April 23, 2021

Kelley Kronenberg Case Law Update: People’s Trust Ins. Co. v. Farinato

People’s Trust Ins. Co. v. Farinato, Fla. 4th DCA, April 7, 2021, No. 4D20-866

People’s Trust Insurance Company (“Insurance Company”) appealed a final judgment on attorney’s fees and costs entered by the trial court in favor of Vincent Farinato and Bernadette Farinato (“Insureds”) in breach of contract action arising out of Hurricane Irma damage to the insured property. The appellate court reversed the final judgement and remanded to the trial court with directions to deny the Insureds’ motion for attorney’s fees, finding that the filing of the  breach of contract lawsuit was a “race to the courthouse” that served no legitimate purpose.

The loss was reported to the Insurance Company on August 2, 2018 and on September 6, 2018, the Insurance Company sent a letter to the Insureds advising that there was coverage for damages to the interior but that the damage to the roof was excluded from coverage under the Policy as it “stemmed from age-related wear and tear.” On October 10, 2018, the Insureds’ counsel submitted their Sworn Proof of Loss in the amount of $35,463.83 along with an estimate in the same amount. Five days later on October 15, 2018, the Insurance Company emailed an appraisal demand letter to the Insureds’ counsel at 11:01 a.m, demanding an “appraisal of the amount of loss and scope of repairs.” The Insureds’ counsel filed the lawsuit on that same day at 1:32 p.m. An appraisal award in the amount of $35,819 was entered during the pendency of litigation, which included the cost of repairs to the roof. Ultimately, the Insurance Company’s preferred contractor repaired the insured property in accordance with the appraisal award.

The appellate court first addressed the question of whether the roof was a coverage question for the court or an amount of loss question for the appraisal process. Relying on People’s Trust Insurance Co. v. Tracey, the Court found that because the Insurance Company did not wholly deny the claim, the dispute over the cause of loss to the roof was an amount-of-loss issue for the appraisers and not a coverage issue for the court.

Regarding the Insureds’ claim for attorney’s fees, the appellate court concluded that the trial court erred in awarding fees because the filing of the lawsuit was not a necessary catalyst to resolve the dispute and force the Insurance Company to satisfy its obligations under the Policy. The appellate court reasoned that at no point was there a breakdown in the claims-adjusting process prior to the filing of the lawsuit and pointed out that in its coverage determination letter of September 6, 2018, the Insurance Company requested a Sworn Proof of Loss from the Insureds if they disagreed with the Insurance Company’s assessment of the damage and furthermore, advised the Insureds of their right to appraisal. The Insurance Company did not refuse to participate in appraisal and did not assert that it would refuse coverage for the roof if awarded in appraisal. Accordingly, the Insurance Company was working to resolve the dispute within the terms of the Policy and did not take any steps to breach the Policy that would justify the filing of the lawsuit.


Authored By:


Andrea Aguilar
Attorney, Fort Lauderdale