RR Restoration LLC v. Empire Indemnity Insurance Company

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

RR RESTORATION, LLC, a/a/o

Amblewood Condominium

Association, Inc.,

Plaintiff,

v. Case No: 2:21-cv-866-JES-NPM

EMPIRE INDEMNITY INSURANCE

COMPANY,

Defendant.

OPINION AND ORDER

This matter comes before the Court on defendant Empire’s

Motion To Dismiss (Doc. #86) filed on March 5, 2024. Plaintiff

RR Restoration, LLC filed Plaintiff’s Response To Defendant’s

Motion To Dismiss (Doc. #90) on March 25, 2024. For the reasons

set forth below, the motion is denied as to dismissal, but the

case is remanded to state court for lack of subject matter

jurisdiction in federal court.

I.

On the eve of trial, defendant Empire Indemnity Insurance

Company (Defendant or Empire) seeks to dismiss this case for lack

of subject matter jurisdiction. More specifically, Empire argues

that RR Restoration, LLC (Plaintiff or RR Restoration) lacks

standing to sue Empire because it is not the insured under the

Policy issued by Empire, a party to Empire’s insurance contract,

nor did it acquire any rights under a purported assignment attached

to the Complaint because those documents do not constitute an

assignment of rights. RR Restoration responds that the attached

documents do constitute a valid assignment of benefits, and in any

event, Empire lacks standing to challenge the validity of that

assignment.

II.

A brief procedural history is in order. Empire issued a

surplus lines commercial insurance Policy to Amblewood Condominium

Association, Inc. (Amblewood) covering nine buildings in its

condominium complex. On or about September 10, 2017, while the

Policy was in effect, Hurricane Irma hit the area and allegedly

caused substantial damage to the Amblewood buildings. Amblewood

filed a claim with Empire on September 18, 2017.

On June 17, 2019 Amblewood and RR Restoration signed a “Work

Authorization Agreement” and an “Addendum.” Plaintiff

characterizes these documents as an “assignment of benefits,”

while Empire sees them as simply an agreement to enter an

assignment which was never actually done.

On October 8, 2021, RR Restoration, purporting to be the

assignee of Amblewood, filed a one-count breach of contract

complaint against Empire in state court in Collier County, Florida.

On November 19, 2021, Empire filed a Notice of Removal (Doc. #1)

removing the case to federal court. The Complaint (Doc. #3)

alleged that after the loss caused by Hurricane Irma, Amblewood

“assigned certain benefits by and through the Policy to Plaintiff.

Plaintiff, as assignee, is entitled to such benefits up to the

amount of services rendered or to be rendered by Plaintiff in

connection with the Claim. A copy of the assignment of benefits

is attached hereto as Exhibit B (hereinafter the “AOB”).” (Doc.

#3, ¶ 14.) Attached as Exhibit B was the June 17, 2019 “Work

Authorization Agreement” and the “Addendum.” (Doc. #3-2.)1

Empire’s Answer (Doc. #20) “[a]dmitted that Amblewood

purported to make an assignment of benefits to RR Restoration.

Denied as to any implication that the assignment is valid. Without

knowledge that Exhibit B represents a complete and authentic copy

of the assignment and, therefore, denied.” (Id. at ¶ 14.) In its

current motion to dismiss, Empire argues that “the Complaint

falsely alleges Amblewood assigned its rights and benefits under

the insurance policy to Plaintiff.” (Doc. #86, p. 5.) This

aspect of the Complaint is false, Empire asserts, because neither

the Work Authorization Agreement nor the Addendum “expressly

authorizes Plaintiff to pursue legal action against Empire.” (Id.

at 6.) As a result, Empire argues, these documents do not confer

standing for RR Restoration to sue Empire for benefits under the

1 Though Plaintiff labeled this exhibit as “Exhibit B”, the

Court will cite each exhibit herein by the numerical number

assigned to it by the Court’s CM/ECF system—in this case, Exhibit

2.

insurance Policy. (Id.) This leaves the federal court without

subject matter jurisdiction since standing is an issue with

jurisdictional significance.

