VOLUME XX, NUMBER 3
December, 2008

PUBLIC ADJUSTER REFORMS OF SENATE BILL 2012 TAKE EFFECT OCTOBER 1, 2008 AND JANUARY 1, 2009

In May of 2008, the Florida Legislature adopted insurance and public adjuster related amendments based on recommendations by the Task Force on Citizens’ Property Insurance Claims Handling and Resolution. The following amendments and modifications of the Florida Statutes were adopted with the intent of protecting consumers from unqualified and/or unscrupulous dealings of Public Adjusters.

Public Adjuster Contact, Fees and Contracts - Effective October 1, 2008, SB 2012 adds subsections (5) through (12) to section 626.854, Florida Statutes.

Subsections (5) and (6) prohibit public adjusters from engaging in intrusive solicitation practices such as contacting insureds on Sundays, after 8 p.m., or within 48 hours of an occurrence. Subsection (7) requires a public adjuster to disclose the time period and manner for cancellation of a public adjuster’s contract. Subsection (8) defines a public adjuster or any person’s circulation or dissemination of any untrue, deceptive, or misleading advertisement, announcement, assertion, or representation with respect to the business of insurance, as an unfair and deceptive trade practice pursuant to s. 626.9541. Subsection (9) and (10) prohibit a public adjuster, public adjuster apprentice, or any representative thereof from offering or giving a monetary loan or advance to a client or prospective client and offering any article of merchandise in excess of $25 for the purpose of advertising or inducement to enter into a contract. Subsection (11) limits contingency fees to 10% for any claim based on events that are subject of a declaration of state of emergence and filed within one year after the declaration of emergency, and to twenty percent for all other insurance claims. These fee limitations do not apply to contracts regarding re-opened or supplemental claims. Subsection (12) requires public adjusters to provide insureds with a written estimate of their loss to assist in the submission of a proof of loss or any other claim for payment of insurance proceeds. Subsections (5) through (12) apply only to residential property and condominium association policies defined in s.718.111(11).

Fraud Statements - Effective October 1, 2008, SB 2012 created section 626.8796 and section 626.8797, Florida Statutes.

 Pursuant to section 626.8796 all public adjuster contracts must be in writing and prominently display the following fraud statement, “Pursuant to s. 817.234, Florida, Statutes, any person who with the intent to injure, defraud, or deceive any insurer or insured, prepares, presents, or causes to be presented a proof of loss or estimate of cost or repair of damaged property in support of a claim under an insurance policy knowing that the proof of loss or estimate of claim or repairs contains any false, incomplete, or misleading information concerning any fact or thing material to the claim commits a felony of the third degree, punishable as provided in s.775.082, s. 775.803, or 775.804, Florida Statutes.” Section 626.9797 requires that all proof of loss statements contain the same fraud statement.

Continuing Education Requirements and Disciplinary Guidelines - Effective October 1, 2008, SB 2012 adds specific continuing education requirements and examination requirements to section 626.869 and modifies the disciplinary guidelines of section 626.8698.

 Public adjusters must now take courses that are specifically designed for public adjusters and approved by the department. These courses are to cover current Florida laws regarding all lines of insurance (except life and annuities), the duties and responsibilities of public adjusters, the current rules of the department applicable to public adjusters, and standard or representative policy forms used by insurers. The amendment provides that a non-resident public adjuster must also comply with Florida continuing education unless the requirements of a nonresident public adjuster’s home state are determined to be substantially comparable and recognize reciprocity with Florida’s continuing education requirements.

The disciplinary guidelines of section 626.8698 were amended to apply not only to public adjusters, but public adjuster apprentices.

Public Adjuster Apprentice - Effective January 1, 2009, SB 2012 creates section 626.8541 and section 626.8651, Florida Statutes.

