When it comes to insurance roofing and restoration contracting, I often wonder if the construction contract is enforceable. A recent Florida case, Florida Roof Specialists, Inc. v. Gloria A. Arthur, 1 highlights the dangers contractors face when contracts lack essential legal elements. This ruling serves as a cautionary tale for insurance restoration contractors and roofers and underscores that policyholders have rights when it comes to amounts charged.
Florida Roof Specialists (FRS) sued homeowner Gloria Arthur to enforce a construction lien and breach of contract claim for unpaid roofing services. However, the court dismissed FRS’s claims because the contractor’s agreement with the homeowner was deemed unenforceable. Here is the ruling:
1. The motion to dismiss is GRANTED. The two counts of the Complaint for enforcement of the construction lien (Count I) and breach of contract (Count II) rely on the viability of the Customer/Contractor Agreement Contract attached to it, and the Court finds that this purported contract is unenforceable per the authority of The Gables 1 Townhouses, Inc. v. Sunmark Restoration, Inc., 687 So.2d 6 (Fla. 3d DCA 1996). No price or specific scope of work is listed in the Customer/Contractor Agreement, rendering it illusory.
2. Therefore, this Court hereby dismisses the Complaint, and further orders that Plaintiff’s May 12, 2023, Claim of Lien set forth in Count I of the Complaint, on Gloria Arthur’s real property….
The well-written Motion To Dismiss explains in greater detail why the roofer lost this case. The contract lacked key provisions such as:
- Specific price terms: The agreement referred vaguely to an “amount equal to full replacement cost value,” without stating a specific price or tying it to an agreed estimate.
- Defined scope of work: The contract did not specify what services or materials the contractor would provide.
- Binding obligations: The court agreed with the policyholder’s argument and found the agreement “illusory,” as it left critical performance terms to the contractor’s discretion without requiring mutual commitment.
As a result, the court dismissed FRS’s claims and ordered the lien on Arthur’s property to be discharged.
This decision highlights many comments I have heard over the years from both policyholder and insurer attorneys, wondering how vague or incomplete insurance restoration contracts can be enforced against the policyholder. Here is a list of essential issues that I have heard raised about needed requirements for a valid restoration contract:
- Clearly Defined Price and Payment Terms
Contracts must specify a clear, agreed-upon price or a method for determining the price (e.g., an approved estimate). Referring vaguely to an insurance company’s “final scope of loss” or other external documents without agreement from the homeowner can render the contract unenforceable. Contracts should include an exact dollar amount or a clause that explicitly ties the price to a mutually agreed-upon estimate. If additional costs arise, there should be provisions requiring homeowner approval before proceeding.
- Detailed Scope of Work
Courts require contracts to spell out what work will be performed and the materials to be used. Ambiguity leaves room for disputes and, as in this case, may invalidate your agreement. The contract needs to describe the work in detail. For example, “Remove and replace 30-year shingles on the main roof and detached garage, including underlayment and flashing.”
- Avoid Illusory Promises
An “illusory” contract is one where one party has complete discretion to decide whether or how to perform, leaving the other party without enforceable rights. In this case, the contractor retained discretion over key terms, which left the homeowner’s obligations undefined. Ensure that both parties’ obligations are clear and binding. Specify deadlines, milestones, and payment schedules to create mutual accountability.
- Comply with Licensing and Legal Requirements
States have various construction rules which must be followed by the letter of the law. Increasingly, policyholders are also raising issues about contractors promising to “take over dealing with the insurance company” as a defense to the contract since that is illegal. Florida law prohibits unlicensed public adjusting activities by contractors, such as negotiating directly with insurers on behalf of homeowners. As noted in this week’s post, Roofer Agrees to Cease and Desist Consent Order Preventing Advertising and Acting As a Licensed Public Adjuster, this is a significant issue. The Motion to Dismiss noted that parts of the contract could be construed as illegal public adjusting. Construction contracts should focus on construction services. Licensed public adjusters or attorneys are the ones who deal with insurance-related matters.
Failing to draft enforceable contracts not only jeopardizes a restoration contractor’s ability to collect payment but can also expose the contractor to counterclaims and possible class action lawsuits. The roofing contract in this case was certainly used in other matters. If it is illegal and unenforceable for one, it is unenforceable for all. While FRS not only lost its claims in this case, it would not be surprising if it also faced additional liability from other homeowners.
The Florida Roof Specialists case is a reminder of the importance of carefully drafted contracts in the roofing and contracting industries. Contractors can avoid costly disputes, safeguard their payments, and maintain a professional reputation by investing time and resources in creating clear, enforceable agreements. Restoration insurance contracts that simply state that the amount charged is going to be the amount the insurance company agrees to pay or provide the unilateral determination of price by the restoration contractor face significant scrutiny.
Pablo Caceres did a wonderful job representing the policyholder homeowner in this case. Pablo will be retiring after 27 years of service from Butler and will become a mediator. Butler is the very fine insurance defense firm I first started with as a clerk and then associate attorney in the early 1980s. I noted this history in Butler Pappas–A Familiar Foe.
Thought For The Day
“Success is built on solid foundations, and contracts are the bedrock of every deal.”
—Richard Branson
1 Florida Roof Specialists, Inc. v. Arthur, No. 2024-001865-CO (Fla. Co. Ct., Pinellas Co., July 31, 2024).
