September 14, 2022

Jake Huxtable Secures Another Win Based on Invalid Assignment of Benefits Defense

Kelley Kronenberg Partner, Jake Huxtable, obtained an arbitration award in favor of our client, Frontline Insurance, in a claim alleging damages as a result of Hurricane Irma. The arbitrator’s decision shielded Frontline from Plaintiff’s request for damages of approximately $115,000.00, attorney’s fees and costs. 

Homeowners and Frontline Insurance homeowner’s policyholders claimed their house was damaged by Hurricane Irma, in 2017. On February 21, 2020, the homeowners signed an Assignment of Benefits that assigned their claim with Frontline to SFR Services. Plaintiff obtained a written, itemized repair estimate from Elite Claims Consultants, a public adjuster retained by SFR which reflected “received” and “entered” dates of February 13, 2020. On February 21, 2020, 894 days after the Hurricane, the homeowners reported a claim for hurricane-related damage to the carrier.  

On February 24, 2020, Elite issued its estimate. The following day, the AOB, with the Elite estimate, was uploaded to Frontline. Frontline inspected the property a month later and the inspector concluded the damage was caused by thermal expansion and contraction, not wind. On this basis, the carrier notified the interested parties it was investigating the claim under a reservation of rights; notification was sent to SFR on June 29, 2020, to Elite on September 1, 2020; and, to the homeowners on November 18, 2020. On December 4, 2020, a denial was issued consistent with the investigator’s findings with the additional ground that late notice may have prejudiced its ability to independently confirm the cause.  

Plaintiff’s suit was premised on the position that the AOB with SFR was valid-that it was provided to the homeowners within three business days and identified Hurricane Irma as the cause of the roof damage. Further, Plaintiff contends it met its burden to show a loss occurred during the policy period, shifting the burden to Defendant to disprove causation. Plaintiff further argued Defendant suffered no prejudice due to the delays. In response, defense attorney Jake Huxtable raised three key arguments: (1) SFR lacks standing to bring suit as the underlying AOB is void, invalid, and unenforceable since failed to contain a written, per-unit, cost estimate of the services to be performed in violation of it violated Florida Statutes section 627.7152, (2) “prompt notice” of the claim was not provided, resulting in a presumption of prejudice to Defendant that SFR cannot rebut; and, (3) the alleged damages were not caused by Hurricane Irma.  

After review of the evidence and both parties’ legal arguments, the arbitrator ruled in Frontline’s favor, specifically stating that SFR lack standing to sue because the AOB violated Florida Statutes section 627.7152 insomuch as it did not contain a written, per-unit, cost estimate of the services to be performed and it also lacked a provision allowing the assignor to rescind the assignment agreement by submitting a written notice of rescission.  On this basis, the AOB was declared void, invalid, and unenforceable. The arbitrator’s ruling avoided an award of the damages sought for approximately $115,000.00, plus the attorneys’ fees and costs potentially due and owing.