Don’t Put The Suit Before The Supplemental Claim

For several years, Florida insurers have been able to move to dismiss litigation disputing the amount paid for a property claim if the insurers paid the amount of an adjustor’s estimate while leaving open the possibility of paying future supplemental claims. Although this principle has been limited in several recent decisions, this article explains that insurers can still move to stay litigation where the insured has not provided information about supplemental claims after an initial payment.

Building a case for a lawsuit is very much like a construction project, as you must ensure you have the right tools to properly get the job done. Just as important as the tools themselves, is the sequence in which you use them. If you utilize the wrong tool or follow the wrong steps, your structure (or case) is likely to fall apart.

For several years, insurers in Florida have been able to rely on the decision in Slayton v. Universal Property and Casualty Insurance Co., ¹ which held an insurer had not breached the provisions of a policy by paying the amount of an adjuster’s estimate while leaving open the possibility of considering supplemental claims. Although recent rulings have limited the applicability of the Slayton defense, those rulings have not rendered it entirely useless.

Slayton involved a first-party property claim presented by Therese Slayton to her homeowner’s insurance company, Universal Property and Casualty Insurance Company. The claim was regarding damages to the insured property as the result of a windstorm, and it was undisputed that Universal Property afforded coverage for the claim. The issue presented to the Fifth District Court of Appeal was whether the payment issued to Ms. Slayton for the claim, which was based on an estimate by its adjuster, was a breach of the insurance policy.

Importantly, at the time of the payment to Ms. Slayton, Universal Property indicated that the payment did not constitute full and final settlement of the claim and she could submit supplemental claims for any damages discovered in the covered reconstruction and repair of the property. Although Ms. Slayton had previously presented her public adjuster’s estimate to Universal Property, she did not respond specifically to the representations of Universal Property that any supplemental claims would be considered. Instead, Ms. Slayton cashed Universal Property’s check, did not submit any supplemental claims, and filed suit.

At trial, Universal Property moved for a directed verdict. The basis for this request was Universal Property’s position that it had paid any and all monies it believed to be due to Ms. Slayton at that time and that Ms. Slayton remained able to present any supplemental claims for consideration. Based on the position that the claim had not been “finalized,” Universal Property did not believe it had breached its policy of insurance. The trial court agreed and granted judgment in favor of Universal Property.²

On appeal, Ms. Slayton argued that the policy provisions violated section 627.7011(3), Florida Statutes, which states: 

In the event of a loss for which a dwelling or personal property is insured on the basis of replacement costs, the insurer shall pay the replacement cost without reservation or holdback of any depreciation in value, whether or not the insured repairs the dwelling or property.³

The Fifth District agreed that Universal Property had not breached its policy of insurance. The court held Ms. Slayton was not precluded from submitting supplemental claims, but was precluded from recovering attorney’s fees and costs.⁴ The court was unable to consider Ms. Slayton’s argument that the policy provisions violated Florida law because that argument was not preserved in the lower court.⁵

Since that ruling, Slayton has been relied on by insurers in similar situations where a coverage determination has been rendered, subject to any new information uncovered by the insured during the repair process. The logic has been that the carrier should be permitted to adjust the loss fully. In order to do that, the carrier should be provided with any and all information regarding additional damages or disputes regarding the initial payment presented. However, Slayton’s continued viability has been called into question by three recent cases from the Third District Court of Appeal.

In Francis v. Tower Hill Prime Insurance Co.,⁶ the insured, Latonya Francis, presented a claim for a water leak which reportedly caused damage to her home. During the adjusting process, Tower Hill investigated the damages to the roofing system and ultimately determined that those damages were the result of deterioration and wear and tear, not a covered event. Based on that determination, Tower Hill issued payment to Ms. Francis for the interior damages but denied payment for any repairs to the roofing system. Tower Hill’s payment letter also indicated Ms. Francis could “submit supplemental claims for any damage discovered in the covered reconstruction and repair of the above-mentioned property.”⁷ Similar to Ms. Slayton, Ms. Francis had presented sworn proof of loss regarding repair estimates from her public adjuster for the reported roof leak. Consequently, upon receipt of the payment from Tower Hill, Ms. Francis filed suit for breach of contract.

In litigation, Tower Hill presented a motion for summary judgment, citing Slayton in support. The trial court granted the motion for summary judgment, finding that there was no genuine issue of material fact with regard to Tower Hill’s prior payment to Ms. Francis and Ms. Francis’ ability to present a supplemental claim as repairs occurred.⁸

The Third District Court of Appeal disagreed and reversed the grant of summary judgment.⁹ The Third District indicated the partial denial with regard to the damages claimed to the roofing system precluded summary judgment; it was unclear whether the damages to the roof were covered in that claim, as the Complaint did not specify the damage and Ms. Francis did not specifically address the roof during her deposition. Moreover, the trial court’s order addressing the subject motion for summary judgment did not specify anything in that regard that would assist with the discrepancy.¹⁰

Significantly, the court found that “widely-divergent estimates of covered repair costs” created a genuine issue of material fact precluding summary judgment. The Third District distinguished its holding from Slayton by stating that the argument based on section 627.7011, Florida Statutes, had been raised and preserved in Francis, but without providing further reasoning about its effect.

