As I read an appellate opinion about the illegal public adjuster contract, which went viral a day later,1 I kept thinking about how this entire scenario could easily have been avoided. The contract was obviously illegal when I read it. I did not have to wait for the opinion to tell me what any rookie lawyer should have known. 

Public adjusters should have a competent lawyer who provides them with compliance advice on retainer. All contracts should be written and approved by a lawyer who does a substantial amount of work in that area of public adjuster compliance. I teach this at seminars and show a slide with an attorney’s name and phone number—Holly Soffer. 



Rather than simply re-hash the appellate opinion, I want to draw attention to the successful policyholder’s legal brief, which noted the following: 

The Flemings’ home was destroyed by Hurricane Michael. In June of 2019, during a declared state of emergency, Monarch agreed to act as the Flemings’ public insurance adjuster (‘Agreement’). Two months later, after Monarch failed to do anything on the claim, the Flemings fired Monarch. 

The Flemings hired an attorney, sued their insurer and, in October of 2020, settled their insurance claim. Monarch did nothing to advance the litigation or settlement of the Flemings’ insurance lawsuit. Fourteen months after being fired; Monarch learned of the settlement and demanded full payment under the Agreement.

The Flemings then sought a judicial declaration of their rights and obligations under the Agreement. Citing venue language buried in an unrelated paragraph, in the middle of the Agreement, Monarch moved to dismiss for lack of venue.

The brief also noted that the public adjuster’s contract which had the change of venue language and required the policyholder to appoint the public adjuster as the appraiser: 

7. PROVISIONS CONCERNING SERVICES: POLICYHOLDER AND PUBLIC ADJUSTER understand and agree that neither party shall settle any claims arising out of the LOSS without first communicating with the other. POLICYHOLDER’s deposit or negotiation of a claim payment is evidence of POLICYHOLDER’s consent to settlement. POLICYHOLDER agrees to cooperate with PUBLIC ADJUSTER to be available for preparation of the claim, conferences, appraisal, and/or mediation, and to keep PUBLIC ADJUSTER fully informed on all matters relating to this LOSS. POLICYHOLDER acknowledges that PUBLIC ADJUSTER has made no guarantees regarding the disposition or results of any stage of the claims process, and all expressions made on behalf of PUBLIC ADJUSTER are the opinion of PUBLIC ADJUSTER based on information known at that time. This Agreement provides the complete and only agreement between POLICYHOLDER and PUBLIC ADJUSTER with respect to the above referenced LOSS, and supersedes all prior written and oral offers, proposals, and agreements. No modification, waiver, amendment, discharge, or change of this Agreement shall be valid unless the same is in writing. In the event a dispute between the parties arises and suit is filed, the venue of such suit shall be in the Miami-Dade County, Florida where PUBLIC ADJUSTER’s above address is located. The substantive law of the State of Florida shall govern this Agreement. Any failure by either party to comply with any provision of this Agreement may be waived, but only if such waiver is in writing and signed by the other party. Any failure to insist upon or enforce compliance with any provision of this Agreement shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing, and if hand delivered, sent by Federal Express or similar overnight carrier, or sent by registered or certified United States Mail, return receipt requested, to the addresses set forth in this Agreement, or to such other address as a party may designate in accordance with this provision, unless specified otherwise for a particular provision in this Agreement. This Agreement shall not be construed more strictly against PUBLIC ADJUSTER simply because it was the party responsible for preparing this Agreement. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one in the same instrument. A copy of this Agreement transmitted by telefacsimile, email, and/or other electronic form shall be deemed an original.

…

10. APPRAISER APPOINTMENT: POLICYHOLDER agrees to appoint the PUBLIC ADJUSTER as the appointed appraiser should the LOSS go to appraisal. While conducting appraisal, the PUBLIC ADJUSTER shall function solely as the appraiser, and not as a public adjuster. The appraisal cost shall be an additional 10% of recovery. Notwithstanding, the PUBLIC ADJUSTER shall retain any and all liens pursuant to the public adjuster agreement. This section is applicable whether or not the claim ultimately goes to litigation.

