Recently Florida’s Second District Court of Appeal concluded that an assignment of benefits agreement executed in conjunction with indoor environmental and air quality testing services fit within Florida’s Assignment of Benefits Statute despite the services not directly involving physical protection, repairs, or restoration. This resulted in a dismissal of the air quality companies lawsuit against the the insurance carrier, and illustrates how broadly courts are interpreting 627.7152, Florida Statutes, and how careful restoration companies and their affiliates must be in complying with its terms.
The Kidwell Group, LLC v. American Integrity Insurance Company of Florida, arose out of damage caused to a homeowner’s home in 2017. As a result, the homeowner’s hired an air quality and indoor environmental testing company to inspect and report on the conditions at their home. The air quality company’s contract included an assignment of insurance benefits and the following terms:
[the company would] perform a non-emergency indoor environmental assessment and/or forensic engineering study . . . . to determine repairability, scope and/or categorization of water damage, testing for contamination including bacteria and/or mold in order to prepare a forensic engineering report and/or remediation protocol report that may be used to prescribe or confirm proper remediation procedures for the damaged property.
. . .
this non-emergency indoor environmental assessment in no way is meant to protect, repair, restore, or replace damaged property or to mitigate against further damage to the property.
After company completed its performance of the contract, the homeowner’s insurance carrier refused to make payment to the air quality company. The air quality company filed suit against the insurance carrier. The insurance moved to dismiss the lawsuit, arguing that the assignment of benefits agreement fell within the requirements of 627.7152, Florida Statutes, and that the air quality company had failed to comply with those requirements. The air quality company countered that while its report “is certainly used in furtherance of repairs or replacements to a property, it does not actually fall within any of the enumerated service types within [section] 627.7152 because the report does not specifically protect, repair, restore, or replace property or . . . mitigate against further damage to the property.” The trial court agreed with the insurance carrier and dismissed the air quality company’s lawsuit.
On appeal, the air quality company reiterated its argument that its agreement fell outside the requirements of 627.7152, Florida Statutes. In reviewing this argument, the Second District Court of Appeal started with the language of 627.7152(1)(b), Florida Statutes, which defines an assignment of benefits as:
any instrument by which post-loss [sic] benefits under a residential property insurance policy or commercial property insurance policy, as that term is defined in [section] 627.0625(1), are assigned or transferred, or acquired in any manner, in whole or in part, to or from a person providing services to protect, repair, restore, or replace property or to mitigate against further damage to the property.
While the court acknowledged that the air quality company’s assignment expressly disclaimed that its services were “meant to protect, repair, restore, or replace damaged property or to mitigate against further damage to the property,” the court focused on the following language to conclude that the assignment actually did fall under 627.7152, Florida Statutes:
[the purpose of the assessment is] to determine repairability, scope and/or categorization of water damage, testing for contamination including bacteria and/or mold in order to prepare a forensic engineering report and/or remediation protocol report that may be used to prescribe or confirm proper remediation procedures for the damaged property
. . .
[the air quality company agrees to provide] reasonable and necessary assessment services” relating to the damage.
The court concluded that this language demonstrated that the air quality company “agreed to provide services as part of the homeowners' efforts to remediate property damage” and thus were required to have fully complied with 627.7152, Florida Statutes. Since the air quality company did not, the Second District Court of Appeal agreed with the trial court that dismissal was proper.
For contractors that perform work where insurance funds are going to be used to pay in part or in whole for the repairs, this case simply illustrates how much harder that industry has become to work in. Courts and insurance companies are examining contracts with a fine tooth comb, and insurance carriers in particular have every incentive to try to argue that a document is an assignment of benefits subject to 627.7152, Florida Statutes. Contractors should regularly examine their contracts and consult with counsel to make sure they are up to date on the most recent requirements for assignments of benefits in Florida.