22 Fla. L. Weekly Supp. 377a
Online Reference: FLWSUPP 2203HENRInsurance — Property — Deductible — For purpose of determining extent of insurer’s obligation to pay plaintiff for loss to covered property, deductible is not to be applied to uncovered loss — Insurer cannot choose to apply deductible to loss that it claims is not covered loss unless it concedes coverage for loss — No merit to argument that, even if plaintiff prevails on coverage issue, it will be unable to recover judgment for damages because insurer will then apply deducible, as plaintiff will be entitled to attorney’s fees for prevailing on coverage issue
COMMERCIAL WATER AND MOLD, LLC A/A/O STACY HENRY AND MONICA HENRY, Plaintiff, vs. CITIZENS PROPERTY INSURANCE CORPORATION, Defendant. County Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 13-9394 SP 23. September 2, 2014. Linda Singer Stein, Judge. Counsel: Timothy O’Malley, Law Offices of Michael Biberman, North Miami Beach, for Plaintiff. Paul Clark, Butler Pappas Weihmuller Katz Craig LLP, for Defendant.
ORDER DENYING DEFENDANT’S MOTIONFOR FINAL SUMMARY JUDGMENT
THIS CAUSE came before the Court for a hearing on July 22, 2014 on Defendant’s Motion for Final Summary Judgment, and the Court having reviewed the entire court file, reviewed the relevant legal authorities and been fully advised, makes its findings as set forth below.
FACTUAL BACKGROUND
1. Plaintiff brought this suit against Defendant, as assignee of insurance benefits allegedly due under a policy of insurance arising from a loss that occurred on November 14, 2012.
2. The subject policy of insurance provided for a deductible of $2,500.00.
3. On December 5, 2012, Plaintiff sent Defendant its invoice in the amount of $2,359.31, along with the Assignment of Benefits Form and other supporting documents, seeking payment of insurance benefits.
4. Following an investigation of the claim, Defendant wrote to its insured on December 17, 2012 denying coverage for the loss. It cited to specific exclusions in the policy for its decision and also reserved its rights preserving other available defenses.
5. Shortly thereafter, Defendant advised Plaintiff that no payment would be made on its invoice as coverage for the loss had been denied.
6. On May 31, 2013, Plaintiff initiated suit against Defendant for breach of contract seeking payment of its invoice.
7. Defendant filed its Answer and Affirmative Defenses on October 30, 2013 raising eleven affirmative defenses, including the defense that Plaintiff’s claim was barred because it was less than the policy’s $2,500 deductible.
8. At no time prior to suit did Defendant notify Plaintiff or the insured that it was applying the policy’s deductible to any portion of the damages claimed.
9. On May 28, 2014, Defendant filed its Motion for Final Summary Judgment asserting it is entitled to judgment as a matter of law on its affirmative defense that Plaintiff’s claim falls under the policy’s deductible and, therefore, no benefits are or can be due.
10. Defendant continues to maintain that the loss is not covered by the policy and no benefits are due, for various reasons, including repeated seepage and leakage of water over time.
LEGAL ANALYSIS
This Court must determine whether Defendant insurance company can apply a policy deductible when it has denied coverage for the loss. The Second District Court of Appeal has addressed a similar question in General Star Indem. v. W. Fla. Vill. Inn, 874 So. 2d 26 (Fla. 2d DCA 2004) [29 Fla. L. Weekly D348a]. The insured in General Star was a motel that had suffered damages as a result of a hurricane. The insurer rejected the insured’s claim and the dispute was referred to arbitration as provided by the policy. The arbitration panel issued an award determining the amount of loss. The insurer then applied a deductible applicable to windstorm and hail rather than hurricane and reduced the amount accordingly. The insured sued for breach of contract alleging the policy was ambiguous regarding its multiple deductible provisions and the insurer wrongly applied the deductible. The insured prevailed in the trial court and the insurer appealed. The appellate court upheld the trial court’s ruling and found that:
[t]he notion that a deductible could be applied to loss that is not covered by the policy is fundamentally unreasonable . . . A deductible loses its meaning entirely if it is to apply to loss that is not covered by the policy. General Star at p. 33.
This court finds the reasoning in General Star to be persuasive — that a loss must first be covered under the terms of the policy before the insurer may apply the deductible. In this case, it is Defendant’s position that this claim is not a covered loss under the policy and no benefits are due. Defendant, therefore, cannot choose to apply the deductible now unless it concedes coverage for the loss on November 14, 2012.
Defendant further contends that if Plaintiff were to prevail at trial on the issue of coverage (e.g. that the insurer wrongly denied the claim and breached the contract), it would then apply the deductible at that point leaving Plaintiff unable to enter a judgment for damages. However, the case law interpreting F.S. 627.428 is clear that if an insurer contests a policy and the insured prevails at trial, then attorney’s fees will be awarded as an element of damages. See Cincinnati Insurance Company v. Palmer, 297 So.2d 96 (Fla. 4th DCA 1974) (“upon suit being filed, the relief sought was both the policy proceeds and attorney’s fees [and] so long as the insurer failed to pay any part of the relief sought, it continued to contest the policy. . . [T]hus even though the claim at that point is limited to the recovery of attorney’s fees, it is nonetheless a claim under the policy”). See also, Gulf Life Insurance Company v. Urquiaga, 251 So.2d 904 (Fla. 2d DCA 1971). Accordingly, contesting the claim or coverage by the insurer gives rise to attorney’s fees under F.S. 627.428 if the insured prevails at trial. The fact that this case involves an assignee does not change that outcome. All Ways Reliable Building Maint. V. Moore, 261 So.2d 131 (Fla. 1972).
For the foregoing reasons, it is ORDERED AND ADJUDGED that Defendant’s Motion for Final Summary Judgment is DENIED.
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