Opinion
No. 4D22-1611
08-02-2023
CITIZENS PROPERTY INSURANCE CORPORATION, Appellant, v. Maril VAZQUEZ and Sara Ordonez, Appellees.
C. Ryan Jones and Scot Samis of Traub Lieberman Straus & Shrewsberry LLP, St. Petersburg, for appellant. Richard J. Rafuls of Rafuls Law Group, North Miami, and Chrystal P. Robinson of Elite Insurance Law, PLLC, Boca Raton, for appellees.
C. Ryan Jones and Scot Samis of Traub Lieberman Straus & Shrewsberry LLP, St. Petersburg, for appellant.
Richard J. Rafuls of Rafuls Law Group, North Miami, and Chrystal P. Robinson of Elite Insurance Law, PLLC, Boca Raton, for appellees.
Gross, J.
Citizens Property Insurance Corporation appeals a final judgment awarding $13,500 in attorney's fees and costs to appellees, the plaintiffs below. We reverse because, before the filing of any lawsuit, Citizens paid the applicable policy limit to the plaintiffs in response to their Notice of Intent to Initiate Litigation.
Facts
Citizens issued a homeowners’ policy covering the plaintiffs’ property from December 30, 2019, through December 30, 2020. The policy contains a $10,000 limit on coverage for covered losses caused by accidental discharge of water from a plumbing system.
In June 2020, the plaintiffs’ property was damaged from an accidental discharge of water. In September 2020, Citizens sent plaintiffs a letter acknowledging coverage for the loss and enclosing payment of $3,517.70, along with an estimate showing the basis for the payment.
On August 6, 2021, the plaintiffs’ counsel sent a Notice of Intent to Initiate Litigation Pursuant to § 627.70152. The Notice of Intent identified $3,982.30 as the "damages in dispute," sought $3,500 in attorney's fees and costs, and made a total settlement demand of $7,482.30.
On August 9, 2021, Citizens acknowledged receipt of the Notice of Intent. The next day, Citizens responded by tendering payment of $6,482.30, which represented the remainder of the $10,000 policy limit.
In September 2021, the plaintiffs sued Citizens in a single-count complaint for breach of contract. The complaint is unclear about what the plaintiffs sought under the policy. The complaint's "wherefore clause" sought "full payment of the damages incurred by the Plaintiff's Property," as well as "reasonable attorney fees and costs pursuant to Florida Statute Section 627.428 or other Florida law." However, the only breaches of contract alleged in the complaint were Citizens’ initial underpayment of the claim and Citizens’ failure to pay the full settlement demand (including attorney's fees) set forth in the Notice of Intent.
Before the plaintiffs served Citizens with the complaint, they moved for attorney's fees pursuant to section 627.70152, Florida Statutes. The plaintiffs acknowledged that Citizens had "provided payment for the full amount" of the plaintiffs’ damages in its response to the Notice of Intent. However, the plaintiffs noted that, "despite paying the full amount" of the plaintiffs’ claim, Citizens "completely ignored undersigned counsel's request for reasonable attorney's fees and costs." The plaintiffs maintained that they were entitled to reasonable attorney's fees pursuant to section 627.70152, arguing that "[t]he clear intent from the statute is to require payment of attorneys’ reasonable fees and costs if required to file a Notice of Intent."
Following a hearing, the trial court entered an order granting the plaintiffs’ motion and finding that they were entitled to reasonable attorney's fees pursuant to section 627.70152, Florida Statutes. The trial court later entered a final judgment awarding the plaintiffs attorney's fees and costs in the amount of $13,500, "for which sum let execution issue."
The Applicable Florida Statutes
Citizens has abandoned any argument that section 627.70152, Florida Statutes (2021), cannot be retroactively applied to a policy issued before the effective date of the statute. Assuming that the 2021 version of section 627.70152(8) applies to this case, the plaintiffs were not entitled to attorney's fees.
Under the previous version of Chapter 627, the plaintiffs would not be entitled to attorney's fees. The plaintiffs relied heavily on the 2021 amendment to argue for attorney's fees below, a proposition we reject in this opinion.
