TALLAHASSEE, Fla. – A Leon County district judge has rejected a contractor’s challenge to a section of the new property insurance law that prohibits attorney’s fees in insurance disputes.
Judge J. Lee Marsh issued the order Monday to end a legal challenge filed in May by the Restoration Association of Florida and Air Quality Assessors, LLC, an Orlando company that specializes in mold testing and leak detection.
The challenge focused on part of the law that was passed in a special session in May in which Gov. Ron DeSantis called to address major issues in Florida’s property insurance market. Melanie Griffin, secretary of the Florida Department of Business and Professional Regulation, and Donald Shaw, executive director of the State Construction Industry Licensing Board, are named as defendants in the lawsuit, as they have the power to regulate and control contractors.
Marsh’s order did not specifically address the law enforcement but dismissed the case because it said Griffin and Shaw were not “fit to be prosecuted,” in part because they were not in charge of enforcing the law.
Insurance companies have been suing for lawsuits and attorney’s fees to save money. The new law adopted several measures to try to overcome these problems, but the problem focused on a part of the measure that is related to what is known as the “profit sector.”
When paying benefits, homeowners sign over their insurance claims to contractors, who seek payment from the insurance companies – often leading to lawsuits over claims and payments.
Contractors previously were able to recover their attorney’s fees from insurers if they were successful in litigation, a concept known as “party costs.” But the new law (SB 2-D) deprived contractors of the ability to recover party fees when they are awarded benefits.
Homeowners can recover party fees if they file claims directly with insurers, but contractors cannot. The lawsuit said the amendment violates equal protection and due process rights and prevents contractors from accessing the courts.
“When an insurer delays, pays little or nothing, contractors are forced to take action against the insurer to recover the full amount of work done,” attorneys for the Restoration Association of Florida and Air Quality Assessors wrote. in Aug. 4 response to the government’s request to dismiss the case. “Without equal rights to recover attorney’s fees, SB 2-D makes it financially difficult for the contractor to pursue his rights and responses in court and thus discourages AOB (good faith work), leaving the employee (contractor) holding the bag.”
But in seeking dismissal, prosecutors focused on whether Griffin and Shaw were defendants. For example, in the July 13 termination decision, the lawyers wrote that the law “does not impose liability on the secretary or general manager for following orders” and does not affect “their responsibility.”
“In other words, does the secretary or the chief executive have a special duty to insure property or to pay attorney’s fees in an insurance case? Obviously they did not,” state lawyers wrote.
As an expression of interest in the case, state-backed companies Citizens Property Insurance Corp., Security First Insurance Co., Tower Hill Signature Insurance Co. and US Coastal Property & Casualty Insurance Co. he formally intervened to help protect the law.
The Restoration Association of Florida and Florida Premier Roofing LLC also have a challenge pending in the circuit court of Leon County to another ordinance (SB 4-D) that was issued in a special session.
The property insurance market in Florida has been in turmoil as insurers have dropped customers and are eager to expand due to the economic downturn. Five property insurers have been declared insolvent since February, and policies have been poured into Citizens, which was created by the government as the last insurer.