WEST PALM BEACH, Fla. (Legal Newsline) - A Florida repair firm with a long history of suing insurance companies has turned on its lawyers, seeking to recoup more than $1 million it says it lost after insurers took advantage of new laws and a favorable court ruling to reject claims it filed on behalf of property owners under the state’s since-repealed assignment-of-benefits law.
South Florida Repair sued Arneson Webb and name partners Jay Arnesen and Paris Webb for legal malpractice in federal court in Florida, accusing them of mismanaging thousands of claims and exposing SFR to liability for the attorney fees of insurance companies. SFR also accuses Arnesen Webb of filing liens on outstanding and settled cases to prevent the contractor from receiving insurance proceeds from successful claims.
SFR, like many other Florida contractors, once thrived under a law allowing property owners to sign over insurance benefits to contractors instead of filing claims themselves. Those laws also allowed plaintiff lawyers to collect hefty fees if the contractor challenged an insurer’s rejection of a claim and won.
Insurance companies complained the laws led to rampant fraud as contractors submitted inflated damage estimates with confidence the attorney-fee provision would discourage insurers from challenging them.
Florida legislators last year made AOB clauses unenforceable in homeowner insurance policies. And the Fourth District Court of Appeal made many existing contracts unenforceable in the June 2022 decision Kivowitz v. United Property & Casualty, ruling that property owners had to have an itemized list of costs when they signed an AOB.
That decision “had wide sweeping consequences for contractors” and made many of SFR’s contracts deficient because the itemized costs were added to the contract after it was signed, the company said.
Even though Arneson Webb knew Kivowitz changed the rules of the game, SFR said, the lawyers “elected to litigate the matters anyway.”
“This ill-advised and negligent strategy forced SFR’s personnel and the insurance carrier’s attorneys to incur significant legal expenses related to arbitrations, mediations, corporate representative depositions, extensive motion practice, depositions of third-parties, and voluminous document requests,” the company said in its July 25 complaint.
In the end, SFR says it dismissed hundreds of lawsuits against insurers and was “forced to terminate” its lawyers for cause. The lawyers then “doubled down on their misconduct” by filing attorney liens on all of their SFR cases, including cases that had been dismissed. The law firm offered to drop the liens for $2,500 per file, or almost $600,000, SFR said in its lawsuit.
SFR is no stranger to litigation, having sued insurance companies for years to collect on damage claims it said were improperly rejected. Insurers got more aggressive in recent years, however. Tower Hill Signature Insurance has won several cases where it accused SFR of misrepresenting the cost of repairs, including one where SFR tried to collect more than $300,000 for roof repairs that were performed by a subcontractor for $99,000.