Claims and Bad Faith Law Blog

"MATCHING" REQUIREMENTS FOR REPLACEMENT PARTS: FLORIDA STATUTE, INSURANCE POLICY.

 

(Image courtesy of NASA)

In SFR Serv's, LLC v. Lexington Ins. Co., No: 2:19-cv-229-FtM-29NPM, 2021 WL 322367 (M.D. Fla. February 1, 2021), the Court addressed many motions in limine.  The Court's rulings on one of them is addressed here:  the insurance carrier's motion in limine to prevent evidence and argument on the issue of matching replacement roof tiles on damaged property.

    The Court's opinion was written for the benefit of the lawyers and the parties in that particular case because so many details come clear only from reading the parties' filings on the electronic docket known as PACER or "Public Access to [Federal] Court Electronic Records," and not from reading the decision alone. 

    The plaintiff in this case is a roofing company.  It contracted with a condominium association to repair roofs that were damaged during Hurricane Irma.  The association gave the roofer an Assignment of Insurance Benefits.

    The roofing company asked the carrier to pay for the cost of replacing roof tiles, in pertinent part.  In pertinent part, the carrier refused to pay.  The roofer sued the carrier.  Its complaint was originally filed in Florida Circuit Court, and was then removed to U.S. District Court by the carrier.

    The complaint may seem to be bare-bones upon review on PACER, but it was good enough to withstand the carrier's motion to dismiss in federal court.  Obviously, the complaint in this case contained all the allegations for claims upon which relief can be granted.  However, the controversy over replacement roof tiles is not alleged in the complaint.  To understand that controversy, we need to turn to the Federal Judge's February 1, 2021 opinion.

    The carrier "seeks to preclude," first, "any evidence, testimony and comment regarding the Florida 'matching' statute, Florida Statutes § 626.9744."  SFR Services, 2021 WL 322367, at *1.  Section 626.9744, as quoted by the Court in this case, provides in part pertinent to the Court's holding:

Unless otherwise provided by the policy, when a homeowner's insurance policy provides for the adjustment and settlement of first-party losses based on repair or replacement cost, the following requirements apply:

...

(2) When a loss requires replacement of items and the replaced items do not match in quality, color, or size, the insurer shall make reasonable repairs or replacement of items in adjoining areas. In determining the extent of the repairs or replacement of items in adjoining areas, the insurer may consider the cost of repairing or replacing the undamaged portions of the property, the degree of uniformity that can be achieved without such cost, the remaining useful life of the undamaged portion, and other relevant factors.

 

SFR Services, 2021 WL 322367, at *1.  To summarize what has just been quoted, the features of the Florida statute that the Court saw as pertinent to this case by quoting this language from the statute, were:

• The statute applies by its terms to "a homeowner's insurance policy."
• The statute applies to the "adjustment and settlement of first-party losses based on repair or replacement cost."
• When "the replaced items do not match" in important respects, then the carrier must take certain actions specified in the statute.

The Court quickly held that Section 626.9744 simply did not apply to the carrier in this case:  "The Policy at issue is a commercial policy, not a homeowner's policy....  Therefore, this statute does not apply to Lexington in this case, and this portion of the motion in limine is GRANTED."  SFR Services,  2021 WL 322367, at *1 (boldface by the Court).

    The question of excluding "evidence or argument concerning an alleged requirement to 'match' under the insurance policy at issue" was a different story, however.  The Court denied the carrier's motion and allowed the plaintiff "to present evidence and argument that the Policy requires 'like kind and quality,' which includes matching tiles."  SFR Services,  2021 WL 322367, at *2.

    The insurance policy at issue in the SFR Services case provided the carrier "with the option of repairing, rebuilding or replacing the damaged property 'with other property of like kind and quality....'"  On the basis of this policy language, then, the carrier's motion to exclude all evidence and argument that the policy requires "matching tiles," was quite simply denied.  "It is up to a jury to decide" whether the carrier's argument that the "non-matching tiles" it proposed to use to repair the condominium roofs damaged by Hurricane Irma constituted property "'of like kind and quality'."   SFR Services,  2021 WL 322367, at *2.

