09 March, 2023

Appellate Practice Group Secures Appellate Court Win for Insurance Company in an Assignment of Benefits Case

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In: Verdicts

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QPWB Partners Thomas A. Valdez and Megan "Maggie" Colter have won a significant appellate decision in favor of their client in the case of Restoration Team v. S. Oak Ins. Co., 3D21-1932, 2023 WL 1999642 (Fla. 3d DCA Feb. 15, 2023). This result is meaningful for insurance carriers because it provides clear guidance on the application of Florida's assignment of benefits statute in section 627.7152, Florida Statutes (2019).

As recounted in the Third District Court of Appeal's opinion, after an insured's property reportedly sustained damage in 2019, the insured assigned their rights under their insurance policy to The Restoration Team. Thereafter, The Restoration Team presented the insured's insurance carrier with an invoice for mitigation services provided at the insured's property. After the insurance carrier declined to pay the invoice, The Restoration Team filed a lawsuit against the insurance carrier alleging a claim for breach of contract premised on the insured's insurance policy.

The insurance carrier moved to dismiss the lawsuit on the basis that the insured's assignment to The Restoration Team was invalid under Florida's assignment of benefits statute in section 627.7152, Florida Statutes (2019). Specifically, the insurance carrier explained the assignment was invalid because it did not comply with section 627.7152(2)(a)(4) since it did not contain a "written, itemized, per-unit cost estimate of the services to be performed by the assignee" and because the assignment violated the $3,000 or 1% cap set forth in section 627.7152(2)(c).

In response to the motion to dismiss, The Restoration Team argued section 627.7152 did not apply because the statute did not exist when the insured's insurance policy became effective in 2018. The Restoration Team further argued the motion to dismiss improperly required consideration of facts outside the four corners of the complaint.

After hearing the Parties' arguments, the trial court granted the insurance carrier's motion to dismiss on the basis that section 627.7152 applied to the assignment of benefits because the assignment was executed after the effective date of the statute. The trial court further found that because the assignment failed to comply with the requirements within section 627.7152, the assignment was invalid.

On appeal, The Restoration Team argued the trial court improperly applied section 627.7152 retroactively because the insured's insurance policy went into effect prior to the effective date of the statute. In response, Valdez and Colter explained on appeal that the operative date for purposes of the statute is the date of the assignment of benefits agreement and not the date the insurance policy went into effect. Florida's Third District Court of Appeal agreed and rejected The Restoration Team's argument.

In its written opinion, the Third District Court of Appeal stated the statute, by its express terms in section 627.7152(13), applied to the assignment of benefits agreement since it was executed on or after July 1, 2019. The Court's well-reasoned opinion also explained that the date the insured and insurer executed the insurance policy is irrelevant because section 627.7152 does not impose requirements on an existing insurance policy, but rather imposes requirements on an assignment of benefits agreement entered into between an assignor and an assignee after the effective date of the statute.

The Third District Court of Appeal also rejected The Restoration Team's argument that because it stands in the shoes of the insured, it is the date of execution of the insurance policy between the insured and insurer that governs. In rejecting this argument, the Court once again explained that section 627.7152 does not modify any rights under the insurance policy. Instead, as pointed out by the Court, section 627.7152 was enacted "to regulate assignment agreements that seek to transfer insurance benefits from the policyholder to a third party." Total Care Restoration, LLC v. Citizens Prop. Ins. Corp., 337 So. 3d 74, 75-76 (Fla. 4th DCA 2022). 

In sum, the Third District Court of Appeal concluded that the agreement addressed in section 627.7152 is the post-loss assignment of benefits agreement and that when the focus is properly placed on the assignment of benefits agreement, it was evident the trial court correctly applied the statute prospectively and not retroactively. In rendering its decision, the Third District Court of Appeal was guided by its recent decision in Adjei v. First Cmty. Ins. Co., 352 So. 3d 900 (Fla. 3d DCA 2022), as well as decisions from the Second, Fourth, and Fifth District Courts of Appeal, all of which have held that applying section 627.7152 to an assignment of benefits agreement executed after the effective date of the statute does not constitute a retroactive application of the statute even if the underlying insurance policy was in effect prior to the effective date. The Court also held the trial court did not improperly consider the assignment of benefits agreement, estimate of repairs, and insurance policy attached to The Restoration Team's complaint when reaching its decision because the "four-corners rule" allows trial courts to review any exhibits attached to a complaint.

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