Section 627.428(1), Florida Statutes (2021), provides for an award of attorney's fees "[u]pon the rendition of a judgment or decree" against an insurer and in favor of an insured, with the amount of reasonable attorney's fees being awarded only as provided in section 57.105 or section 627.70152 when the insured's suit arises under a residential or commercial property insurance policy:
(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured's or beneficiary's attorney prosecuting the suit in which the recovery is had. In a suit arising under a residential or commercial property insurance policy not brought by an assignee, the amount of reasonable attorney fees shall be awarded only as provided in s. 57.105 or s. 627.70152, as applicable .
(Emphasis supplied). The last sentence of section 627.428(1) was added in the 2021 amendment to the statute. Ch. 2021-77, § 9, Laws of Fla. (eff. July 1, 2021).
Section 627.70152, Florida Statutes (2021), creates a presuit notice process for claims arising under a property insurance policy. Section 627.70152(3)(a) provides that, "[a]s a condition precedent to filing a suit under a property insurance policy, a claimant must provide the department with written notice of intent to initiate litigation on a form provided by the department." § 627.70152(3)(a), Fla. Stat. (2021). The notice must be given at least 10 business days before filing suit. Id. In a case involving acts or omissions other than a denial of coverage, the notice must include both the "disputed amount" and the "presuit settlement demand," which must itemize the damages, attorney fees, and costs. § 627.70152(3)(a) 5.a. & b., Fla. Stat. (2021).
Section 627.70152(2) defines the following terms relevant to this appeal:
(a) "Amount obtained" means damages recovered, if any, but the term does not include any amount awarded for attorney fees, costs, or interest.
...
(c) "Disputed amount" means the difference between the claimant's presuit settlement demand, not including attorney fees and costs listed in the demand, and the insurer's presuit settlement offer, not including attorney fees and costs, if part of the offer.
(d) "Presuit settlement demand" means the demand made by the claimant in the written notice of intent to initiate litigation as required by paragraph (3)(e). The demand must include the amount of reasonable and necessary attorney fees and costs incurred by the claimant, to be calculated by multiplying the number of hours actually worked on the claim by the claimant's attorney as of the date of the notice by a reasonable hourly rate.
(e) "Presuit settlement offer" means the offer made by the insurer in its written response to the notice as required by subsection (3).
§ 627.70152(2), Fla. Stat. (2021).
Finally, section 627.70152(8) establishes a sliding scale for calculating the amount of reasonable attorney's fees and costs under section 627.428(1), depending upon the amount obtained by the claimant and the insurer's presuit settlement offer. The portion of subsection (8) relevant to this appeal provides:
(8) Attorney fees.— (a) In a suit arising under a residential or commercial property insurance policy not brought by an assignee, the amount of reasonable attorney fees and costs under s. 626.9373(1) or s. 627.428(1) shall be calculated and awarded as follows:
1. If the difference between the amount obtained by the claimant and the presuit settlement offer, excluding reasonable attorney fees and costs, is less than 20 percent of the disputed amount, each party pays its own attorney fees and costs and a claimant may not be awarded attorney fees under s. 626.9373(1) or s. 627.428(1).
§ 627.70152(8)(a) 1., Fla. Stat. (2021).
Confession of Judgment Doctrine
The Florida Supreme Court has interpreted section 627.428(1), Florida Statutes, as authorizing an award of attorney's fees to the insured both when a judgment has been rendered against an insurer and when the insurer has "declined to defend its position in the pending suit" by agreeing "to settle a disputed case," making its payment of the claim "the functional equivalent of a confession of judgment or a verdict in favor of the insured." Wollard v. Lloyd's & Cos. of Lloyd's , 439 So. 2d 217, 218 (Fla. 1983). The confession of judgment doctrine "applies where the insurer has denied benefits the insured was entitled to, forcing the insured to file suit, resulting in the insurer's change of heart and payment before judgment." State Farm Fla. Ins. Co. v. Lorenzo , 969 So. 2d 393, 397 (Fla. 5th DCA 2007).
