FPCA Homeowners Division — Florida Supreme Court: Attorney’s Fees Not Part of Covered Claim Under Florida Insurance Guaranty Association

Above:  Maria Elena Abate.

Florida Property and Casualty Association Homeowners Division Members:

Attorney’s Fees Not Part of Covered Claim Under Florida Insurance Guaranty Assocation
By Maria Elena Abate, Esq., Shareholder
Colodny Fass

On January 19, 2012, the Florida Supreme Court held that attorneys’ fees under § 627.428 are not part of a Florida Insurance Guaranty Association (“FIGA”) “covered claim.” 

In the case of Petty v. Florida Insurance Guaranty Association, 2012 WL 143605 (Fla. January 19, 2012), the insured, Diane Petty, had received payment from her insurer, Florida Preferred, of a covered claim for damage to her home by Hurricane Charley.  The payment did not cover all the damage and Petty demanded appraisal.  Florida Preferred refused to submit to appraisal and Petty filed suit to compel appraisal.  After the appraisal was completed and an award entered in favor of Petty, Florida Preferred paid the additional benefits.  Petty’s counsel filed motions for confession of judgment and attorney’s fees.  Before these could be heard by the trial court, Florida Preferred was placed into receivership for dissolution.

FIGA was substituted in the lawsuit and the parties agreed the only issue remaining was whether attorney’s fees would be due.  The trial court determined the right to fees under § 627.428 was a covered claim which FIGA must pay.  The Second District Court of Appeal reversed the trial court and the Supreme Court agreed that no fees were owed.

Significantly, the Supreme Court noted that “[t]here is a clear difference between an obligation to pay fees that is imposed by operation of law upon a party due to its behavior under the insurance contract and an obligation imposed upon a party by an express provision for which the party contracted.  Section 627.428(1) imposes the obligation to pay a fee award upon an insurer that has wrongfully contested an insured’s valid claim.  It does not alter the coverage provisions of the insurance contract itself.”

This decision is not final until the time for rehearing has passed.

Should you have any questions or comments, please contact Maria Elena Abate (mabate@cftlaw.com) at Colodny Fass.

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