WEST PALM BEACH, Fla. (Legal Newsline) - A former client that hoped to keep lawyers from taking fees in pending cases is giving up its quest.
Following an order dismissing its claims and the filing of two motions for sanctions, SFR Services on April 19 filed notice of voluntary dismissal of its lawsuit against Arnesen Webb, doing business as Elevate Legal Services.
Judges in West Palm Beach federal court ruled SFR, a contractor service that obtains permission from home-damage clients to pursue recovery from insurance companies, had no case.
SFR had hired Elevate to negotiate with or sue insurers 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.
"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," U.S. Magistrate Judge Bruce Reinhart wrote in a Jan. 16 report later adopted by District Judge Robin Rosenberg.
"SFR asks the Court to declare whether Arnesen Webb was terminated for cause. Resolving that question necessarily requires the Court to evaluate historical facts."
Rosenberg said SFR could try to amend two of its three claims. Elevate responded April 18 with motions for sanctions.
"SFR Services and SFR Lawyers assert false claims in the amended complaint, and after having been presented with evidence refuting the allegations, continue to assert these unsupported positions," the law firm wrote.
"For SFR Services and SFR Lawyers to maintain these factually unsupported allegations belie the true purpose of the SFR Services' legal proceeding: to professionally embarrass Law Firm and to gain improper leverage in negotiating their retaining and charging liens."
SFR had argued Elevate gave up on cases without full explanations but the motion points out emails discussing a change in Florida law that made the lawsuits difficult.
"Any allegation that the Law Firm did not fully explain to SFR Services the full ramifications of dismissing these cases, or that SFR Services was unaware of the ramification of dismissal, is frivolous," the motion says.
Elevate 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.