Defense Digest, Vol. 27, No. 5, December 2021

Florida’s New Property Insurance Statute Changes Entitlement to Attorney’s Fees and Costs in First Party Homeowner’s Insurance Cases

By
Corey K. Setterlund

Key Points:

  • Prior to enactment of Florida Statute § 627.70152, insureds’ attorneys obtained attorney’s fees under Florida Statute § 627.428. 
  • The entitlement to fees for either party is dependent on the insurer’s presuit offer and the insured’s judgment. 
  • It is unclear if Proposals for Settlement are still available to insurers to obtain attorney’s fees in first party homeowner’s insurance cases.

Prior to July 1, 2021, insureds suing their homeowners property insurance carriers simply obtained attorney’s fees under Florida Statute § 627.428, which states:

Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court … shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.

This system of obtaining attorney’s fees emboldened insureds to sue their property insurance carriers because they only needed to obtain $1 in a judgment to have all of their attorney’s fees paid for, and it increased the risk for the carrier to take cases to trial. However, the system began to change in 2019 when the Florida legislature amended Florida Statute § 627.7152, which changed the ability of assignees of insureds to get attorney’s fees when they would sue the insured’s carrier for insurance benefits under an assignment. Florida Statute § 627.7152 requires assignees to provide to carriers a written notice of intent to litigate and allows carriers the ability to make a presuit settlement offer. Subsection 10, which specifically addressed attorney’s fees, states:

Notwithstanding any other provision of law, in a suit related to an assignment agreement for post-loss claims arising under a residential or commercial property insurance policy, attorney fees and costs may be recovered by an assignee only under s. 57.105 and this subsection.

(a)       If the difference between the judgment obtained by the assignee and the presuit settlement offer is:

1.          Less than 25 percent of the disputed amount, the insurer is entitled to an award of reasonable attorney fees.

2.         At least 25 percent but less than 50 percent of the disputed amount, no party is entitled to an award of attorney fees.

3.         At least 50 percent of the disputed amount, the assignee is entitled to an award of reasonable attorney fees.

Enactment of these changes appeared to greatly reduce litigation brought by assignees as it more evenly applied the risk of trial between the parties. In 2021, the Florida legislature enacted F.S. § 627.70152, which provides a similar system of notice of intent to litigate and for entitlement to attorney’s fees and costs. F.S. § 627.70152(8) states:

(a)       In a suit arising under a residential or commercial property insurance policy not brought by an assignee, the amount of reasonable attorney fees and costs under s. 626.9373(1) or s. 627.428(1) shall be calculated and awarded as follows:

1.          If the difference between the amount obtained by the claimant and the presuit settlement offer, excluding reasonable attorney fees and costs, is less than 20 percent of the disputed amount, each party pays its own attorney fees and costs and a claimant may not be awarded attorney fees under … s. 627.428(1).

2.         If the difference between the amount obtained by the claimant and the presuit settlement offer, excluding reasonable attorney fees and costs, is at least 20 percent but less than 50 percent of the disputed amount, the insurer pays the claimant’s attorney fees and costs under … s. 627.428(1) equal to the percentage of the disputed amount obtained times the total attorney fees and costs.

3.         If the difference between the amount obtained by the claimant and the presuit settlement offer, excluding reasonable attorney fees and costs, is at least 50 percent of the disputed amount, the insurer pays the claimant’s full attorney fees and costs under … s. 627.428(1).

While § 627.70152 is not as restrictive as § 627.7152, it does force insureds to at least take a harder look at their case because, if insureds are unable to beat the 20% threshold, they will have to pay their own attorney’s fees. Further, attorneys have to consider not obtaining their full fees if an insured’s case does not result in 50% more of the pre-suit settlement offer.

One issue not addressed in § 627.70152 that was addressed in the assignee statute was the availability of Proposals for Settlement to protect attorney’s fees for carriers. Section 627.7152 specifically states that the only way to obtain attorney’s fees is under 57.105 (sanctions) or the instant statute. However, § 627.70152 does not specifically state such a restriction on attorney’s fees. Yet, the Senate Summary Committee states:

The bill provides that … attorney fees may only be awarded using the methodology created by the bill or when the court imposes sanctions under s. 57.105, F.S. Accordingly, claimants may no longer obtain attorney fees under s. 627.428, F.S., or s. 626.9373, F.S., nor may insurers recover attorney fees using an offer of judgment under s. 768.79, F.S.

Since it appears there was a change to the bill before it was enacted as § 627.70152, as attorney’s fees are available under 627.428, it would seem this comment is moot; however, challenges to an insurer’s use of the offer of judgment statute may arise in the future.

*Corey is an associate in our Jacksonville, Florida, office. She can be reached at 904.358.4215 or cksetterlund@mdwcg.com.

 

Defense Digest, Vol. 27, No. 5, December 2021 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2021 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.