Last week Florida’s Fourth District Court of Appeal affirmed the dismissal of a lawsuit filed by a mold remediation contractor, finding that the standard price list attached to the contract failed to meet the requirements for a “written, itemized, per-unit cost estimate of the services to be performed” required under Florida’s assignment of benefits statute. The decision is another cautionary tale to contractors in the disaster recovery business about risks of non-compliance with the statute.
Air Quality Experts Corporation v. Family Security Insurance Company arises from water damage that occurred at a homeowner’s property. The homeowner entered into an assignment of benefits agreement with a contractor to perform mold remediation at their home. The assignment of benefits contained the following language regarding the charges for which the homeowner would be responsible:
Customer desires to and does hereby engage AQE to provide services and submit invoices for services performed. AQE agrees to furnish and the customer agrees to pay for all of the equipment, supplies, materials, and labor necessary for the PROJECT, at the PROJECT address listed above. See Standard Price List below. Prices indicated on the Standard Price List may vary and are subject to change depending on the property conditions and services provided. The scope of work is based on third party protocol and industry standards.
After performing the work, the contractor submitted two invoices to the insurance carrier. Each invoice “listed a few of the services from the price list, a “quantity” number which varied, the unit cost, and the total cost.” The insurance carrier failed to pay the bills, and the contractor filed suit.
The insurance carrier moved to dismiss the lawsuit, arguing that the claim “on its face failed to meet the requirements of section 627.7152(2)(a)4., which provides: ‘[a]n assignment agreement must . . . [c]ontain a written, itemized, per-unit cost estimate of the services to be performed by the assignee.” The trial court agreed with the insurance carrier and granted the motion to dismiss and the contractor appealed.
On appeal, Florida’s Fourth District Court of Appeal agreed with the trial court and affirmed the dismissal. Specifically the court stated:
Attached to the AOB in this case was not a list of itemized services to be performed. Instead, a price list of the types of services offered by the assignee with the services' unit price was attached. A “price list” is plainly not a “written, itemized, per-unit cost estimate.” See § 627.7152(2)(a)4., Fla. Stat. (2020). Furthermore, the AOB never described the project, nor did it provide an estimate. While many of the services were apparently charged per room, nowhere are the number of rooms involved in the inspection even mentioned. Moreover, the price list was not created specifically to set forth the cost of services for this insured, as is evident from the language used in the AOB identifying the price list:
See Standard Price List below. Prices indicated on the Standard Price List may vary and are subject to change depending on the property conditions and services provided. The scope of work is based on third party protocol and industry standards.
Thus, the prices did not apprise the insured of the actual estimate for performing any work, as the prices were also dependent on the scope of work based upon unexplained standards.
Rather than providing an estimate of the work or services “to be” performed as required by the statute, the price list was simply a menu of services, or, as it is identified by assignee, a “price list” of work or services that could be performed. Accordingly, the trial court correctly found, looking at only the four corners of the amended claim and its exhibits, that the AOB violated section 627.7152(2)(a)4.
The court also found that the insurance carrier had standing to raise the insufficiency of the agreement and its violation of 627.7152, Florida Statutes.
Case law interpreting Florida’s AOB statute, passed in 2019, continues to evolve, but courts appear to be taking a strict approach to reviewing both the statute and contracts that fall under it. Contractors using AOBs should be careful about using generic price lists based on this opinion if they want to ensure that their contracts remain enforceable.