Insurers Are Not Held to Costs of Remediation Work Exceeding the Policy Limits Even on Summary Judgment if Not Properly Reported Under the Policy

Citizens vs. JD Restoration 

Citizens Property Insurance Corporation v. JD Restoration, Inc. a/a/o Marta Burgos,-- No. 4D21-413, LEXIS 15260 (Fla. 4th DCA Dec. 1, 2021), Case Nos. COCE18-025598 and CACE20-015752 

Citizens Property Insurance Corporation (“Citizens”) brought forth this action to appeal two orders granted in the trial court.

First, Citizens appealed the order granting summary judgment in favor to the homeowner’s assignee under an assignment of benefits, JD Restoration, Inc. (“JD Restoration”).  

Second, Citizens appealed the trial court’s order awarding JD Restoration damages for emergency water mitigation services performed for the homeowner, which exceeded the $3,000 limit in the homeowner’s policy.  

The Court affirmed the summary judgment without discussion but agreed with Citizens that the trial court made a mistake by awarding JD Restoration the full damages requested without a proper hearing, and reversed and remanded for further proceedings to that effect.  

Liquidated vs. Unliquidated Damages 

Previously the 4th DCA ruled in Williams v. Skylink Jets, Inc., 229 So. 3d 1275, 1279 (Fla. 4th DCA 2017) (quoting Ciprian-Escapa v. City of Orlando, 172 So. 3d 485, 488-89 (Fla. 5th DCA 2015)) that “[a] judgment rendered without a trial on unliquidated damages and without notice to the defaulting party is void as to any unliquidated damages, but remains valid as to any liquidated damages.”  

To explain this better, first, it is important to understand the difference between liquidated and unliquidated damages in the insurance setting. Liquidated damages refer to damages in which the amount claimed is not in dispute and can be calculated exactly. Unliquidated damages are damages that are in dispute, and which the exact amount has not been agreed upon.  

In this setting, JD Restoration’s claim for damages are liquidated damages, as they provided an exact amount they were owed for the water remediation work performed for the homeowner. Unliquidated damages would be the amount the homeowner would seek from the insurance company in a settlement or at trial for a breach by the insurance company per their policy for denying coverage, as each side would have their own estimates of damages that typically differ greatly.  

Therefore, since JD Restoration won their motion for summary judgment against Citizens for damages owed, it appeared that they would be entitled to the full amount damages for the work performed. However, the Court made a distinction that Williams was a case where there was a default judgment, as opposed to a summary judgment, which occurred in this case. The Court acknowledged their decision in Sloan v. Freedom Sav. & Loan Ass’n, 525 So. 2d 1000, 1001 (Fla. 5th DCA 1988) that “any claim for damages, liquidated or unliquidated, or for attorneys [sic] fees and costs can be decided by summary judgment[,]” but also clarified that “a hearing may be required where there are genuine issues of material fact as to the amount of damages.” 

This may be confusing, since as discussed, JD Restorations claim for damages were clearly liquidated damages. The amount was not in dispute, as the damages claimed were the exact amount owed for the services performed for the homeowner.  

However, the Court stated, “we do not need to determine whether damages were liquidated or unliquidated, but instead, whether there are genuine issues of material fact as to damages.” The Court further clarified that Citizens’ argument that the trial court erred by awarding damages exceeding the policy limits did demonstrate a genuine issue of material fact as to damages.  

Determining “Genuine Issues of Material Fact as to Damages” 

The Court looked to the plain language of the homeowner’s policy under the Reasonable Emergency Measures provisions which state: 

  1. [Citizens] will pay up to the greater of $3,000 or 1% of your Coverage A limit of liability for the reasonable costs incurred by you for necessary measures taken solely to protect covered property from further damage, when the damage or loss is caused by a Peril Insured Against. 
     

  1. [Citizens] will not pay more than the amount in a. above, unless we provide you approval within 48 hours of your request to us to exceed the limit in a. above. In such circumstance, we will pay only up to the additional amount for the measures we authorize.  
     
    If we fail to respond to you within 48 hours of your request to us and the damage or loss is caused by a Peril Insured Against, you may exceed the amount in a. above only up to the cost incurred by you for the reasonable emergency measures necessary to protect the covered property from further damage. 

The damages awarded by the trial court to JD Restoration exceeded the greater amount of $3,000 in this case. The Court stated in their decision that under the policy, there are circumstances in which the trial court had the ability to exceed the $3,000 limit in the policy, but only if it found that “one of the subsection b. scenarios was satisfied.” Therefore, Citizens was entitled to a hearing to determine whether that occurred, as it amounted to a genuine issue of material fact. 

Therefore, the takeaway from this case is that whether a homeowner or company is retained by the homeowner under an assignment of benefits, it is always imperative to read the policy language when it comes to emergency measures taken. This must be done to determine limits on the amount the insurance company will pay when having remediation services performed on the home. Once that amount is determined, if the services to be performed are clearly going to exceed the limit in the policy, both parties should immediately request approval to exceed that amount to satisfy the conditions such as the one in the policy above. If JD Restoration failed to do so in this case, they will be held to the policy limit of $3,000.  

One question that arises in this case, however, is assuming that JD Restoration did comply with the policy and request approval to exceed the $3,000 limit, what happens if the insurance company rejects the request? Is the restoration company then put in a position to only perform services up to the policy limit with the homeowner responsible for the remaining amount? 

If Citizens gave approval or did not respond to the request within 48 hours, it is clear JD Restoration will be awarded the full damages owed under the policy. But the Court may at some point have to clarify whether the limit stands if exceeding the limit is requested and denied by the insurance company, even unrightfully so. The policy seems to be ambiguous as to what factors Citizens would use to determine approval of exceeding the emergency measures limit, which will have to be examined more closely in further proceedings in the trial court.  

But the biggest question that remains is: if JD Restoration had reasonably made the request to exceed the policy limit and Citizens rejected it, can JD Restoration never be made whole by Citizens per the policy language? Can rejection be found to be unreasonable or does Citizens always have final say? Would further litigation by the homeowner whether coverage was improperly denied have any effect on this decision? What if the homeowner reached a settlement with the insurance company about coverage? Can that limit still not be exceeded? It should be interesting to see what the trial court looks to in the further proceeding to make this determination.  

Always Understand the Language of the Policy 

Regardless, as discussed above, it is always imperative that the homeowner and restoration companies do their due diligence to be aware of any limits to services performed, and what is required to exceed those limits, as the Court has determined not even a summary judgment can guarantee insurance companies will be forced to pay the full amount for services performed. Contract law will continue to dictate the amount owed.  

Need help with your property damage claim or experiencing a legal dispute in Fort Lauderdale, FL, call Schirmer Law at (754) 240-3774 or fill out our online contact form today to schedule a consultation. 

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