III.

“Federal courts are courts of limited jurisdiction.” Home

Depot U.S.A., Inc. v. Jackson, 587 U.S. ––––, 139 S. Ct. 1743,

1746 (2019) (internal quotation marks omitted). “It is to be

presumed that a cause lies outside this limited jurisdiction”

unless the party asserting jurisdiction proves otherwise.

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377

(1994).

Article III of the Constitution limits the jurisdiction of

federal courts to “[c]ases” and “[c]ontroversies.” U.S. Const.

art. III, § 2. “[T]hat means the plaintiff must have standing (a

personal stake in the matter) . . . .” Keister v. Bell, 29 F.4th

1239, 1249 (11th Cir. 2022) (citations omitted). Article III

standing “is a threshold jurisdictional question.” Muransky v.

Godiva Chocolatier, Inc., 979 F.3d 917, 923 (11th Cir. 2020) (en

banc). At an “irreducible constitutional minimum,” the standing

doctrine requires that a plaintiff have “(1) suffered an injury in

fact, (2) that is fairly traceable to the challenged conduct of

the defendant, and (3) that is likely to be redressed by a

favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S.

330, 338 (2016) (citation omitted). See also Lewis v. Governor

of Ala., 944 F.3d 1287, 1296 (11th Cir. 2019)(en banc). “Standing

asks, in short, whether a particular plaintiff even has the

requisite stake in the litigation to invoke the federal ‘judicial

Power’ in the first place.” Gardner v. Mutz, 962 F.3d 1329, 1337

(11th Cir. 2020).

Because standing is a jurisdictional matter, it cannot be

sidestepped. Id. at 1338-43. And “[q]uestions of the litigants’

standing may be raised at any time . . . .” Smith v. Miorelli, 93

F.4th 1206, 1211 (11th Cir. 2024) (citing Williams v. Reckitt

Benckiser LLC, 65 F.4th 1243, 1251 (11th Cir. 2023)).

“Article III standing must be determined as of the time at

which the plaintiff's complaint is filed.” Focus on the Family

v. Pinellas Suncoast Transit Auth., 344 F.3d 1263, 1275–76 (11th

Cir. 2003). When ruling on a facial challenge to standing, the

Court must accept as true all material factual allegations of the

complaint and construe them in favor of the complaining party.

Corbett v. Transp. Sec. Admin., 930 F.3d 1225, 1228 (11th Cir.

2019). The Court limits consideration to the facts contained in

the pleadings and attached exhibits. Griffin Indus., Inc. v.

Irvin, 496 F.3d 1189, 1199 (11th Cir. 2007). At the pleading

stage, “general factual allegations” showing the elements of

standing will suffice. MSPA Claims 1, LLC v. Tenet Florida, Inc.,

918 F.3d 1312, 1318 (11th Cir. 2019).

The normal remedy for a lack of subject matter jurisdiction

is dismissal without prejudice. Wiand v. ATC Brokers Ltd., 22-

13658, 2024 WL 1163902, at *6 (11th Cir. Mar. 19, 2024)(“Because

standing is a threshold jurisdictional question, the district

court was not empowered to reach any merits question. And

ordinarily, absent standing, a court must dismiss the plaintiff's

claim without prejudice.” (citations and punctuation omitted));

Stalley ex rel. U.S. v. Orlando Reg'l Healthcare Sys., Inc., 524

F.3d 1229, 1232 (11th Cir. 2008)(“A dismissal for lack of subject

matter jurisdiction is not a judgment on the merits and is entered

without prejudice.”) Here, however, the case was removed from

state court to federal court, so the proper remedy would be to

remand the case back to state court. See 28 U.S.C. § 1447(c) (“If

at any time before final judgment it appears that the district

court lacks subject matter jurisdiction, the case shall be

remanded.”); Mack v. USAA Cas. Ins. Co., 994 F.3d 1353, 1359 (11th

Cir. 2021)(collecting cases).

