Opinion
Case No. 1:20-cv-23061-UU
2020-09-25
RAVEN ENVTL. RESTORATION SERVS., LLC, a/a/o Miami Riverview Apartments, LLC, Plaintiff, v. UNITED NAT'L INS. CO., Defendant.
Alexander Luis Bucelo, Bucelo Law Group, Miami, FL, for Plaintiff. Dana Beth Kuczynski, Jason Michael Chodos, Litchfield Cavo LLP, Fort Lauderdale, FL, for Defendant.
Alexander Luis Bucelo, Bucelo Law Group, Miami, FL, for Plaintiff.
Dana Beth Kuczynski, Jason Michael Chodos, Litchfield Cavo LLP, Fort Lauderdale, FL, for Defendant.
ORDER GRANTING MOTION TO DISMISS
URSULA UNGARO, UNITED STATES DISTRICT JUDGE
THIS CAUSE comes before the Court upon Defendant's Motion to Dismiss Complaint (D.E. 6) (the "Motion"). THE COURT has considered the Motion and the pertinent portions of the record and is otherwise fully advised in the premises.
BACKGROUND
Plaintiff Raven Environmental Restoration Services ("Raven") seeks to recover under a commercial lines insurance policy issued by United National ("Defendant") to its insured, Miami Riverview Apartments, Inc. ("Miami Riverview"), Raven's assignor, bearing Policy No. MP0980097 (the "Policy"), for damages arising out of Defendant's failure to pay insurance benefits to Raven for emergency fire and smoke mitigation and remediation services. D.E. 1-2 at 6–9 (the "Complaint"); D.E. 1-3 (copy of the policy); D.E. 7.
The following facts are alleged in the Complaint, unless otherwise indicated. On or about January 6, 2020, Miami Riverview's property located at 2501 NW 16th Street Road, Unit 313, Miami, FL 33125 (the "Property") suffered a "covered loss." Compl. ¶ 8. Miami Riverview retained Raven to provide emergency restoration services at the Property in connection with the loss, id. ¶ 10, which Raven avers in its opposition brief related to an emergency fire and smoke incident, D.E. 7. On January 9, 2020, Miami Riverview assigned "all rights" under the Policy to Raven for emergency restoration services. Compl. ¶ 11; D.E. 1-2 at 10–12 (copy of assignment attached to Complaint). Defendant received an itemized invoice from Raven detailing the work done and the amount owed, but Defendant has failed to pay the total outstanding bill. Compl. ¶ 15. As such, Raven contends it is entitled to collect insurance proceeds under the Policy for its services. Id. ¶ 12.
The final page of the Policy contains an endorsement titled "POST LOSS ASSIGNMENTS – EXCLUSION, which begins by stating that "THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY" and provides that:
COMMERCIAL PROPERTY COVERAGE PART
This insurance does not apply to any claim submitted by, or on behalf of, any person or entity pursuant to an assignment of benefits, rights, interest, proceeds or causes of action.
D.E. 1-3 at 63 (the "Anti-Assignment Endorsement").
Raven commenced this action on May 6, 2020 by filing its Complaint in the Circuit Court of the Eleventh Judicial Circuit of Florida, Miami-Dade County (2020-009856-CA-01) bringing two causes of action against Defendant: breach of contract (Count 1) and quantum meruit (Count 2). See D.E. 1. Defendant was served with a summons and a copy of the Complaint on May 13, 2020. Id. On June 25, 2020, Defendant received responses to jurisdictional discovery that it served upon Raven, which confirmed there is diversity of citizenship between the parties. Id. ¶¶ 8–12. On July 24, 2020, Defendant removed this action to this Court. D.E. 1.
Defendant filed the instant Motion on July 30, 2020, arguing that the case must be dismissed because: (1) the plainly-worded Anti-Assignment Endorsement bars coverage for claims submitted by, or on behalf of, any third-party pursuant to a post-loss assignment; (2) even if the Policy did not contain such an endorsement, Raven has failed to comply with Fla. Stat. § 627.7152, which sets forth seven requirements that all assignments executed on or after July 1, 2019 must satisfy in order to be valid; (3) the quantum meruit count is legally deficient; and (4) the Complaint is devoid of factual support. D.E. 6. Raven responds that: (1) restrictions on post-loss assignments are prohibited under Florida law; (2) it has complied with Fla. Stat. § 627.7152 ; (3) it has stated a viable claim for quantum meruit ; and (4) the Complaint contains sufficient factual support. D.E. 7.
