The Florida Third District Court of Appeal found that an insurer was required to pay attorney fees that homeowners incurred during a coverage dispute despite a finding that the policyholders committed fraud. The Third District affirmed the lower court’s decision, finding that the insurer was required to pay the policyholders’ attorneys’ fees because the insurer lost its counter-claim against the policyholders. The court found that there was no exception for fraud.
In Citizens Property Insurance Corp. v. Bascuas
, (Third District Court of Appeal, Florida, October 14, 2015), the homeowners claimed that their home sustained water damage due to a break in the plumbing system. The insurer paid $28,000 on the loss and the policyholders sued, claiming the total damage was over $300,000. The insurer lodged a counterclaim, alleging that the policyholders had colluded with a plumber to fake the claim and sought to recover its $28,000 payout.
Both parties lost their claims and the court granted the policyholders’ motion for fees and costs and denied the insurer’s motion for the same. This is despite the fact that the jury found that the policyholders had lied to the insurer. The insurer appealed, arguing that for an insurer to pay fees in a suit where the policyholders lied and committed fraud ran counter to public interest, as it would encourage fraud.
The Third District found that because the insurer lost its counterclaim, it was required to pay attorney fees under Florida law
. The Third District also noted that the insurer’s public policy argument was persuasive, but nevertheless concluded that such a change in the Florida law would have to be effectuated legislatively, not judicially.