September 21, 2022

Kelley Kronenberg Prevails On Appeal, Upholding Dismissal Of Claim Based On Invalid AOB

Kelley Kronenberg’s First Party Property team prevailed on an appeal before the District Court of Appeal for the Second District of Florida leading to a clear opinion from the Court that could effectively shut down efforts to circumvent the 2019 AOB statute. The panel was comprised of Judges Edward C. LaRose, Darryl C. Casanueva, and Andrea Teves Smith.   

In 2019, Florida lawmakers enacted legislation to ”regulate assignment agreements that seek to transfer insurance benefits from the policyholder to a third party,” with the intent to curb AOB abuse. Since then, The Kidwell Group LLC d/b/a Air Quality Assessors of Florida (“Kidwell”), has filed numerous suits for breach of contract seeking payment for services rendered in exchange for AOBs. Kelley Kronenberg’s First Party Property Defense team has successfully defended a multitude of these suits at trial, including the instant action; a small number of these judgments have been appealed. In this appeal, skillfully defended by Kelley Kronenberg attorneys, Kim Fernandes and Matthew Strauss, Kidwell raised novel legal arguments about the scope of the AOB law in response to which the appellate court issued a lengthy opinion strongly refuting all arguments.  


In 2017, Robert and Maureen Mucciaccio sustained hurricane damage to their home which was covered by a homeowner’s insurance policy issued by American Integrity Insurance Company of Florida (“AIIC”). In November 2019, the Mucciaccios executed an agreement assigning their post-loss benefits to Kidwell in exchange for a “non-emergency indoor environmental assessment and/or forensic engineering study.” Tracing the language of the AOB statute, the agreement indicated the assessment “in no way is meant to protect, repair, restore, or replace damaged property or to mitigate against further damage . . .” After completion of its assessment, Kidwell submitted invoices to AIIC. When AIIC refused payment, Kidwell filed suit, attaching the AOB, but not the insurance policy, to its complaint. 

Trial Court Proceedings 

On behalf of AIIC, Attorney Matthew Strauss, moved to dismiss Kidwell’s complaint, arguing Kidwell lacked standing to sue as the language of the complaint and the AOB led to the undisputed conclusion that the contract at issue was an AOB that did not meet the enumerated requirements of Florida Statutes §627.7152(2)(a), and the pre-suit notice requirement of this statutory provision was not met. Kidwell asserted the AOB was not an “assignment agreement” governed by the provisions of §627.7152 because the service provided (a quality assessment) did not fall under services enumerated under the statute: “protect, repair, restore, or replace property or . . . mitigate against further damage . . .” Kidwell also raised its familiar argument that §627.7152 does not apply to an AOB relating to an insurance policy in effect prior to the enactment of the law. Agreeing with AIIC, the trial court dismissed the complaint and this appeal followed.   

The Appeal  

In support of its appeal, Kidwell offered three arguments: (1) that the service provided fell outside of the scope of the AOB statute, (2) that the AOB statute was inapplicable as the insurance policy predated its enactment; and, (3) that the Court should abide by the recent Fifth Judicial Circuit ruling in favor of Kidwell, on a case with similar facts. 

The appellate opinion delved deeply into Kidwell’s argument that the contract fell outside of §627.7152. From a procedural standpoint, the Court set forth that Kidwell’s complaint could not survive dismissal unless it alleged a statement of facts that, when taken as true, would establish entitlement to relief. To this end, the Court declared Kidwell “needed a valid AOB to maintain a breach of contract action.” Citing the AOB statute, the Court noted any assignment agreement that does not comply with the provision of the statute is invalid and unenforceable.   

