INSURANCE COMPANY PRESENTS BONA FIDE DISAGREEMENTS REGARDING ITS RIGHTS UNDER THE POLICY
By: Nikolaos M. Hernandez, Esq.
The Third District Court of Appeal was recently tasked with determining whether or not the trial court properly dismissed an insurer’s claim that the insured breached the contract of insurance by failing to timely provide a sworn proof of loss. The Court, in Peoples Trust Insurance Company v. Diego Alonzo-Pombo Case No. 3D19-1955 (Fla. 3rd DCA 2020), held that the trial court erred in dismissing count II of Plaintiff’s Complaint, for declaratory relief, finding that Peoples Trust Insurance (“PTI”) presented a bona fide disagreement concerning the rights and obligations of the parties under the policy.
A party is entitled to a declaratory judgment when (1) a good-faith dispute exists between the parties; (2) one presently has a justiciable question concerning the existence or non-existence of a right or status, or some fact on which such right or status may depend; (3) one is in doubt regarding one’s right or status and (4) a bona-fide, actual, present, and practical need for the declaration exists.” Id.; quoting Rhea v. Dist. Bd. Of Trs. Of Santa Fe Coll., 109 So. 3d 851, 859 (Fla. 1st DCA 2013). Further, when a cause of action for declaratory relief meets these threshold requirements, it should not be dismissed for failure to state a cause of action. Id.; (see also Travelers Ins.Co.v. Emery, 579 So. 2d 798, 801 (Fla. 1st DCA 1991)). Importantly, a motion to dismiss a complaint for declaratory judgment is not a motion on the merits. Instead, it is a motion to determine whether a party is entitled to a declaration of rights under the policy, not whether it is entitled to a declaration in its favor. Id.; (see also Romo v. Amedex Ins. Co., 930 So. 2d 643, 648 (Fla. 3d DCA 2006) (quoting City of Gainesville v. State, Dep’t of Transp., 778 So. 2d 519, 522 (Fla. 1st DCA 2001))).
On August 16, 2018, Diego Alonzo-Pombo, (“Insured”), uncovered a water leak at his home. PTI’s policy contains a Preferred Contractor Endorsement which gives PTI the option to repair covered damage using its preferred contractor, Rapid Response, instead of issuing payment for damages. Peoples Trust Ins. Co. v. Diego Alonzo-Pombo 45 Fla. L. Weekly D2110. Instead of immediately notifying PTI, the Insured retained Water Restoration Solution to perform emergency mitigation. The mitigation done by Water Restoration Solution occurred one week after the leak was uncovered. Six days after Water Restoration Solution’s performed services, the Insured hired 911 Claims, a public adjusting company, to “adjust, appraise, advise and assist in the settlement of the loss.” Id. In the agreement between the Insured and 911 Claims, PTI was to pay 911 Claims ten percent (10%) of any recovery. After this agreement was executed, 911 Claims filed a claim with PTI on the Insured’s behalf. Id.
Upon acknowledging the claim, PTI sent its inspector to evaluate the loss. PTI’s inspector evaluated the loss to be $13,867.40 in damages which PTI chose to repair as a covered loss. Id. However, PTI required the Insured submit a sworn proof of loss within sixty (60) days to avoid any disagreements regarding the scope of damages. Although this was timely requested by PTI, eighty-four (84) days passed and no sworn proof of loss was submitted by the Insured. Id. On January 18, 2019, PTI notified the Insured that, as a result of this noncompliance, the Insured was in breach of the contract. Thereafter, on February 4, 2019, PTI filed a two count complaint for breach of contract and declaratory relief. Id. In response, the Insured moved to dismiss PTI’s Complaint. At the hearing on the Insured’s Motion to Dismiss, the trial court dismissed both counts of the complaint with prejudice, holding that there was “no case or controversy or justiciable issues for the court to determine.” Id.
On appeal, this Court found PTI did present a bona fide disagreement concerning the parties’ rights and obligations. The Court held that the Complaint presents a bona fide disagreement as to whether the policy language negates the requirement for the Insured to submit a sworn proof of loss upon an insurer’s invocation of a right to repair.