The Court of Appeal of the State of Florida, Third District, recently reversed summary judgment in favor of a mortgagee-loss payee under a homeowner's insurance policy, holding that the mortgagee failed to provide evidence of the value of the property after repairs, and therefore failed to show that repairing the property was not economically feasible.
A copy of the opinion is available at: Link to Opinion
A consumer took out a purchase money loan for $120,000 secured by a mortgage on the residential property. The original lender assigned the mortgage to two fractional assignees, one of whom assigned again it to a limited liability company.
The property securing the loan was damaged by fire and the owner filed a claim with her homeowner's insurance carrier. The insurer issued two checks totaling $94,162.52 jointly payable to the homeowner, the law firm representing her, and the mortgagees.
One of the mortgagees withheld the insurance proceeds, invoking a section of the mortgage that gave it the right to apply the insurance proceeds to the loan if it was not economically feasible to repair the property. An initial exterior appraisal of the home valued it at $90,000, but a contractor's repair estimate was for $98,717. The homeowner later provided a lower revised repair estimate of $53,117.
The homeowner sued the mortgagee, alleging that she was unable to repair the property because the mortgagee refused to release the insurance proceeds. The mortgagee moved to dismiss and the homeowner filed an amended complaint raising claims for breach of contract, breach of implied covenant of good faith and fair dealing, declaratory judgment and unjust enrichment.
The mortgagee moved for summary judgment on all claims and the homeowner filed a response in opposition supported by two affidavits. The trial court granted summary judgment in favor of the mortgagee, finding that "it was not economically feasible to repair the property because the cost to repair was greater than the value of the property." The homeowner moved for reconsideration and rehearing, but the trial court denied the motion. The homeowner appealed.
On appeal, reviewing the summary judgment under a de novo standard, the Appellate Court pointed out that the homeowner's affidavit in opposition to summary judgment indicated that it was economically feasible to repair the property "because the value of the property with repairs will be significantly greater than the outstanding balance on the mortgage."
In addition, the Court noted, the mortgage did not define the term "economically feasible,' a term subject to more than one interpretation. Because the mortgagee "did not provide an estimate of the value of the property after repairs, [it] therefore did not meet its burden of proof that no genuine issue of material fact exists."
The Court further found that summary judgment was improper because a genuine issue of material fact existed as to the cost of repairing the property. The mortgagee relied on the initial estimate that the homeowner used to obtain the insurance pay-out, while the homeowner relied on a revised estimate that was much less than the insurance proceeds.
Such conflicting evidence precluded summary judgment because "the trial court must not weigh material conflicting evidence or pass upon the credibility of the witness." … Only a trier of fact may weigh evidence and determine credibility—the court was without authority to with the evidentiary value of the conflicting estimates."
Accordingly, the Appellate Court reversed the summary judgment order and remanded the case for further proceedings.
Ralph T. Wutscher
Maurice Wutscher LLP
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