HomeWise was declared insolvent in November 2011, and FIGA assumed responsibility for Ms. Heid's claim.

In March 2013, FIGA advised Ms. Heid that there had been no evidence of sinkhole activity on the property but that FIGA was not denying her claim.

In September 2013, Ms. Heid's attorney asked FIGA to either admit or deny coverage, and FIGA's adjuster responded that FIGA had not and was not denying Ms. Heid's claim.

The next month, Ms. Heid sued FIGA.

FIGA invoked the neutral evaluation process and peer review of prior testing, after which FIGA advised Ms. Heid in February 2015 that her claim was not a covered claim and that FIGA would not make payment.

Ms. Heid retained an engineering firm to conduct additional testing. The firm concluded that there was evidence of sinkhole activity that had caused damage to Ms. Heid's home. Ms. Heid shared the report with FIGA, which disagreed.

Ms. Heid then retained a second firm to conduct additional testing, and Ms. Heid shared the report with FIGA.

In December 2015, FIGA conceded that the report confirmed the presence of sinkhole activity and that Ms. Heid's claim was a covered claim.

FIGA and Ms. Heid resolved all issues except Ms. Heid's claim for attorneys' fees and costs.

Ms. Heid moved for attorneys' fees and costs, arguing that she was entitled to fees under Florida Statutes Sections 631.70 and 627.428 and that she was entitled to costs under Section 57.041 and the confession-of-judgment doctrine.

FIGA responded by arguing that FIGA acted swiftly in agreeing to cover Ms. Heid's claim once scientific evidence of sinkhole activity was reported to FIGA.

After Miller v. Florida Insurance Guaranty Ass'n, 200 So. 3d 200 (Fla. Ct. App. 2016) came down, Ms. Heid filed an amended motion for fees, asserting that when FIGA denied coverage for sinkhole loss, then later accepted coverage, the insured was entitled to fees pursuant to Section 631.70.

FIGA responded that fees were precluded under Section 631.54(3)(c) because the fees were "in connection with a sinkhole loss," that a large portion of Ms. Heid's fees were for testing and thus prohibited by Section 631.54(3)(c), that Ms. Heid's claim was not a "covered claim" at the time it was affirmatively denied by FIGA, and that Ms. Heid was not entitled to costs because no judgment had been entered.

The trial court denied Ms. Heid's motion for fees, concluding that the fees Ms. Heid spent on testing for a sinkhole loss were excluded under the definition of "covered claim" in Section 631.54(3)(c) as interpreted by Miller and that any fees related to sinkhole repairs after FIGA agreed to coverage also were barred by Section 631.54(3)(c).

The trial court further found that FIGA's February 2015 denial did not constitute an affirmative denial of a "covered claim" for purposes of Section 631.70 because at the time of the February 2015 denial, there was no scientific evidence that there was sinkhole activity. The trial court concluded that once scientific evidence supported a finding of sinkhole activity, FIGA had never affirmatively denied the claim.

Ms. Heid appealed.

Florida Law

Section 631.70 provides that:

The provisions of s. 627.428 providing for an attorney's fee shall not be applicable to any claim presented to [FIGA] under the provisions of this part, except when [FIGA] denies by affirmative action, other than delay, a covered claim or a portion thereof.

Section 631.54(3) provides that a covered claim does not include:

(c) Any amount payable for a sinkhole loss other than testing deemed appropriate by the association or payable for the actual repair of the loss, except that the association may not pay for attorney's fees or public adjuster's fees in connection with a sinkhole loss or pay the policyholder. The association may pay for actual repairs to the property but is not liable for amounts in excess of policy limits.

(Emphasis added.)

Section 57.041 provides that:

The party recovering judgment shall recover all his or her legal costs and charges which shall be included in the judgment.

The Appellate Court's Decision

The appellate court reversed.

In its decision, the appellate court disagreed with the trial court's conclusion that FIGA had not affirmatively denied a covered claim. The appellate court pointed out that FIGA denied Ms. Heid's claim in February 2015 but then determined that it was a covered claim in December 2015, yet there was "no indication that the status of the sinkhole activity changed during those months."

The appellate court favorably cited Ms. Heid's argument that FIGA's and the trial court's interpretation of a "covered claim" would allow FIGA to "deny statutory benefits by affirmative action, litigate with the insured for years on the ground that there was no 'evidence' of a sinkhole, and then confess judgment by acknowledging the claim is a 'covered claim' with no adverse consequences." The appellate court ruled that because FIGA affirmatively denied Ms. Heid's claim, which was a covered claim, Section 631.70 was satisfied.

The appellate court then decided that the trial court had misconstrued the holding in Miller as barring Ms. Heid from recovering attorneys' fees in this case. Based on the clear language in Miller, the appellate court said, Ms. Heid was entitled to attorneys' fees that were related to the enforcement of the policy itself.

The appellate court noted that Ms. Heid had spent several years attempting to get FIGA to honor her policy and it ruled that she was entitled to fees incurred in that effort. In the appellate court's opinion, the fact that intermittent testing occurred during the litigation and Ms. Heid's effort to enforce her policy did not bar Ms. Heid from recovering fees related to enforcing her policy under Section 631.70.

Finally, the appellate court also decided that Ms. Heid was entitled to recover her costs under Section 57.041. It reasoned that even though she had not obtained a judgment against FIGA, FIGA had ultimately admitted coverage and paid Ms. Heid's claim. In the context of attorneys' fees, the appellate court stated, it was "well settled that the payment of a previously denied claim following the initiation of an action for recovery, but prior to the issuance of a final judgment, constitutes the functional equivalent of a confession of judgment."

The appellate court concluded that there was no reason the confession-of-judgment doctrine should not apply in the context of costs under Section 57.041(1).

The case is Heid v. Florida Ins. Guaranty Ass'n, No. 2D18-737 (Fla. Ct. App. Oct. 11, 2019). Attorneys involved include: Richard N. Asfar of Vaka Law Group, P.L., Tampa (withdrew after briefing); George A. Vaka and Kurt J. Rosales of Vaka Law Group, P.L., Tampa; and Aaron S. Kling of Kling Law, P.A., Tampa, for Appellant. Dorothy V. DiFiore of Quintairos, Prieto, Wood & Boyer, Tampa; and Lisa J. Augspurger of Bush & Augspurger, P.A., Orlando, for Appellee.