IV.

To establish standing for Article III purposes, RR

Restoration must show that it held a legally protected interest in

the insurance Policy which was injured by Empire. “[A] plaintiff

must have standing under both Article III of the Constitution and

applicable state law in order to maintain a [breach of contract]

cause of action.” Ave. CLO Fund Ltd. v. Bank of Am., NA, 709 F.3d

1072, 1077–78 (11th Cir. 2013) (quoting Mid–Hudson Catskill Rural

Migrant Ministry, Inc. v. Fine Host Corp., 418 F.3d 168, 173 (2d

Cir. 2005)). To resolve the current motion, the Court only need

determine whether RR Restoration has standing under Article III of

the Constitution, although this determination is informed by

Florida substantive law.2

“A person not a party to nor in privity with a contract has

no right to enforce it.” Gallagher v. Dupont, 918 So. 2d 342, 347

(Fla. 5th DCA 2005). As the insured under the Policy, Amblewood

allegedly suffered an injury-in-fact. RR Restoration has standing

if it was validly assigned the insurance benefits under the Policy,

the right to sue Empire for the benefits, or both. MSPA Claims

1, 918 F.3d at 1318–19.

RR Restoration argues that Empire lacks standing to challenge

the validity of the assignment. This is certainly incorrect as

to Article III standing, since RR Restoration is attempting to

compel Empire to pay it millions of dollars based on the existence

and validity of the assignment. This clearly allows Empire to

challenge the assignment.

2 “In diversity cases, we are required to apply the

substantive law of the forum state; here, Florida.” Pelaez v. Gov't

Employees Ins. Co., 13 F.4th 1243, 1249 (11th Cir. 2021)(citation

omitted.) Additionally, the Work Authorization Agreement provides

that it “shall be governed by the laws of the state in which the

services were rendered.” (Doc. # 3-2, ¶ 8.) In this case—

Florida.

The parties dispute whether the pertinent documents

constitute a valid assignment. The Complaint attaches and relies

upon the Work Authorization Agreement and the Addendum, asserting

that these documents constitute an assignment of benefits to RR

Restoration. The Work Authorization Agreement (Doc.#3-2) is a

two-page form document signed by both parties. It describes “The

Work” to be done as “[a]ll permanent repairs to the Property

resulting from Hurricane Irma damage . . . .” (Id.) “The Price”

is set at “the total insurance proceeds (“Proceeds”) collected

from the insurance policy(s) for the Work.” (Id.) The parties

then agreed to items set forth in eight paragraphs, of which only

the fourth mentions an “assignment”: “Where and to the extent

allowed by law, the Customer agrees to give the company its

assignment of benefits rights to its insurance policy(s) and allow

the insurance carrier to make payments to the insured. All

payments will be held by the insured in a hurricane account and

payed [sic] in full to RR Restoration as per work is completed on

a percentage basis.” (Id. at ¶ 4.)

Under Florida law, an “assignment” “is defined as a voluntary

act of transferring a right or an interest.” Bioscience W., Inc.

v. Gulfstream Prop. & Cas. Ins. Co., 185 So. 3d 638, 641 (Fla. 2d

DCA 2016). As explained by a Florida appellate court:

“An assignment has been defined as ‘a transfer

or setting over of property, or of some right

or interest therein, from one person to

another.’” Sidiq v. Tower Hill Select Ins.

Co., 276 So. 3d 822, 825 (Fla. 4th DCA 2019)

(quoting Cont'l Cas. Co. v. Ryan Inc. E., 974

So. 2d 368, 376 (Fla. 2008)). Once an interest

has been assigned, “the assignor no longer has

a right to enforce th[at] interest because the

assignee has obtained ‘all rights to the thing

assigned.’” Id. (quoting Cont'l Cas. Co., 974

So. 2d at 376).

