Fourth District Court of Appeal Holds Insured Not Entitled to Attorney’s Fees Where Carrier Tendered Policy Limits in Response to Pre-Suit Notice

By Michael J. Raudebaugh

The Fourth District Court of Appeal recently held that insureds were not entitled to attorney’s fees where the carrier tendered policy limits in response to a pre-suit notice.

In Citizens Property Ins. Corp. v. Vazquez, Citizens acknowledged coverage for a loss related to an accidental discharge of water and issued payment of $3,517.70 to the insureds. Counsel for the insureds subsequently filed a Notice of Intent to Initiate Litigation pursuant to Section 627.70152, Florida Statutes, which identified $3,982.30 as the amount of damages in dispute and $3,500.00 in claimed attorney’s fees and costs. The total settlement demand was thus $7,482.30. Citizens responded by tendering payment of $6,482.30, which represented the remainder of the policy’s $10,000 sub-limit for losses caused by the accidental discharge of water from a plumbing system.

The insureds then sued Citizens, alleging that it breached the insurance contract by initially underpaying the claim and failing to pay the full settlement demand – including attorney’s fees – as set forth in the pre-suit notice. The insureds immediately moved for attorney’s fees pursuant to Section 627.70152, alleging that they were entitled to attorney’s fees because they had been required to file the pre-suit notice. The trial court granted the insured’s motion for entitlement and awarded reasonable fees and costs in the amount of $13,500.00.

The Fourth District reversed the trial court’s order, finding that Section 627.70152 does not create a separate and independent right to attorney’s fees. Instead, the Court held that the statute merely created a process for calculating the amount of attorney’s fees awardable under Section 627.428, Florida Statutes, leaving the existing requirements for obtaining an award of attorney’s fees unchanged. In making this determination, the Fourth District found that the insureds’ lawsuit was not a necessary catalyst to resolving the dispute over the amount of money owed under the policy. While the insureds did receive payment of the remaining policy limits, they did not receive it because of the filing of this lawsuit; rather, they received it as a result of filing the pre-suit notice under Section 627.70152.

Even though the relevance of this decision might be short-lived given the rapid changes in Florida’s statutory scheme with respect to attorney’s fees, it is an important reiteration of the concept that insureds and their counsel cannot be rewarded for racing to the courthouse on a meritless claim. Nothing about the recent legislative activity has changed that fundamental concept.