Engineering Report Not Covered in Kidwell AOB Case, Florida Appeals Court Finds

Insurance carriers do not have to pay for an engineering report if it’s not used in the repair of a property and is not covered by the policy, a Florida appeals court ruled Wednesday in a rebuke of one of the insurance industry’s most prolific opponents.

The decision could ultimately save property insurers thousands of dollars and could help stem the practice of billing for unnecessary forensic reports in assignment-of-benefits roof claims, one of the insurance lawyers in the case said.

“This is a big one because it’s the first decision that looks at these engineering reports,” said attorney Joshua Beck, of Boca Raton, who represented People’s Trust Insurance Co. in the case.

Florida’s 4^th District Court of Appeal found that The Kidwell Group and its sister firm, Air Quality Assessors, which have filed hundreds of lawsuits against Florida property insurers in recent years, failed to show that its engineering report was part of the repair cost, as specified by the People’s Trust homeowners’ policy.

“At trial, the trial court erred by denying the motion for a directed verdict because AQA, in fact, failed to prove that its engineering report was a ‘cost to repair or replace’ under the policy,” Judge Cory Ciklin wrote in the June 28 opinion.

The dispute began after Hurricane Irma plowed across much of south Florida in 2017. People’s Trust, headed by former Florida Insurance Commissioner Tom Gallagher, settled the Pembroke Pines homeowner claim for $30,000. That was more than the cost of a new roof needed on the house, the appeals court noted.

The homeowner had obtained a public adjuster on the claim, though, and had assigned some benefits to the Kidwell Group and Air Quality Assessors, headed by well-known contractor Richie Kidwell. AQA provided a forensic report on the cause of the damage, signed by licensed engineer Anibal Flores. After the settlement, AQA sent People’s Trust a bill for $3,500 for the report. The insurer refused to pay.

AQA then filed suit against the insurance company, claiming breach of contract, and won at trial. People’s Trust asked the trial court for a directed verdict, setting aside the jury verdict. The judge denied that and the insurer appealed.

Some Floridians may wonder about the cost effectiveness of an insurance company spending thousands of dollars in legal fees to fight a $3,500 invoice. In many cases, insurers have simply accepted those invoices and eaten the cost. But Beck argued that the practice had to stop. Kidwell and other contractors have utilized the unneeded-engineering-report tactic in many, many claims, for too long, adding to Florida insurers’ heavy loss expenses, he said.

“AQA has filed thousands of these lawsuits against every carrier in the state,” Beck said Wednesday. “So you say it’s only $3,500 dollars, but you take that and multiply it exponentially. Are carriers supposed to pay $3,500, thousands of times, for something that’s not owed?”

Both sides in the case agreed that the engineering report was never used by the roof repairers, the court noted. The contractor hired by the homeowners testified that he never saw the report. And the People’s Trust expert witness, a general contractor, testified that in his 47 years of construction and roof work, he had never obtained an engineering report.

Engineering assessments are important in some cases, such as sinkhole claims, but are not usually needed in home roof repairs, Beck noted.

“Based on the evidence offered at trial, no reasonable jury could have determined that the engineering report was a ‘cost to repair or replace’ the roof, and, accordingly, the trial court should have granted the insurer’s motion for a directed verdict,” the 4^th DCA opinion reads.

The court also found that the trial judge, Kathleen McHugh, gave improper instructions to the jury: The verdict form did not ask the jury whether the engineering report was a cost factor in the roof work, and was not given the opportunity to answer that crucial question.

Kidwell said Wednesday that he was disappointed in the outcome, and plans to ask the court for reconsideration.

“We believe that the provision of engineering reports, like the one we provided in this case, is a vital part of the recovery and rebuilding process,” he said in an email. “Yet, the decision by the appeals court appears to discount this service as an ‘outsider’ expense rather than a necessary part of repairing or replacing damaged property. This contradicts our experience and understanding of homeowners’ needs following such destructive events.”

He argued that the engineering report was used to negotiate the settlement and was, in fact, helpful in repairing the property. Kidwell’s attorney, Chad Barr, of Altamonte Springs, could not be reached for comment Wednesday.

Kidwell has prevailed in some Florida appeals in the last few years, but has lost on others. After the Florida Legislature in May 2022 barred assignees of benefits from collecting attorney fees, Kidwell was quick to challenge the law. But a Leon County judge dismissed the suit.

With the Florida Legislature’s December ban on assignment of benefits agreements altogether, the engineering reports will likely be less of an issue in coming years. But they could still come into play in first-party suits by policyholders in claims disputes.

Topics Florida