Friday, January 28, 2011

State Homestead Law Prevents Lawyer From Recovering Legal Fees From Property Insurance Damage Proceeds After Being Stiffed By Client/Florida Homeowner

The following facts are taken from an April, 2010 court ruling by a Florida appeals court:

  • Homeowner, Quiroga, suffered damages to his Florida homestead as a result of two hurricanes.

  • Quiroga retained the services of a law firm on a contingency fee basis to help him secure the benefits due him pursuant to a homeowner's insurance policy.

  • Upon securing the benefits of the insurance policy through the efforts of the law firm, Quiroga promptly showed his appreciation by firing them and terminating their contingent fee representation of him, stiffing them out of their legal fees in the process.

  • In attempting to recover the legal fees, the law firm filed a motion to impress a charging lien on the homeowner's insurance proceeds, at which point Quiroga claimed that said cash proceeds are exempt homestead property, not subject to attachment by means of a charging lien by reason of Art. X, § 4(a), Florida Constitution.

In agreeing with a lower court ruling, the Florida appeals court denied the law firm in its effort to recover its legal fees from the homeowner's insurance proceeds. According to the court:

  • The parties do not dispute the hurricane-damaged property is constitutionally exempt homestead property. See Cutler v. Cutler, 994 So. 2d 341, 343 (Fla. 3d DCA 2008) ("To qualify for protection under Article X, section 4 of the Florida Constitution, a parcel of property must meet constitutionally defined size limitations and must be owned by a natural person who is a Florida resident who either makes or intends to make the property that person's residence.").

    In the event a homestead is damaged through fire, wind or flood, the proceeds of any insurance recovery are imbued with the same privilege. Orange Brevard Plumbing & Heating Co. v. La Croix, 137 So. 2d 201, 203-04 (Fla. 1962).

    Because Quiroga did not and, as a matter of public policy in this State, cannot through an unsecured agreement, such as the contingent fee agreement in this case, enter into an enforceable contract to divest himself from the exemptions afforded him through Article X, section 4(a), see Chames v. DeMayo, 972 So. 2d 850, 853 (Fla. 2007), this Court is compelled to affirm the order under review, the equities of the matter notwithstanding.

    See Pub. Health Trust of Dade County v. Lopez, 531 So. 2d 946, 951 (Fla. 1990) ("The homestead protection has never been based upon principles of equity.") (citing Bigelow v. Dunphe, 143 Fla. 603, 197 So. 328, 330 (Fla. 1940)); Pierrepont v. Humphreys (In re Newman's Estate), 413 So. 2d 140, 142 (Fla. 5th DCA 1982) ("The homestead character of a piece of property . . . arises and attaches from the mere existence of certain facts in combination in place and time.")
    .

For the ruling, see Quiroga v. Citizens Prop. Ins. Corp., 34 So. 3d 101 (Fla. App. 3d DCA, 2010).

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