21 Fla. L. Weekly Supp. 150a
Online Reference: FLWSUPP 2102URBAInsurance — Homeowners — Attorney’s fees — Where insurer was investigating bona fide coverage issue and had not denied benefits directly or indirectly at time insured filed suit four months after submission of claim, insured is not entitled to attorney’s fees under confession of judgment doctrine
MARY URBANSKI, Plaintiff(s), vs. SOUTHERN FIDELITY INSURANCE COMPANY, Defendant(s). Circuit Court, 9th Judicial Circuit in and for Orange County. Case No. 2011-CA-000142-O. December 4, 2013. Patricia A. Doherty, Judge. Counsel: David R. Heil, Winter Park, for Plaintiff. Timothy S. Kazee, Vernis & Bowling of Central Florida, Deland, for Defendant.
ORDER ON PLAINTIFF’S MOTIONFOR ATTORNEY’S FEES
THIS CAUSE came before the Court for an Evidentiary Hearing on Plaintiff’s Motion for Attorney’s Fees on March 21, 2013 and October 31, 2013 and the Court having heard testimony, reviewed evidence, reviewed the court file, having heard argument of counsel and being otherwise advised in the premises hereby
FINDS and ORDERS the following:
I. Introduction:
This lawsuit arises from the Plaintiff, Mary Urbanski’s (“Urbanski”) claim for homeowners insurance benefits following a water damage loss in a second home owned by Urbanski. Urbanski filed her complaint on Jan. 5, 2011 and the parties settled the case in August 2012. The Plaintiff seeks attorney fees under the confession of judgment doctrine1. The Defendant asserts the doctrine does not apply and accordingly, the court conducted an evidentiary hearing on the issue.
The Defendant presented live testimony from its corporate representative, Sarah Russoniello, published portions of the Plaintiff’s deposition of Aug. 16, 2012 and submitted various documents into evidence including the Plaintiff’s examination under oath and the insurance policy. The Plaintiff offered no additional evidence.
II. Summary of the Case:
Based on the evidence presented the following is a summary of the timeline and facts of the case.
Urbanski did not live in the home which sustained the water damage. The house was rented to tenants from March 16, 2010 until their eviction on August 10, 2010. Urbanski discovered water damage in the home on August 10, 2010 when she and a sheriff deputy went to the home to serve the eviction notice. During the August 10, 2010 visit the Plaintiff discovered the home was vacant, the wood floors were buckled and there was mold from apparent water damage. She hired a public adjuster who provided the Defendant with its first notice of the claim on September 9, 2010.
The parties do not dispute that Southern Fidelity issued Mary Urbanski a homeowners insurance policy that was in effect at the time that the loss occurred and contained certain exclusions. For example, there is no dispute the policy excluded coverage for water damage if the dwelling was vacant or unoccupied for more than 30 consecutive days immediately before a loss. The policy also excludes coverage for constant or repeated leakage of water over a period of weeks, months or years unless such seepage or leakage of water and the resulting damage is unknown to the insured and is hiding within the walls or ceilings or beneath the floors or above the ceilings of a structure. It is undisputed that Ms. Urbanski was not living in the house at the time of the claimed loss and she could not provide the exact date of loss or cause of loss as part of her claim.
Following receipt of the claim, Southern Fidelity requested Urbanski provide certain documents and took her unsworn recorded statement on September 23, 20102. The requested records included the rental lease, rent checks, eviction records, maintenance records, appliance repair records and utility bills. Urbanski provided the lease, one rent check dated May 2010 and the eviction records. However, it is undisputed, neither Urbanski nor the produced records established the date the tenants last occupied the home before discovery of the water loss on August 10, 2010.
The Southern Fidelity representative testified its investigation also included hearsay information received from two neighbors in Oct. 2010 indicating the home had been vacant 3 or 6 months. The corporate representative also testified Ms. Urbanski’s public adjuster called on November 4, 2010, advising he could not reach Ms. Urbanski and they were still trying to get the requested stove repair invoice and utility records. Southern Fidelity asserts, these records were requested because they may indicate dates electric was in use at the home and therefore occupied.
Following the Nov 4th conversation with Urbansky’s public adjuster, Southern Fidelity did not receive additional documents relating to the home’s occupancy dates. Via a letter dated December 9, 2010, Southern Fidelity requested Ms. Urbanski submit to an Examination Under Oath (EUO) on December 21, 2010.
