23 Fla. L. Weekly Supp. 163b
Online Reference: FLWSUPP 2302ELRInsurance — Homeowners — Standing — Assignment — Loss payment provision in policy did not preclude post-loss assignment of claim even when payment was not yet due — No merit to argument that only named insured can sue for breach of contract when insurer has denied coverage
ELR RESTORATION INC, Plaintiff(s), vs. STATE FARM FLORIDA INSURANCE COMPANY, Defendant(s). County Court, 9th Judicial Circuit in and for Orange County. Case No. 2013-CC-016779-O. June 16, 2015. Steve Jewett, Judge. Counsel: Earl I. Higgs, Jr., Higgs Law, P.A., Orlando, for Plaintiff. Peter Vilmos, for Defendant.
ORDER ON PLAINTIFF’S MOTION FORPARTIAL SUMMARY JUDGMENT
This cause came on for consideration by the undersigned on the Plaintiff’s Motion for Partial Summary Judgement, a hearing was held May 27, 2015, and court having heard argument and considered the motion, finds as follows:
1. Plaintiff, ELR Restoration, Inc., filed this suit seeking reimbursement for restoration services performed on the property of State Farm Insurance Company’s insured, Ramonita Hernandez.
2. Hernandez’s property sustained water damage on or about February 3, 2012. At that time, the property was covered by a State Farm insurance policy.
3. Hernandez assigned her rights and benefits under the insurance policy to the Plaintiff as consideration for the services provided by the Plaintiff in repairing the property.
4. After completion of the repairs, the Plaintiff notified the Defendant of the loss and demanded payment for the repairs.
5. The Defendant denied payment.
6. Upon the denial of payment, the Plaintiff filed the above styled action seeking payment of the bill pursuant to the assignment of benefits from the insured.
7. The Defendant’s answer contained several Affirmative Defenses. In essence, Affirmative Defenses two, three and six argue the Plaintiff lacks standing to bring this action.
8. The Plaintiff has filed this Motion for Summary Judgment as to Affirmative Defenses two three and six.Defendant’s Affirmative Defense #2
Defendant’s Second Affirmative Defense alleges in part; “Failure to State a Claim:. . .At best, Plaintiff obtained the right to directly receive payment for the insurance benefit resulting from Plaintiff’s reasonable and customary services. The Hernandez/State Farm insurance contract is neither assignable nor is it transferrable without State Farm’s approval and consent. State Farm did not consent to the assignment of the insurance contract’s rights, duties or obligation. Any objection to the denial of coverage must be made by the insured, and such obligation is not assignable. To the extent the Plaintiff’s Complaint seeks to either avoid the insured’s obligations under the Hernandez/State Farm insurance contract or assume the Insured’s rights, duties and obligations under the Hernandez/State Farm insurance contract, Plaintiff’s complaint fails to state a cause of action.”Defendant’s Affirmative Defense #3
Defendant’s Third Affirmative Defense alleges in part; “Plaintiff Not a Party in Interest: . . .Plaintiff improperly portrays itself throughout the Complaint as a party with rights, duties and obligations under the Hernandez/State Farm insurance contract when in fact it is, as best, an assignee to the insured’s benefit in the amount of the reasonable and customary charges services resulting from the insured’s insurance claim. In short, Plaintiff lacks standing to enforce the Hernandez/State Farm Contract. To the extent Plaintiff’s Complaint seeks to claim rights, duties and/or obligations under the Hernandez/State Farm insurance contract or to improperly assume the insured’s rights, duties and obligations under the Hernandez/State Farm insurance contract, Plaintiff’s Complaint fails to state a cause of action against State Farm.Defendant’s Affirmative Defense #6
Defendant’s Sixth Affirmative Defense alleges in part; “Proper Denial. . . . State Farm properly denied its insured’s claim. Whether or not Plaintiff actually performed the services for which they seek payment. . ., State Farm is not legally liable to the Assignee for such payment. It is undisputed that Assignee has no rights as an Insured. Rather, Assignee merely has rights to receive the benefit of amounts payable under the terms of the Hernandez/State Farm insurance contract for the work performed. It is undisputed that State Farm denied the Hernandez claim. It is undisputed that the insured (Hernandez) has not contested State Farm’s denial because Hernandez has not contested State Farm’s denial, the denial remains in force. . . .Because State Farm owed its Insured no damages related to the claim at issue, State Farm correspondingly does not owe the Insured’s Assignee damages. Because the insurance rights, duties and obligations are neither transferable nor assignable without State Farm’s consent, and because State Farm has not and does not consent to a transfer or assignment of the insurance contract, the denial of benefits acts as a legal bar to the Assignee’s lawsuit against State Farm.”
