TALAHASSEE – Contractors have appealed a legal battle over part of a new property insurance law in Florida that limited attorney fees in disputes over claims.
The Restoration Association of Florida and Air Quality Assessors, LLC, an Orlando company that does work such as mold testing and leak detection, filed a notice Wednesday that is a first step in challenging the Aug. 29 ruling. of Leon County Circuit Judge J. Lee Marsh to dismiss a constitutional challenge to the law.
The Legislature passed the attorney fee restriction in a May special session that Gov. Ron DeSantis called amid massive problems in the state property insurance market. Insurers have long blamed litigation and attorney fees for driving up costs.
As is common, the notice filed Wednesday does not detail the arguments the Restoration Association of Florida and the air quality assessors will present to the 1st District Court of Appeals.
The association and Air Quality Assessors filed a lawsuit on May 31, alleging that the attorney fee restriction violates equal protection and due process rights and denies contractors access to court. The lawsuit named Melanie Griffin, secretary of the Florida Department of Business and Professional Regulation, and Donald Shaw, executive director of the State Construction Industry Licensing Board, as defendants because they have disciplinary and regulatory authority over contractors.
Marsh’s decision did not directly address the law’s constitutionality, but dismissed the case because he said Griffin and Shaw were not “suitable defendants,” in part because they weren’t were not responsible for enforcing the law.
The case centers on a practice known as ‘assignment of benefits’, which involves homeowners assigning insurance claims to contractors, who then seek payment from insurance companies – often resulting in lawsuits regarding complaints and payments.
In the past, contractors could recoup their attorney’s fees from insurers if they were successful in lawsuits, a concept known as “existing party costs”. But the new law (SB 2-D) has stripped contractors of the ability to recover costs from the current party when they are awarded benefits.
Homeowners can still recover costs from the winning party if they sue insurers directly, but contractors cannot.
“Where the insurer delays, underpays or does not pay a claim at all, contractors are obligated to bring an action against the insurer to recover the full amount owed for the work performed,” the attorneys for the company wrote. association and Air Quality Assessors in an August. 4 response to the State’s motion to dismiss the case. “Without the corresponding right to recover attorney’s fees, SB 2-D makes it economically impossible for the contractor to pursue its legal rights and remedies in court and thus effectively nullifies the AOB (assignment of benefits), leaving the assignee (the entrepreneur) holding the bag.”
But Marsh agreed with the state’s arguments that Griffin and Shaw were not true defendants and therefore the case should be dismissed.
In a July 13 motion to dismiss, state attorneys wrote that the law “does not mandate the secretary or executive director to enforce its provisions” and does not implicate their “specific responsibilities.”
“In other words, does the secretary or executive director have any specific responsibilities regarding property insurance or awarding attorneys’ fees in insurance disputes? They clearly don’t. “, wrote state prosecutors.
The association and Florida Premier Roofing LLC also have a pending challenge in Leon County Circuit Court against another law (SB 4-D) passed in the special session.
The property insurance market in Florida has been turned upside down as insurers abandoned customers and sought large rate increases due to financial losses. Five property insurers have been declared insolvent since February, and thousands of policies a week have poured into the state-backed Citizens Property Insurance Corp., which was set up as an insurer of last resort.