Defining Occurrence – When Policy Definitions Do Not Apply To All Coverages
September 24, 2020
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.
Recently, we covered the Fourth District Court of Appeal’s (“4DCA”) opinion affirming a trial court’s final summary judgment in favor of an insurer, which held the contractor’s AOB invalid. That case is One Call Prop. Servs., Inc. aao Schlanger v. St. Johns Ins. Co., No. 2013CA000868, 2014 WL 7496474 (Fla. 19th Cir. Ct. Nov. 20, 2014). The appeal number is 4D14-4585.
Late last week, the Second District Court of Appeal (“2DCA”) issued its opinion reversing a trial court’s final summary judgment in favor of an insurer, which held the contractor’s AOB invalid. The case is Bioscience West, Inc. aao Gattus v. Gulfstream Prop. & Cas. Ins. Co., No. 53-2013CA-000847, (Fla. 10th Cir. Ct. July 29, 2014). The appeal number is 2D14-3946.
In Gattus, contractor Bioscience provided services to the insured following a loss at her house. The insured executed an AOB to Bioscience in return for its work. Bioscience, relying on the AOB, requested payment from Gulfstream for its services. After conducting its claim investigation, Gulfstream determined the loss was not covered. Thus, Gulfstream issued no payment to Bioscience. Bioscience then sued Gulfstream for breach of contract.
Gulfstream argued the AOB was invalid for three reasons. First, Gulfstream argued the AOB was invalid because it was executed prior to the conclusion of Gulfstream’s claim investigation. Gulfstream relied on the insurance policy’s non-assignment and loss-payment provisions to support this argument. Second, Gulfstream argued that the AOB was invalid because it was an improper public adjusting agreement. Third, Gulfstream argued the AOB was invalid because Bioscience did not have an insurable interest in the insured’s house. Thus, Bioscience had no standing to sue for insurance benefits.
The trial court agreed with Gulfstream on its first argument saying, “In this case, the assignment occurred prior to the claim having been adjusted and any accrued benefit having become due. In this case, the assignment improperly purports to transfer the right or privilege to adjust the claim to Plaintiff. Consequently, Plaintiff lacks standing to bring this lawsuit.” The trial court entered final summary judgment for Gulfstream.
The 2DCA reversed. First, the 2DCA noted that while the insurance policy’s anti-assignment provision prohibits the assignment of the entire policy, it does not prohibit the assignment of rights for post-loss benefits. Second, the 2DCA noted that the insurance policy’s loss-payment provision specifically contemplates persons other than the insured being paid benefits because of the following language: “[Gulfstream] will pay you unless some other person . . . is legally entitled to receive payment.” Third, the 2DCA rejected the argument that the AOB amounts to a public adjusting contract. Fourth, the 2DCA rejected Gulfstream’s insurable interest argument by holding that an insured’s insurable interest is imputed to an assignee.
In closing, the 2DCA noted that “there are competing policy considerations here. These policy considerations are for the legislature to decide, not our court.” In fact, the Florida Legislature is currently debating a bill that would address contractor AOBs right now. The fate of that bill is uncertain. We will continue to keep you updated on AOB developments as they occur. Should you have any questions, feel free to contact Tim Engelbrecht.