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  Newsletter

  April 2016

In This IssueAssignment of Benefit Litigation in

Florida

Golf & Tennis Outing

Membership Application

2016 Board Members  Lawson Thompson ­ PresidentFrontier Adjusterslthompson@frontieradjusters.com770­951­0044

Robbie Maples ­ Vice PresidentCunningham LindseyRMaples@cl­na.com770­828­0098

Marilyn Roberts ­ TreasurerACE North American ClaimsMarilyn.roberts@acegroup.com678­795­4293

Griffin Rogers ­ SecretaryCrawford & CompanyGriffin_Rogers@us.crawco.com404­300­1262

Gwendy Schulte ­ AsstSecretary/TreasurerOneBeacon Insurancegschulte@onebeacon.com781­332­8688    Executive Board  Chris Nichols ­ Past PresidentPLS Claims770­381­8855  Bill Cartwright ­ Eagle AdjustmentServices, Inc.770­928­9686   

President's Message "The best (times) are when we have messages, things thatmake us think, but we can also laugh and enjoy ourselves."-Jane Goodall      Many thanks to Bill Barbee and Marty Sikes ofServicemaster of Cobb for sponsoring our March luncheonand providing CE on water damage.  I had no idea that awashing machine leak could fill a swimming pool in twenty-four hours!    Our members had an after hours social on March 30th at theDiner as Northpoint. This was an excellent chance topreview our new luncheon facility and for fellowship andnetworking.  Our bi-annual golf and tennis tournament will be heldThursday, April 28th so there will be no luncheon meetingnext month.  The board is committed to adding value to SLA membershipby offering more varied activities and enhancingopportunities for networking; hence the quote above.   Regardless of how many CE credits we offer, ourmembership will only grow if they have fun at our events.We hope you enjoy these new activities and ask that youprovide feedback, whatever your opinion. There will be moreannouncements in the near future!  Have a Happy Spring vacation and we'll see you on April28th!  Regards,      Lawson

  

Quick Links

SLA website2016 on line Dues Renewal

 Schedule of Events

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Bob Murner ­ McLarens678­296­9634

Joel Steber ­ Engle Martin678­553­4438

Brian Richey ­ Custard678­602­9061  John Southall ­ HistorianFM Global ­ retired770­331­8572  Howard Zandman ­ Financial AdvisorHabif, Arogeti & Wynne404­814­4915  

NewsletterSubtitle Month Year

  04/28/16 ­ Spring Golf Outing 05/12/16 ­ May Luncheon  06/09/16 ­ June Luncheon 

                 

  

Assignment of Benefit Litigation in FloridaTimothy R. Engelbrecht, Esq.

Butler Weihmuller Katz Craig LLP813­594­5805     tengelbrecht@butler.legal

    

Over the past five years, first­party property insurers in Florida have been experiencing a waveof  claims  and  lawsuits  by  contractors  who  obtain  insurance  rights  from  insureds  throughdocument called an assignment of benefits  ("AOB"). This article  is  intended  to  introduce  thereader to this topic and explain some of the challenges facing insurers in dealing with AOBs inFlorida. The reader is welcome to contact the author to learn more.

  Here  is  how  most  AOB  situations  arise.  The  insurer  issues  an  insurance  policy  that  coversresidential  or  commercial  property.  The  property  then  suffers  damage.  Part  of  the  damagerequires  emergency  services  to  protect  the  property  from  further  damage,  often  timesemergency water extraction caused by a broken pipe or a leaking roof.

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  The insured hires a contractor, who in turn, requires the insured to execute an AOB at the timethe  insured hires  the contractor. The AOB  is  typically a one­page document  that  looks  like awork order or service agreement. In theory, the AOB is intended to ensure the contractor getspaid for her work by transferring insurance rights from the insured to the contractor to pay forthe contractor's work. The AOB often says something to the effect of "for and in considerationof  the  insured assigning  insurance  rights  to  the contractor,  the contractor agrees  to performwork at the insured property to remediate the damage and protect the property from furtherdamage."

  The contractor then performs the work and makes a claim directly to the insurer for paymentof  her work.  Typically  the  insured  also makes  a  claim  to  the  insurer  for  the  damage  to  herproperty separate and apart from the contractor's claim.

  Upon  notice  of  the  claim,  the  insurer  inspects  the  property  and  makes  a  coveragedetermination as to whether the loss is covered. If the loss is not covered the insurer informsthe insured and the contractor of that determination and no payment  is  issued. If the loss  iscovered,  the  insurer  informs the  insured and the contractor of  that decision, and the  insurerthen determines what is the reasonable value of the loss and the contractor's work.

  If the contractor disagrees with either the insurer's claim determination or the insurer's amountof payment, the law in Florida is reasonably clear (with some exceptions) that the contractorhas the right to sue the insurer directly. The contractor's lawsuit is separate and apart from anydisagreement or lawsuit by the insured. In fact, it is not uncommon to see two lawsuits ­ onefrom the insured and one from the contractor ­ in claims where the insurer has determined theloss is not covered.

