Lawsuits by homeowners against their own insurance companies for failing to pay on damage claims that homeowners believe and argue are covered by their policies of insurance are quite common in Florida.  Frequently these involve claims for water-related damages—a typical example being a slow leak from piping in a kitchen or bathroom sink that is unknown to the homeowner but that occurs over an extended period of time and that ultimately causes damage to adjoining cabinets or perhaps even flooring.  As a plumber who came to inspect such damage in my own house once remarked, when I asked him what all this meant, “Water has to go somewhere.”

A homeowner’s insurance policy is, in its most basic form, a contract of insurance.  Each party to any contract has certain rights, duties and obligations under the contract.   If a party breaches his or her contractual obligations, the other party may have a claim for damages.  Under these circumstances, while other claims may exist, the homeowner’s primary claim against her own insurance carrier, resulting from the carrier’s refusal or failure to pay for damages that the homeowner maintains are covered by her insurance policy, is a claim for breach of contract.

From a homeowner’s perspective, one of the advantages that perhaps minimizes the risk of a lawsuit against her own insurance company is the one-way attorney’s fee provision set forth in Florida Statutes Sec. 627.428.  Subsection (1) of this statute provides:

Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.

Thus, if a homeowner sues her insurance company for failing to pay for a loss that the homeowner feels is covered by her policy and wins that lawsuit, she will be awarded her reasonable attorney’s fees.  If, however, the homeowner loses that lawsuit, she will not be required to pay the company’s attorney’s fees.  That is why Florida Statutes Sec. 627.428 is a one-way attorney’s fee statute.

If attorney’s fees are awarded, those fees become part of the actual judgment under subsection (3) of Florida Statutes Sec. 627.428.   In addition, if an appeal is filed and the homeowner prevails in that appeal, the attorney’s fees associated with the appeal are recoverable.

Florida has implemented a rather simple statutory scheme to address claims that a real property owner believes she may have against a contractor, subcontractor, supplier or design professional for construction defects on her property—whether those defects involve construction, repairs, remodeling or alterations to the property.  The law, Florida Statutes Sections 558.001-005, attempts to strike a balance between protecting the rights of property owners and reducing the litigation associated with such claims.

In a nutshell, before a property owner files a lawsuit in court or a demand for arbitration, to the extent arbitration is required, she must first, at least 60 days (120 days if the action involves an association that represents more than 20 parcels) prior to filing that lawsuit or demand for arbitration, serve a written notice of her claim on the contractor, subcontractor, supplier or design professional whom she claims is responsible for the defects.  Defects encompass a number of different deficiencies arising from defective materials, components and products; violations of applicable codes; failure of a design professional to comply with applicable standards; or a failure to build or remodel property consistent with accepted trade standards.

The 60-day pre-suit notice must describe in detail each and every construction defect that the owner believes exists, as well as all known damages resulting from the defects and the location of each defect.  Within 30 days of service of the owner’s notice of claim, the contractor, subcontractor, supplier or design professional to whom the notice is directed is entitled to inspect the property in order to assess each defect.  If the contractor, subcontractor, supplier or design professional determines that destructive testing is necessary to determine the nature of the alleged defects and what caused those defects, there are certain other notice rights and obligations associated with that destructive testing, including the right of the owner to object under Florida Statutes Sec. 558.004.

Within 45 days after service of the property owner’s notice of claim, the contractor, subcontractor, supplier or design professional served with that notice is required to serve a written response which must provide for one of the following:

  • an offer to remedy the defect, at no cost to the owner, with a detailed description of the necessary repairs and the timetable for completion;
  • an offer to settle the claim by a payment of money;
  • a hybrid, for lack of a better term, offer to settle the claim by a combination of repairs and a monetary payment, with, again a description of the required repairs and the timetable to complete those repairs;
  • a statement that the claim is disputed and that there will be no attempt to remedy the alleged defect or settle the claim;
  • a statement that any monetary payment will be determined by the contractor’s, subcontractor’s, supplier’s or design professional’s insurance company within 30 days after the insurance company is notified of the claim. This statement may include an offer under paragraph c.) contingent upon the owner accepting the carrier’s determination whether to make an additional payment of money.

An owner who receives a settlement offer must serve a written notice of acceptance or rejection within 45 days after receiving that offer.  If the contractor, subcontractor, supplier of design professional either disputes the owner’s notice of claim or does not respond to it, the owner can, without any further notice, file a lawsuit or demand for arbitration, where applicable.

If a contractor, subcontractor, supplier or design professional is sued for alleged construction defects without the owner first providing any pre-suit notice, that contractor, subcontractor, supplier or design professional should immediately move to stay the lawsuit under Florida Statutes Sec. 558.003