LEGAL STANDARD
To state a claim, Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." A plaintiff must state his claims in numbered paragraphs, each limited as far as practicable to a single set of circumstances. Fed. R. Civ. P. 10(b). And "[i]f doing so would promote clarity, each claim founded on a separate transaction or occurrence ... must be stated in a separate count." Id.
While the Court must consider the allegations contained in the plaintiff's complaint as true, this rule "is inapplicable to legal conclusions." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In addition, the complaint's allegations must include "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. (citing Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Thus, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).
In practice, to survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim of relief that is plausible on its face.’ " Id. (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. The plausibility standard requires more than a sheer possibility that a defendant has acted unlawfully. Id. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief. Id. Determining whether a complaint states a plausible claim for relief is a context-specific undertaking that requires the court to draw upon its judicial experience and common sense. Id. at 679, 129 S.Ct. 1937.
DISCUSSION
I. Background on Surplus Lines Insurance
Insurance coverage in Florida is generally provided by insurance companies that fall into one of two categories: (1) insurers that conduct business on an "admitted" or "authorized" basis, which are licensed to do business in the state; or (2) insurers that conduct business on a "non-admitted" or "unauthorized" basis, which are not licensed to do business in the state. COUCH ON INSURANCE (3d ed.), Insurance terminology—Classifications of insurers , 1 COUCH ON INS . § 1:4 (June 2020) ; see also Fla. Stat. § 624.09. Insurance companies that fall into the latter of these two categories are commonly known as "surplus lines" insurers. See id.
The surplus lines insurance market exists to assume risks that licensed insurance companies decline to insure or will only insure at a very high price, with many exclusions, or with a very high deductible. INSURANCE INFO. INST. , Surplus Lines , https://www.iii.org/publications/a-firm-foundation-how-insurance-supports-theeconomy/driving-economic-progress/surplus-lines (last visited Sept. 22, 2020). A party might seek surplus lines insurance when the general lines insurance market fails to provide a policy to cover the type of risk involved. Fla. Stat. §§ 626.915, 626.916(1)(a). To ensure that there would be insurance companies willing to provide this type of coverage in Florida, the Florida legislature created a statutory scheme that permits out-of-state "unauthorized" insurers to provide surplus lines coverage through in-state "surplus lines agents," who serve as middlemen between surplus lines insurers and "producing agents/general lines agents," who, in turn, provide surplus lines policies to insureds. See Fla. Stat. §§ 626.913 – 626.937.
The Surplus Lines Law provides criteria for unauthorized insurers to export policies into this state. Fla. Stat. § 626.916. No insurance coverage shall be eligible for export unless the full amount of insurance is not procurable, after a "diligent effort" has been made by the surplus lines agent. Id. " ‘Diligent effort’ means seeking coverage from and having been rejected by at least three authorized insurers currently writing this type of coverage and documenting these rejections." Id. § 626.914(4). The export eligibility criteria, however, does not restrict unauthorized insurers from including more restrictive terms or exclusions on its policies. Id. § 626.916. In fact, it is required that a surplus lines insurer's policy "shall not be more favorable to the insured as to the coverage or rate than under similar contracts on file and in actual current use in this state by the majority of authorized insurers actually writing similar coverages on similar risks." Id. § 626.916(1)(c).
" ‘To export’ means to place, in an unauthorized insurer under this Surplus Lines Law, insurance covering a subject of insurance resident, located, or to be performed in this state." Fla. Stat. § 626.914(3).
For an unauthorized insurer to become an "eligible surplus lines insurer," it must comply with certain basic conditions set for in Section 926.918, which include, for example that: the insurer must be currently an authorized insurer in the state or country of its domicile as to the kind or kinds of insurance proposed to be so placed and must have been such an insurer for not less than the 3 years; the insurer must furnish its annual financial statement to the Florida Office of Insurance Regulation ("OIR"); and certain capital and surplus requirements be met as to policyholders. Id. § 626.918.
In general, surplus lines insurers need not adhere to the same, numerous statutory requirements as authorized insurers. Fla. Stat. § 626.913(4). One such requirement is that an authorized insurer generally must file all forms it intends to use with the OIR for approval. Id. §§ 627.410, 627.4102; Sec. First Ins. Co. v. State, Office of Ins. Regulation , 177 So. 3d 627 (Fla. 1st DCA 2015). Another requirement is that "[a] residential or commercial property insurance policy may not prohibit the assignment of post-loss benefits unless it complies with s. 627.7153." Fla. Stat. § 627.422(2).
