Sinkholes & Attorney Fees: Johnson v. Omega

Sinkholes & Attorney Fees: Johnson v. Omega

Consistent with Florida’s pro-consumer precedent, a recent Florida Supreme Court case reaffirmed an insured’s entitlement to attorney’s fees and costs after being forced to litigate a sinkhole claim. In Johnson v. Omega[1], the Court analyzed two issues:

(1) whether an insured in litigation has the burden of rebutting the initial sinkhole “presumption of correctness” afforded to insurers pursuant to Florida sinkhole Statute, Section 627.7073(1)(c)[2], and

(2) the insured’s entitlement to fees pursuant to Florida Statute, Section 627.428[3].

A (very) brief rundown of the facts:

Johnson noticed damage attributed to sinkhole activity, filed a claim with her insurance company who hired an engineer to investigate. What was the conclusion? You guessed it – no sinkhole, claim denied.

Johnson, in turn, hired an engineer of her own who found sinkhole activity, and subsequently filed suit. Fast forward through the part where Omega hires a second engineer who agrees with Johnson’s engineer, Omega’s confession of judgment and admittance to Johnson’s entitlement to over $200K in damages, and you’ll find Omega flipping their litigation stance in an effort to avoid paying Johnson’s attorney’s fees

After confessing judgment, Omega recanted and proclaimed Johnson had to prove Omega acted in bad faith and rebut the “presumption of correctness” afforded to Omega’s initial investigative report during the adjustment phase of the claim.

The Court rejected Omega’s arguments, holding (again)[4] that the “presumption” only applies to the initial adjustment phase, not litigation; and Johnson did not have the burden of separately rebutting the “presumption” to recover her attorney’s fees pursuant to Florida Statute, Section 627.428.

The Florida Supreme Court specifically stated:

To allow the insurer to backtrack after the legal action has been filed without consequence would essentially eliminate the insurer’s burden of investigating a claim…Here, it is undisputed that Omega did not admit its error in denying benefits until after Johnson filed the action.

Thus, there is no question that Johnson is entitled to attorney’s fees in this situation. We cannot, as the court below held and Omega requests here, discourage insureds from seeking to correct the incorrect denials of valid claims and allow insurers to deny benefits to which insureds are entitled without ramifications.[5]

It is refreshing to know that our Supreme Court continues to acknowledge and admonish insurer-deployed litigation tactics in their efforts to avoid paying the piper after wrongfully denying claim benefits. Johnson v. Omega is another win for Florida’s first-party claimants.

References: