Background
Danielle Simmons sued her homeowner’s insurer, United Property & Casualty Insurance Co., for Hurricane Irma property damage. The parties settled at mediation for a $75,000 lump sum. The mediation materials and later release contemplated payment through checks to Simmons and other claim-related payees, including her current and former attorneys; the former attorney held a charging lien.
Before payment, UPC became insolvent and the Florida Insurance Guaranty Association was substituted as defendant. FIGA paid $37,500 but disputed amounts directed to counsel and other payees, maintaining that attorney’s fees are not “covered claims” under the FIGA statute. The circuit court enforced the full settlement, finding its allocation unclear.
The Court’s Holding
The Third District reversed. FIGA is responsible only for covered claims—claims arising from and within the insurance policy’s coverage—and cannot be compelled to pay attorney’s fees and costs arising solely from a post-loss settlement agreement.
Because Simmons had pleaded statutory attorney’s fees, the settlement was presumed to include existing demands unless she proved otherwise. The mediator’s communications, references to the charging lien, separate checks to law firms, and counsel’s acknowledgment that part of the sums payable to counsel represented fees established that at least some of the settlement had an attorney-fee component. The lack of a clear allocation did not permit enforcement of those amounts against FIGA.
Key Takeaways
- FIGA need not pay settlement amounts attributable to attorney’s fees or costs unless they arise from coverage under the insurance policy.
- An insured who pleaded attorney’s fees bears the burden to show that a settlement did not include them.
- The case was remanded for an evidentiary hearing to identify attorney-fee payments and determine whether any non-fee attorney-directed payments were covered by the policy.
Why It Matters
The decision reinforces that the form of a settlement payment cannot expand FIGA’s statutory obligation after an insurer becomes insolvent. Parties resolving insured-property disputes should clearly identify any allocation among policy benefits, fees, costs, liens, and other payees.