The contractor has standing to sue the insurer directly by way of the AOB. Also, Florida has anattorney  fee  shifting  statute  that  applies  to  first­party  insurance  disputes.  In  a  nutshell,  if  aclaimant  prevails  in  litigation  against  her  insurer,  the  claimant  has  the  right  to  collect  herreasonable  attorney  fees  from  the  insurer.  Florida  courts  have  held  that  that  statute  alsoapplies  to assignees. So,  if a contractor sues an  insurer by way of an AOB and prevails,  thecontractor has the right to collect her reasonable attorney fees from the insurer.

  Insurers  face many  challenges  in  handling  AOB  claims  and  defending  against  AOB  lawsuits.The biggest challenge is often with the AOB itself. Many AOBs are drafted by non­lawyers. As aresult,  the AOB can be confusing or difficult  to  interpret. One of  the most common  issues  iswhether the AOB transfers all the insured's rights to the contractor or just rights sufficient forthe contractor to get paid for her work. The issue is often unclear because many AOBs refer to"any and all  insurance rights, benefits, proceeds and causes of action" when identifying whatrights have been transferred to the contractor.

  Another  challenge  occurs  when  the  insured  makes  multiple  assignments  to  multiplecontractors. This sometimes occurs in water losses where the insured hires a plumber, a waterextraction  company,  a  mold  assessor,  and  a  mold  remediator  each  with  its  own  AOB.Sometimes,  the  insurance  limits are exhausted but not all assignees have been paid. Also,  ifmultiple  assignees  file  multiple  lawsuits,  there  can  be  issues  pertaining  to  missingindispensable parties and the permissibility of consolidating the lawsuits.

  Another challenge occurs when fewer than all the insureds named in an insurance policy signthe AOB. This is often the case when a husband and wife are named insureds, but only one ofthe two signs the AOB. This raises issues as to whether the AOB is valid, and what an insurermust do to account for the insured(s) who did not sign the AOB.

  Another challenge occurs when the  insurer  is  investigating a claim made by an assignee andthe insurer wants to use the insurance policy's conditions of a proof of loss or an examinationunder oath to obtain information. In Florida, for the most part, an assignee does not obligateitself  to  satisfy  the  conditions  of  the  insurance  policy  unless  the  AOB  expressly  says  theassignee agrees to do so. Most AOBs do not say that. However, an AOB does not relieve theinsured of her duty to satisfy the conditions of the insurance policy, including the conditions tosubmit a proof of loss and attend an examination under oath. Also, in Florida, the failure of an

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insured  to  satisfy  the conditions of  the  insurance policy  can bar her  claim. The  failure of aninsured to satisfy the conditions of the insurance policy can also bar the assignee's claim.

  Although an insurer typically cannot compel an assignee contractor to satisfy the conditions ofthe  insurance  policy,  the  law  in  Florida  is  reasonably  clear  that  an  insurer  can  invoke  theinsurance  policy's  appraisal  provision  to  determine  the  amount  of  the  loss  of  the  assigneecontractor's  claim.  Some  insurers  have  found  appraisal  particularly  effective  at  resolvingassignee contractor claims because the amounts in dispute are often low (typically at or under$15,000).  However,  unless  the  insurance  policy's  appraisal  provision  states  that  appraisal  ismandatory  when  requested, many  assignee  contractors  prefer  not  to  go  to  appraisal.  Theytend to prefer litigation because, for the assignee contractor, litigation is actually less expensivebecause there is an attorney fee shifting statute as noted above.

  Insurers face many other challenges when handling AOB claims and lawsuits. In Florida, AOBclaims and lawsuits are on

This newsletter  is a publication of Southern Loss Association, Inc., P.O. Box 421564, Atlanta, GA 30342. The articleswritten  in  the newsletter are  in a general  format and are not  intended  to be  legal advice applicable  to any specificcircumstances. Legal opinions may vary when based on subtle factual differences. All rights reserved.

     

   The 2016 Spring Golf and Tennis Outing

             The 2016 Southern Loss Association Spring Golf and Tennis Outing will be

held at Chateau Elan Golf Club on Thursday, April 28, 2016.

Registration begins at 10:00 a.m.  Golf begins at 11:30 AM - Tennis beginsat 1:00 PM - Dinner at 6:00 PM

Fees are as follows:

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         Golf & Dinner                $110.25           Tennis & Dinner              $68.25Dinner (per person)          $36.75

Register NowPlease complete your registration and submit payment

no later than April 15, 2016

Would you like to become a sponsor?  Sponsor event

   

          

Welcome to New MembersWe'd like to congratulate all of the new members to our organization:

 

Full Membership:   Jason Dale - Crawford & CoCody Kinchen - Crawford & Co

 Associate Membership:Rodney Sanders - Applied Technical Services, IncBrian Roberts - Blue-Line Consulting ServicesT. Nicholas Goanos - Butler, LLPKelly Cressy - Provencher & CoRhett Hesprich - Aon Fire Protection EngineeringMichael Lamb - Rimkus Consulting Group

                 

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Become a Member of Southern Loss Association Would you like to join Southern Loss Association or know someone who is interested?  We cannow take your membership application right on line!  Membership is limited and subject to approval by the board of directors and its membershipbody.  Please read all the terms on the application!

 Apply today!

 

  

 We thank our advertisers for their support.  If you would like toadvertise with us, please contact us at southernloss@gmail.com.  

 | P.O. Box 421564 | Atlanta | GA | 30342