Section 626.8541(1) defines a “public adjuster apprentice” as a person not licensed as a public adjuster, but employed by or contracted with a licensed public adjuster in good standing, and satisfying the requirements of s. 626.8651. Subsection (2) requires a 12 month period as a public adjuster apprentice to become eligible for appointment as a licensed public adjuster. In order to obtain a public adjuster apprentice license, person must be 18 years old, a U.S. Citizen or legal alien, trustworthy and reputable, and pay the requisite fees pursuant to s. 624.501.

Public Adjuster Licensing Requirements - Effective January 1, 2009, SB 2012 amends section 626.865 and section 626.870, Florida Statutes.

Subsection (3) is added to section 626.865, requiring public adjuster applicants to pass an exam, designed by the Department of Financial Services, to specifically address the adjusting of claims on behalf of the public. Additionally, the licensing examination must be re-taken and passed before reinstatement of a suspended, terminated, canceled, revoked or expired license. Subsection (4) is added to section 626.870, requiring an individual to pass the public adjuster exam and pay an applicable fee for reinstatement of a public adjuster’s license, appointment, or eligibility. Upon passage, reinstatement is still subject to denial pursuant to ss. 626.207, 62.611, 626.621, and 626.8698. Subsection (4) also provides that a license, an appointment, or eligibility that has been suspended may not be reinstated without a filing and approval of an application for reinstatement in accordance with s.626.641.

Nonresident Public Adjuster Applicants - Effective January 1, 2009, SB 2012 amends section 626.8732, Florida Statutes.

Nonresident applicants must have been continuously licensed and employed in their home state for the past three years in order to apply for a license in Florida. If available, the department must verify the nonresident applicant’s licensing status through the producer datable maintained by the National Association of Insurance Commissioners or its affiliates or subsidiaries.

Please feel free to contact Powers, McNalis, Torres & Teebagy for additional information regarding the newly enacted statutes.

Morgan A. Fairthorne

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SECOND DISTRICT CERTIFIES CONFLICT WITH FIRST DISTRICT AS TO VALIDITY OF APPORTIONED PROPOSALS FOR SETTLEMENT TO HUSBAND AND WIFE

In two recent decisions, the First and Second Districts have certified conflict as to the validity and enforceability of an apportioned Proposal for Settlement to a husband and wife, which is conditioned upon the acceptance of the proposal by all parties.

On April 21, 2008, in the matter of Clements v. Rose, 982 So.2d 731 (Fla. 1 st DCA 2008), the First District Court of Appeal found that a proposal for settlement to a husband and wife that is conditional upon both parties accepting and paying their respective portions is valid and enforceable.

James Clements (“Clements”), filed suit against Bobby and Maudeanna Rose (“Defendants”), a married couple, after being bitten by their dog. During the course of the proceedings, Clements filed a Proposal for Settlement in the amount of $75,000.00, specifically proposing the following: “Seventy-Five Thousand and no/100 Dollars ($75,000.00), payable to Plaintiff, JAMES CLEMENTS; (Thirty-Seven Thousand Five Hundred and no/100 Dollars ($37,500.00) from Defendant, BOBBY B. ROSE, and Thirty-Seven Thousand Five Hundred and no/100 Dollars ($37,500.00) from Defendant, MAUDEANNA ROSE.)” The Proposal for Settlement further provided the condition that, “Plaintiff will execute a Release releasing the Defendants, BOBBY B. ROSE, SR. and MAUDEANNA ROSE, and their insurer, with regard to any and all claims that arose as a result of the subject incident set forth in the Plaintiff’s Amended Complaint and dismiss this lawsuit, with prejudice, as to Defendants, BOBBY B. ROSE, SR. and MAUDEANNA ROSE.

The Defendants rejected the settlement offer. A jury returned a $120,000.00 verdict in favor of Clements. Clements then sought an award of attorneys’ fees and costs pursuant to Florida Statute § 768.79. The trial court found the proposal was ambiguous as to whether each defendant could settle separately, or whether both defendants had to agree to the settlement.