This statute was repealed effective March 24, 2023. Ch. 2023-15, § 11, Laws of Fla.
We have explained that the key factor in applying the confession of judgment doctrine is whether the lawsuit was a necessary catalyst to resolving the dispute:
When an insured moves for attorney's fees, the underlying issue is whether the suit was filed for a legitimate purpose, and whether the filing acted as a necessary catalyst to resolve the dispute and force the insurer to satisfy its obligations under the insurance contract. However, the confession-of-judgment doctrine should not be applied where the insureds were not forced to sue to receive benefits, as applying the doctrine in such a circumstance would encourage unnecessary litigation by
rewarding a race to the courthouse for attorney's fees even where the insurer was complying with its obligations under the policy .
People's Tr. Ins. Co. v. Farinato , 315 So. 3d 724, 728 (Fla. 4th DCA 2021) (internal citations, quotation marks, and brackets omitted) (emphasis supplied).
Thus, "attorney's fees under section 627.428 cannot be awarded where no suit is filed prior to payment of the full amount of the proceeds due under the insurance policy." Fla. Life Ins. Co. v. Fickes , 613 So. 2d 501, 504 (Fla. 5th DCA 1993). As the Fifth District explained, "it would require too great a leap of statutory construction to say that payment prior to litigation is in effect a ‘confession of judgment.’ " Id. at 503.
This Case
Here, the trial court erred in awarding attorney's fees to the plaintiffs. The plaintiffs are not entitled to such fees because the trial court did not render a judgment against Citizens on the underlying contract claim and Citizens did not confess judgment.
First, section 627.428 does not authorize an award of attorney's fees in this case. The lawsuit was not a necessary catalyst to resolving the dispute over the amount of money owed under the policy. The plaintiffs did not receive any payment of insurance benefits because of the filing of this lawsuit. In response to the plaintiffs’ Notice of Intent, Citizens tendered the remainder of the policy limit for the actual discharge of water, which was more than the damages sought by the insureds, excluding attorney's fees. Citizens’ presuit payment covered more than the full amount of damages identified in the Notice of Intent and did not constitute a confession of judgment.
Second, section 627.70152 did not create a separate and independent right to attorney's fees. That section merely created a process for calculating the amount of attorney's fees awardable under section 627.428. This interpretation is confirmed by the plain language of both statutes. Section 627.428(1) was amended in 2021 to add language stating in relevant part that "the amount of reasonable attorney fees shall be awarded only as provided in s. 57.105 or s. 627.70152, as applicable." § 627.428(1), Fla. Stat. (2021) (emphasis added). Likewise, the portion of section 627.70152 dealing with fees expressly recognizes section 627.428 as the source of the fee claim and states that "the amount of reasonable attorney fees and costs under ... s. 627.428(1) shall be calculated and awarded" pursuant to a sliding scale formula. § 627.70152(8), Fla. Stat. (2021) (emphasis added). And section 627.70152(2) excludes attorney's fees from the definitions "Amount obtained" and "Disputed amount," leading to the conclusion that a dispute over attorney's fees alone cannot be the trigger for a lawsuit or a fee award under the statute.
We read the language in section 627.70152(2)(d) requiring a presuit settlement demand to "include the amount of reasonable and necessary attorney fees and costs incurred by the claimant" as a notice provision designed to alert the insurer of its possible exposure to presuit attorney's fees if it rejects the settlement offer and the insured later obtains a judgment or confession of judgment.
Nothing in the 2021 version of section 627.70152 created an independent right to attorney's fees or otherwise changed the law requiring an insured to obtain a judgment or a confession of judgment to trigger entitlement to attorney's fees under section 627.428. Had the legislature intended for section 627.70152 to create a new substantive right to attorney's fees, it would have said so.
We therefore reverse the final judgment for attorney's fees and remand to the county court for the entry of an order denying the plaintiffs’ fee motion.
Reversed and remanded.
Gerber and Levine, JJ., concur.