In Lewis v. Universal Property and Casualty Insurance Co., ____ So.3d ____ (Fla. 4th DCA June 3, 2009), the insureds sustained damage to the roof on their home as a result of Hurricane Wilma. The insureds believed that the insurer should pay to replace their entire roof. In a November 16, 2006 letter, the insurer advised the insureds that based on its engineer’s report, it would only pay for 1 square foot of concrete tile shingles, and 120 linear feet of ridge tiles. According the insurer, the remainder of the damage was due to aging, wear and tear or construction deficiencies. In this letter, the insurer advised the insureds of their right to invoke the mediation and/or appraisal provisions of the policy and that the insurer was "closing its file."
Thereafter, the parties participated in mediation which impassed. The insureds then retained counsel who mailed a letter with a copy of a civil complaint to the insurer. The insurer responded by demanding appraisal under the policy and also noting that it reserved its right to "deny the claim." Shortly thereafter, the insureds’ attorney filed suit. Over the insureds’ objections, the legal case was stayed while the matter proceeded to appraisal. The appraisal resulted in the insurer paying its insureds over $51,000.
After the appraisal, the attorney for the insureds filed a motion for attorneys fees pursuant to 627.428. The insurer objected to paying fees, claiming that the insureds were not entitled to fees because: 1) the insurer had invoked its appraisal clause before filing suit; and 2) the insured had never confirmed the appraisal award and obtained a judgment.
The Court noted that there are some cases denying fees when the lawsuit is filed after the insurer invokes its right to appraisal, but according to the Court:
The decisions in these cases plainly indicate that whether suit is filed before or after the invocation of the appraisal process is not determinative of the insured’s right to fees; rather, the right to fees turns upon whether the filing of the suit served a legitimate purpose.
The Court then held that the lawsuit in this case did serve a legitimate purpose. According to the Court:
Here, more than a year after the loss, the insurer was taking the position that the bulk of the damage to the roof was not covered and indicating to the insured that it intended to take no further action and was ‘closing [its] file.’ The insureds thus invoked their right to mediation under the insurance contract. When this failed to resolve the dispute, the insured hired counsel and threatened suit, sending the insurer a draft complaint, stating a claim for breach of contract. Only after the insureds’ counsel sent the letter and draft complaint did the insurer invoke its right to an appraisal and, even in invoking such right, the insurer asserted it was retaining the right to deny the claim. The insureds then filed suit, stating a claim for breach of contract and seeking a declaratory judgment regarding coverage. These circumstances are not indicative of an insured who ‘raced to the courthouse’ or who filed suit simply for the purpose of securing a fee award.
With regard to whether the insured was required to confirm the appraisal award and obtain a judgment, the Court stated:
And, while it is true that the trial court never entered judgment or an order confirming the appraisal award, it is undisputed that the insurer paid the claim. Florida law squarely holds that ‘payment after suit was filed operates as a confession of judgment…entitling [the insured] to attorney’s fees.
As a result, the Court ultimately held that the insureds were indeed entitled to prevailing party attorneys fees under 627.428.