provided a detailed estimate of the loss to Plaintiffs based on the engineering consultant's report. The estimate was less than $10,000.
By this time, Plaintiffs had hired a public adjuster to prepare an estimate of the loss and an engineering / environmental consultant to inspect the property and prepare a damages report using laboratory testing. However, the public adjuster did not provide his estimate to Defendant until August 3, 2020.
A week later, on August 10, 2020, Plaintiffs submitted a sworn proof of loss claiming over $151,000 based on the public adjuster's estimate.
Four days after the proof of loss was submitted, Defendant sent Plaintiffs an initial payment of $6,724.16, which was the amount of the independent adjuster's estimate less depreciation and the applicable deductible. The letter accompanying the check advised Plaintiffs that Defendant was forwarding the public adjuster's estimate to the independent adjuster and it requested additional information "in furtherance of its continuing investigation of the claim." The letter also stated that Defendant "will, if warranted, issue any supplemental payment" upon the conclusion of the independent adjuster's review.
Less than a month later, on September 10, 2020, Plaintiffs' attorney sent Defendant a letter stating that Plaintiffs had obtained legal counsel and requesting copies of the insurance policy and documents related to the claim. That same day, Plaintiffs filed a complaint against Defendant in state court alleging that Defendant breached its obligations under the policy "by failing to pay the benefits due and owing under the Policy for a covered cause of loss during the policy period."
On September 22, 2020, a week after being served with the complaint, Defendant made an additional payment on the claim in the amount of $2,235.27 and demanded an appraisal under the policy "to the extent [Plaintiffs] dispute that [Defendant] has fully adjusted and paid for all of the damages to the dwelling." Plaintiffs did not respond to the demand for an appraisal.
Defendant timely removed the case to this Court based on diversity jurisdiction and promptly filed a motion to compel appraisal. Plaintiffs opposed the motion to compel, but on November 9, 2020, the Court granted the motion, ordered the parties to participate in the appraisal process under the insurance policy, and stayed the case pending completion of the appraisal process. See Doc. 10.
On February 22, 2021, an appraisal award was entered in the amount of $35,803.38. Defendant timely paid the award on March 24, 2021.
Then, after the Court lifted the stay, Plaintiffs filed motions to confirm the appraisal award, enter final judgment, and determine their entitlement to attorney's fees. Defendant opposed the motions and countered with a motion to dismiss the case as moot based on its payment of the appraisal award. These motions were fully briefed and are ripe for rulings. No hearing is necessary.
Analysis
Plaintiffs' entitlement to attorney's fees is governed by Florida law because the Court's jurisdiction is founded on diversity of citizenship. Prime Ins. Syndicate, Inc. v. Soil Tech Distribs., Inc. , 270 F. App'x 962, 963 (11th Cir. 2008) ("[I]n diversity cases a party's right to attorney's fees is determined by reference to state law.").
Florida law provides for an award of reasonable attorney's fees when an insured obtains a "judgment or decree" in a suit against a surplus lines insurer such as Defendant. See § 626.9373(1), Fla. Stat. ("Upon the rendition of a judgment or decree ... against a surplus lines insurer in favor of any named ... insured ..., the trial court ... shall adjudge or decree against the insurer and in favor of the insured ... a reasonable sum as fees or compensation for the insured's ... attorney prosecuting the lawsuit for which recovery is awarded."). The purpose of this statute is to "place the insured ... in the place she would have been if the carrier had seasonably paid the claim or benefits without causing the payee to engage counsel and incur obligations for attorney's fees." Maloy v. Scottsdale Ins. Co. , 376 F. Supp. 3d 1249, 1253 (M.D. Fla. 2019) (quoting Lewis v. Universal Prop. & Cas. Ins. Co. , 13 So.3d 1079, 1081 (Fla. 4th DCA 2009) ).
Plaintiffs claim entitlement to attorney's fees under § 627.428, Fla. Stat., see Doc. 1-1, at 6; Doc. 17, at 3-8, but that statute does not apply to surplus lines insurers. See Bryant v. GeoVera Specialty Ins. Co. , 271 So.3d 1013, 1019 n. 1 (Fla. 4th DCA 2019) (explaining that surplus lines insurers are "exempt from the provisions of Chapter 627, including section 627.428, Florida Statutes") (citing § 626.913(4), Fla. Stat.). However, courts construe § 626.9373 in the same way as § 627.428 because the two statutes are nearly identical. Id.
