Florida Contractor Group Already Files Suit Challenging New AOB Fee Restrictions

By | June 1, 2022

A group of contractors wasted little time in challenging the constitutionality of a law approved at the Florida Legislature’s special session last week, one the restoration companies argue singles them out and deprives them of attorney fees in assignment-of-benefits claims.

“The inability to recover prevailing party attorneys’ fees will effectively shut the courthouse door to plaintiffs because it will be cost-prohibitive to pay an attorney for these types of of small claims,” reads the complaint, filed in Leon County Circuit Court by Restoration Association of Florida and Air Quality Assessors.

Florida House Speaker Chris Sprowls gavels the special session on property insurance to a close, May 25. (AP Photo/Phil Sears)

Senate Bill 2D, passed largely along party lines, bars assignees of benefits from collecting attorney fees, even if they prevail in court. Insurers have long complained that the fees, coupled with Florida’s fee multiplier, is encouraging unnecessary claims litigation and is costing the industry huge sums every year.

The lawsuit argues that “deprivation of this right is significant because SB 2D wrongfully treats contractors, as assignees, disparately from homeowners and insurers.”

Some lawmakers and insurance industry advocates at the special session predicted the bill would be challenged by contractors, just as 2021’s Senate Bill 76 was challenged, then was temporarily suspended by a court. SB 76 sought to bar roofing contractors from soliciting homeowners and encouraging them to file insurance claims on roof damage. A federal judge has said the law may violate contractors’ constitutional rights to free speech.

Kidwell (Linkedin)

Restoration Association did not bring that challenge, but it is no stranger to Florida insurers. The association’s president is Richie Kidwell, who also owns Air Quality Assessors, a mold-remediation firm. He spoke forcefully against SB 2D at the May 23-25 special session. Kidwell and his group also recently filed suit against the Florida insurance commissioner and two carriers over their policy endorsements.

One endorsement, by American Integrity Insurance, offers premium discounts for policyholders who agree to binding arbitration in claims disputes. Another, by Heritage Property & Casualty Insurance, states that the insurer won’t pay contractors, but will only reimburse the insured for restoration work, effectively barring AOB claims.

That suit and the May 31 challenge to SB 2D were filed by Boca Raton attorney Joshua Alper and the Center for Constitutional Litigation.

A Florida law professor said neither suit stands much chance of succeeding.

“In a word, this lawsuit isn’t going anywhere,” Robert Jarvis, a professor at Nova Southeastern School of Law, said about the challenge to SB 2D.

He explained that it’s very difficult to win a lawsuit based on the Florida Constitution’s equal protection clause, Article I, Section 2. “That’s because the clause only protects plaintiffs who are ‘similarly situated’ to people or groups that aren’t impacted by the law the plaintiffs are challenging,” Jarvis said. “But there’s almost always some difference between the plaintiffs and non-plaintiffs.”

Jarvis said that in weighing the validity of an economics-regulation law, the courts use a “rational basis” test. The defendants, in this case the Florida Department of Business and Professional Regulation, need only show that some rational basis exists for distinguishing the targets of the law – the assignees of benefits.

“This is a very easy standard to meet—there’s almost always some rational basis that supports the law and the distinctions it draws,” said Jarvis, who studies and teaches constitutional law and contract law. “In passing laws, the Florida Legislature is not required to address every ill. Thus, singling out just AOB contractors is a perfectly legitimate exercise of the Legislature’s powers.”

The plaintiffs must also show that the law is clearly unconstitutional, but courts have generally found that, while they may disagree with a piece of legislation, they won’t usually nullify it.

“Judges often opine that there was a better solution that the Legislature could and should have selected, but they won’t strike down a law simply because it’s not the best solution,” Jarvis explained in an email. “They leave that to the Legislature (which can always see the error of its ways and enact a new law) and the people (who can always set things right by electing new legislators).”

Topics Lawsuits Florida Contractors

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