The Georgia Court of Appeals has sided with Hippo Insurance Services and its underwriter, Spinnaker Insurance Company, in a legal battle with Atlantic Restoration Services, Inc. The case, which involved a disputed insurance claim, centered on whether Atlantic had the legal right, or “standing,” to sue Hippo for not paying for water damage mitigation services provided to a homeowner, Amber Dawson.
The conflict began in 2021 when Dawson’s condominium sustained water damage due to a plumbing leak. She contracted Atlantic Restoration Services to handle the cleanup. Their service agreement included a clause that transferred Dawson’s insurance rights to Atlantic. This clause stated that Dawson assigned and transferred to Atlantic “all of [Dawson’s] legal and equitable rights, title, and interest under all insurance policies arising from claims for the damage [Atlantic] was hired to address… includ[ing]… the rights to collect insurance policy benefits and proceeds… [and] to sue the insurance company…”
However, Hippo’s insurance policy had a provision that specifically prohibited assignments of the policy without their prior consent. The policy stated that “Assignment of this policy will not be valid unless we give our consent.” Because Hippo hadn’t approved the assignment, they contested Atlantic’s right to sue under Dawson’s policy.
Atlantic sued Hippo in 2022, seeking payment for the services provided to Dawson. Hippo responded by challenging Atlantic’s standing to sue, arguing that Dawson’s assignment of rights was invalid without their consent. The trial court initially denied Hippo’s motion for summary judgment, based on a rule requiring such motions to be filed within 30 days after the close of discovery in the case. Hippo appealed this decision, arguing that the challenge to standing wasn’t a matter for summary judgment but a fundamental issue that could be raised at any stage of the legal process.
The Court of Appeals agreed with Hippo, finding the trial court erred in dismissing the motion as untimely. The appellate court emphasized that challenges to a plaintiff’s standing to sue are considered issues of abatement, meaning they can be brought up at any point in a legal case. Because of this, the court reversed the trial court’s decision and sent the case back for further proceedings, allowing the lower court to decide on Hippo’s motion based on its merits.
This ruling highlights the significance of contract provisions regarding assignment clauses in insurance policies. It underscores the need for policyholders and service providers to obtain the insurer’s approval before assigning policy benefits. The outcome is important for insurers, as it supports the enforcement of policy terms that require consent for assignments. This could potentially limit claims against insurers by third parties who lack a direct contractual relationship. Additionally, it highlights the importance for restoration and mitigation service companies to review insurance contract restrictions before depending on assignments for payment.