On December 21, 2010, (the date of the scheduled EUO), the Plaintiff hired attorney David Heil. Attorney Heil contacted the Defendant on the same date requesting the EUO be rescheduled to accommodate his and his client’s conflicts. The letter of representation stated: “Please be advised that we still continue to cooperate to every reasonable request to the best of our ability and will continue to do so.” The letter requests counsel for Southern Fidelity to contact his [Attorney Heil’s] office to set a “mutually agreeable date for the Examination Under Oath to be taken.” Southern Fidelity agreed to reschedule the EUO. By letter dated December 27, 2010, Southern Fidelity re-scheduled the EUO to January 4, 2011 as requested by Ms. Urbanski.
The EUO went forward on January 4, 2011. On January 5, 2011 (the day after the Examination Under Oath), Ms. Urbanski filed her lawsuit. The parties reached a settlement at mediation in August 2012.
Southern Fidelity contends it had not denied coverage and was actively investigating the claim when the Plaintiff filed the lawsuit the day after her EUO. More specifically, it was investigating the occupancy and timing of loss issues in order to establish coverage. Prior to the EUO the only information available regarding the loss was the fact of water damage, that damage occurred over time based on the nature of the damage, the loss occurred in a vacant house, the length of the vacancy was unknown and there was a time period in Nov. 2010 of no contact from the Plaintiff. Based upon this information, Southern Fidelity asserts the EOU was needed to determine coverage.
The Plaintiff contends that, Southern Fidelity unreasonably delayed payment of the claim necessitating the law suit.
III. Summary of the Law:
The confession of judgment doctrine is based on the policy underlying Fla. Stat. 627.428: discouraging insurers from contesting valid claims and reimbursing insureds for attorney’s fees when they must sue to receive the benefits owed to them. State Farm Fla. Ins. Co. v. Lorenzo, 969 So.2d 393, 397-98(Fla. 5th DCA 2007) [32 Fla. L. Weekly D1791e].
However, the doctrine is generally not applied when the insureds are not forced to file suit to receive benefits. The courts recognize that applying the doctrine in such circumstances would encourage unnecessary litigation rewarding “a race to the courthouse for attorney’s fees” even when the insurer was complying with its obligation under the policy. Id.
It is when the adjusting process breaks down and the parties are no longer working to resolve the claim within the contract and are actually taking steps to breach the contract that the insured may be entitled to attorney’s fees under section 627.428. Hill v. State Farm, 35 So. 3d 2010 (Fla. 2d DCA 2010). Fees should normally be limited to work associated with the filing of the lawsuit after the insurance carrier ceases to negotiate or has breached the contract and the additional legal work is necessary and reasonable to resolve the breach of contract. Id.
IV. FINDINGS AND HOLDING:
a. It is undisputed the property in question was vacant when the Plaintiff discovered the loss on Aug. 10 2010 and it is undisputed the exact date of loss is unknown.
b. It is undisputed the Plaintiff does not know the date the house was vacated.
c. The Plaintiff testified in her EUO on Jan. 4, 2011, she was last in the home on an unspecified date in July and it was occupied. She could not give a specific date for this visit.3
d. It is undisputed the Plaintiff did not provide any documentation showing when the home was last occupied before discovering the loss.
e. It is undisputed the Policy in question excludes coverage if the home is vacant for 30 consecutive days immediately before the loss.
f. It was uncontroverted there was a period of time in Nov. 2010 that neither the Public Adjuster nor the Defendant were able to contact the Plaintiff and did not hear from the Plaintiff.
g. It is undisputed the EUO was reset at the Plaintiff’s request.
Based on the foregoing, the court finds the Defendant was moving forward with its investigation in good faith to determine if the home had been occupied within 30 days before the loss and/or whether other exclusions applied. Further, the court finds this presented a bona fide issue for investigation by the Defendant and that under these facts the four months that elapsed from the date it received the claim was not unreasonable. Further, the Court finds that as of the date the law suit was initiated the Defendant had not breached the contract and had not denied benefits either directly or indirectly through its conduct.
Based on the foregoing the court finds the Plaintiff is not entitled to fees under the confession of judgment doctrine and the Motion is Denied.
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1See Jerkins v. USF&G Specialty Insurance Co., 982 So. 2d 15 (5th DCA 2008) [33 Fla. L. Weekly D763a] citing First Floridian Auto & Home Ins. Co. v. Myrick, 969 So. 2d 1121, 1124 (Fla. 2d DCA 2007) [32 Fla. L. Weekly D2672a].
2Urbanski’s unsworn statement was not published to the court or offered into evidence and therefore was not available for consideration by the court.
3The Plaintiff’s unsworn statement given in September 2010 was not admitted into evidence or otherwise made available to the court for consideration. Accordingly, it is unknown what information was provided by the Plaintiff to the Defendant in her statement.
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