Many people come into my office with policies that their own mortgage company bought. Most don’t see what the big deal is and never even thought about changing it. These are bad, bad policies that no homeowner should carry unless absolutely faced with no other choice. Essentially, if you have a mortgage you have to have insurance. Some people fail to obtain insurance either because they are so far behind on their mortgage payments they can’t afford it or some just miss a deadline or a payment or just forget to get insurance. In this situation your mortgage company will buy insurance for itself and then force the payment onto the homeowner. The downsides are vast. First, they are expensive, usually much more than an average policy. Second, the coverage is usually minimal. Most forced placed policies are bought with just enough insurance coverage to cover the mortgage amount. This means if the house is worth $200,000 but the mortgage is $100,000 they will usually only insure the $100,000 because they just want their money back if the house is destroyed and the homeowner will never have enough money to actually fix the house. Third, most if not all of these policies do not insure the homeowner but the bank instead. This means that any payments made go to the bank and not the homeowner because they are not the “insured” that bought the policy. This also means that homeowners may have limited abilities to enforce the insurance if it is denied. Finally, there is case law that says even if a homeowner has to sue to enforce the insurance policy they may not even get the benefit of their legal fees paid. We have written about the positive law that has come down for homeowners and when they beat their insurance company that company has to pay their legal fees and costs. That statute only applies to protect an “insured” on a policy. As stated above, the bank is the insured, not the homeowner. Some Courts have said the homeowner is not entitled to the protections of the law. Long story short, if you are stuck with a forced placed policy please get away as fast as you can, they are not insurance for you and only benefit the banks interest.
Just wanting to wish a happy new year and a thank you to everyone we worked with this year. 2016 was a fantastic year. We went undefeated in every trial, won a huge Supreme Court appeal and negotiated some truly remarkable settlements. 2017 looks just as good if not better with some large and interesting cases on the horizon and lots and lots of trials. Cant wait.
We wrote about a case this firm handled from the trial court assisting up to the Florida Supreme Court in September. The case, Johnson v. Omega, has become a hallmark whenever attorney fee issues arise in sinkhole claims now. It really has set the standard moving forward and put insurance companies on notice to monitor their own conduct a little differently. The case has continued to grow stronger and branch out in a short period of time. Tow cases since September have come out supporting Johnson. The first is out for he Fifth District Court of Appeals, the same Court that was told they were wrong when they denied Mrs. Johnson attorney fees originally. The case, Garcia v. Tower Hill, is brief but states identical facts to Johnson: the claim was denied, the insured filed a lawsuit, after a neutral evaluation the insurance company changed its mind and accepted the claim. The Court states that under its prior rulings the Garcia’s would not be entitled to attorney fees but after the Supreme Court’s contrary opinion, they had no choice but to reevaluate it. In a more recent case from the Federal Middle District Court, Life Changing Ministries v. Canopius, the same facts played out and again the Court was asked to award attorney fees. In a long and interesting opinion from the Judge, it appears that he almost doesn’t want to award fees. Many comments made during the opinion appear that he personally doesn’t think they are entitled to attorney fees. Yet, in the end the Judge acknowledges that our Supreme Court has mandated that in these situations there is no choice but to compensate the homeowner and award the fees. The Judge essentially states that under the law the Supreme Court set forth, if the insurance company denies the claim, the homeowner files a lawsuit and the insurance company admits it was incorrect to deny the claim, that is all that is needed to award attorney fees.
Over the years our firm has become more and more active in the property and community management community. We have decided to join several organizations dedicated to providing services to property managers as well as HOA board members. It is such a fun group and very informative for us to learn the inner workings of what it takes to manage a community. So far we have been featured in a legal q&a session, have been asked to sit in advice booths during trade shows and have even been able to lecture specifically on large loss sinkhole claims with a course accredited by the state to apply towards continuing education credits. The expos and trade shows have been a great opportunity to meet and greet and the girls in the office sure enjoyed the Christmas party. We hope to build on this partnership even more in 2017 and we even have several additional courses that will be available for continuing education credits.
It has been a busy trial season and our trial team had another successful result in November. The trial was focused solely on the issue of whether structural damage was present or not, without anyone having even tested for sinkhole activity, the first of its kind as far as we can tell. The trial took place in Marion County, Ocala and was scheduled to last four days. The sides presented three days worth of evidence and were schedule to present closing arguments and receive the jury verdict on Thursday. The night before closings the two sides reached a settlement agreement that was extremely favorable for the homeowner, over three times what she demanded before trial to settle. Although there was never a verdict rendered this was certainly a tremendous result as evidenced by the homeowner shedding tears of happiness with the news.
