WEST PALM BEACH, Fla. (Legal Newsline) - A federal judge has agreed that a former client has no federal case against a law firm it hopes to prevent from taking fees in pending cases.
U.S. Magistrate Judge Bruce Reinhart on Jan. 16 issued a report recommending the lawsuit filed by SFR, a contractor service that obtains permission from home-damage clients to pursue recovery from insurance companies, be dismissed.
SFR hired Arnesen Webb, doing business as Elevate Legal Services, to aid in that quest but later terminated the agreement.
Cases are still pending, and SFR sued for a declaration that Elevate is not entitled to fees from those cases. The lawsuit was inappropriate, though, Reinhart said.
"SFR is not entitled to a declaration of its rights because adjudicating those alleged rights requires factual determinations that are inappropriate in a declaratory judgment action," Reinhart wrote.
"SFR asks the Court to declare whether Arnesen Webb was terminated for cause. Resolving that question necessarily requires the Court to evaluate historical facts."
Presiding judge Robin Rosenberg on Jan. 26 adopted Reinhart's findings, dismissing the case. She is allowing SFR to try to amend two of its three claims.
Arnesen Webb was hired by SFR Services to handle assignment of benefit claims under a previous law that allowed property owners to sign over insurance claims to a contractor who would then collect payment from the insurer.
The law led to widespread fraud as contractors submitted inflated claims with the knowledge insurers were likely to pay them to avoid being assessed with hefty legal fees if they fought the claim and lost. Florida legislators amended the law in 2019 to require contractors provide detailed estimates with AOB contracts and then outlawed the practice entirely for home insurance last year.
A 2022 appeals court ruling further hurt the contractors by invalidating all contracts signed without estimates after July 1, 2019. SFR sued Elevate in Florida federal court to recoup more than $1 million it says it lost through mismanagement and ill-advised litigation.
The two sides nearly came to an agreement, but the settlement was never finalized.