In its reasoning, the Court acknowledged that the services explicitly set forth in §627.7152 included those “to protect, repair, restore, or replace property or to mitigate against further damage to the property,” and cited Kidwell’s prior acknowledgment that its assessment report would be “used in furtherance of repairs or replacement to a property.” The Court concluded that a service “to determine repairability, scope and/or categorization” of damage and “testing . . . to prepare a forensic engineering report and/or remediation protocol report that may be used to prescribe or confirm proper remediation procedures” is within the scope of an assignment agreement. Without mincing words, the DCA held that Kidwell’s AOB “’is an assignment agreement’” under §627.7152, regardless of [its] attempts to disguise it as something else.” Further, while the DCA acknowledged action subsequently taken by the Florida Legislature to clarify the statute’s intent (namely, the addition of “including, but not limited to, inspecting” to the list of covered activities), it stated this did not alter its interpretation of the 2019 version of the statute, the clear language of which implicitly included inspection and assessment.  

In an apparent effort to preempt additional creative efforts, the Court mentioned the exclusions explicitly set forth within the statute and advised it is without power to “add words to the statute which do not exist.” On these bases, the Court found that Kidwell agreed to provide services as part of efforts to remediate property damage, bringing it within the scope of §627.7152.  

Turning to Kidwell’s retroactivity argument, the Court unequivocally confirmed a trial court should apply a statute prospectively, not retroactively, to a contract where the statute preexisted the contract; however, in refuting Kidwell’s argument, it went on to state Florida Statute §627.7152 applies to AOBs executed on or after July 1, 2019, noting that the statute establishes the procedural requirement for an AOB to be valid and enforceable, and subsection (2) affects rights under an AOB, not substantive rights pursuant to an insurance policy. In the words of the Court, “[i]t seems beyond cavil that an assignee acquires no rights to an insured claim until it executes a valid AOB” and, as such, “the law in effect at the time the parties executed the AOB controls.” In speaking to the facts at bar, the Court noted §627.7152 had been in effect for months prior to execution of this AOB and Kidwell was clearly aware of this as the wording of its AOB attempted “to disclaim its application.”  

Perhaps most notably, the Second DCA spoke to one of the primary cases relied upon by AOB vendors, Menendez v. Progressive Express Insurance Co., 35 So.3d 873 (Fla. 2010), dispelling the belief that this case is applicable to AOBs. In so doing, the Court distinguished this misapplied precedent on the basis it did not involve an AOB and did not discuss whether a subsequent contract is subject to the notice requirements of an earlier enacted statute. Id. Similarly, the Court rejected the federal cases relied upon by Kidwell which failed to mention whether the AOB was enacted after the effective date of §627.7152.  

Finally, the Court addressed Kidwell’s reference to and suggested reliance upon Kidwell Grp., LLC. v. Am. Integrity Ins. Co. of Fla., 339 So.3d 1068 (Fla. 5th DCA 2022), wherein dismissal of Plaintiff’s complaint was held to be inappropriate as the underlying insurance policy was not attached to the complaint. The Second DCA noted, while a trial court must rely only on the evidence contained within the complaint and that which is attached when adjudicating dismissal, in this context, that argument is a red herring. In the case at bar, there was no dispute regarding coverage—at issue was not “whether benefits under a policy can be assigned but only how that assignment can be accomplished—in other words, the procedures that need to be followed.” Then, pointing to a subsequent case decided by the Fifth DCA in which Kidwell was also the Appellant, the Court seemed to subtly admonish Kidwell, reiterating, “the operative date for the purposes of [section 627.7152] is the date of the [AOB], not the date the insurance policy was issued.” Kidwell Grp., LLC v. Olympus Ins. Co., Fla. L. Weekly D1571, D1571 (Fla. 5th DCA July 22, 2022). The Fifth DCA explained, “the assignee cannot ‘step into the shoes’ of the insured when the statute in effect at the time of the AOB dictat[ed] otherwise.” Id. Accordingly, the Court indicated its focus must remain on the AOB as the “operative document” central to the case. 

The potential impact of the Second DCA’s opinion could be far-reaching; we expect it will curtail statutory non-compliant claims by AOB vendors. 

CTA: If you have denied payment under an AOB and seek representation by an attorney with a proven track record in successfully defending these claims, call Kelley Kronenberg’s First Party Property Defense team!