9. The Defendant argues “Though the Plaintiff allegedly holds an assignment of benefits from the Named Insured, this assignment of benefits only entitles Plaintiff to any benefits due and owing in the event State Farm provides coverage for the claim. In this case, State Farm denied the claim pursuant to the terms of the Policy. Therefore, no benefits are currently due and owing. Plaintiff conflates the concept of payment with the concept of coverage.” Further, Defendant argues “Plaintiff cannot have been assigned all of the rights under the policy — it could only have been assigned, at most, the right to payment, if any, under the policy. Therefore, Plaintiff has no right to question State Farm’s reasoning for denying the claim under the policy — only the Named Insured has the right.”
10. The Defendant further argues that it is “undisputed that State Farm denied coverage under the policy, that the policy contains an anti-assignment clause and that State Farm did not consent to the assignment in this case” and the “assignment the Plaintiff relies upon cannot grant Plaintiff right to maintain a lawsuit against State Farm once coverage is denied. The ability remains with the Named Insured and remains with Named Insured.” Ultimately, the Defendant takes the position that. . . “because State Farm denied coverage for the Insured’s claim, the question of coverage pursuant to the policy is one which the Named Insured must bring forth before this Court” and “Because no proceeds are “due and owing” at this stage, and the dispute is about coverage for the claimed loss, Plaintiff does not have standing to sue.”
11. The Defendant relies on a Pinellas County Court decision from 2014 to support its position.1 That decision is not controlling or binding. In addition, it was decided well before the 5th DCA’s decision in Accident Cleaners2 and the 4th DCA’s decision in One Call Property Services3. Therefore the reliance is misplaced.
12. Once an assignment has been made, “the assignor no longer has a right to enforce the interest because the assignee has obtained all rights to the thing assigned.” Continental Cas. Co. v. Ryan Inc. E., 974 So.2d 368, 376 (Fla.2008) [33 Fla. L. Weekly S59a].
13. Even when an insurance policy contains a provision barring assignment of the policy, an insured may assign a post-loss claim. In 1917, the Florida Supreme Court held; “The policy was assigned after loss, and it is a well-settled rule that the provision in a policy relative to the consent of the insurer to the transfer of an interest therein does not apply to an assignment after loss.” W. Fla. Grocery Co. v. Teutonia Fire Ins. Co., 74 Fla. 220, 224, 77 So. 209, 210-11 (1917).
14. The rationale for the W.Fla. Grocer decision is still followed today; Citizens Prop. Ins. Corp. v. Ifergane, 114 So.3d 190, 195 (Fla. 3d DCA 2012) [37 Fla. L. Weekly D2205a] (“Post-loss insurance claims are freely assignable without the consent of the insurer.”); Better Constr., Inc. v. Nat’l Union Fire Ins. Co., 651 So.2d 141, 142 (Fla. 3d DCA 1995) [20 Fla. L. Weekly D420a] (“[A] provision against assignment of an insurance policy does not bar an insured’s assignment of an after-loss claim.”); Gisela Invs., N.V. v. Liberty Mut. Ins. Co., 452 So.2d 1056, 1057 (Fla. 3d DCA 1984) (“A provision in a policy of insurance which prohibits assignment thereof except with consent of the insurer does not apply to prevent assignment of the claim or interest in the insurance money then due, after loss.”).
15. The Defendant takes the position that payment must be due under the loss payment provision before an insured may assign a post-loss claim under the policy. The 4th DCA found “the loss payment provision “falls far short of creating a contractual bar to assignment. One Call Property Services Inc. v. Security First Ins. Co., 2015 WL 2393353(Fla. App. 4 Dist.,2015) [40 Fla. L. Weekly D1196a].
16. The 2nd DCA in Curtis v. Tower Hill Prime Ins. Co., 154 So.3d 1193 (Fla. 2d DCA 2015) [40 Fla. L. Weekly D209a], rejected just such an argument when they rejected an insurer’s argument that the insureds could not “maintain a breach-of-contract suit until the time for payment under the loss-payment provision has come and gone without payment.” They held that “[t]he loss-payment provision of the policy did not render the suit premature; indeed, that provision expressly contemplated that there might be a final judgment — presumably stemming from a lawsuit — before payment was due.” Curtis at 1196.
17. Following the reasoning of Curtis, the 4th DCA in One Call held that “ a standard loss payment provision in an insurance policy does not preclude an assignment of a post-loss claim, even when payment is not yet due. The loss payment clause merely addresses the timing of the payment and expressly contemplates that a lawsuit could occur before payment is due. We decline to interpret it as affecting the validity of a post-loss assignment. . . .We conclude that an assignable right to benefits accrues on the date of the loss, even though payment is not yet due under the loss payment clause. One Call citing In re Surfside Resort & Suites, Inc., 344 B.R. 179, 189 (Bkrtcy.M.D.Fla.2006).