Florida law allows recovery of attorney's fees under this statute even in the absence of a literal judgment or decree when the insured obtains "the functional equivalent of a confession of judgment or a verdict in favor of the insured," such as an appraisal award that exceeds what the insurer would have otherwise paid. Id. at 1253-54 (quoting Wollard v. Lloyd's & Cos. of Lloyd's , 439 So.2d 217, 218 (Fla. 1983)) ; see also Bryant , 271 So.3d at 1019 n.1 (explaining that "the confession-of-judgment doctrine applicable to section 627.428 applies equally to section 626.9373."); Lewis , 13 So.3d at 1081 ("Florida's cases have uniformly held that [a statutory] attorney's fee award may be appropriate where, following some dispute as to the amount owed by the insurer, the insured files suit and, thereafter , the insurer invokes its right to an appraisal and, as a consequence of the appraisal, the insured recovers substantial additional sums.") (emphasis in original). However, "an award of attorneys' fees [is] not appropriate if the insurer was taking steps to resolve the dispute without court intervention." J.P.F.D. Inv. Corp. v. United Specialty Ins. Co. , 322 F. Supp. 3d 1263, 1270 (M.D. Fla. 2018), aff'd , 769 F. App'x 698 (11th Cir. 2019).
The insured is entitled to attorney's fees only if the insurer incorrectly denies benefits due to the insured under the insurance policy, see Johnson v. Omega Ins. Co. , 200 So. 3d 1207, 1219 (Fla. 2016), and if the insured "races to the courthouse" without giving the insurer a chance to complete the claims adjusting process, then there has not been an incorrect denial of benefits and the insured is not entitled to fees, see J.P.F.D. Inv. Corp. , 769 F. App'x at 706 ("[A]ttorney's fees ... were not warranted where ‘the insured never gave the insurer the opportunity to incorrectly deny the benefits before filing a lawsuit[.]’ ") (quoting Goldman v. United Servs. Auto. Ass'n , 244 So.3d 310, 312 (Fla. 4th DCA 2018) ). Stated another way, unless there has been a breakdown in the claims adjusting process or the insurer is taking an inordinate amount of time to complete the process, the insureds must let the process—which they are contractually bound by under the insurance policy—play out before filing suit. See Hill v. State Farm Fla. Ins. Co. , 35 So.3d 956, 960 (Fla. 2d DCA 2010) ("Adjusting and settling property claims under insurance policies is never an easy process. It requires a level of good faith and cooperation from all parties. The law does not provide any general mechanism to impose attorneys' fees against one party or the other merely because the negotiation process is difficult. It is only when the claims adjusting process breaks down and the parties are no longer working to resolve the claim within the contract, but are actually taking steps that breach the contract, that the insured[s] may be entitled to an award [of] fees[.]").
Here, less than four months after the property loss occurred, and only four days after Plaintiffs submitted their sworn proof of loss, Defendant provided them an initial payment of $6,724.16 and told them that supplemental payment might follow depending on the independent adjuster's review of the public adjuster's estimate. Rather than letting this review play out, Plaintiffs filed suit.
The timeline in this case does not indicate a breakdown of the claims adjusting process or improper "foot dragging" by Defendant that would justify the filing of a lawsuit to resolve the claim. Indeed, putting aside the fact that Defendant likely could not have been in breach of the insurance policy when the suit was filed, Plaintiffs knew (or should have known) that the claims adjusting process was still underway because Defendant's letter transmitting the initial payment specifically referred to the investigation of the claim as "continuing" and told Plaintiffs that the independent adjuster would be reviewing the public adjuster's report—something reasonably expected to take some time given the significant difference between the two adjusters' estimates and how long it took the public adjuster to prepare its estimate. Accordingly, Defendant's payment of the appraisal award after the suit was filed does not amount to a confession of judgment that would entitle Plaintiffs to an award of attorney's fees in this case.
The suit was filed 30 days after the proof of loss was submitted, but the policy states that the loss is not payable until 60 days after the proof of loss is received and other criteria are met. See Doc. 8-9, at 18.
Additionally, because it is undisputed that Defendant timely paid Plaintiffs the appraisal award, there is no need to confirm the award or enter judgment and this case can be dismissed. See J.P.F.D. , 322 F. Supp. 3d at 1267 n.3 ("Here, the dispute has been resolved through appraisal, the award paid, and the remaining issues raised by the Complaint have been mooted. Therefore, the case is due to be dismissed.") (citing Federated Nat'l Ins. Co. v. Esposito , 937 So. 2d 199, 200 (Fla. 4th DCA 2006) ).
Conclusion
In sum, for the reasons explained above, it is ORDERED that:
1. Plaintiffs' motions (Docs. 17, 18) are DENIED .
2. Defendant's motion to dismiss (Doc. 23) is GRANTED .
3. This case is DISMISSED with prejudice , and the Clerk shall close the case file.
DONE and ORDERED this 17th day of May, 2021.