The following month, the Third District decided Siegel v. Tower Hill Signature Insurance Co.,¹¹ also dealing with a disagreement over claim estimates. David and Tamara Siegel presented a claim to Tower Hill pursuant to a collapsed drain line in their home. Tower Hill inspected and adjusted the loss and then issued payment pursuant to their adjuster’s estimate. Tower Hill’s payment letter indicated that the Siegels were able to submit supplemental claims for additional payment as repairs occurred. The Siegels had a competing repair estimate for a higher amount, but it is unclear whether a request for supplemental payment was submitted to Tower Hill prior to suit being filed.

The Third District took the opportunity to detail the effect of section 627.7011, Florida Statutes, which sets a minimum amount for initial payments made pursuant to a replacement cost homeowner’s policy: “the insurer must initially pay at least the actual cash value of the insured loss, less any applicable deductible.”¹² The court explained that summary judgment was inappropriate because a carrier cannot unilaterally determine what the actual cash value of a loss is as a matter of law. The amount of the actual cash value would be a question of fact due to the competing repair estimates prepared on behalf of the carrier and the insured, simply as to pricing. The carrier’s estimator would present testimony that its estimate is the correct value of the claim, while the insured’s estimator would do the same.¹³

Finally, a month after Siegel, the Third District decided Milhomme v. Tower Hill Signature Ins. Co.¹⁴ Again, payment was made pursuant to the carrier’s estimate and the insureds provided a higher estimate from their own adjuster. After the payment, the Milhommes submitted a request for supplemental payment, citing to the estimate prepared by their public adjuster. Tower Hill declined any further adjustment or payment, and the Milhommes filed suit. The trial court granted summary judgment for Tower Hill.¹⁵ Relying on Francis and Siegel, the Third District reversed the lower court and found that the two conflicting estimates created a genuine issue of material fact precluding summary judgment. The court explained that the Milhommes’ claim “was not a ‘supplemental claim,’ or one for ‘damages discovered in the covered reconstruction and repair’ the property.”¹⁶ Instead, the claim was related to the amount necessary to address “the original casualty event.”¹⁷

In Slayton, the carrier was able to successfully defeat the lawsuit presented, in part, due to the fact that the insured was able to submit requests for supplemental payment. Slayton no longer allows a carrier to summarily dispose of a case under the presumption that it has paid the undisputed amount. The amount paid is deemed to be disputed when an insured provides a conflicting estimate because of the statutory requirement that the carrier pay at least “actual cash value.”

Despite this, Slayton still gives a carrier the ability to stay litigation if it receives additional information to support a demand for supplemental payment that was not provided prior to litigation. The carrier may be able to stay the litigation, adjust the supplemental claim, issue additional payment, and attempt to dismiss the lawsuit and any demand for attorney’s fees and costs. The information should be new to the carrier and the carrier must intend to consider this additional information. If applied in the proper context, Slayton can still be a useful tool when insureds put the cart before the horse — or the suit before their supplemental claims.

1. 103 So. 3d 934 (Fla. 5th DCA 2012).
2. Id. at 935.
3. See id. at 936 (quoting section 627.7011(3), Fla. Stat. (2009)).
4. Id.
5. Id. (citing § 627.7011, Fla. Stat.).
6. 224 So. 3d 259 (Fla. 3d DCA 2017).
7. Id. at 261 (emphasis in original).
8. Id. at 260.
9. Id. at 262.
10. Id. at 261.
11. § 225 So. 3d 974 (Fla. 3d DCA 2017).
12. § 627.7011(3)(a), Fla. Stat. (2017).
13. 225 So. 3d at 978.
14. 227 So. 3d 724 (Fla. 3d DCA 2017).
15. See id. at 725.
16. Id.
17. Id.

About the Authors

PATRICIA G. PRECIADO is a partner in the Deerfield Beach office of Roig Lawyers and Chair of the firm’s first-party property division. Ms. Preciado manages all types of property insurance defense matters, such as claims denied pursuant to policy exclusions, claims denied pursuant to failure to comply with policy conditions, and claims where payment was issued and the amount of recovery due remains in dispute. She is a graduate of Florida International University College of Law.

LINDSAY FRENKEL LOBELLO is with The Monson Law Firm, LLC, in Coral Springs, and concentrates her practice in the areas of Personal Injury Protection (PIP) and first-party property/homeowners defense. Ms. LoBello represents carriers in matters involving fraud, improper billing and licensing, and scope and pricing disputes. She also advises insurers relating to coverage disputes, policy interpretation, and policy exclusions. Ms. LoBello graduated cum laude from Stetson University College of Law.