Our firm took a denied sinkhole claim on a commercial property here in Tampa Florida to a jury last week and prevailed. The trial lasted four days and the jury returned a verdict in favor of our client, a local business owner, Thursday afternoon. The insurance company presented four experts and a corporate representative verse only tow experts presented by the business owner. The issues were extremely complex and at times confusing. The issues involved whether structural damage existed, whether sinkhole activity was a cause of those damages and whether sinkhole activity was the primary cause of the causes verse other excluded causes. We were proud to prevail on all of the issues on behalf of our client who was also extremely excited with the result
In 2010 my firm assumed representation of Kathy Johnson, an insured in Ocala with horrific damage to her home. Her claim was denied by Tower Hill (also named Omega Insurance). We hired another engineering firm who did more testing and found clear evidence of sinkhole activity. We moved forward with a lawsuit and shortly after being sued Tower Hill agreed to accept coverage and rescind its denial. Kathy Johnson signed a contract to begin repairing her home. We argued in front of the trial court judge that Tower Hill should bear the burden of paying Johnson’s attorney fees under the existing law. The judge in Ocala agreed exactly with our position and granted those fees. Tower Hill decided to appeal the decision to the Fifth District Court of Appeals. That court reversed the trial court and opined that Johnson is not entitled to fees because she didn’t prove that Tower Hill acted “wrongfully” when it denied her claim and therefore did not deserve to be punished. We appealed that ruling to the Supreme Court who agreed to hear the case. Probably less than 5% of cases appealed to the Supreme Court are actually heard.
The Supreme Court issued a 31 one page opinion today finding in Johnson’s favor and re-affirming her entitlement to attorney fees paid by her insurance company. The Supreme Court wrote that incorrectly denying a homeowners claim is what triggers the insurance company to pay fees. We do not need to go so far as to evaluate whether the insurance company was acting in bad faith. The Supreme Court expressed the importance of this law here in Florida and how an insured could not be expected to single-handedly take on a large insurance company by herself. They also expressed how a homeowner needs an expert lawyer and engineer to challenge the insurance company and both cost money.
The Supreme Court noted how Johnson, thorough our firm, did not present some frivolous claim but presented “cold hard facts” to support that Tower Hill was wrong in denying her claim. The Court pointed out that Johnson did the right thing in how proceeded with her claim and that it refused to0 punish her by making her food the bill for her legal fees. This is a huge victory not just for our firm and Kathy Johnson but all insureds throughout Florida. Local judges were letting insurance companies get away with too much and the Supreme Court recognized that and wrangled them all back in.
Scientists have discovered a sinkhole in the ocean off the South China Sea that they believe to be the deepest ever recorded. This one called the Dragon Hole has been recorded at 300 meters or 987 feet deep. The previous record holder was the Blue Hole in the Bahamas at 202 meters. The hole appears to be self contained and contains over 20 species of fish. The holes appear when carbonate rocks dissolve. This is exactly how sinkholes form, when limestone, which is a carbonate rock, is dissolved away usually by acidic water. People may not know that you can dive sinkholes right here in Florida. One of the more famous ones, Devils Den, is in the Ocala area but there are many others throughout the state.
As background to this issue, when a homeowner prevails against their insurance company on a sinkhole claim (or any insurance claim) the insurance company is required by statute to compensate the homeowners lawyer for their services. The court will look to how many hours the lawyer spent working on the case and then multiply that number by what the court believes the lawyer is worth per hour. In addition to that it has been allowed for decades here in Florida that the court could increase that number even more, we call this a multiplier. The court would consider things such as if the case was unique or complex or if the homeowner had difficulty finding a lawyer to even take the case in the first place. The court can also look at the potential risk of losing the case when the lawyer took it on. In other words, the goal is to reward lawyers who are willing to risk their time and their own money to take on a risky, unique or complicated case and do it on a contingency fee basis. Contingency fee means they only get paid if they win the case. Many judges at the trial court level have continued to award these multipliers to lawyers that win sinkhole trials but lately the appellate courts have been reversing these. The recent trend has been that its no longer difficult to find a lawyer to take on a sinkhole case these days and because there are so many sinkhole cases around now that they are no longer so unique or complex. Any lawyer that has ever represented anybody in a sinkhole claim should disagree. These cases are extremely expensive, time consuming and risky. They also remain extremely complex and unique due to the ever changing law that accompanies these cases. And of course, we can’t forget that to be a good sinkhole lawyer you also have to be a amateur geologist, contractor and engineer to boot. I just don’t understand the rationale behind these new cases other than they are being decided by people that don’t see the daily complex scientific and legal battles that we face.
Thats right, well kind of. A sinkhole opened up on the Upper West Side of New York swallowing a BMW and part of a dance studio several weeks ago. Granted the sinkhole was the result of a water main break and not necessarily natural causes like we associate with sinkholes here in Florida. In similar news a sinkhole opened up in Miami on the turnpike. This was also the result of a water main break. I have always taken a little exception to these water main breaks even being called sinkholes. Sinkholes as we know them are natural causes and not man made. Most “sinkholes” portrayed in the news are actually the result of water mains and not naturally occurring.