Background
Samuel and Lynn Vainberg’s condominium flooded after a water-supply-line break. Their insurer, Avatar Property and Casualty Insurance Co., elected under the policy to repair the damage. Avatar’s contractor replaced the flooring, but the Vainbergs alleged the work was deficient and that Avatar ultimately refused to correct it adequately.
The Vainbergs sued over the resulting repair contract. After an earlier appeal required a new trial, Avatar became insolvent and FIGA was substituted. FIGA paid $19,000 of the Vainbergs’ approximately $49,675 repair estimate, declining several items including ordinance-and-law-related work. The parties later entered a consent judgment requiring FIGA to pay the remaining policy limits, while reserving fees and costs.
The Court’s Holding
The Fourth District reversed the denial of attorney’s fees. It held that former section 627.428 applies to litigation over a Drew repair contract created when an insurer elects to repair. Although that contract is separate from the insurance policy, it arises from the policy’s repair option and is a contract executed by the insurer within the statute’s scope.
The court also held that former section 631.70 did not bar fees against FIGA. FIGA affirmatively denied part of the covered claim by partially withholding payment for ordinance-and-law items, asserting coverage defenses, maintaining that the repair-contract claim was not covered, and seeking summary judgment on that position. Those actions went beyond delay. The court remanded for determination of the fee amount.
Key Takeaways
- An insurer’s election to repair cannot avoid the insured’s statutory fee remedy if the insurer breaches the resulting repair contract.
- A Drew repair contract can qualify as a contract executed by the insurer for purposes of former section 627.428.
- FIGA may incur fee liability when it affirmatively denies a covered claim or part of one, rather than merely delaying investigation or payment.
Why It Matters
The decision confirms that the former one-way insurance fee statute reached disputes over insurer-selected repairs, not just straightforward disputes over payment under a policy. It also illustrates that FIGA’s conduct must be evaluated in context: a sustained substantive coverage position can constitute an affirmative denial even after FIGA enters litigation already underway.