2 errors might have helped curb a 'cottage industry' allegedly targeting insurers
The case involves an engineer's report that was the focus of the breach-of-contract action.
Two mistakes in court were brought to light in a case that still has 2017′s Hurricane Irma in the spotlight in disputes between homeowners and insurance carriers.
This time, payment for a $3,500 engineer’s report was the focus of the breach-of-contract action.
And at least one lawyer suggests it’s good news for insurance carriers.
In Wednesday’s ruling, Florida’s Fourth District Court of Appeal ruled in favor of People’s Trust Insurance Co., and determined that the mistakes made in the lower court had landed in the insurer’s favor on appeal.
The insurance company appealed a final judgment entered in Broward Circuit Court, where Judge Kathleen McHugh had ruled in favor of the Kidwell Group LLC, doing business as Air Quality Assessors of Florida.
Chief Judge Mark W. Klingensmith and Judges Cory J. Ciklin and Robert M. Gross all agreed that this was a mistake.
“We agree that the trial court erred by denying the insurer’s motion for a directed verdict, and [additionally] giving an erroneous jury verdict form and jury instructions, and we reverse,” Ciklin wrote for the appellate panel.
‘Being done across the board’
Joshua Seth Beck of Beck Law in Boca Raton celebrated the outcome for his client, suggesting the court helped curb a trend.
“This has become a real cottage industry. The carriers get more lawsuits from AQA Kidwell than pretty much anybody else,” Beck said. “So while the amount involved was not substantial — it’s a $3,500 engineer report — but when you take into consideration that these are being done across the board, typically through the public adjuster, referring it to AQA to get an engineer’s report in exchange for the insured just assigning away their rights, it’s something that really has to be aggressively challenged.”
Now, the court has favored the insurer.
“The appellate court had agreed with us on two fronts,” Beck said. “One, they agreed that directed verdicts should have been entered in our favor that this report was not owed because it was not a cost to repair or replace the property. Two, even if the directed verdict wasn’t entered, the trial court had used improper jury instructions and verdict form because there was never a question dealing with whether or not this report was a cost to repair or replace the property.”
For the appeal, attorney Brett Ross Frankel from People Trust Insurance Co. joined Beck as co-counsel.
Two additional People’s Trust attorneys were also on the case: Jonathan Michael Sabghir and Robert Benjamin Gertzman.
‘Taken that victory away’
But Kidwell’s attorney believes the judges got it wrong.
“We are obviously disappointed in the appellate court’s ruling. We firmly believe that the law and the facts were on our client’s side,” Chad Barr said. “A jury determined that our client’s claim was compensable, and the appellate court has now taken that victory away from them.”
The case concerned a Pembroke Pines homeowner who had purchased a People’s Trust policy, and sustained damage in Hurricane Irma in 2017.
Cliff Warren was named in the appeal as the insured who signed his benefits over to Kidwell.
“Relevant to this appeal, the policy’s loss-settlement provision states that the insurer will pay ‘the cost to repair or replace’ the damaged property,” Ciklin wrote. “The homeowner hired a public adjuster, and the public adjuster filed a claim with the insurer, which claim included costs for a full roof replacement.”
Through the public adjuster, the homeowner then hired AQA to prepare an “engineering report” on the cause and extent of the damages to send to the insurer. In exchange for this engineering report, the homeowner assigned his benefits under the insurance policy to AQA, the ruling said.
The ruling noted that AQA sent the insurer an invoice for $3,500 for its engineering report.
But People’s Trust refused to pay, contending the report’s cost was not covered under the policy because it “is not a physical loss to the property and is akin to a consulting fee.” It also argued that the report was “not a cost to repair or replace covered property.”
Click here to read the statement of claim
AQA sued the insurer for breach of contract, seeking $3,500 in damages.
In May 2022, McHugh ruled in the assessor’s favor.
“At trial, the trial court erred by denying the motion for a directed verdict because AQA, in fact, failed to prove that its engineering report was a ‘cost to repair or replace’ under the policy,” Ciklin said.
The appeal judges said none of the evidence presented demonstrated AQA’s $3,500 engineering report was a “cost to repair or replace” the roof. “In fact … the evidence proved the opposite,” the jurists said.
“Based on the evidence offered at trial, no reasonable jury could have determined that the engineering report was a ‘cost to repair or replace’ the roof, and, accordingly, the trial court should have granted the insurer’s motion for a directed verdict,” Ciklin wrote.
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