ASSIGNEES CAN ENFORCE AN ASSIGNMENT OF BENEFITS CONTRACT DESPITE AN INSURANCE POLICY’S ANTI-ASSIGMENT CLAUSE AND LOSS PAYMENT PROVISION
On May 20, 2015, Florida’s Fourth District Court of Appeal in One Call Property Services, Inc. a/a/o William Hughes v. Security First Insurance Company, and Emergency Services 24, Inc. a/a/o Jay Meiselman v. United Property & Casualty, Ins. Co. case cite held that an assignee can enforce an assignment of benefits (“AOB”) contract despite the insurance policy’s anti-assignment clause and loss payment provision.
In One Call, the assignee sued Security First for breach of contract to recover for the services it provided to Security First’s policyholder, William Hughes (“Hughes”). The pertinent portion of the AOB stated that Hughes was assigning any and all insurance rights, benefits and proceeds to One Call. The lower court dismissed One Call’s lawsuit on the basis that One Call did not have standing because of the anti-assignment provision when read in conjunction with the loss payment provision. Citing Florida precedent, the 4th DCA re-affirmed the proposition that an insured may assign a post-loss claim regardless of a policy’s provision barring the assignment. Security First argued that at the time the assignment was executed, there was nothing to assign, as the Policy’s Loss Payment provision had not been met. Similar to American Integrity’s policy, Security First’s loss payment provision provided as follows:
Loss Payment. We will adjust all losses with you. We will pay you unless some other person is named in the policy or is legally entitled to receive payment. Loss will be paid upon the earliest of the following:
a. 20 days after:
(1) We receive your written proof of loss and reach a written, executed agreement or settlement with you according to the terms of the written agreement; or
b. 60 days after we receive your written proof of loss and:
(1) There is an entry of a final judgment or, in the case of
an appeal from such judgment, within 60 days from and
after the affirmance of the same by the appellate court; or
(2) Written executed mediation settlement with you according to the terms of the written mediation settlement; or
c. Within 90 days after we receive notice of an initial claim “reopened claim” or “supplemental claim” from you, we will pay or deny such claim or a portion of the claim unless the failure to pay such claim or portion of claim is caused by factors beyond our control which reasonably prevent such payment
The Fourth District reversed the trial courtand held that 1) post-loss assignments of insurance proceeds are valid under Florida law even if the policy contains an anti-assignment clause; 2) the right of payment accrues on the date of the loss; and (3) the loss payment provision does not preclude an assignment of benefits and has never been construed to have any bearing on the issue of assignments. Citing Curtis v. Tower Hill Prime Ins. Co., 154 So.3d 1193 (Fla. 2d DCA 2015), The 4th DCA ruled that the loss-payment provision of the policy did not render the suit premature; indeed, that provision expressly contemplated that there might be a final judgment presumably stemming from a lawsuit before payment was due.
The court did state in dicta that there are competing public policy interests implicated in these types of cases between fraudulent and excessive insurance claims and the ability for homeowners to hire contractors to perform emergency remediation work after a loss has occurred. The Fourth District Court’s ruling did not reach the other legal arguments such as whether the AOB violated the public adjuster statutes, or whether the AOB is a partial assignment and not enforceable without the insurer’s consent, but remanded the case to the trial court to address these issues. This ruling will have a significant detrimental effect on the ability to defend insurance property carriers from the onslaught of lawsuits filed by assignees of homeowner’s claims.
If you have any questions, please contact Gary Shendell at firstname.lastname@example.org
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