II. The Anti-Assignment Endorsement Bars this Action
Defendant argues that because the Anti-Assignment Endorsement explicitly prohibited Miami Riverview from assigning its rights under the Policy, Raven, the would-be assignee, does not have valid rights under the Policy and thus cannot state a claim upon which relief can be granted. D.E. 6 at 8–11. Raven replies that despite the Anti-Assignment Endorsement, Miami Riverview was free to assign its post-loss rights to Raven because restrictions on post-loss assignments are prohibited under Florida law. D.E. 7 at 3–5.
The Parties do not dispute the following facts: Defendant is a surplus lines insurer, the Policy contains the Anti-Assignment Endorsement, and Miami Riverview executed an assignment of its post-loss rights under the Policy to Raven. Further, it is beyond question that in Florida, an authorized insurer of a residential or commercial property insurance policy cannot prohibit post-loss assignments unless it follows certain statutory requirements. Fla. Stat. § 627.422(2). The issue here is whether a surplus line insurance contract's prohibition of post-loss assignments is valid under Florida law.
Florida law permits a policyholder of an authorized insurance policy to freely assign post-loss insurance claims. See Fla. Stat. § 627.422. This is because "[g]enerally, rights under a contract are assignable." Prof'l Consulting Servs. v. Hartford Life & Accident Ins. Co. , 849 So. 2d 446, 447 (Fla. 2d DCA 2003) (citation omitted). With respect to authorized insurance policies, this is true even if the policy provides an anti-assignment clause. § 627.422(2) ; Better Constr., Inc. v. Nat'l Union Fire Ins. Co. , 651 So. 2d 141, 142 (Fla. 3d DCA 1995) (citations omitted).
"[I]nsurance contracts must be construed in accordance with the plain language of the policy." Swire Pac. Holdings, Inc. v. Zurich Ins. Co. , 845 So. 2d 161, 165 (Fla. 2003) (citations omitted). Insurance contracts are to be interpreted and construed in a manner that is "reasonable, practical, sensible, and just." Doctors Co. v. Health Mgmt. Assocs., Inc. , 943 So.2d 807, 809 (Fla. 2nd DCA 2006) (citations omitted). "[I]f a policy provision is clear and unambiguous, it should be enforced according to its terms whether it is a basic policy provision or an exclusionary provision." Taurus Holdings, Inc. v. USF & G , 913 So. 2d 528, 532 (Fla. 2005) (citation omitted). Courts should "attempt to construe the contractual language in a manner which gives all the provisions effect." Siegle v. Progressive Consumers Ins. Co. , 819 So. 2d 732, 739 (Fla. 2002).
"In the absence of statutory provisions to the contrary, insurers have the right to limit their liability and to impose such conditions as they wish upon their obligations, not inconsistent with public policy and the courts are without the right to add to or take away anything from their contracts." France v. Liberty Mut. Ins. Co. , 380 So. 2d 1155, 1156 (Fla. 3d DCA 1980) (citing Zipperer v. State Farm Mut. Auto. Ins. Co. , 254 F.2d 853 (5th Cir. 1958) ); see also Geico Gen. Ins. Co. v. Arnold , 730 So. 2d 782, 784 (Fla. 3d DCA 1999).
While authorized insurers may not prohibit the assignment of post-loss rights or benefits, no such prohibition applies to surplus lines insurers. "Except as may be specifically stated to apply to surplus lines insurers, the provisions of chapter 627 [governing "insurance rates and contracts"] do not apply to surplus lines insurance authorized under ss. 626.913 – 626.937, the Surplus Lines Law." Fla. Stat. § 626.913(4) (emphasis added); Essex Ins. Co. v. Integrated Drainage Sols., Inc. , 124 So. 3d 947, 950-51 (Fla. 2d DCA 2013) ("The Office of Insurance Regulation has never regulated surplus lines insurers as to rate, form, or other requirements under ch. 627, F.S.") (quoting Fla. S. Comm. on Judiciary, CS for SB 1894 (2009) Staff Analysis 1–2 (Apr. 2, 2009)). Nothing in chapter 626, which governs surplus line insurers, or in chapter 627, refers to assignments with respect to surplus lines insurers. Under chapter 627, insurers of residential or commercial property "may not prohibit the assignment of post-loss benefits unless it complies with s. 627.7153." Fla. Stat. § 627.422(2). Because nothing in chapter 626 or chapter 627 "specifically state[s]" that such a prohibition "appl[ies] to surplus line insurers," surplus lines insurance contracts are not subject to the post-loss assignment prohibition set forth in chapter 627. Id. § 626.913(4).
