On Monday, July 29, 2019, the Florida Supreme Court, by a vote of 4 to 3, decided to discharge jurisdiction and not address whether Florida law allows for an insurer’s homeowner’s policy to require the consent of all insureds, including a mortgagee such as a bank, before a post-loss assignment of benefits under the insurance policy is considered valid. Late last year, the Florida Supreme Court accepted jurisdiction to resolve a conflict between two district courts of appeal in the cases of Restoration 1 of Port St. Lucie v. Ark Royal Insurance Co., 255 So. 3d 344 (Fla. 4th DCA 2018) and Restoration 1 CFL, LLC v. ASI Preferred Insurance Co., 239 So. 3d 747 (Fla. 5th DCA 2018), concerning the issue of whether or not an insurer may require that a mortgage holder consent to a post-loss assignment of benefits. In its recent Order, the Court stated that because Florida’s recent assignment of benefits legislation, chapter 2019-57, Laws of Florida, “addresses on a going-forward basis the issue before us, we exercise our discretion to discharge jurisdiction.” Further, the Court’s short Order discharging jurisdiction closed the door on any rehearing or reinstatement of its decision not to decide the legal issue.
What does it mean?
The Supreme Court’s disappointing decision not to resolve the conflict in the Ark Royal and ASI Preferred cases fails to squarely address whether or not an insurer may continue to require the consent of all insureds, including a mortgagee, in a post-loss assignment of benefits. We can speculate on the position of at least 4 of the Justices who considered that the recent assignment of benefits legislation corrected the conflict on an on-going basis. The Supreme Court’s Order states that:
The conflict issue involves the validity of “a restriction” in an insurance policy “that requires the consent of all the insureds and the mortgagee before any assignment [of post-loss benefits].”
The Supreme Court then cites the recent assignment of benefits legislation, specifically referencing Section 2 of chapter 2019-57, Laws of Florida, which creates section 627.7153, Florida Statutes (2019), titled:
“Policies restricting assignment of post-loss benefits under a property insurance policy,” that among other things permits an insurer to “make available a policy that restricts in whole or in part an insured’s right to execute an assignment agreement” if certain conditions are met.
Immediately following the above quoted language, the Supreme Court stated that it was dismissing the appeals because the new legislation addresses the issues on a going-forward basis. The only way to read the Supreme Court’s conclusion that the new legislation addressed the issue on a “going-forward basis” is to start with the premise, presumably held by 4 of the Justices, that the mortgagee’s consent was a “restriction.” If the mortgagee’s consent was not a “restriction” on the assignment of benefits, then the new legislation would have no effect on that particular issue. This outcome, however, should be one that is made with a full legal analysis, not something to be parsed out through reading the Order. Moreover, the Supreme Court’s Order should not be read as precedent for holding that requiring a mortgagee’s consent is a restriction of an assignment of benefits because the Court simply did not address the issue. The unfortunate result of the Supreme Court’s decision not to address the conflict of law presented in the Ark Royal and ASI Preferred case is that this area of law still remains unclear, and still remains in conflict in two of the five Districts, without any indication on where the issue stands in the remaining three Districts.
Restoration 1 of Port St. Lucie, etc., v. Ark Royal Insurance Co., Case Nos. SC 18-1624, SC18-1623 (Fla. 2019)(Order discharging jurisdiction July 29, 2019).