Sunday, March 27, 2016
One of the areas of contract law where the mere language alone frequently trips my students up is the area of assignment and delegation, largely because neither courts nor contracts are always exactly precise in what they mean in this area. It remains one of the areas that, say, a large insurance company can find it got the wording wrong, as happened in a recent case out of Florida, Bioscience West v. Gulfstream Property and Casualty Insurance, Case No. 2D14-3946.
A homeowner had bought a insurance policy from Gulfstream. The policy prohibited assignment "of this policy" without Gulfstream's written consent. The homeowner's house suffered water damage and she hired Bioscience to fix the damage. She assigned "any and all insurance rights, benefits, and proceeds pertaining to services provided by BIOSCIENCE WEST INC. under the above referenced policy to BIOSCIENCE WEST, INC." When Gulfstream subsequently denied the homeowner's insurance claim, Bioscience sued as the assignee of the homeowner's right to recover the insurance policy's benefit. Gulfstream responded by stating that the policy could not be assigned with Gulfstream's consent, which had never been given. The distract court agreed, found the homeowner's assignment to be improper, and entered summary judgment in Gulfstream's favor.
The appellate court disagreed. The appellate court said that the phrase "assignment of this policy" plainly referred to the entire policy. What the homeowner assigned, however, was something less than the entire policy, i.e., just a portion of the benefits. Therefore, under the "unambiguous" wording of the policy, the homeowner's actions were permissible without Gulfstream's consent; Gulfstream's consent was only required if she tried to assign the entire policy.
And, in fact, the court found this was consistent with the loss-payment portion of the policy, which provided that Gulfstream would pay the homeowner "unless some other person . . . is legally entitled to receive payment." The court said that proved that Gulfstream understood that the homeowner would be able to assign benefits under the policy. (Although arguably all this proved was that Gulfstream understood that the homeowner would be able to assign benefits under the policy with Gulfstream's consent.) At any rate, there was ample precedent in Florida's case law supporting the proposition that policyholders can assign post-loss claims without the consent of the insurer.