18. Furthermore, even assuming an insured’s right to benefits does not accrue until payment is due under the loss payment provision, there is no reason why an insured could not assign an unaccrued right to benefits under the policy, so long as the assignment took place after the loss. The fact that a right is unaccrued does not necessarily prevent its assignment before the right accrues. One Call Property Services Inc. v. Security First Ins. Co., 2015 WL 2393353(Fla. 4th DCA 2015) [40 Fla. L. Weekly D1196a].
19. Clearly, the Defendant’s Affirmative Defense #2 based on the anti-assignment clause in the insurance contract is not well taken.
20. As to Affirmative Defense #3, the Defendant admits Hernandez maintained an insurance policy covering the insurable interest (the home) on the date of the loss. However, the Defendant argues that. . . “because State Farm denied coverage for the Insured’s claim, the question of coverage pursuant to the policy is one which the Named Insured must bring forth before this Court” and “Because no proceeds are “due and owing” at this stage, and the dispute is about coverage for the claimed loss, Plaintiff does not have standing to sue.” The Defendant is claiming only the Named Insured can object to State Farm’s denial of payment and sue for the resulting breach of contract. In essence, the Named Insured MUST “adjust” the claim with Defendant before there is anything that gives the Plaintiff the right to sue.
21. The 4th DCA considered such an argument when it discussed whether an assignee can sue for a breach of the insurance contract. They held “Nor can the assignment be invalidated on the theory that it attempts to assign a contractual “duty to adjust” from the insured to a third party. In arguing that the insured owes a duty to adjust the loss, the insurers rely upon the language of the loss payment provision stating that “[w]e will adjust the loss with you.” Grammatically, “we” is the subject of the sentence and refers to the insurer, while “you” is the indirect object of the sentence and refers to the insured. Although this language contemplates the insured’s participation in the adjustment process, it does not impose a duty on the insured to adjust the loss. In fact, a “duty to adjust” is not among the insured’s duties in the section of the policy listing the insured’s Duties After Loss. An insured is not an “adjuster” and does not “adjust” losses. To “adjust” means “[t]o determine the amount that an insurer will pay an insured to cover a loss.” Black’s Law Dictionary (9th ed.2009). An insured does not determine the amount that the insurer will pay to cover the loss, nor does an insured fit within any commonly recognized definition of “adjuster.” ” One Call Property Services Inc. v. Security First Ins. Co., 2015 WL 2393353(Fla. 4th DCA 2015) [40 Fla. L. Weekly D1196a].
22. Defendant’s argument ignores that the right to recover is freely assignable after loss and that an assignee has a common-law right to sue on a breach of contract claim. Accident Cleaners, Inc. v. Universal Ins. Co., 2015 WL 1609973 Fla. App. 5 Dist., 2015 [40 Fla. L. Weekly D862a].
23. “In Florida Statutes section 627.405, the Legislature did not state that it was displacing well-settled common law of (1) the free assignability of contractual rights to recover or (2) the inability for insurers to restrict post-loss assignments. . . .We therefore construe section 627.405 to require the property owner who holds the policy to have an insurable interest at the time of loss. The property owner’s insurable interest is imputed to the post-loss assignee. This interpretation allows both the insurable-interest requirement and free assignability of post-loss claims to coexist. Accident Cleaners, Inc. v. Universal Ins. Co., 2015 WL 1609973 Fla. App. 5 Dist., 2015 [40 Fla. L. Weekly D862a]
24. The One Call and Accident Cleaners decisions belie the rationale for Defendant’s Affirmative Defenses #3 and #6.
THEREFORE it is hereby ORDERED AND ADJUDGED:
The Plaintiff’s Motion for Partial Summary Judgement as to Defendant’s Affirmative Defense #2 is GRANTED.
The Plaintiff’s Motion for Partial Summary Judgement as to Defendant’s Affirmative Defense #3 is GRANTED.
The Plaintiff’s Motion for Partial Summary Judgement as to Defendant’s Affirmative Defense #6 is GRANTED.
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1 United Water Restoration Group, Inc. A/A/O Donald Knight, Plaintiff, vs. Homeowners Choice Property & Casualty Insurance Company, Inc., 22 Fla. L. Weekly Supp. 109a.
2Accident Cleaners, Inc. v. Universal Ins. Co., 2015 WL 1609973(Fla. 5th DCA 2015) [40 Fla. L. Weekly D862a] April 10, 2015
3One Call Property Services Inc. v. Security First Ins, Co., 2015 WL 2393353 [40 Fla. L. Weekly D1196a] (Fla. 4th DCA 2015) May 20, 2015
