Florida’s Second District Court of Appeal affirmed dismissal of a lawsuit brought by a roofing contractor against an insurance carrier on behalf of an insured, finding that the assignment of benefits contract between the contractor and insured did not strictly comply with the requirements of section 627.7152, Florida Statutes.
Gale Force Roofing and Restoration LLC v. American Integrity Insurance Company of Florida, arises from a dispute brought by a roofing contractor on behalf of an insured against an insurance carrier pursuant to an assignment of benefits. After the contractor filed its lawsuit, the trial court dismissed the lawsuit because it determined the contract between the roofing contractor and its customer failed to comply with 627.7152, Florida Statutes, and therefore was unenforceable, leaving the roofing contractor without standing to sue the insurance carrier. The roofing contractor appealed, arguing that the trial court had only considered the first two pages of the six page contract in reaching its decision.
On appeal, Florida’s Second District Court of Appeal first noted that “section 627.7152 establishes mandatory requirements which an [assignment of benefits] must include to be enforceable.” The Court went on to note that only the following sections of the statute were applicable to the appeal:
(2)(a) An assignment agreement must:
. . . .
2. Contain a provision that allows the assignor to rescind the assignment agreement without a penalty or fee by submitting a written notice of rescission signed by the assignor to the assignee within 14 days after the execution of the agreement, at least 30 days after the date work on the property is scheduled to commence if the assignee has not substantially performed, or at least 30 days after the execution of the agreement if the agreement does not contain a commencement date and the assignee has not begun substantial work on the property.
. . . .
6. Contain the following notice in 18-point uppercase and boldfaced type:
YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER YOUR INSURANCE POLICY TO A THIRD PARTY, WHICH MAY RESULT IN LITIGATION AGAINST YOUR INSURER. PLEASE READ AND UNDERSTAND THIS DOCUMENT BEFORE SIGNING IT. YOU HAVE THE RIGHT TO CANCEL THIS AGREEMENT WITHOUT PENALTY WITHIN 14 DAYS AFTER THE DATE THIS AGREEMENT IS EXECUTED, AT LEAST 30 DAYS AFTER THE DATE WORK ON THE PROPERTY IS SCHEDULED TO COMMENCE IF THE ASSIGNEE HAS NOT SUBSTANTIALLY PERFORMED, OR AT LEAST 30 DAYS AFTER THE EXECUTION OF THE AGREEMENT IF THE AGREEMENT DOES NOT CONTAIN A COMMENCEMENT DATE AND THE ASSIGNEE HAS NOT BEGUN SUBSTANTIAL WORK ON THE PROPERTY. HOWEVER, YOU ARE OBLIGATED FOR PAYMENT OF ANY CONTRACTED WORK PERFORMED BEFORE THE AGREEMENT IS RESCINDED. THIS AGREEMENT DOES NOT CHANGE YOUR OBLIGATION TO PERFORM THE DUTIES REQUIRED UNDER YOUR PROPERTY INSURANCE POLICY.
While the appellate court acknowledged that the contractor’s contract contained the bold, capitalized statement set forth above, the contract failed because it did not comply with section 2 above, stating specifically:
[S]ubsection (2)(a)2 requires a provision that allows recission “without a penalty or fee,” whereas the required uppercase and boldfaced statement in subsection (2)(a)6 mentions a “penalty,” but not a “fee.” Further, subsection (2)(a)2 expressly requires a provision that permits the assignor to rescind by submitting a “written notice,” whereas the required uppercase and boldfaced statement in subsection (2)(a)6 is silent as to the mechanism for doing so. Thus, the required uppercase and boldfaced statement in subsection (2)(a)6 lacks two separate terms expressly required by subsection (2)(a)2
The court also concluded that a “cancellation provision” in the contract also did not satisfy the requirements of the assignment of benefit’s statute because it did not reference the fourteen-day deadline set forth in the statute nor did it reference that cancellation could be accomplished without a penalty or fee. The court went on to hold that because the assignment of benefits statute indicates that certain terms relating to rescission or cancellation of the contract are to be contained in a provision, that meant they must be contained in one, single provision, not spread across multiple provisions in the contract. Accordingly, the appellate court affirmed the dismissal of the lawsuit.
The key takeaway from this decision is that contractors performing work where they intend to be paid using insurance proceeds need to take as many steps as they can to ensure that their contracts are up to date and enforceable. The statutes governing this type of work and the contracts that can be used in connection with it have changed multiple times in the last five years, and new case law comes out regularly interpreting and applying those statutes. Contractors should have their contracts updated regularly to ensure they are in step with the most recent changes in the law.