A line in the sand: Is insurer entitled to relief?
In October 2016, Guillermo Acosta and Laura Pirela filed a claim with their homeowners insurer, People’s Trust Insurance Company, for water damage to their residence. The insurer sent an inspector to view the damage and notified the insureds that it would exercise its contractual right under the policy to repair the damage. The relevant policy provision stated:
If a peril causing a loss and related damage are covered (other than sinkhole loss) and repairs are necessary to protect covered property from further damage, [the Insureds] must notify [the Insurer] before authorizing or commencing repairs so [the Insurer], at [its] option, may select Rapid Response Team, LLC™ to make the covered Reasonable Repairs.
If [the Insureds] and [the Insurer] fail to agree on the amount of loss, which includes the scope of repairs, either may demand an appraisal as to the amount of loss and the scope of repairs.
The scope of repairs shall establish the work to be performed and completed by Rapid Response Team, LLC.™ Such repair is in lieu of issuing any loss payment to [the Insureds] that otherwise would be due under the policy.
The policy also required the insureds to “execute all work authorizations to allow contractors and related parties entry to the property.” After notifying the insureds that it was exercising its contractual right to repair, the insurer provided the insureds a written proposal for the scope of repairs.
Through their public adjuster and claims agent, the insureds disputed the “scope, pricing and methodology of [the insurer’s] proposed repair” and advised the insurer that appraisal was “not possible due to lack of financial resources.” Thereafter the insureds decided to execute a work authorization form, although making certain additional “minor” requests, to allow the insurer to proceed with the repairs.
These requests, itemized by the insureds’ public adjuster, included: (1) a request for payment of 20% of the amounts payable by the insurer’sdesignated repair contractor, or inclusion as a co-payee on any draftspayable to that contractor; (2) designation of the insureds’ mortgage lender as a co-payee on any such payments; (3) evidence that the repair contractor has a “payment and performance bond from a Class A surety” with an additional obligee rider in favor of the mortgage lender; and (4) consent by the contractor to allow a film crew hired by the public adjuster “to video the entire repair process.”
The insurer responded to the public adjuster’s requests with: (1) a refusal to pay the public adjuster or add the adjuster as a co-payee on any check paid to the insurer’s designated repair contractor; (2) a refusal to add the insureds’ mortgage lender as a co-payee on any payment to the contractor; (3) an offer to allow the insureds to inspect the contractor’s bond at a meeting intended to commence the repair work, though declining to provide any obligee rider (as the public adjuster had no authority from the lender to request such a rider); and (4) an assent to allow filming so long as the process would not interfere with the repair work.
The next day the insurer issued a reservation of rights letter to the insureds based on their failure to provide a signed work authorization to the contractor to commence repairs and “because there is a question as to whether coverage applies to this loss,” based on the insureds’ noncompliance with their post-loss obligations under the policy. The insureds provided a marked-up, signed version of the insurer’s work authorization form with material alterations to the form.
Some 10 days later the insurer filed a complaint for (1) temporary injunctive relief or, alternatively, specific performance of the policy terms for repair by the insurer’s contractor, (2) declaratory relief regarding the policy terms, and (3) an action for “anticipatory breach and repudiation of the election-to-repair” terms in the policy. The insureds opposed the motion, and the trial court denied the motion. The insurer appealed from the non-final order.
On appeal, the court noted that the insurer argued that the trial court was denying the insurer a critical form of relief that it had specifically bargained for in the policy. The court disagreed, concluding that the availability of abatement, declaratory relief, and money damages after the completion of repairs (should the repairs prove insufficient or defective) adequately protected the insurer. The judgment of the trial court was affirmed.
People’s Trust Insurance Company v. Acosta-District Court of Appeals of Florida, Third District-October 10, 2018-No. 3D17-2811.