The First District Court of Appeal found that Clements’ settlement offer, which apportioned the amount each defendant was responsible to pay, was not ambiguous and that it satisfied the particularity requirement under Rule 1.442(c)(3). In the instant case, the Court found that the Defendants, who are husband and wife, would know the financial responsibility of the other. Further, the Court found that, although conditional, the settlement offer was clear and definite, as it depended on each defendant electing to settle. Accordingly, the First District reversed the trial court’s order, which denied Clements’ motion for attorneys’ fees, and remanded the case for further proceedings.

On September 3, 2008, in Attorneys’ Title Insurance Fund, Inc. v. Gorka, 989 So.2d 1210 (Fla. 2 nd DCA 2008), the Second District Court of Appeal affirmed the trial court’s finding that a Proposal for Settlement that specifically apportions the amounts and terms of the proposal to each party, but is conditioned upon the acceptance of both parties is invalid and unenforceable.

Attorneys’ Title Insurance Fund, Inc. (“Attorneys’ Title”), issued a title insurance policy to Joseph W. Gorka and Laurel Lee Larson (“Gorka and Larson”), who are husband and wife. A dispute regarding the insured property arose, and Gorka and Larson sought to have their property title defended by Attorneys’ Title. Attorneys’ Title refused, and Gorka and Larson filed suit seeking declaratory relief. During the course of the proceedings, Attorneys’ Title filed a Proposal for Settlement, which offered payment of $12,500.00 to Gorka, and of $12,500.00 to Larson. The Proposal specifically stated that it was “conditioned upon the offer being accepted by both John W. Gorka and Laurel Lee Larson. In other words, the offer can only be accepted if both John W. Gorka and Laurel Lee Larson accept and neither Plaintiff can independently accept the offer without their co-plaintiff joining in the settlement.”

Gorka and Larson did not accept the Proposal for Settlement. The trial court issued a Final Judgment in favor of Attorneys’ Title, and Gorka and Larson appealed. Attorneys’ Title sought to tax fees and costs against Gorka and Larson, as well as its appellate attorneys’ fees, pursuant to the unaccepted Proposal for Settlement. The Second District Court of Appeal remanded the matter to the trial court, which determined that the Proposal for Settlement was invalid and unenforceable. Specifically, the trial court found that although the amounts and terms offered to Gorka and Larson were specifically apportioned, neither Gorka nor Larson was able to independently evaluate or accept the offer, as the offer required the acceptance of both Gorka and Larson. The Second District Court of Appeal found that neither Gorka nor Larson could independently accept the amount offered under the proposal. In addition, the Second District Court of Appeal found that should only one party accept the offer, this party would ultimately be exposed to the same fee sanctions as the party who did not opt to accept the offer. As such, one party would be penalized for the conduct of the other party, rather than his or her own decision to reject the offer. As such, the Second District Court of Appeal. affirmed the trial court’s ruling that the Proposal for Settlement was invalid and unenforceable.

The Second District Court of Appeal went on to distinguish the instant matter, in part, from Rose v. Clements, in which a Proposal for Settlement to a husband and wife was found valid and enforceable where the offer amount was apportioned to each party and was unambiguously conditioned upon the mutual acceptance by both parties. The Court noted that in Rose v. Clements, the First District Court of Appeal did not address the impact a conditional proposal has on a party’s ability to independently evaluate and act on a Proposal for Settlement, and it did not address the potential penalties to a party who wishes to accept a Proposal for Settlement when a co-party rejects the proposal.

The Second District Court of Appeal certified conflict with the First District Court of Appeal regarding the validity and enforceability of joint offers conditioned upon the mutual acceptance of all parties. In the First District, the Court determined that a Proposal for Settlement conditioned upon the acceptance of both husband and wife is valid and enforceable, as the nature of the parties’ relationship provides that each party knows the financial responsibility of the other. Although presented with a similar fact pattern, the Second District examined different considerations than the First District, specifically the impact a conditional proposal has on a party’s ability to independently evaluate and act on a Proposal for Settlement, as well as the potential penalties to a party who wishes to accept a Proposal for Settlement when a co-party rejects the proposal. We will report further, pending review of these conflicting decisions by the Florida Supreme Court.

Megan A. Wilson

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