    There you have the twin rulings of the SFR Services Court.  They do not match, but they addressed two different things.  One was a statute.  The other was an insurance policy.  In this case, the insurance statute did not govern the insurance policy;  it didn't even apply to it.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.

ANOTHER POST-LOSS ASSIGNMENT HELD VALID: NOW FLORIDA.

(Luis Sinco / Los Angeles Times) 

Extreme Energy Fire & Water Restoration LLC came to Homestead.  They went to the home of Mr. and Mrs. Julio and Nora Lugones.

The Lugoneses could not afford what Extreme needed to repair and mitigate damage to their home.  However, they had a homeowner's policy with Lloyd's.  Extreme contracted with the Lugoneses to repair and mitigate the damage to the Lugoneses' home in exchange for Lugoneses' right to be paid for the loss under their homeowner's policy with Lloyd's.

There was a problem, though, it seemed.  Lloyd's thought so.  There was an anti-assignment provision in the Lloyd's policy.  Lloyd's refused to recognize Extreme as the Lugoneses' assignee of the policy proceeds.

So Extreme sued Lloyd's for breach of the homeowner's insurance contract.  Lloyd's defended on the basis of the anti-assignment clause in the same  homeowner's insurance policy.  The trial judge agreed with Lloyd's that the assignment was barred by the policy.

On appeal, Florida's Third District Court of Appeal reversed.  The Florida appellate court made short work of Lloyd's argument:

    For more than a century, the law in Florida has been well-settled: an insured need not obtain the consent of the insurer before making a post-loss assignment of its right to payment of a claim under an insurance policy, and any attempt by an insurer to restrict the insured's right to do so is invalid. 

Extreme Emergency Fire & Water Restor. LLC v. Certain Underwriters at Lloyd's of London, No. 3D20-5, 2020 WL 7379133, at *1 (Fla. 3d DCA December 16, 2020) (stated NOT FINAL).

That settles the matter in Florida, at least until any further review by the full Third District Court of Appeal in this case, perhaps, or by the Supreme Court of Florida in this or some other case.  At the same time, the Supreme Court of Oklahoma reached a similar result one day before the decision was reached in the Extreme case.  The Oklahoma Supreme Court's decision was discussed in an article published here the day after it was decided, MAJORITY WINNER RECOGNIZED ON ISSUE OF POST-LOSS ASSIGNMENT ... OF PROPERTY INSURANCE COVERAGE CLAIM.  That was the same day that the Third District panel published the Extreme decision, which is now the subject of this article.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.

MAJORITY WINNER RECOGNIZED ON ISSUE OF POST-LOSS ASSIGNMENT ...

... OF PROPERTY INSURANCE COVERAGE CLAIM.

(Matt Whittaker / New York Times)

In Johnson v. CSAA Gen. Ins. Co., No. 118689, 2020 WL 7349186 (Okla. December 15, 2020) (stated not released for official publication at this time),  the Oklahoma Supreme Court recognized that a majority of Courts addressing the issue has held that an insured's post-loss assignment of its property insurance coverage claim to a contractor is valid.  The Supreme Court held in this case that such a post-loss assignment is the permissible assignment of a chose in action, and not an impermissible assignment of the policy.

    The Oklahoma Supreme Court's framing and resolution of this issue is so well-stated that no attempt to summarize it can improve it.  Here is how the Supreme Court stated the matter:

    This case involves an insured assigning a post-loss property insurance claim to a construction company for the purpose of the company repairing her property after a storm. Insurer argued the insured property owner was required to obtain written consent from the insurer prior to making the assignment. We agree with a majority of courts stating an insured's post-loss assignment of a property insurance claim is an assignment of a chose in action and not an assignment of the insured's policy. We hold insured's assignment was not prohibited by either the insurance policy or 36 O.S. § 3624. We conclude the District Court's judgment was erroneous when it dismissed the construction company as a party because written consent for the assignment was not provided by insurer to the insured. We reverse the judgment of the District Court and remand for further proceedings. The insurer's motion to dismiss the appeal is denied.

Johnson, 2020 WL 7349186, at p. *1, ¶ 1.

Please read the disclaimer.  ©2020 Dennis J. Wall.  All rights reserved.