An assignee of post-loss insurance benefits could sue for breach of such benefits.

In United Water Restoration Group., Inc. v. State Farm Fla. Ins. Co., 2015 Fla. App. LEXIS 10403, United Water Restoration Group, Inc., asks that we exercise our authority to reinstate its complaint against State Farm Florida Insurance Company, which was dismissed by the county court in an order affirmed by the circuit court. According to the complaint, the home of Oran Walker—insured by State Farm—was damaged by water in 2012. Walker entered into a remediation contract with United Water to repair the damage, executing a written assignment of “any and all insurance rights, benefits and proceeds” from his State Farm policy to United Water. After State Farm refused to pay the $2,744.64 bill that United Water submitted, the latter sued the former for breach of contract, alleging that United Water was an assignee of Walker’s rights and benefits. Attached to the complaint were copies of the assignment and United Water’s bill.

State Farm moved to dismiss and for summary judgment, contending that it had notified Walker it was denying coverage because an inspection of the home showed the damage was consistent with “repeated leakage and seepage, mold, rot, and decay, which are all specifically excluded under the policy.” It argued that the duty to satisfy the conditions of coverage remained solely with Walker, who was required to contest in court the denial of coverage, not United Water.

After a hearing, the county court ruled that the “question of coverage pursuant to the policy is one which the named Insured must bring before the Court and thus, Plaintiff, United Water Restoration Group, Inc. as assignee cannot pursue the claim before the Court.” The court granted State Farm’s motion to dismiss, a ruling affirmed by the circuit court. United Water petitioned for relief via certiorari to the First District Court of Appeal of Florida.

The First District Court of Appeal found that due process was not afforded to United Water because the county court granted the motion to dismiss by going beyond the four corners of the complaint. The dismissal order was based on State Farm’s defense that coverage under its policy was unavailable, a ruling that went beyond whether United Water’s complaint stated a claim. Additionally, the Court stated that the dismissal of United Water’s complaint violated the clearly established principles of law that an assignee of post-loss insurance benefits can sue for breach of such benefits. The Court reiterated that clearly established law permits United Water to bring suit to seek recovery under the State Farm policy, and if necessary, seek a coverage determination. The dismissal order had the harsh effect of barring United Water’s enforcement of its bargained-for right to pursue assigned benefits, which amounts to a miscarriage of justice.