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Hurricane Season 2016 Kicks Off With Two Managed Repair Touchdowns for Policyholders

HURRICANE SEASON 2016 KICKS OFF
with TWO MANAGED REPAIR TOUCHDOWNS FOR POLICYHOLDERS 


By Jill Henniger Bowman
Stockham Law Group P.A.  

       Florida Policyholders kick-off the 2016 Hurricane Season with two ball-spiking, celebration dancing, pro-policyholder rulings from Florida appellate Courts.  While these decisions fall far short of protecting Policyholders from the oppression of Managed Repair, they do arguably salvage some Policyholder rights and indicate that Florida courts may be willing to take a hard look at Insurers' Managed Repair options and obligations before the repairs are forced on the Insured. 

     In sum, Florida appellate courts in the second and fourth district court of appeals held, respectively, that:

TOUCH DOWN #1
  • Insurers' "[w]e may repair . . ." language precluded Insurers from requiring Policyholders to sign contracts with Managed Repair Contractors.  The Court explained that the plain language of the Policy required the Insurer to "repair" and requiring the Policyholder to enter into a contract with the Managed Repair contractor was not the proper exercise of the option.  Florida Peninsula v. Wagner, Cases No. 2D150-1152; 2D15-1790, June 1, 2016 (2d DCA 2016) (non-final until the rehearing time expires or rehearing is determined).
TOUCH DOWN #2
  • Insured may contest the scope of repairs before the repairs are completed.  The Fourth District Court of Appeals on a Writ of Certiorari quashed an Order abating the Policyholder's lawsuit filed after the Insurer DENIED his claim for refusing to sign a work authorization because of a dispute over the scope of the repairs.  Specifically, the Court found that: 1) the abatement departed from the essential requirements of law because it precluded a determination concerning whether the Insurer had properly exercised its right to repair; and 2) that a homeowner is entitled to dispute the scope of repairs before the repairs are completed.  Diaz v. Florida Peninsula Insurance CompanyΒΈ No. 4D15-3283, June 1, 2016.

So, as a practical matter, what does this mean?  First, Policyholders cannot be forced to sign contracts obligating them to pay Managed Repair Contractors where the Policy uses the common language "at our option" . . . "we may repair . ."  This is important as many Managed Repair contractors may attempt to disclaim warranties and separately obligate the Homeowner for payment of some or all of the amounts required to complete the Managed Repair.  Policyholders should not sign contracts with Managed Repair contractors; and Insurers' insistence that they do so is the improper exercise of the Managed Repair option.

    Second, Policyholders now have appellate authority for the position that Insurers cannot force repairs down the Policyholder's throat when there is a dispute over the SCOPE of the repairs required to return the Policyholder's property to its pre-loss condition.  The Policyholder will be permitted to proceed under the Policy to seek a determination of the appropriate scope of repairs without breaching its obligations under the Policy.  Policyholders need not permit repairs to be completed and wait to sue until after the inadequate scope of work is completed.

    For the time being, at least, trial courts will be bound by these decisions and should allow these type of declaratory judgment and scope based cases to proceed.  See, Nader v. Fla. Dep't of Highway Safety & Motor Vehicles, 87 So. 3d 712, 724 (Fla. 2012) (explaining the hierarchy of district appellate court decisions and explaining that a holding by an appellate court in another district is controlling on the trial court in another district if that district has not spoken on the issue).  Notably, in Nader the Florida Supreme Court also describes additional limitations on Certiorari review where there is a requirement that the appellate court find that the trial court departed from the essential requirements of law.  Put another way, Diaz stands as a buffer against other jurisdictions even reviewing the matter at the beginning of a case.  

    Policyholders and their advocates should not be shy about using these new tools to challenge Managed Repair and require Insurers' to provide Policyholders with the benefits they are entitled to under their Policies.