Appeals court: Orlando business sued too quickly amid insurance dispute, not getting attorney fees

By Marian Johns | Apr 25, 2019

Elbert Tuttle Courthouse, Atlanta   Eoghanacht [Public domain]

ATLANTA - A federal appeals panel has denied an Orlando business' try to force an insurance company to pay its attorneys' fees, saying the business jumped the gun in suing its insurer before the contractually-required appraisal process had a chance to play out.

According to the April 16 court filing, plaintiff JPFD Investment Corp. appealed to the U.S. 11th Circuit Court of Appeals after a judge in the U.S. District Court for the Middle District of Florida ruled last August to deny JPFD's request for attorneys' fees and costs in its lawsuit against United Specialty Insurance Company.

JPFD's lawsuit stems from an insurance claim for water damage that occurred to its building in January 2017. JPFD has since feuded with United Specialty over the amount of loss from the damage, court filings said. Five days after the water damage occurred, United Specialty paid a water extraction company $152,262 for extraction and remediation on the property. The water extraction company eventually submitted a "loss amount" of $302,772 to the insurance company, which United Specialty rejected because an independent adjuster's inspection resulted in a lower loss estimate. 

According to JPFD's policy, an appraisal was required if there was a disagreement over the loss amount. United Specialty retained a consultant to address the differences. However, the water extraction company that submitted the loss amount did not respond to United Specialty's requests to discuss the differences in the damage estimates, court filings said. During that time, JPFD went ahead and sued United Specialty claiming breach of insurance contract for the losses. 

The district court granted United Specialty's motion to compel appraisal, and both parties agreed to a loss amount. JPFD was paid the agreed upon amount, court filings said. JPFD then filed its appeal requesting attorneys' fees and costs. 

JPFD argued the district court should have conducted "an evidentiary hearing" and the court erred in saying JPFD could not receive attorney's fees because there was "an appraisal award" made to JPFD after it filed the lawsuit. 

The appeals court said the district court "did not abuse its discretion" by denying JPFD's evidentiary hearing and also agreed with the district court's ruling on attorney's fees, saying United Specialty "never denied coverage" and the dispute was regarding "the amount of covered loss," the opinion said. The court also noted JPFD's suit was filed before the insurance company could begin "the appraisal process."

U.S. 11th Circuit Judges Jill Pryor, R. Lanier Anderson and Frank Hull concluded per curiam that they believe JPFD "would have received the same loss payment without filing suit" and that they should have participated in the "appraisal process" according to the policy. They said it was that process, not the lawsuit, that resulted in their receiving payment, which does not entitle them to attorneys' fees.

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U.S. Court of Appeals for the Eleventh Circuit U.S. District Court for the Middle District of Florida

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