Defendant acknowledges that there is Florida case law declining to enforce similar anti-assignment clauses that preclude an insured from assigning post-loss benefits. However, these cases involve policies that were subject to chapter 627 and approval by the OIR. See, e.g., Sec. First Ins. Co. v. Fla. Office of Ins. Regulation , 232 So. 3d 1157, 1160 (Fla. 5th DCA 2017) (upholding the OIR's disapproval of an endorsement excluding post-loss assignments of benefits in policy); Sec. First Ins. Co. v. State , 177 So. 3d 627 (Fla. 1st DCA 2015) (same). While these cases do not draw distinctions as to authorized versus unauthorized or surplus insurers, as Raven points out in its opposition, the fact that OIR approval was involved in both cases indicates that the insurers were authorized insurers subject to chapter 627. Fla. Stat. § 627.410 ; D.E. 7 at 4–5. Further, while both cases cite to several sections in chapter 627, neither case cites to chapter 626, the Surplus Lines Law. Both the Parties and the Court are unaware of any case in Florida or in federal courts located in Florida approving or declining to enforce anti-assignment clauses contained within a policy issued by a surplus lines insurer.
Raven's opposition ignores § 626.913(4) ’s mandate that chapter 627 does not apply to surplus lines insurers, except to argue, conveniently, that § 627.7152 does not apply to the surplus lines insurance Policy here (Defendant's second argument). D.E. 7 at 7. Instead, Raven points to § 626.913(2) to argue that "by choosing to transact insurance and conduct business in Florida on a surplus lines basis, [Defendant] is subject to Florida law." D.E. 7 at 3. Fla. Stat. § 626.913(2) provides that:
It is declared that the purposes of the Surplus Lines Law are ... to protect such authorized insurers, who under the laws of this state must meet certain standards as to policy forms and rates, from unwarranted competition by unauthorized insurers who, in the absence of this law, would not be subject to similar requirements ; and for other purposes as set forth in this Surplus Lines Law.
Fla. Stat. § 626.913(2) (emphasis added). Raven does not argue, and the Court does not see, how the above provision negates § 626.913(4) ’s directive that surplus lines insurers shall not be subject to the same chapter 627 requirements as are applicable to authorized insurers.
Miami Riverview could have only turned to the surplus lines market after being rejected by three authorized insurers and implicitly recognized that it would be receiving a less favorable policy from Defendant. Fla. Stat. § 626.914(4). And, in this regard, Defendant was free to include exclusions that authorized insurers otherwise cannot since it is not subject to chapter 627 or the OIR's review or approval process. Fla. Stat. § 626.913(4). Miami Riverview accepted the terms offered by Defendant and both parties entered into the Policy, including the post-loss assignment exclusion. Moreover, as noted above, Florida law requires a surplus lines insurer to offer a less favorable policies than those available by admitted carriers. Fla. Stat. § 626.916(1)(c). And Florida law mandates that insurance contracts must be construed in accordance with the plain language of the policy. Swire Pac. Holdings , 845 So. 2d at 165. The terms of the Policy must be enforced as written.
In sum, Miami Riverview was explicitly contractually prohibited from assigning its post-loss rights under the Policy. Although Florida law prohibits such assignments as to authorized insurers, no such prohibition exists for surplus line insurers. Accordingly, Miami Riverview's purported assignment to Raven is invalid and Raven cannot seek to enforce any rights under the Policy against Defendant.
Having found that the Anti-Assignment Endorsement bars this action, the Court need not consider whether Raven complied with Fla. Stat. § 627.7152, whether the Complaint states a claim for quantum meruit , or whether the Complaint contains sufficient factual support.
The Court notes that this argument would likely fail given that chapter 627 does not apply to surplus line insurance contracts. Fla. Stat. § 626.913(4).
CONCLUSION
For the reasons stated herein, it is hereby
ORDERED AND ADJUDGED that the Motion to Dismiss, D.E. 6, is GRANTED. This case is DISMISSED. It is further
The Court could have converted the motion to dismiss to a motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c). In that event, the result would have been the same—judgment for the Defendant.
ORDERED AND ADJUDGED that the Clerk of Court SHALL administratively close this case. All future hearings and deadlines are CANCELLED, and all pending motions are DENIED AS MOOT.
DONE AND ORDERED in Chambers, Miami, Florida this 25th day of September, 2020.