By: Jadee A. Pope
2021 WL 1310947 (Fla. 4th DCA 4/7/2021)
People’s Trust appealed a final judgment on attorney’s fees and costs entered for the Insureds. The Fourth Circuit agreed the Insureds were not entitled to attorney’s fees and costs.
The Insureds reported a Hurricane Irma claim to People’s Trust on August 2, 2018. On September 6, 2018, People’s Trust sent the Insureds’ a claim-decision letter stating there was no coverage available for the roof because the damage was caused by wear and tear, and the covered damage to the interior of the property was below the Insureds’ hurricane deductible. On October 10, 2018, the Insureds’ attorney sent People’s Trust a letter of representation, Sworn Proof of Loss, and an estimate that included repairs to the roof. Shortly thereafter, People’s Trust sent the Insureds an appraisal demand letter, stating they disputed the Insureds’ scope of loss and amount of damages. A few hours after People’s Trust sent its appraisal demand letter, the Insureds’ filed suit alleging breach of contract.
After suit was filed, People’s Trust moved to compel appraisal, and to compel its right to repair the Insureds’ property in accordance with an appraisal award, and compel the Insureds to pay the deductible. The trial court granted People’s Trust’s motion to compel appraisal. An appraisal award was entered for $35,819.98, which included roof repairs. People’s Trust retained a contractor who repaired the Insureds’ property in accordance with the policy terms and the appraisal award.
After appraisal was completed, the Insureds moved for attorney’s fees, alleging that the lawsuit was necessitated by People’s Trust’s failure to satisfy its obligations under the policy and that post-suit payment of the claim operated as a confession of judgment. The trial court held that the Insureds were entitled to fees because their counsel’s involvement essentially set the process in motion after People’s Trust denied coverage for the roof. The trial court entered a final judgment for $12,000 in fees and costs.
Upon appeal, the Fourth District Court of Appeals reversed the trial court, finding the filing the lawsuit was not a necessary catalyst to resolve the dispute. When the insured moves for attorney’s fees, the underlying issue is whether the suit was filed for a legitimate purpose and whether the filing acted as a necessary catalyst to resolve the dispute and force the insurer to satisfy its obligations under the insurance contract. Here, the court determined that although there was a dispute over whether the roof damage was covered, there was no breakdown in the claims-adjusting process before the insureds sued. Also, in its appraisal demand letter, People’s Trust indicated that it would repair any damages awarded in the appraisal, which would include the roof. Therefore, the court reasoned that the disagreement as to the roof did not equate to a breakdown in the claims-adjusting process, as the roof would be addressed through appraisal. Moreover, People’s Trust demanded appraisal before suit was filed. Thus, the court found that the fact that People’s Trust demanded appraisal after the Insureds retained counsel was not enough to entitle the Insureds to attorney’s fees and costs.
The court further determined that the dispute over the cause of damage to the roof was an amount-of-loss question for the appraisers and not a coverage issue for the court. Causation is a coverage question for the court when an insurer wholly denies there is a covered loss. But when an insurer admits there is a covered loss, but disputes the amount, the amount-of loss is a question for the appraiser and not the court.