The trial court found that Florida law capped Monarch’s fee at 10% of the Flemings’ insurance recovery; that Florida law prohibited Monarch from charging, agreeing to, or accepting anything of value in excess of 10% of the Flemings’ insurance recovery; and that the Flemings promise to appoint Monarch their appraiser was a thing of value. As a result, the contract was illegal and void. The venue clause of an illegal contract was not enforceable. 

Most public adjusting firms never would have litigated the matter this far with these facts. They would have agreed not to charge a fee, and the litigation would never have occurred. Once a trial court made this disastrous ruling, most would simply stop. But an appeal was filed, which resulted in an anticipated ruling against the public adjusting firm, which has now made national press. 

Finding for the same reasons as the trial court and which most competent attorneys would predict would happen, the appellate court affirmed the trial judge, stating:

As explained in Gables Insurance, the fact that the appraisal scenario never came to pass is irrelevant. Public adjusters violate section 626.854(10)(b) when they ‘agree to’ be compensated with any ‘thing of value’ in excess of the fee cap. See § 626.854(10)(b), Fla. Stat. (‘A public adjuster may not charge, agree to, or accept from any source compensation, payment, commission, fee, or any other thing of value in excess of . . . [t]en percent of the amount of insurance claim payments or settlements . . . .’)…This violation of a valid Florida statute rendered the entire Service Agreement unenforceable. See Gables Insurance, 261 So. 3d at 626 (holding that an agreement that violated section 626.854 is unenforceable); Loc. No. 234, 66 So. 2d at 821 (stating that an agreement that violates a valid statute is illegal and void).

So, what does this mean for that public adjusting firm? First, all their contracts are illegal. This subjects them to disciplinary proceedings and fines—for each illegal contract they had a client sign! Second, any policyholder who was represented by this public adjusting firm can now file a lawsuit to recover their fees, which were illegally charged. It would not surprise me if a class action lawsuit has already been filed. It is a certain winner. 

What are some more lessons? First, public adjusters have to invest in great legal talent to make certain contracts are legal. Second, the contracts should be reviewed periodically to make certain they comply with changing laws and regulations. Third, why make onerous venue selection clauses that harm policyholders by making them litigate away from the policyholder’s community? Isn’t this the same venue issue we complain about insurance companies placing in their contracts? 

If you faced having brain surgery, would you go to a doctor who only did 5% of his practice as brain surgery? Of course not. So why go to attorneys who do less than 5% of their practice making public adjuster contracts? That is stupid as well.  

Holly Soffer specializes in this area of law. Her two-person law firm writes public adjuster, appraiser, and umpire contracts. This is what they do for a living. I do not get a dime or anything of value to suggest you seek her legal services. 

I am a litigator who is involved full-time in trying to have the best policyholder recovery firm in the business. If I were to establish a practice of public adjuster compliance, I would take time away from trying to be the best at what really matters to me—winning claims disputes—and would invite conflicts of interest if my clients ever became at odds with my public adjuster clients. Property insurance litigators who do both set themselves, their clients, and public adjusters up for failure. 

Holly Soffer regularly has discussions with insurance regulators about public adjuster compliance. Holly wrote a guest blog, Public Adjusting in Louisiana, a few years ago about Louisiana licensing requirements. She has since had legions of discussions with the Louisiana Department of Insurance regarding various technical aspects of compliance. She does the same thing all over the country—every day.  

I appreciate that some may see this post as a “harsh warning from dad.” But the lesson is serious, and I do not want to see anybody accused of breaking the law. This case is a warning to all public adjusters. Compliance, actual and technical, is very important. Insurance is a highly regulated industry, and that type of government oversight requires specialized legal help if you want to avoid disaster. 

Thought For The Day 

I’m trusting in the Lord and a good lawyer.

—Oliver North

1 Monarch Claims Consults v. Fleming, No. 1D22-601 (Fla. 1st DCA Sept. 6, 2023).