Butler has been at the forefront of defending insurers against the tidal wave of assignment of benefit (“AOB”) litigation that has hit Florida over the past four years.
One difficult issue that insurers face in dealing with AOB claims and lawsuits is the question of who has the standing to sue the insurer once an AOB has been executed by the insured in favor of an assignee contractor.
On April 22, 2016, the Fifth District Court of Appeal (“5DCA”) issued its opinion in the case of Restoration 1 CFL aao White v. State Farm Fla. Ins. Co., No. 5D15-1049 (Fla. 5th DCA April 22, 2016). The opinion addresses how courts should construe the language in an AOB especially with regard to who has the standing to sue.
The facts are simple. The insured’s property was damaged by water from a toilet leak. The insured hired Restoration 1 to mitigate the water damage. The insured executed an AOB in favor of Restoration 1 assigning to Restoration 1 “any and all insurance rights, benefits, and proceeds under the [insurance policy] for the water mitigation.”
Thereafter, both the insured and Restoration 1 sued State Farm in separate lawsuits seeking money under the insurance policy. State Farm consolidated the two lawsuits. State Farm took the insured’s deposition. The insured testified that she was unaware of the consequences of the AOB and that she did not intend to assign away her insurance rights. She testified she was unaware that a valid assignment would prevent her from suing State Farm.
Armed with this testimony, State Farm moved for entry of final summary judgment in Restoration 1’s lawsuit arguing that the assignment was invalid because the insured’s testimony shows she did not intend to assign rights to Restoration 1. The trial court agreed and granted State Farm’s final summary judgment in the lawsuit brought by Restoration 1. Restoration 1 appealed.
The 5DCA reversed. The 5DCA held that, because the AOB was clear and unambiguous, it was error for the trial court to consider the insured’s testimony in interpreting the meaning of the AOB. The 5DCA remanded the case to the trial court and stated that Restoration 1 has “…standing to participate in the suit to determine coverage under the policy for the benefits assigned….”
The 5DCA opinion does not address the issue of whether only Restoration 1 can sue State Farm, or whether both the insured and Restoration 1 can continue to sue State Farm. As noted above, the 5DCA held the AOB was clear and unambiguous. The language of the AOB appears to transfer “any and all” of the insurance policy’s rights to Restoration 1 in exchange for Restoration 1’s water mitigation services. In light of that language, one would expect the insured no longer has the standing to sue State Farm because any and all insurance rights were assigned to Restoration 1.
The 5DCA has previously addressed AOBs in the PIP context where a car accident victim assigned her insurance rights to a medical provider in exchange for medical treatment. In the case of Oglesby v. State Farm Mut. Auto. Ins. Co., 781 So. 2d 469, 470 (Fla. 5th DCA 2001) the 5DCA held “…only the insured or the medical provider ‘owns’ the cause of action against the insurer at any one time. And the one that owns the claim must bring the action if an action is to be brought.”
At this point, we will have to see what, if anything, occurs in the trial court following the remand and this opinion. It is possible there could be additional appellate activity in this case that might serve to clarify if in fact both an insured and an assignee can maintain actions against an insurer despite the existence of a clear and unambiguous AOB that assigns “any and all” rights to an assignee. As always, we will continue to keep you informed. Should you have any questions, please contact Timothy Engelbrecht.