Brown v. Omega Ins. Co., 322 So. 3d 98, 100–01 (Fla. 4th DCA 2021).

At the time relevant to this case, Florida law allowed an

insured to assign the right to benefits under a contract of

insurance.3 Schuster v. Blue Cross & Blue Shield of Florida, Inc.,

843 So. 2d 909, 911–12 (Fla. 4th DCA 2003). However, an assignment

of benefits must be specific, since an assignment can be tailored

to the work that a contractor performs, rather than all of the

rights under the insurance contract. Salyer v. Tower Hill Select

Ins. Co., 367 So. 3d 551, 554 (Fla. 5th DCA 2023)(citations

omitted); Sidiq v. Tower Hill Select Ins. Co., 276 So. 3d 822, 827

(Fla. 4th DCA 2019). This would allow both an insured and an

assignee to have a cause of action against the insurer.

The plain and unambiguous language of the Work Authorization

Agreement shows that it is not an assignment at all, but rather

only an agreement to make an assignment in the future. There are

3 Recently, “[f]or insurance policies issued after January 1,

2023, the Florida Legislature has declared all assignments to be

void, invalid, and unenforceable.” Kidwell Group, LLC v. SafePoint

Ins. Co., 4D2022-2806, 2023 WL 8792662, at * 2 n.2 (Fla. 4th DCA

Dec. 20, 2023)(citing Fla. Stat. § 627.7152(13)(2023)).

no words of assignment or transfer. The documents do not disclose

what interest is transferred and what is not transferred. While

the Complaint characterizes the two documents as an assignment,

this is contradicted by the documents themselves, which control.

Hoefling v. City of Miami, 811 F.3d 1271, 1277 (11th Cir. 2016)(“A

district court can generally consider exhibits attached to a

complaint in ruling on a motion to dismiss, and if the allegations

of the complaint about a particular exhibit conflict with the

contents of the exhibit itself, the exhibit controls.”)

The Addendum confirms that no assignment was intended or given

by these two documents. The first of the nine-paragraphs in the

Addendum states: “Amblewood will sign an Assignment of Benefits to

R&R Restoration.” (Doc. #3-2, ¶ 1.) No such signed document is

referred to or attached to the Complaint. The Addendum further

provides that only Amblewood will have the authority to accept or

reject an insurance settlement offer. (Id. at ¶¶ 4-6.) In short,

the two documents do not purport to transfer anything to RR

Restoration, and without a valid assignment RR Restoration lacks

Article III standing. The case will therefore be remanded to

state court.

The Court does not purport to bind the state court on any

issue. The state court will not have an Article III issue, and

state law appears to treat the lack of standing as a waivable

affirmative defense. Schuster, 843 So. 2d at 912 (“There is no

question that lack of standing is an affirmative defense that must

be raised by the defendant and that the failure to raise it

generally results in waiver.”) An assignment of benefits may or

may not deprive the insured of standing to assert its claim for

breach of contract and the right to sue for damages. Brown, 322

So. 3d at 102.

Accordingly, it is hereby

ORDERED :

1. Empire’s Motion To Dismiss (Doc. #86) is granted to the

extent that it is determined RR Restoration has no Article

ITI standing to sue Empire and denied to the extent that

Empire requests dismissal of the Amended Complaint.

Finding no subject-matter jurisdiction, the case is

remanded to the Twentieth Judicial Circuit Court, in and

for Collier County, Florida, for all further proceedings.

3. The Clerk shall terminate all pending motions as moot and

close the file.

DONE and ORDERED at Fort Myers, Florida, this 28th day

of March, 2024.

□ —_ Afr

: le hy ZC. AK Zo0b

ade E. STEELE

SHNIOR UNITED STATES DISTRICT JUDGE

Copies: Counsel of Record